iNtegrate 2 Screening Committee Analysis finalsystem.nevada.edu/tasks/sites/Nshe/assets/File/BoardOfRegents/Ag… · workflow automation, support for mobile devices, and reporting

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iNtegrate 2 Screening Committee Options Analysis October 7, 2014

Introduction The iNtegrate 2 Screening Committee evaluated proposals from five firms proposing three distinct software solutions: Oracle, Workday and SAP. Successive rounds of analysis narrowed the options to bids from Sierra-Cedar (formerly Cedar Crestone) featuring Workday and Ciber featuring Oracle’s PeopleSoft solution (Oracle). This report summarizes the Committee’s analysis of the two finalists. Executive Summary The majority of institutions favor or are leaning towards Sierra-Cedar and Workday (Workday). Workday’s ease of use, integrated reporting, human resource functionality, technology currency, and future development roadmap tipped the scales in its favor for these committee members. Workday’s technology currency and Software as a Service (SaaS) offering avoids the substantial cost and disruption of future major upgrades that is inherent to the Oracle option. The majority of institution’s find Workday’s finance package sufficiently developed to meet most of our baseline operational requirements. If chosen, it is important that Workday meets its promised development milestones and introduces additional capabilities prior to NSHE’s projected implementation in 2016. The two universities have greater concerns about Workday’s financial system. One prefers Ciber-Oracle (Oracle) and finds Workday’s current finance capability did not sufficiently meet RFP requirements for finance. The other would support Workday, if there were contractual commitments to meet specific development milestones. Otherwise, this institution is split between Oracle, which is favored by its finance users and Workday, which is favored by its HR users. For institutions favoring Oracle, the case is based on four factors: (1) the longevity and depth of its successful use in similar complex institutions and systems of higher education, (2) the full maturity and capability of its financial system, (3) a significantly lower proposed cost for software licensing, hosting and implementation consulting (see cost section), and (4) familiarity with the technology and how these new systems would interface with our current student system.

(BOARD OF REGENTS 10/22/14) Ref. BOR-3c, Page 1 of 13

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Oracle is completely redeveloping their product to become a SaaS offering. Oracle will support the present software version through at least 2027. NSHE would not initially implement this version, but would need to upgrade to it by or before the present version becomes unsupported. The point in time at which performing the upgrade becomes a necessity is uncertain. The upgrade would be a substantial change and the transition effort akin to a re-implementation performed either in one large project or phased in over a longer period of time. Therefore, we should expect to begin its implementation one to two years in advance of 2027. Sooner, if we desire the benefits of its promised capabilities. Oracle’s change in technology direction creates uncertainty about the product’s long-term roadmap and NSHE’s future costs. For most of the Committee, the requirement to undertake a major upgrade of Oracle during the ten years after the initial implementation, outweighs the short-term concerns about Workday’s current gaps in functionality or worries about its ability to continue to develop its financial system.

Analysis There are five dimensions to the Committee’s analysis of options: software capability, services capability, technology, cost and risk. A summary of each dimension is presented below.

Software Capability Workday has consistently been evaluated as the best fit for human resource requirements and Oracle for finance. Workday’s strengths in HR derive from its workflow automation, support for mobile devices, and reporting capabilities in conjunction with strong capabilities for the majority of HR processes. Particular advantages were identified in capabilities to support on boarding, personnel administration, HR workflow development and maintenance, and HR ad-hoc reporting. For HR, Oracle was also scored as very capable with strengths in position administration and benefits. Through successive rounds of analysis, only one institution (UNLV) evaluated Oracle as stronger for HR. Oracle’s financial system is more complete today. The financial system has been developed and enhanced over more than twenty years and is used by many universities. Reviewers identified few gaps in its ability to meet NSHE’s requirements in finance, with the possible exceptions of requiring additional optional modules to support strategic sourcing and supplier contract management. The optional modules cover areas that Workday is still developing capabilities to address. Oracle’s present capabilities are particularly stronger in procurement, bank reconciliation, encumbrance tracking, and cash reporting for cost centers (e.g., projects). Workday is developing additional functionality in these areas (see Appendix A for a list of Workday and Oracle gaps). The Committee identified several other areas of advantage in the Workday solution. Workday’s workflow configuration tools are highly adaptable and easy to


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configure. Some institutions felt the Oracle workflow tools were more complex and might be less flexible. This could increase the effort required to configure complex business processes that are tailored to reflect necessary institutional differences. Also, the chart of accounts structure in Oracle is more traditional and will support the preparation of standard financial reports. Workday also supports the preparation of standard financial reports and offers greater access to financial management information. The Workday chart of accounts uses “tags” to enable transactions to be identified based on their purpose or the program they support in addition to the fund and expense category. Both Oracle and Workday support NSHE’s redesigned chart of accounts. The Workday approach offers additional potential to provide greater management information (e.g., tracking program costs) available real-time, without constructing specialized queries. Workday delivers superior capability to access information and perform business processes from mobile devices. This is particularly important to the productivity of faculty and administrators who are less tied to working at their desks than in the past. Initially, members of the Committee were concerned that the Workday financial solution is insufficiently developed to meet our fundamental requirements. Subsequent investigation and site visits have allayed this concern for the majority. Visits confirmed that the software is developed and functioning sufficiently to support accounting and financial transaction processing at government, non-profit and higher education clients. Additional complex higher education institutions will be using Workday by the time NSHE would implement financials including the University of Miami, the University of Rochester, Yale University and the University of Texas at Austin. All members of the committee believe that if Workday is selected there must be contractual financial penalties if it fails to deliver the functionality it has promised for its future releases due and other NSHE required functionality that is not on the current roadmap. There are concerns about the budget solutions from both proposers. The third party budget system proposed by Workday won’t meet NSHE’s needs and the committee recommends it be removed from their bid. Likewise, some institutions are concerned that Oracle’s proposed budget solution (Hyperion) isn’t sufficiently effective to warrant its implementation. UNLV currently uses Hyperion and feels that it will meet their needs with a proper implementation. The committee recommends that institutions be provided the flexibility to continue to use their current approach to developing budgets to meet the state’s requirements, import final budgets to Workday or Oracle and rely on the new financial system to track budget to actual cost performance and budget revisions. Both options require NSHE to negotiate for the inclusion of additional modules to round out the solutions. For Workday, it will be important to evaluate the costs and benefits to add their “big data analytics” and future inventory management modules to the scope. For Oracle, there are several additional modules proposed in their best and final response that would add important capability in


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procurement and analytics. The cost and benefits of adding these modules should be evaluated, as well. Additionally, the Committee recommends that NSHE require Oracle to develop and maintain several modifications to its software to address a few gaps in capability.

Services The services proposals aren’t appreciably different and both meet NSHE’s needs. Cedar has worked with NSHE on iNtegrate 1 and that may provide a small advantage in understanding the culture, system structure and differential missions of the institutions. Ciber has a higher level of experience implementing Oracle than Cedar has implementing Workday because Workday is a relatively new product. However, past experience suggests that the quality of the individual consultants assigned to NSHE is more important than the firms’ methodologies or past clients. In this regard, Ciber and Cedar are equally positioned to offer an experienced consulting team. The implementation methods and timelines of the two proposals are similar. It will be important to hold the selected firm accountable to help build NSHE’s knowledge of the technologies they are implementing. If Oracle/Ciber is selected, the Committee recommends implementing analytics (e.g. data warehouse) concurrent with finance and HR. The current proposal calls for it to be deployed as a third phase, which is too late. The Cedar proposed implementation timeline and order appears to meet our needs. If the Oracle solution is chosen, they will use Switch SuperNAP, a Nevada company, as a hosting facility.

Technology The Workday technology is more current and designed for “cloud-based”, Software as a Service (SaaS) application delivery. As a new product, it uses modern technologies that optimize appearance (e.g., usability), integration of data across modules, on-demand reporting, and compatibility with mobile devices. Workday’s technology is not the bleeding edge. It is developed in software development languages that are used extensively to operate web-based applications across industries. Oracle’s technology is proven and familiar to NSHE’s IT staffs and is the software used for the Student System, which is expected to remain in place for some time. Oracle’s has numerous internal interfaces to move data between its modules that require effort to maintain, especially if any modifications are made to the software. The finance and HR databases are separate (and the student system is a third database) and require effort to maintain integration and automated synchronization of data. It also limits the range of inquiries of data in the online systems; a separate data warehouse is required to support reporting. Oracle users will require more training, especially for infrequent users who need to understand its less intuitive design and navigation. However, for those that use Campus Solutions as well as HR or finance, it may be easier, as there will be


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more consistency across applications. Oracle and Workday have fundamentally different technologies for structuring data. Oracle uses relational databases and Workday keeps all data in memory, making it essentially always available within the flow of a business process. Oracle’s approach makes it more difficult to view finance and HR data within the context of a business process. The data is available but requires additional navigation and queries to access it. Oracle’s business process modeling and management tools for automating workflow aren’t as intuitive, graphical and flexible as Workday’s. Workday’s technology also facilitates the required technical support responsibilities that NSHE will maintain for integrating existing and future third party systems to the finance and HR solution or creating small custom extensions of functionality. These interfaces and integrations are outside the scope of Workday’s software as a service support or the application management services that Ciber will provide for Oracle. The skill sets required to develop integrations for Workday are common to many web development architectures. Oracle requires technical support staff with these skills and knowledge of proprietary development tools. Staff with these skills are more costly to recruit and retain and the work they perform more complicated and less agile. Oracle will be replacing its current software with a new version that uses technologies similar to Workday’s and NSHE may want or will need to migrate to it in the future. This cost of this migration will be significant. Technically, it requires the reconversion of data from the current Oracle system to the new software as a service system. It requires the configuration of new modules and presumably new workflows using different tools. Oracle has recommended to NSHE that it remain on the present version of their software for as long as possible to recoup its initial implementation expenditures, before taking on the upgrade to the new version.

Cost The five-year software acquisition and implementation consulting costs bid for Oracle are less than Workday’s. Oracle’s proposed license, maintenance, application hosting and management support and implementation services over the first five years of ownership (including the period of implementation) are $18.1 million. Comparable proposed costs for Workday including software subscription and implementation services are $27.8 million. Cost differences are attributable to lower software acquisition costs and less costly implementation/hosting services costs for Oracle. There are several uncertainties and risks in the cost estimates that are of concern to many on the Committee. Most significantly, Oracle has provided no detail on what the costs are to transition to its cloud based software. In its RFP response, Oracle stated it will support the version of the software that NSHE will implement till at least 2027. It is possible that this date may be extended. However, premium level support, which NSHE currently enjoys for iNtegrate 1,


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will discontinue in 2018. From that point, NSHE would transition to Oracle’s extended support, which is promised through 2021. Presumably, this date would be extended to 2027 to align with the promise to support the current version through 2027. The major difference between premium and extended support is that Oracle may no longer certify that software will work with the full range of third party products that NSHE may employ. The implications could include increased cost to custom develop integrations, the inability to use some third party products, or the necessity to change to products that are certified. After extended support ends, NSHE could continue to use the software under a sustaining support model. Sustaining support transfers all the risk and responsibility to maintain the software to NSHE. Under sustaining support, Oracle will no longer provide security updates, critical patches and fixes, tax, legal or regulatory updates, or certification with other Oracle or third party products. It is likely that at some point prior to 2027, NSHE will need to upgrade to the new cloud based version either to take advantage of its capabilities or to prepare for the discontinuation of support. This transition is closer to a re-implementation than a moderate upgrade. Data will need to be reconverted, software reconfigured and users retrained. The transition will require additional consulting support and dedicated time from NSHE personnel. Costs could approach those of the initial implementation and the level of disruption to the institutions would be equivalent to a new implementation. A second source of concern is the staffing requirements to support the implementations. NSHE has received inconsistent information from both vendors regarding the staffing the institutions and SCS need to dedicate to the implementation effort. Initially, proposers were asked to estimate the hours or FTE from NSHE that would be required to complement their consulting team during the implementation. At that time, the iNtegrate 2 project support team analyzed the proposals and found that Workday would require a core team of 45.8 FTE and Oracle would require 55.6 FTE. Both estimates excluded additional FTE required to perform institution specific tasks such as project management, communications, training end users or developing unique interfaces. Both proposals indicated that NSHE should expect all institutions to devote two additional full-time resources and multiple part-time resources to manage and perform campus implementation activities. Larger institutions will face a greater staffing requirement. More recently, the Committee provided each vendor with the same description of a core NSHE team that was significantly smaller than either had originally proposed (Appendix B) at 26.9 FTE. Proposers were asked for comments about the adequacy of the projected staffing and impact on required consulting costs. Both accepted the NSHE team size as largely sufficient (a larger training team was suggested) and chose not to increase their consulting estimates. The Committee believes that NSHE will need to support the cost of a larger team than projected in Appendix B for either option (see cost ranges in Table 1).


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The most recent responses suggest that the implementation team and associated backfill costs are comparable for both proposers. While this could be the case, some members of the Committee identify it as a risk point to both the total costs of the project and the comparative costs of each option. Both proposers originally requested more resources and since neither is offering a fixed price for services at this time, they aren’t yet sharing in the risk of an NSHE team that could be smaller than necessary. During our visit with Oracle, Ciber indicated they would provide a fixed cost proposal if desired. This is an option that should be explored regardless of solution. Implementation team size is also a potential point of cost difference between the solutions given that Oracle’s original proposal appeared to request a team size that was nearly 40% larger than Workday’s and twice as large as NSHE’s counter proposal. Table 1 identifies the major categories of cost associated with each solution and degree of certainty with which it can be projected at this time. NSHE core team costs are presented as a possible range incorporating the NSHE proposed team size and the proposer’s original projection of team size. Finally, Table 1 excludes the cost of backfill for staffing to support campus specific implementation tasks. The Committee recommends that backfill be provided for these costs as well. NSHE personnel costs are projected at $100 an hour to represent the potential costs of new hires, contract employees or backfill. Table 1: Comparative Solution Costs Item Oracle Workday

Known Costs Five Year Software License or Subscription Costs

$2,006,264 $16,186140

Five Year Software Maintenance $2,206,891 $0 Implementation Consulting and Training $9,574,260 $11,630,685 Five Year Hosting and Application Management

$4,367,340 $0

Partial Costs $18,154,755 $27,816,825 Uncertain Additional Costs

NSHE Core Team $11,200,000 to $23,140,000

11,200,000 to $16,688,000

Cost of Major Upgrade to Successor Product $TBD $0

Risk Workday presents greater short-term risk and Oracle’s is longer-term. If Workday is selected, success is dependent in part on the continued development of the


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capabilities promised in the financial system. Failure to deploy promised functionality could delay NSHE’s ability to implement, limit ability to automate and improve processes, or otherwise degrade efficiency and potentially increase cost by the need to develop or purchase a solution for missing functionality. Many of these risks may be mitigated through a contract that secures Workday’s commitment to develop additional functionality along with financial penalties for missed milestones. The risks of selecting Oracle are all associated with the uncertain cost and timing of the upgrades to the cloud version. Oracle hasn’t offered any specifics beyond promising to maintain the current software to at least 2027. Beyond this, no specifics have been offered in response to inquiries about changes in license costs or transition costs. Therefore, it is difficult to assess the magnitude of this risk or options to mitigate it.

Additional Success Factors Independent of the choice of software, several other issues will have a significant bearing on the overall success of iNtegrate 2. The Committee has identified several issues that are vital to achieving the project vision and essential to our ability to implement. Without support for each of these elements, the project is likely to fail outright or fall unacceptably short of expectations. The Committee recommends NSHE: • Fund backfill for institution and SCS staff deployed to the shared core

implementation team and to support institutional implementation teams. Staffing levels aren’t adequate at most institutions to reassign many staff nearly full-time to a one to two year project. Smaller institutions would be most vulnerable, as they have limited staffing (even more so now).

• Expand the project to include integrating the new finance and HR solution with SCS and institutional data warehouses to support reporting on non-converted, historical data and to facilitate analyses that require combining finance and HR data with other data sources (e.g., student, research, space). While the approach would differ for each software solution, both will require some data warehousing capability.

• Define a project governance and decision-making structure to oversee the implementation phase of the project and for ongoing use of the system. Maintenance of the Chart of Accounts and other items will require discussion given that we will all share one HR and Finance system and it will be connected to three copies of the software for the student system..

• Review the reengineering recommendations in order to make some of the structural and process design decisions that will serve as the blueprint for implementation. In particular, final determinations of what functions will move into a shared service center and how such an entity would be structured.

Conclusion The Committee welcomes the opportunity to discuss the options analysis. We are grateful for the extensive work performed by many NSHE staff from around


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the system to develop requirements, read written proposals and review the software capabilities.


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Appendix A: Gaps to Be Addressed in Contract Terms Workday

• Procurement o Ability to use one p-card and identify travel versus purchasing

activities on the card in Workday for the ability to identify travel charges and send them to travel for claims processing.

o Confirm the current availability or a date by which the system will have the ability to encumber travel expenses to enable travel advances.

o Support the creation of purchase orders for services as promised in Workday 24.

o Support procurement processing of Request for Quotes including sending RFQs to suppliers in an invitation list, electronic receipt of bids, recording RFQ responses, electronic notification to suppliers, and awarding a PO from an RFQ.

o RFx processing as promised in Workday 24 and 25. o Self-service vendor registration

• Provide an asset management module with additional support for taking physical inventories, integration of bar codes and scanners and tracking of item locations, quantity on hand and re-order points.

• Confirm the current capacity or commit to a date by which Workday provides the ability to determine the cash position of any cost center. Some departments use cash instead of a budget (for example, they may be too small for a budget, but they are allowed to spend the cash within their account – perhaps from department sales). Institutions need a mechanism to check the available funding at the lowest level (cost center) and have that expenditure approved based on an unencumbered balance in a cash account, rather than on a budget balance.

• Provide the ability to calculate average daily cash balances by cost center/project/account or higher levels.

• Deliver the capability to incorporate budget checks into non-approval steps in workflows for expense transactions as promised in Workday 24.

• Enable applicants to apply to an institution without applying for a specific job. • Expand the number of events that trigger automatic recalculation of

retroactive pay and benefits as promised in Workday 25.


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For Oracle • Payroll accounting – currently Oracle is unable to provide split position

funding by a flat $ amount (they only support % of a total salary). NSHE, especially DRI, UNLV and UNR need both for positions that are funded by multiple grants, for example, by a fixed $ amount. Institutions would like to see Oracle provide this as a customization that they would maintain.

• Oracle will need to add to their bid the additional modules demonstrated but not included in the proposal and implementation services for them

• Oracle and Ciber need to alter their proposal to implement analytics in parallel with HCM and Finance implementations and not wait until the end of the implementation.

• Ciber must provide additional clarification of what support they will provide to ‘major’ upgrades versus ‘on-going’ updates and what criteria will be used to distinguish between upgrade and update.

• NSHE requires a system to support student employees with multiple jobs. PeopleSoft does not easily support student workers with multiple jobs. Institutions would like Ciber and Oracle to create and maintain a customization to handle this requirement.


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Appendix B: Forecasted NSHE Core Team Provided to Proposers

Area Role Count Description

Project O

ffice

Project Director 1 Overall leader for the execution of the project. Manages vendor relationships. Day to day oversight of all project team members.

Project Manager 1 Maintain detailed project plans and budgets. Oversee logistics of the project team. Assist the Director in preparing reports and briefings for project oversight committees. Track and manages issue resolution.

Communications Lead 1 Develops project communication strategies and works with consultants to execute communications plan. Liaison to institutions.

Training Lead 1 Identifies training requirements. Coordinates training schedules. Collaborates with consultants and functional teams to develop training materials. Procures external training resources as necessary.

Testing Coordinator/Analyst Lead

1 Collaborates with consultants to build test plans and test cases. Coordinates the execution of tests and the reporting and resolution of issues.

HR

Team

HR Team Leader/Co-leader

11 Leads the functional module teams to configure the system. Primary liaison to the consulting team supporting the implementation. Manages and assigns tasks to project team members and tracks their completion. Resolves many process design and configuration issues in accordance with guidance from executive sponsors and steering committee. Refers issues to project director and project steering committee for resolution. Understands and documents major configuration decisions and develops a broad knowledge of the solution capabilities.

Campus HR Expert 1 Provides broad HR expertise and knowledge of the needs of the smaller, rural campuses. Primary liaison to the rural campuses on their specific configuration needs.

Payroll & Time and Labor

3 Design workflows and configure the system to support the majority of institutional needs.

1 HR and Finance teams will have a full-‐time leader. The co-‐leader roles will be filled by a member of the finance and HR team who will also be involved in the hands on work of configuring the modules.


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Area Role Count Description Benefits Admin & On-boarding

2 Specify requirements for integration and data conversion. Specify reporting requirements. Develop and execute test plans. Develop training materials and lead train the trainer efforts for each institution. Advise institutions on tailoring workflows to meet local institutional needs.

Recruiting & Classification

2

HR Analytics and Reporting

2

Finance Team

Finance Team Leader/Co-leader

1 Same duties as HR Team Lead

Campus Finance Expert 1 Same duties as Campus HR Expert Role

GL/Fin Reporting/Inventory

2 Same duties as HR Functional Team

Procurement, P-Card, AP, Travel

3

Grants 2 Treasury, e-banking, AR

1

Budget 2 Finance Analytics and Reporting

2

Technical team

Technical Lead 1 Lead the execution of all technical tasks. Liaison to technical consulting team and hosting company (if applicable). Coordinate with campus technical resources and SCS to accomplish data conversion and system-wide and local integrations.

Application Developers 4 Develop integrations to new system. Develop small applications that extend functionality of new system. Configure complex workflows.

Report Developers & Analysts

4 Create frequently required reports or modifications to delivered reports.

Legacy Developers 32 Extract data from legacy systems to support data conversion and integration

Security Lead 1 Support functional teams with the development and maintenance of security profiles in the system.

2 Part-‐time resources available to the project team as needed during data conversion.


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iNtegrate 2 Screening Committee Analysis finalsystem.nevada.edu/tasks/sites/Nshe/assets/File/BoardOfRegents/Ag… · workflow automation, support for mobile devices, and reporting