State of KansasState of Kansas

Financial Management SystemFinancial Management SystemNeeds Assessment ProjectNeeds Assessment Project

Steering Committee MeetingSeptember 28, 2006

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Meeting AgendaMeeting Agenda

Introductions Project Governance Project Overview Key Activities

• Requirements Validation• Business Case Analysis

Upcoming Activities Questions

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Project Governance Project Governance Organizational StructureOrganizational Structure

EXECUTIVE SPONSORS

STEERING COMMITTEE

PROJECT DIRECTORDuncan Friend

PROCUREMENT TEAMChris Howe/Angela Hoobler, Manager

TECHNOLOGY TEAMCathy Jones/Jay

Coverdale, Manager

PROCUREMENT FOCUS GROUP

TECHNOLOGY FOCUS GROUP

PROJECT CONSULTANTSSalvaggio, Teal & Assoc.

ACCOUNTING TEAMBob Mackey/Martin Eckhardt, Manager

ACCOUNTING FOCUS GROUP

ELECTED OFFICIALS

AGENCY SUBJECT MATTER EXPERTS

AGENCY CFOsAGENCY CIOs

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Project SponsorsProject SponsorsMembershipMembership

Duane Goossen• Secretary of Administration

Carol Foreman• Deputy Secretary of Administration

Denise Moore• Executive Branch Chief Information Technology

Officer

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Project SponsorsProject SponsorsRoles & ResponsibilitiesRoles & Responsibilities

Actively champion the project Establish and cultivate legislative sponsors

Provide executive level support Steering Committee and Project Team guidance Monitor project progress

Provide clear direction Ensure that the FMS initiative is aligned with the State’s strategic goals

and objectives Empower the team

Steering Committee and the Project Team Assist with issue resolution

Resolve issues in a timely manner per the project issue escalation policy

Assist in removing obstacles Secure required resources

Ensure funding/staff necessary to achieve project objectives

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Steering CommitteeSteering CommitteeMembershipMembership

Chair - Carol Foreman, Deputy Secretary of Administration Mary Blubaugh, Board of Nursing Alan Conroy, Legislative Research Department Gary Daniels, Department of Social & Rehabilitation Services Elaine Frisbie, Department of Administration; Division of Budget Kathy Greenlee, Department on Aging Mike Hayden, Department of Wildlife and Parks Lynn Jenkins, State Treasurer Deb Miller, Department of Transportation Reginald Robinson, Board of Regents Howard Schwartz, Judicial Administrator Joan Wagnon, Department of Revenue Roger Werholz, Department of Corrections

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Steering CommitteeSteering CommitteeRoles & ResponsibilitiesRoles & Responsibilities

Actively participate in Steering Committee meetings Remove obstacles to project success Actively champion the project Communicate project status within respective

agencies Review and provide input to final report

December 11 – December 14

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Sponsor/Steering Committee InvolvementSponsor/Steering Committee InvolvementDecision MakingDecision Making

Key Decisions • Will be presented during mid October – mid November

– Impact analysis will be provided (as appropriate) to facilitate decision making

– Documentation and communication of the decision is critical

Examples of Key Decisions• Proposed funding model• Maximizing return on investment

– Level of agency participation– User agency “shadow” systems – Duplicate copies of FMS software

• Deployment strategy (phased vs. “big bang”)• Functional scope• Procurement strategy

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Enterprise Resource Planning (ERP) – A comprehensive suite of integrated modules delivered by a single software vendor that provides end-to-end support for statewide administrative services

For purposes of this study, we will use the term ‘Financial Management System’ (FMS) rather than ERP since the scope of the project includes financials and procurement only – due to current / future investment in the SHARP system

FMS is a proposed solution that provides functionality similar to STARS, SOKI, Central Setoff System, and other agency administrative systems, but in a fully integrated manner

Project OverviewProject OverviewWhat is ERP? FMS?What is ERP? FMS?

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Project Overview Project Overview Why FMS?Why FMS?

Satisfy the needs of the agencies• Eliminate the proliferation of stand-alone agency systems• Avoid the cost associated with new agency administrative

systems • Avoid the cost associated with maintenance/upgrades of

current systems Significantly improve the quality, quantity, and

timeliness of information • Effective decision-making• Efficient and accurate research capabilities • Enhanced ad hoc reporting and inquiry functionality

Streamline processing and control of electronic “documents” through workflow management• Facilitates document routing, review and approval

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Project Overview Project Overview Why FMS?Why FMS?

Streamline and simplify State’s business processes • Financial• Budgeting• Procurement• Other administrative operations

Improve operational efficiency • Commercially-available FMS systems include many features

representing best management practices Support Web-enabled self-service

• State employees• Vendors conducting business with the State

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Project Overview Project Overview Why FMS?Why FMS?

Replace existing disparate systems• Costly to maintain• Difficult to administer

Automate and integrate• State’s financial accounting, procurement, asset management,

and other administrative business processes within a single database

Provide single point of entry• Eliminate duplicate points of data entry• Eliminate duplicate databases• Simplify reconciliation

Reduce/eliminate paper documents• Reduce paper and handling costs (e.g., vouchers) • Simplify record retention and audit compliance

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CORE FINANCIAL• General Ledger /

Budgetary Control• Accounts Payable• Accounts Receivable

& Cash Receipting• Cash Management• Cost Allocation• Grant Accounting• Project Accounting• Asset Management

PROCUREMENT• Solicitations (RFx)• Catalog Procurement• Reverse Auctions• Inventory Management• Commodity Management• Vendor ManagementHR / PAYROLL

• Automated Interfaces to/from SHARP

BUDGET DEVELOPMENT INTEGRATION

• Appropriation Budget

Common Database

Project OverviewProject OverviewProposed FMS functionality for considerationProposed FMS functionality for consideration

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Key Activities Key Activities FMS Needs AssessmentFMS Needs Assessment

Update the system requirements for a new integrated FMS

Update the business case analysis associated with implementing a new FMS

Determine whether there is a compelling business case for procuring/implementing an integrated statewide FMS

Submit recommendations regarding• Organizational best practices• Implementation best practices

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Business Case Analysis Report

Sept

Oct Nov Dec

Project Start-

UpValidate the

Business Case

FMS Needs Assessment Update

Key Deliverables

Key Activities Key Activities TimelineTimeline

Validate Functional / Technical

Requirements

Updated Needs Assessment

Organization / Implementation Best Practices

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Business Case AnalysisBusiness Case AnalysisCost versus Benefits Cost versus Benefits

FMS Costs • Software• Hardware• Implementation• Upgrades• Ongoing Maint. & Mgmt.• Training

FMS Benefits/Avoided CostsSystem Savings• Replacing current systems• Not implementing planned

systemsProcess-Improvement Benefits• Value Pocket benefits

vs.

1 2

3

Standard financial analyses will be performed using dollar-quantifiable costs and benefits: - NPV (Net Present Value) - IRR (Internal Rate of Return) - Payback Period

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Business Case Analysis Business Case Analysis Information We Need From AgenciesInformation We Need From Agencies

Value Pocket Survey Interviews with State employees

who are process/functional SMEs

Process-Improvement Benefits: Estimated cost savings and other benefits that an FMS system would likely enable/yield

Agency System Survey Interviews with statewide

administrative systems SMEs

System Savings: Estimated cost savings from:

Replacing existing statewide & agency-specific systems

Not implementing planned/anticipated systems

Information provided by vendors and other statewide ERP projects

STA experience

FMS Costs: Estimated costs of implementing, maintaining, and upgrading

Information Needed

Data-Gathering Approach

SMEs = Subject Matter Experts

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1

3

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Business Case Analysis Business Case Analysis What Are Value PocketsWhat Are Value Pockets©©??

Value Pockets Most likely sources of value (i.e., cost

savings and other benefits) to be found in each process/functional area within the scope of an FMS implementation

Provide quantified justification STA’s proprietary formulas and calculations

Used to quantify process-improvement benefits obtained through the implementation of a statewide FMS

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Specific Nature and Source of the Value FMS Enabler Formula for Calculating the Value (i.e., Benefit or

Cost Savings), if applicable Source of Value for Each Variable in the Formula

Business Case Analysis Business Case Analysis Value Pocket ComponentsValue Pocket Components

For each Value Pocket in each process/functional area, we identify:

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Requirements from 2001 Needs

Assessment Study

STA Requirements

Toolkit

Baseline Requirements

Draft Requirements

Final Requirements

Focus Group

End User Community

Functional and Technical Requirements Development Process

Project Team

Update / Validate FMS RequirementsUpdate / Validate FMS Requirements

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Functional ComponentsProcurementGrants / ProjectsCash ManagementGeneral Ledger / Cost AllocationAccounts Payable / Accounts ReceivableInventory / Asset ManagementBudget Development / IntegrationHR / Payroll IntegrationData Warehousing / ReportingGeneral and Technical

Project ScopeProject ScopeFMS Needs AssessmentFMS Needs Assessment

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Sample Functional RequirementsSample Functional Requirements

Business RequirementsVendor

Response CommentsVendor Files

PU 19.00

System provides the ability to track and to report/inquire on vendor performance including delivery, complaints (including complaints about discrimination allegations) and resolution.

PU 20.00

System provides the ability to search for a vendor by commodity code/number/description and by vendor number/name. (Attach vendor to commodity).

PU 21.00System can infer default vendor information from the vendor master file when creating requisitions and purchase orders.

PU 22.00

System provides the ability to automatically carry forward a vendor number to the next transaction (i.e., requisition to PO and PO to invoice), optional on requisition.

PU 23.00

System provides the ability to assign status codes to vendors (i.e., inactive) and this status can vary by agency or facility (i.e., a vendor can be blocked from use by certain agencys/facilities but not blocked for other agencys/facilities).

PU 24.00System maintains pricing information, quantity breaks, freight terms and shipping information for each vendor.

PU 25.00System tracks vendor by performance / history, date added / deleted or inactivated and reason.

PU 26.00System provides the ability to classify one-time vendors and to check whether already on file based on multiple criteria (e.g., FEIN, SSN, etc.).

PU 27.00System can delete or deactivate vendor from vendor listing by date with reason. Historical data would be retained.

PU 28.00

System rates vendor at each event point based on user-defined criteria and these ratings are displayed at each point in the procurement process.

PU 29.00Vendor numbers (numeric and alphanumeric) can be system generated or assigned manually.

Reference Number

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Obtain Agency (Stakeholder) InputObtain Agency (Stakeholder) Input

Sixteen agencies have been identified as “stakeholder agencies”• Adjutant General• Department on Aging• Department of Agriculture• Department of Administration• Department of Health and Environment• Department of Transportation• Highway Patrol• Department of Labor• Department of Commerce• Juvenile Justice Authority• Department of Corrections• Department of Revenue• Social and Rehabilitation Services• State Treasurer• Judicial Branch• Department of Wildlife and Parks

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Conduct Agency Outreach SessionsConduct Agency Outreach Sessions

Agencies are invited to participate!Fifty-eight individuals representing twenty-three

(23) agencies are participating in our focus group sessions

Sixteen (16) large agencies are participating in stakeholder meetings

All agencies are invited to review and comment on the draft requirementsPosted to the project website

All agencies are invited to participate in the Cost Benefit Survey

All agencies are invited to participate in the final Agency Briefings

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Project RisksProject RisksSpecifically related to the FMS Needs AssessmentSpecifically related to the FMS Needs Assessment

Executive Level Sponsorship/Involvement Appropriate Level of Agency Participation

• Timeliness of survey response• Focus Group subject matter expert (SME)

participation Decision Making Process

• Impact of key decisions

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Upcoming ActivitiesUpcoming Activities

Validate Functional &Technical Requirements• October 2 – November 21

Perform Business Case Analysis• Business Case Report

– November 30 Obtain Stakeholder Input and

Approval• November 30 – December 7

Conduct Agency Outreach Sessions• December 7 – December 14

Updated Needs Assessment• December 11

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Future MeetingsFuture Meetings

October Meeting• October 25

– 2:00 p.m. – 4:00 p.m.

November Meeting• November 16

– 2:00 p.m. – 4:00 p.m.

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Questions?Questions?