1. Proprietary and Confidential Transforming UT Modernization and Business Productivity Initiative TASSCC March 21, 2014

2. 2 Transforming UT Societal and Economic Pressures Facing Higher Education Today Affordability Accessibility Transparency Accountability Innovation Reduced state support Protracted Recession

3. 3 Transforming UT Administrative Initiatives to Improve Agility and Reduce Costs Administrative Systems Modernization Shared Services

4. 4 Open and transparent communication Involvement of key stakeholders Strong governance Adoption of best practice business processes Customization used only where needed for operational or competitive advantage Opportunities for career development Guiding Principles

5. 5 Transforming UT – Current Environment – Drivers to Change – Plan for Change – Expected Gains – Anticipated Challenges Administrative Systems Modernization

6. Current Technical Environment 25+ years custom developed administrative systems – Mainframe – Adabas/Natural Upgrades over time to add web capability Developers embedded in the business area Well-established developer community and training program Increasing adoption of third party vendor products for specific business needs Increasing development using other platforms and languages 6 Administrative Systems Modernization

7. 2004 – Commission of 125 2006 – Core Application Strategy for the Enterprise (CASE) 2009 – Strategic IT Accountability Board (SITAB) Report 2012 – Administrative Systems Master Plan (ASMP) 7 Drivers to Change

8. Case for Change – Desire to take advantage of technological advancements – Mitigate risks of relying on aging technology toolset (Adabas/Natural are reaching end of life) – Integration with third party open standard systems is very difficult and expensive in the current environment – Up-to-date standards and best practices are difficult with current toolset – Difficulty attracting and retaining workforce 8 Administrative Systems Master Plan (ASMP)

9. 1.Create business driven systems and data management 2.Modernize the administrative IT infrastructure 3.Strengthen systems development processes 9 ASMP Requirements

10. What will it take to re-tool and re-train workforce? What is an appropriate strategy for customization? What does the market currently offer? 10 Buy vs Build Considerations

11. Technology Waves – Administrative Systems IA, MSA, Integral, Tesseract Software 2000, SSA SAP, Oracle, PeopleSoft, SunGard Salesforce, Workday, Google Mainframe Client Server Mini Cloud/SaaS

12. Workday, Inc. (NYSE symbol: WDAY) 12 Established in 2005 by PeopleSoft founders Dave Duffield and Aneel Bhusri. Mobile first, consumer-based design methodology with single code line. Committed to serving the higher education ERP market. Human resource, payroll and finance applications are fairly mature. Presently building student system designed to interact with today’s students (e.g. social media, mobility). UT Austin is participating as a strategic design partner.

13. 13 Higher Education Texas State and Local Commercial Workday Customers

14. Architecture

15. Audit and Compliance Third-party auditors test Workday processes and controls on a regular basis ISO 27001 –Certified in September 2010 SOC 1 Type II –Audited every 6 months since July 2007 –Moved to SSAE-16 from SAS 70 standard in June 2011 SOC 2 Type II –Audited every 6 months since December 2011 –Covers Trust Services Principles of Security & Confidentiality

16. Create Business Driven Systems and Data Management Modernize the Administrative IT Infrastructure Strengthen the Systems Development Processes Create Business Driven Systems and Data Management Modernize the Administrative IT Infrastructure Strengthen the Systems Development Processes ASMP Administrative Systems Master Plan 2012

17. Implement Workday for HR/Payroll and Finance. Student-TBD. Transition all other mainframe- based systems off mainframe. Develop Strategic Reporting Master Plan and Enhance IQ Implement Open Systems Technical Architecture (Integration and Development) Develop, Test and Deploy Standards and Methodology Processes Implement Workday for HR/Payroll and Finance. Student-TBD. Transition all other mainframe- based systems off mainframe. Develop Strategic Reporting Master Plan and Enhance IQ Implement Open Systems Technical Architecture (Integration and Development) Develop, Test and Deploy Standards and Methodology Processes Create Business Driven Systems and Data Management Modernize the Administrative IT Infrastructure Strengthen the Systems Development Processes Create Business Driven Systems and Data Management Modernize the Administrative IT Infrastructure Strengthen the Systems Development Processes ASMP Administrative Systems Master Plan Administrative Systems Modernization Program 2012 2014

18. Workday Implementation – HR/Payroll/Timekeeping – Finance – Integrations Student System Replacement – Document current processes, requirements, stakeholder needs – Initiate policy changes that will facilitate transition – Participate as design partner for Workday Student Organizational Readiness – Communication including web presence/branding – Stakeholder engagement – Training 18 Administrative Systems Modernization Program ASMP 2.0

19. New Technical Architecture – Open standards technology stack for hosting non-Workday applications, including custom development – Development, deployment and execution infrastructure and tools – Integration environment Transition all mainframe-based systems off of mainframe – Comprehensive inventory – Develop roadmaps for transition/replacement Data Management – Strategic Reporting – Business Intelligence – Data Governance 19 Administrative Systems Modernization Program ASMP 2.0

20. Front of next wave of technology Faster implementation Best practice business processes Intuitive modern user experience – attract and retain staff More robust self-service Enhanced mobile capabilities Better analytics and access to data for decision-making Improved ability to integrate disparate systems 20 Expected Gains

21. Major change on multiple fronts Culture shift – institutional level prioritization of resources Hundreds of integration points Scheduled down times with Workday Loss of ability to customize Scope and scale of effort to transition distributed systems Workforce impacts Financing 21 Anticipated Challenges

22. 22 Transforming UT – Drivers to Change – Current Environment – Plan for Change – Moving Forward – Financial Strategy Shared Services

23. Percentage of University’s budget – 1984-85: 47% – Today: 13% – Undergraduate tuition remains low, ranking second lowest in 2012-13 out of a 12-institution national comparison group Cost to operate has risen (principally due to inflation) – Forced to limit salary merit increases – Funding for merit derived from closing unoccupied positions or laying off staff – Remaining staff left with an increased workload – Declining ability to attract and retain the best talent Revenues to fund general operations are expected to remain flat or in decline for the foreseeable future 23 Steadily declining state support (general revenue) Drivers to Change

24. 2013 Committee on Business Productivity Report Smarter Systems for a Greater UT – 13 Distinguished Leaders in Business – Advice on aspects of the University’s business operations and processes that could be improved, streamlined, and leveraged to better effect – Recommendations on asset utilization, technology commercialization, and administrative service transformation 24 Drivers to Change

25. Administrative workforce*: – Total of ~12,000 staff and students (~8,500 Full-time Equivalents**(FTEs)) – Total administrative headcount supporting HR, Finance, Procurement, IT = 4,500 staff (~2,500 FTEs) Administrative activities are: – Highly decentralized operations with manual processes – Supported by administrative systems at end-of-life Annual attrition: – Historical attrition trends for UT Austin staff supporting HR, Finance, Procurement, IT ranges from 500- 600 people per year – Across all administrative staff, recent turnover attributed to layoffs ranges from 150-200 people annually per year Limited shared services exists on campus today including: – McCombs School of Business (McCombs) – College of Liberal Arts (CoLA) – Central Business Office (CBO) – Information Technology Services Customer Support Services (ITS CSS) 25 Current Business Environment * Administrative workforce refers to non-faculty employees at UT Austin. Total administrative headcount and attrition ranges for HR, Finance, Procurement, and IT are estimates for initial planning purposes and will be updated over time. ** FTE = Full-time Equivalent and NOT Full-time Employee.

26. Plan for Change Plan Phase activities included: Number of participants across campus: more than 250 Number of workshops, interviews, and group meetings: more than 100 Additional Campus Dialogue activities included: Number participants across campus: hundreds Number of sessions across campus: about 40 26

27. Campus Dialogue Feedback Summary Five key themes emerged from Campus Dialogue that have changed the proposed Shared Services Implementation Plan. 27 FeedbackResponse 1.Look at what UT Austin is already doing in shared services 2.Be thoughtful and diligent in the approach to shared services 3.Include campus input into decision-making 4.Be transparent and track progress of shared services 5.Be sensitive to the impacts the proposed changes will have on the UT Austin community 1.Build around a core of existing shared services 2.Take more time and pilot with volunteers to collect UT Austin specific data on shared services 3.Establish ongoing governance framework and expand communication 4.Transparently track and report existing and future progress of shared services 5.Tailor workforce transition approach to UT Austin culture

28. 28 Plan & Prepare Transition Volunteers Operate Pilots Implement Improvements Deploy to Pilots Pilot Approval Shared Services Decisions Pilot Review Pilot Review Pilot Review EstablishGovern Pilots Assess Plan & Prepare Prepare Transition Volunteers Track Benefits Proposed Implementation Plan and Timeline for Pilots

29. 29 Based on input from Campus Dialogue, the pilots have lengthened the implementation timetable and the investment is now expected to pay back in Year 8. Expected perpetual annual benefits remain $30-40M. Financials: Investment and Savings for Proposed Plan

30. 30 ASMP 2.0 initiatives will have significant cost ~ $100M Modernized systems will help Shared Services to realize maximum efficiencies and cost savings Savings from Shared Services used to pay back cost of ASMP 2.0 Future savings re-invested in core mission Bringing It All Together

31. 31 Questions?