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Realizing Additional Value from ERP Realizing Additional Value from ERP Systems: Beyond Initial ImplementationSystems: Beyond Initial Implementation
Donald E. EdmistonSenior Government Advisor, BearingPoint
William GreerDirector, State and Local Government, SAP
Harvey C. EckertCommonwealth Comptroller, Commonwealth of Pennsylvania
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Value - Where To LookValue - Where To Look
Donald E. Edmiston
Senior Government Advisor, BearingPoint
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Enterprise Resource PlanningEnterprise Resource Planning
• ERP is an enterprise-wide project that involves the redesign of business processes
• ERP is a business transformation effort, not a technological project
• ERP is an investment, not a cost
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Business TransformationBusiness Transformation
• ERP implementation is about making changes for business transformation
– Defining the core business requirements
– Identifying available best business practices
– Applying best business practices to make end-to-end business processes more effective and efficient
– Using data warehousing for improved business intelligence
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Business TransformationBusiness Transformation
• Post-ERP implementation is about business transformation providing opportunities
– Return on investment
– Improved utilization and allocation of resources
– Continuous improvement of business processes
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Return on InvestmentReturn on Investment
• Procurement initiatives
– Enterprise-wide procurement results are visible and accessible in data warehouse and enable:
– Maximizing existing enterprise procurement contracts
• Identify off-contract procurement
• Enforce use of existing enterprise procurement contracts
– Strategic sourcing• Leverage purchasing power of enterprise with
strategic vendors
• Significant volume discounts
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Return on InvestmentReturn on Investment
• Procurement initiatives
– Just-in-time inventory
• Strategic contract with one supply vendor
• Supplies delivered directly to agencies
• Maintenance of inventory remains with vendors
• State operated supply warehouses can be closed
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Return on InvestmentReturn on Investment
• Improving cash management
– Earlier recognition of revenues
– Match current revenues with current accounts payables
– Longer term investments
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Return on InvestmentReturn on Investment
• Decommissioning of agency program and shadow systems
– Current ERP functionality-meets or exceeds existing agency system requirements
– New ERP functionality-meets delta between ERP system functionality and agency system requirements
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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources
• Shared service centers
– Procurement• Strategic sourcing
• Complex commodity/service procurements
– On-line auctioning, RFPs, IFBs, etc.
– Human Resources• Call center/help desk
– System technical support
– Employee self-service
• Day to day personnel transactions
– New hires, transfers, retirements, benefits
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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources
• Organizations aligned with functionality
– Finance
• Accounts payable
– Single point of contact for vendors and disbursement agency
• Federal accounting and reporting
– Payroll and travel management
• Single point of contact for employee payments
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Improved Utilization, Allocation of ResourcesImproved Utilization, Allocation of Resources
• High level restructuring of government
– Service functions (fleet management)
– Constituent regulation (licensing, permitting, certification, insurance)
– Cross-agency functions (laboratories, inspection, enforcement)
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Business Process Continuous ImprovementBusiness Process Continuous Improvement
• Strive for Faster Production of Financial Reports-Budgetary/GAAP Basis
– Consider additional system validations/edits for data capture and integrity
– Reassess structure and analytical use of data warehouse
– Evaluate relationship with internal/external auditors-”Business Partnership”
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Business Process Continuous ImprovementBusiness Process Continuous Improvement
• Streamline Audit Approach/Methodology
– Increased dependence upon system-”Audit system, not around system”
• Effective system validations/edits
• Improved user security
• Better and more timely data
• Consolidation of enterprise wide historical data
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Business Process Continuous ImprovementBusiness Process Continuous Improvement
• Streamline Audit Approach/Methodology
– Collaboration between/among separate audit organizations
• Reliance on other audit organizations work papers
• Elimination of duplicate audit activities
– More meaningful audits• Focus on high value/high risk transactions
• Establish “business partnership” with audit organizations
– Support for continuous business
process improvement
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Business Process Continuous ImprovementBusiness Process Continuous Improvement
• Review of Policies/Procedures in Relation to ERP System
– Administrative or statutory based
– Focus on elimination of customizations/modifications of initial ERP implementation
– On-going reengineering of business processes
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Business Process Continuous ImprovementBusiness Process Continuous Improvement
• Consideration for ERP Functionality Beyond Original Scope
– Add-on to existing functionality
– New functionality for additional business processes
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Enabling ValueEnabling Value
William Greer
Director, State and Local GovernmentSAP Americas
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“The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled … people must again learn to work, instead of living on public assistance …”
Marcus Tullius Cicero(106-43 B.C.) Roman Statesman & Philosopher
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Aid & Development
RetailServices
Constituent & Gov
Services
Tax & Revenue
Management
Public Utilities
Banking Services
Health
Bio-MedicalResponse
IncidentResponse
(HLS)
PublicSecurity
Education
Transportation
Justice
Environment,Health & Safety
Public Administration & Management
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Public ROI = Public Value Public ROI = Public Value
Operational ROI :Financial cost / benefit analysis
Social ROI:Impact of IT on society and quality of life
Political ROI : the impact of IT to policies, legislation
PublicROI
PublicROI
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What Enables Public Value? What Enables Public Value?
OptimizedOptimized
FlexibleFlexible
ResponsiveResponsive
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Optimized Public AdministrationOptimized Public AdministrationUnified core solutions and shared servicesUnified core solutions and shared services
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Responsive Line of Business SolutionsResponsive Line of Business SolutionsFulfill specific agency and program requirementsFulfill specific agency and program requirements
Tax & Revenue
Social Services
Public Security
Incident Management
Education
Health
Public Utilities
Transportation
Government & Constituent Svcs
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A Business Process PlatformA Business Process Platform
An “enterprise” system should really support the whole “enterprise”
The benefit of a platform
Adaptability and scalability
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Value – Value – Where We Are Finding ItWhere We Are Finding It
Harvey Eckert
Commonwealth Comptroller,Commonwealth of Pennsylvania
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ERP Implementation RecapERP Implementation Recap
• 07/02 – Wave 1 agencies*
• 10/02 – Wave 2 agencies*
• 01/03 – Wave 3A agencies*
• 07/03 – Wave 3B agencies*
• 01/04 – HR/Payroll
• 07/04 – PA DOT** Finance, Budget, Procurement, and BW
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Post ERP Implementation ProjectsPost ERP Implementation Projects
• Accounting Initiatives
• Procurement Initiatives
• Implemented new Travel Planning software
• Plant Maintenance in PA Department of Transportation
• PA Liquor Control Board Retail ERP
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Accounting InitiativesAccounting Initiatives
• Preparation of a more timely CAFR
• Reengineering Requisition to Check
• Implementing Revenue in SAP
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Preparation of a more timely CAFRPreparation of a more timely CAFR
• Where we were:– ’02 CAFR issued by 12/31/02
– ’03 CAFR issued by 5/31/04
– ’04 CAFR issued by 3/31/05
• Where we are:– ’05 CAFR issued by 12/31/05
– ’06 CAFR issued by 12/31/06
• Where we are going:– ’07 CAFR issued by 11/30/07 (5.0 mos.)
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Preparation of a more timely CAFR (cont’d)Preparation of a more timely CAFR (cont’d)
• Expedite the CAFR production and Audit Process– “Top Down” Approach - What’s material?– Focus on Opinion Units, significant funds– Use variance analysis approach– Use estimates– Use Entity Wide entries– Promote Timelier Component Unit Audits
• Improve coordination and communication with the Auditors
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Reengineering Requisition to CheckReengineering Requisition to Check
• Make recommendations to improve standardization, workload and cycle time and align the Commonwealth with industry best practices.
• Recommendations will cover agencies, Comptroller Offices, and Treasury.
• Includes the payment process for Procurement, Utilities, and Grants
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Requisition to Check DeliverablesRequisition to Check Deliverables
• Recommend options for process improvement. Currently working on recommended quick hits.
• Delineate organizational roles and responsibilities
• Guidelines for processes and procedures
• Identification of policies and statutes to update
• Recommend changes to SAP configuration
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Implementing Revenue in SAPImplementing Revenue in SAP
• Replacement of 25+ year paper-based legacy system (out-of scope during original ERP implementation)
• Redundant entry of same data into multiple systems
• Delays in recording revenue when significant funds are now electronically transferred
• Complicated reconciliation process due to timing differences and data entry errors in multiple systems
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Improving Revenue ReportingImproving Revenue Reporting
• Utilize SAP for reporting all Commonwealth revenue data
• Decommission various legacy systems
• Eliminate duplicate data entry by utilizing file transfer
• Eliminate/reduce paper documents
• Utilize consistent number ranges to track documents/records
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Procurement InitiativesProcurement Initiatives
• Implementation of SRM
• Strategic Sourcing
• Just-In-Time Inventory
• Shared Service Centers
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Implementing the Supplier Relationship Implementing the Supplier Relationship Management ModuleManagement Module
• Purpose of SRM:
– Automated Purchase Order from a shopping cart (Implemented 8/31/06)
– Contract automation of bidding process and auction functionality (Sch. 3/15/07)
– Streamline and standardize workflow
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Implementing the Supplier Relationship Implementing the Supplier Relationship Management ModuleManagement Module
• Increase utilization of catalogs/punch out (Some were implemented 8/31/06)
• Implement vendor self-registration
• Electronic transmission of Purchase order and Invoice using supplier self-service or XML
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Strategic SourcingStrategic Sourcing
• Consolidation of PA’s buying power for goods and services at reduced rates
• Twenty-five commodities/services sourced to date
• Procurement savings from sourcing is $180 Million
• Provides opportunity to direct more resources to programs that benefit citizens without raising taxes
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Just-In-Time InventoryJust-In-Time Inventory
• Office supplies purchased when needed, not stored in bulk
• Office supplies delivered directly to state offices by supplier
• Thirteen supply warehouses closed
• Savings from the closing of the warehouses was $4 Million
• Forty warehouse employees were reallocated to other state jobs
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Shared Service CenterShared Service Center
• Department of General Services established a shared service center for procurement of goods and services
• Shared service center staffed with buyers or purchasing agents from state agencies
• Provides collaboration among agencies in the purchase of similar goods and services
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Shared Service CenterShared Service Center
• Buyers specialize in a specific industry and use that knowledge to get better pricing and better products
• Reduces administration burden on agencies for procurement activities such as analyzing historical data, developing RFP’s and RFQ’s and negotiating contracts
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Implemented Travel Planning softwareImplemented Travel Planning software
Amadeus Travel Planning Software
• Internet Web based software was implemented October 2, 2006
• Travel plans synchronized into SAP
• Commonwealth receives commission from hotels for on-line bookings
• Expanded flight selection options
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Implemented Travel Planning SoftwareImplemented Travel Planning Software
• User-friendly interface that looks and feels like commercial web sites
• Flexible, one-stop online booking
• Low nightly rate for hotels
• Hotel searches by price or proximity to location
• Reporting capabilities – each agency has license to reporting tool
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Plant Maintenance in PA Dept of Plant Maintenance in PA Dept of TransportationTransportation
• Major Project to integrate PA DOT maintenance management business into the Commonwealth’s ERP environment (sch. 7/9/2007)– 11 Engineering Districts
– 58 maintenance organizations in 67 counties
– Annual budget > $1 Billion
• Improve the business processes of the highway, fleet, and materials management, and sign inventory and ordering processes
• Federally mandated requirements
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PA Liquor Control Board Retail ERP SystemPA Liquor Control Board Retail ERP System
• Issued RFP for software vendor and integrator to implement a Retail ERP System
• Replace antiquated Financial Systems with ERP Solution
• Reengineering of the Business Process (Started this with some quick hits)
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Questions