1. Federal Financial Management Conference Shared Services: Progress through Partnerships Larry Neff Deputy Chief Financial Officer U.S. Department of Transportation March 11, 2008

2. 2 Background on DOT and our Enterprise Services Center (ESC) DOT has 55,000 employees & a $66 billion annual budget Highly decentralized organization (Operating Administrations) OST, WCF, OIG, FAA, FHWA, FTA, FRA, FMCSA, NHTSA, MARAD, PHMSA, RITA/BTS/Volpe, STB, SLSDC ESC has 1,000 employees & is in a Franchise Fund IT Services/Data Center, Applications Support, Accounting Services, Customer Services/Help Desk Located at the Mike Monroney Aeronautical Center in beautiful Oklahoma City 1,100 acre secure campus 5,500 total employees Professional, knowledgeable, dedicated career staff

3. 3 DOT & ESC Accomplishments 2000-2003: DOT implemented all 14 bureaus on a COTS- based, FSIO-certified financial system with no customizations running on a cost-effective single production instance Produce financial statements overnight from the core accounting system DOT has consolidated all accounting operations to ESC Saving $5+ million per year Bureaus more willing to streamline & standardize processes Clean financial audit opinions 6 of last 7 years DOT raised to “yellow” on PMA goal for Financial Management

4. 4 Enterprise Services Center (ESC) Feb. 2005: OMB designated DOT/ESC 1 of 4 Federal Shared Service Providers (FSSPs) ESC currently cross-services Government Accountability Office (GAO) Commodity Futures Trading Commission (CFTC) Institute of Museum and Library Services (IMLS) National Endowment for the Arts (NEA) ESC using Service Oriented Architecture (SOA) technology to integrate PRISM with Oracle Financials Eliminates duplicate manual data entry & reconciliation Supports commitment accounting

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6. 6 Partnerships for Shared Services ESC recognized the need for an on-going private sector partner for help marketing to & implementing new external customers Implementation workload goes up & down Continuity to ensure expert & experienced staff Competed a Task Order on NIH’s CIO-SP2 i contract Won by SRA with IBM Mutually beneficial relationship Gained new customers Marketing expertise Implementation resources

7. 7 Partnerships for Shared Services ESC also has a contract with L-3 for on-going operational support Data Center support Application support Operational accounting support Exploring a Blanket Purchase Agreement Consolidate support Compete Task Orders among vendors

8. 8 Partnerships for Shared Services Initially, some agencies thought the FM LoB was focused on shared hosting of financial systems This view-point was too narrow No economy of scale realized just by moving from 1 large data center to another Hosting costs are a small part of any IT system’s costs The biggest potential economy of scale is in shared application support Professional staff with expertise in running the system Biggest cost of system operations Only way to drive down cost of application support is by using standard systems FSIO standards make this even easier

9. 9 Partnerships for Shared Services Alternatives for ensuring high quality services through competition 4 Federal SSPs & __# Private SSPs all competing against each other vs. Teams of Private & Federal staff working together as SSPs competing against other Private-Federal SSP Teams

10. 10 Benefits of Shared Services Low Cost Customers get all the advantages of DOT’s financial system & accounting services without contributing to DOT’s $125 million capital investment ESC already provides 90% or more of most required solutions; most additional needs can be met through configuration & set-up and interfaces Customers only pay 1-time implementation costs and their fair share of annual operating & maintenance costs, plus future upgrade costs Low Risk Much lower risk to migrate to a system that’s stable and has been in production for 8 years than to migrate to a new custom- developed system Delphi has 4,000 users and been successfully upgraded 7 times Delphi has passed multiple CFO and SAS-70 audits

11. 11 Benefits of Shared Services Experienced Team DOT has successfully implemented Oracle Financials for 20 customers We know how to do this SRA/IBM business partner also has extensive experience Helped with GAO’s successful implementation DOT follows Oracle’s Application Implementation Methodology (AIM) Change Management & User Support Effective support for Change Management Provide 4 to 6 weeks of “desk-side” user support after go-live, including the 1 st month-end close Experienced Accounting & Help Desk staff know the Oracle application & Federal accounting inside & out All system & user documentation available on-line

12. 12 Benefits of Shared Services We Handle the IT Requirements Professionally run data center Meet all IT planning, IT security, Disaster Recovery, SPII & Privacy Act requirements DOT Strategy Don’t customize the COTS software Modify business processes to take advantages of best business practices inherent in the Oracle software Don’t recreate the legacy accounting system Consolidate & standardize accounting operations

13. 13 Lessons Learned Executive support is essential Clean up your data! Streamline business processes Clean up your data! Consolidate accounting operations Clean up your data! Talk to your customer’s customers Clean up your data! Change management is critical Communicate, communicate, communicate Train, train, train Support, support, support Clean up your data at the detail level!

14. 14 Looking to the Future Long-term Business Transformation effort Business drivers Plan for Oracle release 12 i.FSIO – complete system re-architecting Plan for Common Government-wide Accounting Code (CGAC) Better link costs to program mission performance metrics Automate Dept.-wide roll-up of performance data Support cost accounting & Earned Value Management (EVM) Started summer 2007 Workgroups & governance structure established Integrated procurement solution Automate commitment accounting Eliminate duplicate manual data entry & reconciliation Provide more useful information to program managers Eliminate the need for “cuff records” systems

15. 15 For more information: www.esc.govwww.esc.gov Larry NeffMarshal Gimpel Deputy Chief Financial OfficerDirector U.S. Department of TransportationEnterprise Services Center (202) 366-2335(405) 954-8980 Larry.Neff@dot.govMarshal.Gimpel@faa.gov Mike UptonBob Stevens Deputy DirectorManager, Customer ServiceEnterprise Services Center (405) 954-8980(405) 954-7143 Mike.Upton@faa.govMike.Upton@faa.gov Robert.Stevens@faa.govRobert.Stevens@faa.gov