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Realizing Additional Value from ERP Realizing Additional Value from ERP Systems: Beyond Initial ImplementationSystems: Beyond Initial Implementation

Donald E. EdmistonSenior Government Advisor, BearingPoint

William GreerDirector, State and Local Government, SAP

Harvey C. EckertCommonwealth Comptroller, Commonwealth of Pennsylvania

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Value - Where To LookValue - Where To Look

Donald E. Edmiston

Senior Government Advisor, BearingPoint

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Enterprise Resource PlanningEnterprise Resource Planning

• ERP is an enterprise-wide project that involves the redesign of business processes

• ERP is a business transformation effort, not a technological project

• ERP is an investment, not a cost

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Business TransformationBusiness Transformation

• ERP implementation is about making changes for business transformation

– Defining the core business requirements

– Identifying available best business practices

– Applying best business practices to make end-to-end business processes more effective and efficient

– Using data warehousing for improved business intelligence

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Business TransformationBusiness Transformation

• Post-ERP implementation is about business transformation providing opportunities

– Return on investment

– Improved utilization and allocation of resources

– Continuous improvement of business processes

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Return on InvestmentReturn on Investment

• Procurement initiatives

– Enterprise-wide procurement results are visible and accessible in data warehouse and enable:

– Maximizing existing enterprise procurement contracts

• Identify off-contract procurement

• Enforce use of existing enterprise procurement contracts

– Strategic sourcing• Leverage purchasing power of enterprise with

strategic vendors

• Significant volume discounts

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Return on InvestmentReturn on Investment

• Procurement initiatives

– Just-in-time inventory

• Strategic contract with one supply vendor

• Supplies delivered directly to agencies

• Maintenance of inventory remains with vendors

• State operated supply warehouses can be closed

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Return on InvestmentReturn on Investment

• Improving cash management

– Earlier recognition of revenues

– Match current revenues with current accounts payables

– Longer term investments

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Return on InvestmentReturn on Investment

• Decommissioning of agency program and shadow systems

– Current ERP functionality-meets or exceeds existing agency system requirements

– New ERP functionality-meets delta between ERP system functionality and agency system requirements

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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources

• Shared service centers

– Procurement• Strategic sourcing

• Complex commodity/service procurements

– On-line auctioning, RFPs, IFBs, etc.

– Human Resources• Call center/help desk

– System technical support

– Employee self-service

• Day to day personnel transactions

– New hires, transfers, retirements, benefits

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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources

• Organizations aligned with functionality

– Finance

• Accounts payable

– Single point of contact for vendors and disbursement agency

• Federal accounting and reporting

– Payroll and travel management

• Single point of contact for employee payments

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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources

• High level restructuring of government

– Service functions (fleet management)

– Constituent regulation (licensing, permitting, certification, insurance)

– Cross-agency functions (laboratories, inspection, enforcement)

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Business Process Continuous ImprovementBusiness Process Continuous Improvement

• Strive for Faster Production of Financial Reports-Budgetary/GAAP Basis

– Consider additional system validations/edits for data capture and integrity

– Reassess structure and analytical use of data warehouse

– Evaluate relationship with internal/external auditors-”Business Partnership”

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Business Process Continuous ImprovementBusiness Process Continuous Improvement

• Streamline Audit Approach/Methodology

– Increased dependence upon system-”Audit system, not around system”

• Effective system validations/edits

• Improved user security

• Better and more timely data

• Consolidation of enterprise wide historical data

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Business Process Continuous ImprovementBusiness Process Continuous Improvement

• Streamline Audit Approach/Methodology

– Collaboration between/among separate audit organizations

• Reliance on other audit organizations work papers

• Elimination of duplicate audit activities

– More meaningful audits• Focus on high value/high risk transactions

• Establish “business partnership” with audit organizations

– Support for continuous business

process improvement

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Business Process Continuous ImprovementBusiness Process Continuous Improvement

• Review of Policies/Procedures in Relation to ERP System

– Administrative or statutory based

– Focus on elimination of customizations/modifications of initial ERP implementation

– On-going reengineering of business processes

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Business Process Continuous ImprovementBusiness Process Continuous Improvement

• Consideration for ERP Functionality Beyond Original Scope

– Add-on to existing functionality

– New functionality for additional business processes

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Enabling ValueEnabling Value

William Greer

Director, State and Local GovernmentSAP Americas

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“The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled … people must again learn to work, instead of living on public assistance …”

Marcus Tullius Cicero(106-43 B.C.) Roman Statesman & Philosopher

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Aid & Development

RetailServices

Constituent & Gov

Services

Tax & Revenue

Management

Public Utilities

Banking Services

Health

Bio-MedicalResponse

IncidentResponse

(HLS)

PublicSecurity

Education

Transportation

Justice

Environment,Health & Safety

Public Administration & Management

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Public ROI = Public Value Public ROI = Public Value

Operational ROI :Financial cost / benefit analysis

Social ROI:Impact of IT on society and quality of life

Political ROI : the impact of IT to policies, legislation

PublicROI

PublicROI

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What Enables Public Value? What Enables Public Value?

OptimizedOptimized

FlexibleFlexible

ResponsiveResponsive

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Optimized Public AdministrationOptimized Public AdministrationUnified core solutions and shared servicesUnified core solutions and shared services

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Responsive Line of Business SolutionsResponsive Line of Business SolutionsFulfill specific agency and program requirementsFulfill specific agency and program requirements

Tax & Revenue

Social Services

Public Security

Incident Management

Education

Health

Public Utilities

Transportation

Government & Constituent Svcs

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A Business Process PlatformA Business Process Platform

An “enterprise” system should really support the whole “enterprise”

The benefit of a platform

Adaptability and scalability

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Value – Value – Where We Are Finding ItWhere We Are Finding It

Harvey Eckert

Commonwealth Comptroller,Commonwealth of Pennsylvania

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ERP Implementation RecapERP Implementation Recap

• 07/02 – Wave 1 agencies*

• 10/02 – Wave 2 agencies*

• 01/03 – Wave 3A agencies*

• 07/03 – Wave 3B agencies*

• 01/04 – HR/Payroll

• 07/04 – PA DOT** Finance, Budget, Procurement, and BW

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Post ERP Implementation ProjectsPost ERP Implementation Projects

• Accounting Initiatives

• Procurement Initiatives

• Implemented new Travel Planning software

• Plant Maintenance in PA Department of Transportation

• PA Liquor Control Board Retail ERP

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Accounting InitiativesAccounting Initiatives

• Preparation of a more timely CAFR

• Reengineering Requisition to Check

• Implementing Revenue in SAP

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Preparation of a more timely CAFRPreparation of a more timely CAFR

• Where we were:– ’02 CAFR issued by 12/31/02

– ’03 CAFR issued by 5/31/04

– ’04 CAFR issued by 3/31/05

• Where we are:– ’05 CAFR issued by 12/31/05

– ’06 CAFR issued by 12/31/06

• Where we are going:– ’07 CAFR issued by 11/30/07 (5.0 mos.)

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Preparation of a more timely CAFR (cont’d)Preparation of a more timely CAFR (cont’d)

• Expedite the CAFR production and Audit Process– “Top Down” Approach - What’s material?– Focus on Opinion Units, significant funds– Use variance analysis approach– Use estimates– Use Entity Wide entries– Promote Timelier Component Unit Audits

• Improve coordination and communication with the Auditors

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Reengineering Requisition to CheckReengineering Requisition to Check

• Make recommendations to improve standardization, workload and cycle time and align the Commonwealth with industry best practices.

• Recommendations will cover agencies, Comptroller Offices, and Treasury.

• Includes the payment process for Procurement, Utilities, and Grants

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Requisition to Check DeliverablesRequisition to Check Deliverables

• Recommend options for process improvement. Currently working on recommended quick hits.

• Delineate organizational roles and responsibilities

• Guidelines for processes and procedures

• Identification of policies and statutes to update

• Recommend changes to SAP configuration

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Implementing Revenue in SAPImplementing Revenue in SAP

• Replacement of 25+ year paper-based legacy system (out-of scope during original ERP implementation)

• Redundant entry of same data into multiple systems

• Delays in recording revenue when significant funds are now electronically transferred

• Complicated reconciliation process due to timing differences and data entry errors in multiple systems

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Improving Revenue ReportingImproving Revenue Reporting

• Utilize SAP for reporting all Commonwealth revenue data

• Decommission various legacy systems

• Eliminate duplicate data entry by utilizing file transfer

• Eliminate/reduce paper documents

• Utilize consistent number ranges to track documents/records

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Procurement InitiativesProcurement Initiatives

• Implementation of SRM

• Strategic Sourcing

• Just-In-Time Inventory

• Shared Service Centers

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Implementing the Supplier Relationship Implementing the Supplier Relationship Management ModuleManagement Module

• Purpose of SRM:

– Automated Purchase Order from a shopping cart (Implemented 8/31/06)

– Contract automation of bidding process and auction functionality (Sch. 3/15/07)

– Streamline and standardize workflow

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Implementing the Supplier Relationship Implementing the Supplier Relationship Management ModuleManagement Module

• Increase utilization of catalogs/punch out (Some were implemented 8/31/06)

• Implement vendor self-registration

• Electronic transmission of Purchase order and Invoice using supplier self-service or XML

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Strategic SourcingStrategic Sourcing

• Consolidation of PA’s buying power for goods and services at reduced rates

• Twenty-five commodities/services sourced to date

• Procurement savings from sourcing is $180 Million

• Provides opportunity to direct more resources to programs that benefit citizens without raising taxes

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Just-In-Time InventoryJust-In-Time Inventory

• Office supplies purchased when needed, not stored in bulk

• Office supplies delivered directly to state offices by supplier

• Thirteen supply warehouses closed

• Savings from the closing of the warehouses was $4 Million

• Forty warehouse employees were reallocated to other state jobs

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Shared Service CenterShared Service Center

• Department of General Services established a shared service center for procurement of goods and services

• Shared service center staffed with buyers or purchasing agents from state agencies

• Provides collaboration among agencies in the purchase of similar goods and services

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Shared Service CenterShared Service Center

• Buyers specialize in a specific industry and use that knowledge to get better pricing and better products

• Reduces administration burden on agencies for procurement activities such as analyzing historical data, developing RFP’s and RFQ’s and negotiating contracts

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Implemented Travel Planning softwareImplemented Travel Planning software

Amadeus Travel Planning Software

• Internet Web based software was implemented October 2, 2006

• Travel plans synchronized into SAP

• Commonwealth receives commission from hotels for on-line bookings

• Expanded flight selection options

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Implemented Travel Planning SoftwareImplemented Travel Planning Software

• User-friendly interface that looks and feels like commercial web sites

• Flexible, one-stop online booking

• Low nightly rate for hotels

• Hotel searches by price or proximity to location

• Reporting capabilities – each agency has license to reporting tool

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Plant Maintenance in PA Dept of Plant Maintenance in PA Dept of TransportationTransportation

• Major Project to integrate PA DOT maintenance management business into the Commonwealth’s ERP environment (sch. 7/9/2007)– 11 Engineering Districts

– 58 maintenance organizations in 67 counties

– Annual budget > $1 Billion

• Improve the business processes of the highway, fleet, and materials management, and sign inventory and ordering processes

• Federally mandated requirements

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PA Liquor Control Board Retail ERP SystemPA Liquor Control Board Retail ERP System

• Issued RFP for software vendor and integrator to implement a Retail ERP System

• Replace antiquated Financial Systems with ERP Solution

• Reengineering of the Business Process (Started this with some quick hits)

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Questions