1. Financial Management System Needs Assessment Study Update
State of Kansas
Financial Management System
Needs Assessment Study Update
Briefing for Agency CFOs
October 3, 2006

2. Agenda Welcome and Introductions CFO Representation Project Overview
Project Scope
Key Activities
Business Case Analysis
Contact Information
Questions

3. CFO Representation Stakeholder Agencies
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
Kansas Health Policy Authority
Judicial Branch
Department of Wildlife and Parks

4. STA Experience Statewide ERP/eProcurement Systems
State of Arkansas
State of Tennessee
State of Nebraska
State of Texas
Commonwealth of Kentucky
State of Minnesota
State of Wisconsin
State of Texas
State of Nevada

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. Project Scope Update/Validate FMS Requirements
Functional Components
Procurement
Grants / Projects
Cash Management
General Ledger / Cost Allocation / Activity Based Costing
Accounts Payable / Accounts Receivable
Inventory / Asset Management
Budget Development / Integration
HR / Payroll Integration
Data Warehousing / Reporting
General and Technical

13. Project Scope 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

14. Business Case Analysis Costs 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

15. Business Case Analysis Financial Analysis
Illustrative 1 2 3

16. 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

17. Business Case Analysis Agency System Survey
Walk-through of Agency System Survey

18. Contacts for Agency System Survey
If you have any questions whatsoever regarding this survey, please do not hesitate to contact:
Chip Julian at:
(281) mobile
Mitt Salvaggio at:
(512) mobile
Please complete and return the survey via attachment to Chip Julian no later than the close of business on October 18, 2006

19. 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

20. Business Case Analysis What Are Value Pockets©?
Most likely sources of significant 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

21. Business Case Analysis Value Pocket© Categories
Dollar-Quantifiable System Benefits/Cost Savings (Tangible Items)
Improved Process Outcomes/Results, for example:
Decreased cost of goods and services
Decreased inventory carrying costs
Reduced Cost of Executing the Process. For example, reassign/reduce headcount (FTEs) by:
Reducing the number of FTEs required to enter data into systems:
Avoid entering the same data/transactions into multiple systems
Avoid entering data on a form that is then entered into a system (instead of entering into system directly)
Reducing the number of FTEs require to generate needed information by no longer being required to obtain and consolidate data from multiple sources (also results in faster and better decision making)
Reducing the number of FTEs required to reconcile data among multiple systems
Reducing the number of FTEs required to track transactions spread over multiple systems (e.g., avoid keeping tracking data in spreadsheets, using paper logs, etc.)
Non-Dollar-Quantifiable System Benefits/Cost Savings (Intangible Items)
Reduced Cycle Times
In Support of Strategic Initiative(s)
Increased Accuracy
Improved Usefulness of Information

22. Business Case Analysis Examples of Value Pockets©
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
PROCUREMENT VALUE POCKETS
Reduce cost of goods and services
Reduce cost of conducting solicitations
Reduce cost to maintain vendor file
Reduce inventory carrying costs
Reduce inventory reorder cost
Common
Database
BUDGET DEVELOPMENT
Appropriation Budget

23. Business Case Analysis Examples of Value Pockets©
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
FINANCIAL VALUE POCKETS
Increased compliance with State prompt payment law (interest savings)
Increase collection of receivables
Reduce time responding to vendor inquiries
Reduce time maintaining the chart of accounts
Reduce mailing costs
HR / PAYROLL
Automated Interfaces to/from SHARP
Common
Database
BUDGET DEVELOPMENT
Appropriation Budget

24. 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

25. Business Case Analysis Value Pocket© Components – Example
Source of Value
Reduce the prices the State pays for goods and services
Integrated FMS functionality, including eProcurement functionality, would enable the State to better leverage its purchasing power via consolidated reporting and reduced maverick spend
FMS Enabler
Relevant State spend
x Savings factor
Formula & Source for Values of Variables
Division of Purchases
Experience of Other Organizations

26. Questions?