0. Making enterprise systems work for State Government
NASACT — Concurrent session #15
August, 2012
Making Enterprise Systems Work for State Government. Government is not organized for efficiency, it is organized for checks and balances with clear separation of duties and responsibilities which often result in redundancy. Enterprise systems are built for efficiency, with limited redundancy and dependency between users. How do you get the two aligned, as enterprise systems are important for states looking to reduce costs, become more efficient, and improve performance for constituents? The focus of the presentation would be how New York implemented an enterprise system that crossed multiple elected officials and addressed the related challenges

1. Terry Blake Principal Deloitte Consulting LLP
Topic overview
Terry Blake Principal Deloitte Consulting LLP

2. Government organization vs. enterprise system efficiency
Government is not organized for efficiency, it is organized for checks and balances with clear separation of duties and responsibilities which often result in redundancy
Enterprise systems are built for efficiency, with limited redundancy and high levels of dependency between users
vs.
Options (or a path?) for getting the two aligned:
Limit the system to fit within the existing organizational boundaries, which is not really an enterprise system
Use technology to improve the updates of the redundancy, e.g. Service Oriented Architecture (SOA) which increases costs and complexity
Have assertive leaders that cross the organizations and force the changes required via a governance model overseeing the enterprise system to handle the interactions between organizations and prioritize what is done
Either gradually instill the culture to institutionalize the change or make dramatic reorganizations
(Terry)

3. Statewide Financial System (SFS) as an example
We will use NYS SFS as an example of an enterprise system
Approach
New York
Timing
Limit the system to fit within the existing organizational boundaries
Separate systems for Comptroller and Governor with MOU
2000 – 2009
Use technology to improve the updates of the redundancy (e.g., Service Oriented Architecture)
Share COA, vendor file, and use SOA to tie systems together
2008 – 2009
Have assertive leaders that cross the organizations and force the changes required via a governance model overseeing the enterprise system to handle the interactions between organizations and prioritize what is done
Combined projects, individual leaders for Governance Board, used consultants heavily. State not ready to go it alone.
2009 – 2012
Either gradually instill the culture to institutionalize the change or make dramatic reorganizations
Today — reorganization of SFS entity and phased reduction of consultants. Concern of long term success
2012 +
(Terry)

4. Sometimes you can’t take the direct path
Sometimes things change that aren’t planned, and you need to adapt. Whether that be a change in leadership, additional budget challenges, inability of the organization to adapt to change quickly, or taking advantage of a new opportunity.
(Terry)

5. Scope of SFS — PeopleSoft modules
General Ledger
Commitment Control (Budgets)
eSupplier Connection
Purchasing (including Vendors and P-card Functionality)
Accounts Payable
Grants
Projects
Contracts
Billing
Accounts Receivable
Banking (including Bank Reconciliation)
Cash Management
Deal Management (including Investments)
Travel and Expense (including Travel Credit Card Functionality)
(Terry)

6. SFS has been a very successful implementation
The following statistics reflect transactions processed and usage of SFS from April 13, 2012 through July 16, 2012:
$30,430,236,269 in payments processed
1,263,091 vouchers paid
52,142 vendors paid
12,690 vendors using SFS Self-Service (eSupplier)
114,988 total vendors registered in SFS
7,864 Agency travelers users
12,796 Agency financial SFS users
CAFR Report submitted within 120 days
(Terry)

7. SFS customer model
There are 97 organizational entities that are currently using the SFS system:
63 Phase 1 entities of which 27 are hosted by other entities
15 Future phase entities of which 2 are hosted by other entities
4 never phase agencies: SUNY, SUNYCF, CUNY, CUNYCF
15 public benefit corporations using SFS to initiate debt service payments with other functions (such as budget set up) emerging
The agencies providing hosting services are as follows: OGS (17), DOB (3), DCJS (2), OSC (2),OCFS (2), DMV (1), Tax (1) and OPWDD (1)
(Terry)

8. SFS customer model (cont.)
10 entities (2 hosted). DOH, OMH, and OPWDD, are a hybrid of Phase 1 and Phase 2 functionality.
Business Services Center
The Business Service Center is currently in the planning stages and does not host agencies yet
Future Phase Entities (10)
Phase 1 Entities (60)
2 entities that are not ever scheduled to go on line to SFS
60 Phase 1 entities (27 hosted) that are candidates for BSC. DOH, OMH, and OPWDD, are a hybrid of Phase 1 and Phase 2 functionality.
SUNY & CUNY
Office of the State Comptroller
Phase 1 and 2
SFS
OSC as a control agency is Phase 1, but as an operational agency is Phase 2. Controlled by separately elected official.
Courts
Phase 1
Public Benefit Corporations
(Terry)
15 entities that use SFS to initiate debt service payments and potentially additional functionality
Legislature
Assembly & Senate
Phase 2
Department of Law
Phase 1
In addition to OSC, 4 entities controlled by separate branches of government or separately elected officials
Provided by KPMG

9. State of New York The journey towards enterprise systems
NASACT August, 2012

10. The organization of State Government in NY
Joan Sullivan Executive Deputy Comptroller for Operations New York State Office of the State Comptroller

11. State of New York organizational context
Elected State Comptroller
Responsible for audit of payments and contracts, statewide accounting and financial reporting
Elected Governor
Responsible for business operations within executive agencies and cash management via the State Treasurer
Change with multiple office holders over last six years:
Four Governors (George Pataki, Eliot Spitzer, David Paterson, Andrew Cuomo)
Two Comptrollers (Alan Hevesi, Thomas DiNapoli)
Joint Governance established to coordinate new financial systems
(Joan)
Several states have separately elected officials with check and balance responsibilities that make an enterprise system very challenging.

12. State of New York Government organization
New York State Government
Executive Branch
Judicial Branch
Legislative Branch
Governor
State Attorney General
State Comptroller
All four officials are separately elected on a state wide ballot.
LT. Governor
Department
of Law
Department
of Audit and Control
State Agencies (in the following functional areas):
Economic Development
Education
Parks/Environment
Health and Social Welfare
General Government
Transportation
Mental Health
Public Protection
Department of Tax and Finance.
Deputy Commissioner and State Treasurer.
(Joan)

13. Statewide Financial Systems Governance (2009)
Joint Governance Board (JGB)
Legislature
Quality Assurance (QA)
Judicial Branch
Joint Coordinating Committee (JCC)
Business
Domain Owners
Accounting
Budget
Procurement
Information Technology
Domain Owners
Operating Decisions
NYFMS Steering Committee
Business/Design Decisions
IT Architecture/ Design Decisions
FOCAS Steering Committee
(Joan)
NYFMS
Project Director
PMO
Joint Project Team Lead(s)
FOCAS
Project Director
PMO
Operating Decisions
Operating Decisions
NYFMS Project Team
Joint Project Team(s)
FOCAS Project Team
Executives from the State Comptroller, Division of the Budget, and Office for Technology comprise the Joint Governance Board (JGB)

14. New York financial systems integration solution (2009)
The planned solution was to connect the two instances of PeopleSoft Financials using Oracle’s Fusion middleware SOA architecture.
SOA Integration Layer
Near real time transactions
Orchestrates interagency approvals
Keeps budgets and ledgers in synch
Streamlines processing
OSC
PeopleSoft
Governor
PeopleSoft
Chart of Accounts Crosswalk — Converts old chart of accounts to new chart of accounts
(Joan)
Interfacing Agencies

15. . . . And then more budget challenges
Revenue was down significantly because of the economy and its affect on Wall Street
We couldn’t afford both projects and the SOA to tie them together, so we asked our vendors to privately meet and help us figure out what we should do
Deloitte
KPMG
Oracle
IBM
The outcome was to combine the projects into one and deal with the challenges of a single instance through the business focus of the GB
(Joan)

16. Approaches to address organizational challenges
Joan Sullivan Executive Deputy Comptroller for Operations New York State Office of the State Comptroller
Don Edmiston Advisor Deloitte Consulting LLP

17. Statewide financial systems governance (2010–2012)
Joint Governance Board (JGB)
Quality Assurance (QA)
Operating Decisions
Steering Committee
Business
Domain Owners
Accounting
Budget
Procurement
Information Technology
Domain Owners
Business/Design Decisions
Statewide Financial System Project Team
IT Architecture/ Design Decisions
Legislature
Judicial Branch
(Don)
Agencies under Governor’s Jurisdiction
OSC
Operating Decisions
Executives from the State Comptroller and Division of the Budget comprise the Joint Governance Board (GB)

18. Desired enterprise approach . . .
DOB, OSC, Agencies and SFS should work closely together with an enterprise view GB
Agencies
SFS
OSC
DOB
(Don)

19. The reality
SFS was playing facilitation role between DOB, OSC and Agencies
Stakeholders providing information directly to GB
GB was playing too detailed of a role, requiring too much time and effort GB
Legislature
SFS
DOB
OSC
(Don)
Treasurer
Agencies

20. Allow time for the organization to adapt
Extended “testing” time, that really included a lot of training
Separation of “System Readiness” and “Organization Readiness”
Allowed users to use the system in “test mode” for an extended period (“Sandbox” turned into an operational, production sized, test system they could access at their desk and send and receive bulk transactions)
Allowed users to gain confidence that the system was real and worked
Allowed users to change their procedures if needed
Allowed users to “get comfortable” with the system before go-live
Provided two full dress rehearsals
(Joan)

21. In search of the program director
Limited resources within State with skills and willingness to take on the challenge of the Program Director that was acceptable to both members of GB
Split the role between the former project directors of NYFMS and FOCAS
Advertised for the role with limited success
Brought on an experienced contractor to fill the role
Asked the SIs to fill the role
Placed someone from the State that was open, logical, and willing to make project decisions and able to drive to go-live
Now looking for leader to take SFS to next level
(Joan)

22. Changes to the team Replaced State team leaders that:
were not open to an enterprise view,
were not focused on customer service,
did not perform at the appropriate level, or
were not the right fit
Each replacement of a key resource took its toll, but in the long run, we believe the State is better off
But there is a concern that we are running out of replacements
(Joan)

23. Potential SFS organization
Separates the Service Desk and Tier 2 Support from the Business Team to create a Service Delivery Team. Service Delivery will be responsible for the Service Desk and Customer Outreach.
Planning has been strengthened with Change Management
Deputy Director
Compliance Office
Administrative Services
Quality Assurance
Security Management
Business Process
Change Management
Release Management
Project Mgmt
Enterprise Architecture
Operations
Application Development
Service Desk
Customer Outreach
SFS BI & DW Development
Director
Governance Board
Change Control Board
User Groups
Admin overhead is minimized
Customer Service focus
Planning
Business
Technology
Service Delivery
(Joan)

24. Integrating business processes
Simhadri Basava Specialist Deloitte Consulting LLP

25. Stakeholders, ownership and relationships
OSC
Vendors
SFS
Legislature
Banks
DOB
(Simhadri)
Media
Treasury
Agencies

26. Examples of integration of business processes
Benefit of integration (Silo to enterprise)
Reconciliation
Using the same system simplifies and improves reconciliation, but requires OSC and Treasury to work closely together
Payment release
New processes provide better controls between OSC and Treasurer for the release of big money items such as investments and funding transfers
Payment status
Using one online system for payment status, including cancellations, reconciliations, and escheatment processes, provides up-to-date information to the agencies
Budgets and approvals
SFS greatly simplifies budget checking and approvals through automated workflow, multiple levels of budget control and reduction in paper processing for agencies, OSC and DOB
Vendor payments
An online, accessible statewide vendor file streamlines processing and provides additional information to vendors on their payments
(Simhadri)

27. Lessons Learned
Joan Sullivan Executive Deputy Comptroller for Operations New York State Office of the State Comptroller
Terry Blake Principal Deloitte Consulting LLP

28. Enterprise change requires leadership
Enterprise Systems need leaders that are committed, respected by the stakeholders, and work well together
New York had such leaders that additionally balanced their independent management styles, goals and objectives
Approach-Driver vs. Guardian
Management-Strong Disciplinary vs. Forceful Direction
Focus-Management Reporting vs. Operations/Accuracy
End Game-Implementation Date vs. Doing It Right
(Terry)

29. Six lessons learned
Make sure all stakeholders are identified, involved and managed. Preach and live the enterprise gospel
Be adaptable and flexible about how you get there, but drive to get there
The governance structure can’t be too bureaucratic — it must be action oriented
The silo culture is entrenched in the separation of duties — you must find the individuals that can force the change, become customer service oriented, and build the rest of the team around them, even if it takes several tries and time
It takes one set of people to implement the change, it may take another set to maintain the change
Be sure to have Trusted Advisors that bring the needed experience and insights
(Joan)

30. Questions?
Joan Sullivan Executive Deputy Comptroller, Office of the State Comptroller, State of New York Terry Blake Principal Deloitte Consulting LLP Don Edmiston Senior Advisor Simhadri Basava Specialist Leader

31. Integrating business processes — Details
Appendix
Integrating business processes — Details

32. Integration for reconciliation
Using the same system simplifies and improves reconciliation, but requires OSC and Treasury to work closely together.
Prior to SFS (Silo)
After SFS (Enterprise)
Treasury maintained their own set of books, separate from the Office of the State Comptroller (OSC).
SFS replaced both Treasury and OSC books with a single set of books resulting in the single source of truth for reconciliation.
Treasury reconciled the bank balances to the Treasury Books and OSC reconciled the bank balances to OSC cash ledger.
Treasury reconciles the transactions — Payments and Receipts from the State General Checking to the SFS Sub-Ledgers at individual transaction/
payment/deposit level.
Treasury performed monthly book to bank reconciliation using their own set of books and forwarded the results to OSC.
OSC could not verify or validate Treasury results since they are using a different set of books for reconciliation.
Treasury also performs book to bank reconciliation on a monthly basis and inquiries and queries are built to trace the reconciling items.
OSC reconciles the expenses, revenue and cash balances between sub-ledgers and the main ledgers (Mod Accrual and Cash).
Treasury faced significant challenges in accurately identifying the reconciling items that could not be explained or tallied with Treasury books.
(Simhadri)

33. Integration for payment release
New processes provide better controls between OSC and Treasurer for the release of big money items such as investments and funding transfers.
Prior to SFS (Silo)
After SFS (Enterprise)
OSC Cash Management Unit created transactions in a shadow system and then re- entered/duplicated using bank software, and released the transactions at the bank
OSC Cash Management Unit creates transactions in SFS and selects them for OSC Bureau of State Expenditures approval.
OSC Bureaus (BSE and BAO) recorded accounting transactions in the central accounting system, sometimes before it is released at the bank and sometimes after it released at the bank. There is no formal approval of these transactions.
OSC BSE approves the transactions after verifying the recipients/destination accounts using automated workflow.
OSC Cash Management unit creates the payment file in SFS for dispatch to the bank without any need for re-entry through bank software.
Treasury did not have any role in the release and reconciled the transactions the next day using bank statements.
Treasury releases the payment file to the bank after verifying the transactions and totals.
(Simhadri)

34. Integration for payment status
Using one online system for payment status, including cancellations, reconciliations, and escheatment processes, provides up-to-date information to the agencies.
Prior to SFS (Silo)
After SFS (Enterprise)
OSC maintained a shadow system, Remittance Management System (RMS), to perform cancelations, reconciliations and annual escheatment process for Comptrollers refunds and unclaimed funds.
SFS became the single source for cancelations, reconciliations and annual escheatments. The shadow system is still maintained but only as document management tool.
No integration existed between the main accounting system and shadow system to easily track the reissuances which resulted in the need for multiple bank accounts to track second and third reissuances.
Outbound Interfaces from SFS provided RMS the info on check issuances, cancelations and reconciliations.
Agencies did not have access to the RMS and could not easily know the status of the check whether it is paid or not.
All reissuances could be easily tracked to the main issuance eliminating the need to maintain multiple bank accounts.
Agencies have access to verify the status of the check and any related reissuances.
(Simhadri)

35. Integration for budgets and approvals
SFS greatly simplifies budget checking and approvals through automated workflow, multiple levels of budget control and reduction in paper processing for agencies, OSC and DOB.
Prior to SFS (Silo)
After SFS (Enterprise)
Agencies, OSC and DOB maintained separate systems for tracking agency budgets, state-wide appropriations and segregations, and DOB Cash Control budgets.
Agencies, OSC and DOB are able to use single system for tracking agency budgets, state-wide appropriations and segregations, and DOB Cash Control budgets.
Central accounting system only enforced controls for Appropriations and Segregations. Agencies/DOB used their own systems for tracking the budget spending.
Automated end to end workflow involving all stakeholders, (agencies, DOB and OSC) eliminated the need for manual/paper based approval for budget certificates and provided timely status.
Agencies have to obtain paper approval of their budget certificates before submitting in the central accounting system for OSC approval.
Agencies and DOB are able to setup their own budgets along with State-wide budgets and enforce all budget controls on the transaction at the same time.
No functionality existed in the system to enforce controls on grant related expenditure based on the grant liquidation date.
Functionality to capture liquidation date for grants and enforce controls on grant spending accordingly.
(Simhadri)

36. Integration for vendor payments
An online, accessible statewide vendor file streamlines processing and provides additional information to vendors on their payments.
Prior to SFS (Silo)
After SFS (Enterprise)
There is no single state-wide vendor master file and agencies maintained their own vendor masters.
A single state-wide vendor master file maintained centrally by OSC and can be accessed by all agencies.
Vendors did not have easy access to the information that State maintained about their addresses and bank accounts.
Self Service portal for vendors to view and update their addresses and bank account information.
Vendors did not have information on what vouchers comprised a particular payment amount.
Self Service portal for vendors to view the underlying vouchers for a particular payment and contact respective agencies for any clarifications.
(Simhadri)

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