Financial Management System Needs Assessment Project State of Kansas Financial Management System Needs Assessment Project Steering Committee Meeting September 28, 2006

Meeting Agenda Introductions Project Governance Project Overview Key Activities Requirements Validation Business Case Analysis Upcoming Activities Questions

Project Governance Organizational Structure Our starting position Steering Committee – Recognize Steering Committee members present We are currently evaluating adding several non-voting members from outside of state government; SMEs/Advisors – Let us know if you have suggestions Org chart will evolve Purpose is to illustrate the cross-department involvement and commitment required Different types of roles will be needed for success

Project Sponsors Membership Duane Goossen Secretary of Administration Carol Foreman Deputy Secretary of Administration Denise Moore Executive Branch Chief Information Technology Officer

Project Sponsors Roles & 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

Steering Committee Membership 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

Steering Committee Roles & 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

Sponsor/Steering Committee Involvement Decision 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

Project Overview What is ERP? FMS? 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 Overview 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

Project Overview 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

Project Overview 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

Project Overview Proposed FMS functionality for consideration PROCUREMENT Solicitations (RFx) Catalog Procurement Reverse Auctions Inventory Management Commodity Management Vendor Management CORE FINANCIAL General Ledger / Budgetary Control Accounts Payable Accounts Receivable & Cash Receipting Cash Management Cost Allocation Grant Accounting Project Accounting Asset Management HR / PAYROLL Automated Interfaces to/from SHARP Common Database BUDGET DEVELOPMENT INTEGRATION Appropriation Budget

Key Activities FMS 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

Key Activities Timeline FMS Needs Assessment Update Validate Functional / Technical Requirements Project Start-Up Validate the Business Case Sept Oct Dec Nov Summary project schedule From the BAFO document that meets their revised project timeline Business Case Analysis Report Updated Needs Assessment Organization / Implementation Best Practices Key Deliverables

Business Case Analysis Cost versus Benefits Standard financial analyses will be performed using dollar-quantifiable costs and benefits: - NPV (Net Present Value) - IRR (Internal Rate of Return) - Payback Period FMS Costs Software Hardware Implementation Upgrades Ongoing Maint. & Mgmt. Training FMS Benefits/Avoided Costs System Savings Replacing current systems Not implementing planned systems Process-Improvement Benefits Value Pocket benefits 1 2 vs. 3

Business Case Analysis Information We Need From Agencies Information Needed Data-Gathering Approach FMS Costs: Estimated costs of implementing, maintaining, and upgrading Information provided by vendors and other statewide ERP projects STA experience 1 System Savings: Estimated cost savings from: Replacing existing statewide & agency-specific systems Not implementing planned/anticipated systems Agency System Survey Interviews with statewide administrative systems SMEs 2 Process-Improvement Benefits: Estimated cost savings and other benefits that an FMS system would likely enable/yield 3 Value Pocket Survey Interviews with State employees who are process/functional SMEs SMEs = Subject Matter Experts

Business Case Analysis What Are 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

Business Case Analysis Value Pocket Components For each Value Pocket in each process/functional area, we identify: 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

Update / Validate FMS Requirements Functional and Technical Requirements Development Process Requirements from 2001 Needs Assessment Study Baseline Draft Final Project Team Focus End User Community Requirements Requirements Requirements Group STA Requirements Toolkit

Project Scope FMS Needs Assessment Functional Components Procurement Grants / Projects Cash Management General Ledger / Cost Allocation Accounts Payable / Accounts Receivable Inventory / Asset Management Budget Development / Integration HR / Payroll Integration Data Warehousing / Reporting General and Technical

Sample Functional Requirements

Obtain 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

Conduct 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 requirements Posted 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

Project Risks Specifically 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

Upcoming 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

Future Meetings October Meeting November Meeting October 25 2:00 p.m. – 4:00 p.m. November Meeting November 16

Questions?