Information Technology Executive Council Sunflower Project Kansas Financial Management System Kent Olson Director of Accounts and Reports April 24, 2008

Today’s Agenda Project Purpose and Business Case Project Status Project Governance Structure & Team Project Timeline

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

A&R and Most Programmatic Agencies Have a Collection of Disparate Systems Asset Mgmt Asset Mgmt Receipting Revenue Receipting Revenue A/P A/P Agency 1’s Systems Agency 2’s Systems A/P Purchasing Cash Mgmt Purchasing Cash Mgmt Grants/ Projects/ Cost Cntrs Grants/ Projects/ Cost Cntrs Receipting Revenue Asset Mgmt STARS & Other Central Systems Purchasing Cash Mgmt Asset Mgmt Asset Mgmt Grants/ Projects/ Cost Cntrs A/P A/P Agency 4’s Systems Agency 4’s Systems Cash Mgmt Cash Mgmt Purchasing Purchasing 4

Financial Management System (FMS) Definition: “A comprehensive suite of integrated modules delivered by a single software vendor that provides end-to-end support for statewide administrative services” The FMS will not include the extensive materials management and manufacturing elements found in many Enterprise Resource Planning (ERP) systems.

FMS Will Consolidate Administrative Systems, Integrate Agency Business Functions and Interface w/ Programmatic Systems Agency 1 Agency 2 GL A/P Asset Mgmt Purchasing FMS Cash Mgmt Receipting Revenue Reporting Data Archiving Agency 3 Agency 4 6

Business Case for Change 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

Business Case for Change 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

Business Case for Change 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

Business Case for Change Standard financial analysis was 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 for Change Cost-Benefit Analysis (from 2006 STA Needs Assessment) Costs Estimate system cost = $40,000,000 Benefits/Avoided Costs System Savings: Estimated system cost savings = $27.6 million over an 11-year estimating period Process Improvement Benefits: Estimated FTE-based benefits = $3.5 million annually after discounting Estimated non-FTE-based benefits = $3 million annually (procurement and postage savings) Payback in Year 12 (assuming “go-live” in Year 4) Alto, the FMS will provide a number of significant intangible benefits such as better decision-making resulting from better information, improved level of service to internal and external customers, etc.

Business Case for Change Agencies continue to spend, and have plans to spend, significant amounts on enhancing their existing agency-specific legacy systems or purchase their own agency-specific integrated systems – this funding could be applied toward the implementation of a single, statewide FMS Redundant, manual work continuing to proliferate, along with smaller custom shadow systems Previously existing shadow systems getting older, with even less technical support available Increased retirements in next decade will provide more risk around custom/non-standard approaches, but also increase opportunity to capture savings through process standardization and automation

Business Case for Change 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

Project Scope “Big Bang” implementation Software modules include: General ledger Purchasing Accounts payable Asset management Project and grant accounting Data warehouse and reporting Accounts receivables and billing (optional for pilot)

Project Scope Twenty-three agencies surveyed based on size and interfaces to STARS (central accounting system) Met w/ representatives of the seven universities and validated current interfaces to STARS and SHARP Identified approximately 54 agency systems to be de-commissioned (accounting, purchasing, grant/project/contract management, asset management) Identified 69 agency interfaces that will need to be modified or developed by agencies Identified numerous central agency interfaces that will need to be modified or developed by Systems Integrator (Set-off, SHARP, BMS)

Project Status Three bids received: Tier 1 software providers Large multi-national systems integrators Evaluation of proposals is proceeding Evaluation team – 16 members from various state agencies Software demonstrations in May Final selection expected in July

Project Governance Structure & Team

Project Timeline Project kick-off Oct 2008 Go-live July 2010 07/01/10 10/08 01/09 03/09 01/10 03/10 07/10 Planning Design Configuration/Development/Testing Integration Acceptance Testing Testing Project kick-off Oct 2008 Go-live July 2010 Twenty-one month duration

Project website http://www.da.ks.gov/ar/fms/ Questions Project website http://www.da.ks.gov/ar/fms/