Abu Dhabi Budgeting by Hazem Turki El Khatib
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Transcript of Abu Dhabi Budgeting by Hazem Turki El Khatib
Document No. ITO-FM-001-01 Restricted
November 27, 2013
Abu Dhabi ERP
Shared Service
7th OECD MENA SBO
Abu Dhabi, 10th December, 2014
Document No. ITO-FM-001-01 Restricted
● Introduction
● Case for Change
● Best Practices
● ADERP Solution
● Benefit Analysis
Agenda
3 Document No. ITO-FM-001-01 Restricted
The Abu Dhabi Shared Enterprise Resource Planning (ADERP) solution is an electronic shared service
allowing Government entities to manage their internal and external resources.
The ADERP platform also provides centralized reporting capabilities which empower the AD Government
with the visibility needed to manage the enablers of its 2030 vision.
Solution is deployed on shared infrastructure platform which leverages economics of scale.
Definition of the ADERP
Financials & Assets
Procurement Inventory &
Supply Chain
Human Resources
Projects
Business Intelligence
& Reporting
4 Document No. ITO-FM-001-01 Restricted
DoF Aspires To Establish A Centralized ERP As Per Executive Council Decree, And In-line With Its Vision
Department of
Finance’s Vision
DoF’s mandate for the Emirate of Abu
Dhabi revolves around five key areas
The Executive Council has decreed a centralized
ERP across Abu Dhabi government entities
“Achieving prosperity of Abu Dhabi through world-class financial management
and sound fiscal policy.”
• Foster an effective and prudent financial
management framework across the Abu Dhabi
government
• Provide proper financing for government initiatives
including private-sector participation
• Enable optimal use of financial resources through
sound planning and performance monitoring
• Advise on fiscal policies
• Provide world class customs administration
services for Abu Dhabi government
Source: DoF personnel interviews; www.DoF.gov.sa/english/
• The centralization of the
ERP system for 64
government entities within
Abu Dhabi into a shared
service instance
• Help decision makers.
• The unification of HR
system within Abu Dhabi’s
entities
5 Document No. ITO-FM-001-01 Restricted
Usage of the ADERP
AD Government entity employee: I use the ADERP to
run my HR, Finance, Procurement, Project and
Reporting internal processes
AD Government business operations employee: I use
the ADERP to run central HR, Finance, Budgeting,
Payroll and Reporting cross-Government processes
ADERP
6 Document No. ITO-FM-001-01 Restricted
Phase I
DOF Financials
& Payroll
Implementation
Phase II Phase V
1995 1999 2001 2007
Phase III Phase IV
FMS Upgrade to
Oracle R12 with
New COA
2010
Package
Selection Deployment of FMS
To Selected
Departments
FMS Deployment
To Remaining
Departments
ADERP Road Map (1995-2014)
Centralized ERP
across 64 Abu
Dhabi government
entities
Phase VI
2013
Document No. ITO-FM-001-01 Restricted
● Introduction
● Case for Change
● Best Practices
● ADERP Solution
● Benefit Analysis
Agenda
8 Document No. ITO-FM-001-01 Restricted
Abu Dhabi’s Centralized ERP Is Driven By Laws And Delivers Key Enhancements To Government Entity Operations
Laws drive centralization initiative… … which accomplishes numerous objectives
2030 vision
Compliance
Reporting
Cost effectiveness
Autonomy
Support
Ease of Access
Integration
Source: Executive instructions of the Financial Law #18 for the year 2006 ; Abu Dhabi Shared Government Enterprise Resource Planning Program (SGERP) objectives
Manage KPIs and benefits of all government initiatives
Consistent compliance with government regulations
Unified and holistic view of business information
Cost-effective infrastructure leveraging economics of scale
Flexible platform allowing autonomous entity operation
Expert and efficient support and training
Timely & efficient access to critical government information
End -to-end business processes across functional boundaries
Executive instructions of the Financial
Law #18 for the year 2006 assert that:
• DoF is to prepare
budget and closing
• Entities are to adhere
to a unified CoA
• Entities have certain
governance responsi-
bilities on their data
• HR payroll is to be
unified across entities
9 Document No. ITO-FM-001-01 Restricted
Various Clauses Within Executive Instructions Of Financial Law 18 Of 2006 Are Enabled Or Supported By A Shared ERP At DoF (1/5)
Source: Executive instructions of the Financial Law #18 for the year 2006
Section Article Clause Instruction Implication (required capabilities)
1 3 2 The Department of Finance
is to prepare the general
budget and closing accounts
(balances)
DoF needs comprehensive, timely access to entity
financials which would be highly optimized through
an automated system running on centralized data,
as opposed to manually polling entities for
information
2 7 1 It is required that all
government entities whose
budget is constituted within
the general budget to adhere
to the approved government
chart of accounts
The Instructions require a consistent implementation
of a unified chart of accounts across all government
entities, adhering to the approved DoF CoA. This is
not the case across all government entities today,
and would be both enabled and enforced through a
centralized system with one CoA
3 14 Several [entities are required to use a
unified payroll system
across the government, with
the DoF responsible for
reviewing payroll variance]
A centralized HR system would greatly facilitate a
consistent system for payroll by entities and
variance review and analysis by DoF, which would
otherwise be very cumbersome to manually review
without errors
Not exhaustive
Document No. ITO-FM-001-01 Restricted
● Introduction
● Case for Change
● Best Practices
● ADERP Solution
● Benefit Analysis
Agenda
11 Document No. ITO-FM-001-01 Restricted
Besides Ensuring Fulfillment of Requirements, Looked at Best Practice Around Shared Services
Laws and
Requirements
Additional Best
Practices
• We will make sure that our way
forward both:
− Supports the law
− Fulfills entity requirements
and objectives
• In addition, best practices on
which the proposed solution will
be based
+
ADERP will respect the
law, take into account
the Executive Council
decree, ensure
fulfillment of entity
objectives, and be
based on best practices
12 Document No. ITO-FM-001-01 Restricted
Similar Implementations
UK
MoF, Bosnia
MoF, Egypt
MoF, Uganda MoF, Saudi
Arabia
MoF, UAE
MoF, Jordan
Ministry of
Treasury, Russia
13 Document No. ITO-FM-001-01 Restricted
ADERP Benchmark Analysis
S. No. Application Ministry of Finance,
Bahrain
Department of
Finance, Madhya
Pradesh - India
Department of
Finance, Dubai
Ministry of Finance,
UAE
Ministry of Finance,
Singapore
Department of
Finance and
Personnel, Northern
Ireland
1 Human Resource (HR) Oracle e-Business suite Custom Application based
on J2EE/SOA Oracle e-Business suite Oracle e-Business Suite
SAP Human capital
Management Oracle e-Business suite
2 Finance application(Budget) Oracle e-Business suite Custom Application based
on J2EE/SOA Oracle Application Oracle Hyperion Planning SAP Financial Management
Custom Application based
on J2EE/SOA
3 Finance (Accounting) Oracle e-Business suite and
custom application Oracle e-Business suite Oracle e-Business suite Oracle e-Business Suite SAP Financial Management Oracle e-Business suite
4 Finance (Treasury management)
Oracle e-Business suite –
and custom Treasury
contract system (based on
.Net)
Custom Application based
on J2EE/SOA Oracle e-Business suite Oracle e-Business Suite SAP Financial Management Oracle e-Business suite
5 Finance (Asset management) Oracle e-Business suite
11.5.10
Custom Application based
on J2EE/SOA Oracle e-Business suite Oracle e-Business Suite SAP Financial Management Oracle e-Business suite
6 Finance (Inventory, Purchase, Support,
Property management)
Oracle e-Business suite
11.5.10
Custom Application based
on J2EE/SOA Oracle e-Business suite Oracle e-Business Suite
SAP Property and
Inventory Management and
Custom application based
on J2EE/SOA
Oracle e-Business suite
7 Business Intelligence/Reporting Crystal reports
Oracle BI Enterprise Edition Oracle BI Enterprise Edition Oracle reports
SAP Reports and Oracle
Reports Oracle reports
14 Document No. ITO-FM-001-01 Restricted
Shared Services Have Proven To Impact Cost Savings Significantly …
0.73
1.26
-42%
47
89
-47%
0.68
0.85
-20%
Finance Cost
As a percent of total budget
HR Cost
USD spend per employee
Procurement Cost
As a percent of total spend
Source: Hackett Shared Services Performance Study Results
Standard
Shared service
Document No. ITO-FM-001-01 Restricted
● Introduction
● Case for Change
● Best Practices
● ADERP Solution
● Benefit Analysis
Agenda
16 Document No. ITO-FM-001-01 Restricted
DoF Proposed Solution Was Carefully Composed To Address The Implications of Financial Law’s Executive Instructions (1/5)
Source: Executive instructions of the Financial Law #18 for the year 2006
Instruction Implication (required capabilities) Required Solution Components
The Department of Finance is
to prepare the general
budget and closing accounts
(balances)
DoF needs comprehensive, timely access to entity
financials which would be highly optimized through
an automated system running on centralized data, as
opposed to manually polling entities for information
Government entities are
responsible for setting up an
internal governance system
in compliance with financial
governance requirements …
Entities require consistent and comprehensive
governance tools to enable them to track and
monitor transactions and information access, as well
as log and report on these findings to ensure
compliance with law and financial regulations
The head of a government
entity is given the right to
delegate approval rights
and other authorities …
Entities require a system with a consistent and
comprehensive set of workflows for approvals and
devolution of power, in adherence with a consistent
set of laws, regulations, and instructions
Financials
Financial Mgmt
Planning
FDQM
Financial Mgmt
BI & Reporting GRC
Core ERP & HCM GRC
17 Document No. ITO-FM-001-01 Restricted
Change
Management
Use r
Productivity Kit
Master Data Management
Technology
Infrastructure
Business Intelligence & Reporting
Procurement & Spend Analytics
EPM GRC
Public Sector
Budget
Core ERP & HCM
Financial Analytics Human Capital Mgmt Analytics
Planning Financial
Management Project
Finance
Financial Data Quality Management
Financials Procurement
Human
Capital
Mgmt GRC Control GRC Manager
GRC Intelligence
Data Relations Management Sites Banks Customers Suppliers Inventory Others
DoF Proposes A Robust, Functional Solution To Support Abu Dhabi’s Centralized System ...
18 Document No. ITO-FM-001-01 Restricted
ADERP Is Designed To Meet Abu Dhabi’s Requirements With Best Practices In Mind
ADERP proposed solution … … is designed with several key considerations in mind
• Unifying the government’s chart of accounts
consistently
• Effectively extending the successful DoF ERP
footprint for the benefit of all 64 Abu Dhabi government
entities
• Consolidating and centralizing the government ERP
and largely standardizing its utilization
• Enhancing the data quality across entities’ financial,
customer, supplier, and other data for improved
consistency across the government
• Improving governance and visibility on government
data and information
19 Document No. ITO-FM-001-01 Restricted
DoF Will Also Create A Competency Center To Provide All The Support And Continuous Improvements For The Shared ERP
Organizations are
establishing
competency centers
to leverage on the
gained experience and
trained resources to
maintain continuous
improvement and
solution evolution to
get the best outcome
of system investment
Develop
strategy
Build
business case
Manage
programs
Prioritize
requirements
Implement
requirements
Develop
knowledge
Develop talent
Manage
complexity
Develop strategy and
roadmap to accomplish
DoF’s objectives
Build ROI/Business case
for each project and
manage the funding
Manage and control the
approved projects /
programs
Prioritize and evaluate the
business and technical
change requests
Implement new
requirements based on
business priorities
Develop knowledge to
increase the efficiency and
effectiveness of processes
Retain and develop talents
who participated in the
initial implementation
Manage the cross-
functional complexity of
the ERP solution
Roles of DoF Competency Center
Document No. ITO-FM-001-01 Restricted
● Introduction
● Case for Change
● Best Practices
● ADERP Solution
● Benefit Analysis
Agenda
21 Document No. ITO-FM-001-01 Restricted
Abu Dhabi Stands To Realize Benefits, Not Only In IT, But Also In Other Business Metrics Across Its Government Entities
Proposed solution accomplishes the
initiatives’ aspirations and objectives …
… bringing tangible IT as well as other business benefits
Value
IT Benefits
Business
Benefits
• Savings in:
− Implementation
− Support
− Infrastructure
• Metric improvements in:
− Time / effort to carry out
operational tasks
− Transaction and
information governance
− Others
2030 Vision Alignment
Enhanced Compliance
Visible Reporting
Cost effectiveness
Autonomy
Improved Support
Ease of Access
Integration
22 Document No. ITO-FM-001-01 Restricted
108
50
60
126 98
-88%
Cost of Shared
Service ERP
Additional
module cost (+)
34
Infrastructure
savings (-)
Support
savings (-)
Implementation
savings (-)
594
Distributed
816
630
Overall, The Recommended Solution Would Result In Substantial Savings And Deliver A Best Practice Solution To Entities
Summary of shared service savings
AED millions
Sources: DoF cost assessment workshop
Non-shared
deployment
Savings from shared service
(AED 752 million)
Best practice
additions
Shared service
deployment
Infrastructure
Support
Implementation
Additional modules
23 Document No. ITO-FM-001-01 Restricted
Conducting A Case Study On DoF Itself Suggests Promising Improvements For Entities, Especially Ones Not Running An ERP Sample metric improvements at DoF
Sources: DoF ERP results assessment workshop
Finance
Bank
Reconciliation
(days)
Procurement Human Resources
Annual close
(months)
Budgeting
process
(months)
Payables
(days)
1
10
1.5
4
1
3
3
45
Purchasing
cycle
(days)
Supplier
registration
(days)
Receiving
Leave request
processing
(days)
Payroll
processing
(days)
Hiring cycle
(months)
Production of
salary cert.
(days)
1
7
1
5
minutes
hours 3
instant
1
7
2
15
1
4
Before ERP implementation After ERP Implementation
Document No. ITO-FM-001-01 Restricted
Thank You