Making enterprise systems work for State Government NASACT — Concurrent session #15 August, 2012

Making enterprise systems work for State Government

NASACT — Concurrent session #15

August, 2012

Topic overviewTerry BlakePrincipalDeloitte Consulting LLP

Copyright © 2012 Deloitte Development LLC. All rights reserved.3 Making enterprise systems work for State Government

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

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.


Statewide Financial System (SFS) as an exampleWe will use NYS SFS as an example of an enterprise system

Approach New York Timing

1. Limit the system to fit within the existing organizational boundaries

Separate systems for Comptroller and Governor with MOU

2000 – 2009

2. 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

3. 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

4. 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 +


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.

Sometimes you can’t take the direct path


• 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)

Scope of SFS — PeopleSoft modules


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

SFS has been a very successful implementation


• 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)

SFS customer model


SFS customer model (cont.)

SFS

Business Services Center

Phase 1 Entities (60)

Office of the State

Comptroller

Phase 1 and 2

Public Benefit Corporations

Department of Law

Phase 1

Legislature

Assembly & Senate

Phase 2

Courts

Phase 1

SUNY & CUNY

Future Phase Entities (10)2 entities that are not ever

scheduled to go on line to SFS

15 entities that use SFS to initiate debt service payments

and potentially additional functionality

In addition to OSC, 4 entities controlled by separate

branches of government or separately elected officials

The Business Service Center is currently in the planning stages and does not host

agencies yet

OSC as a control agency is Phase 1, but as an operational agency is Phase 2. Controlled by separately elected official.

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.

10 entities (2 hosted). DOH, OMH, and OPWDD, are a hybrid

of Phase 1 and Phase 2 functionality.

Provided by KPMG

State of New York The journey towards enterprise systems

NASACTAugust, 2012

The organization of State Government in NYJoan SullivanExecutive Deputy Comptroller for OperationsNew York State Office of the State Comptroller


• 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

State of New York organizational context

Several states have separately elected officials with check and balance responsibilities that make an enterprise system very challenging.


State of New York Government organization

Executive Branch

New York State Government

Judicial Branch

Legislative Branch

State Attorney General

State Comptroller

Governor

LT. Governor

Departmentof Law

Departmentof 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

All four officials are separatelyelected on a state wide ballot.

Department of Tax and Finance.

Deputy Commissioner and State Treasurer.


Statewide Financial Systems Governance (2009)

Executives from the State Comptroller, Division of the Budget, and Office for Technology comprise the Joint Governance Board (JGB)

Joint Governance Board (JGB) Legislature

Joint Coordinating Committee (JCC)

Business Domain Owners

AccountingBudget

Procurement

Information TechnologyDomain Owners

NYFMS Steering

Committee

QualityAssurance (QA)

NYFMS Project Director

PMO

FOCAS Project Director

PMO

NYFMSProject Team

Joint Project Team(s)

FOCAS Project Team

FOCAS Steering

Committee

Business/Design Decisions

IT Architecture/ Design Decisions

Operating Decisions

Operating Decisions

Op

erat

ing

Dec

isio

ns

Joint ProjectTeam Lead(s)

Judicial Branch


The planned solution was to connect the two instances of PeopleSoft Financials using Oracle’s Fusion middleware SOA architecture.

New York financial systems integration solution (2009)

SOA Integration Layer

• Near real time transactions

• Orchestrates interagency approvals

• Keeps budgets and ledgers in synch

• Streamlines processing

Chart of Accounts Crosswalk — Converts old chart of accounts to new chart of accounts

OSC

PeopleSoft

Governor

PeopleSoft

Interfacing Agencies


• 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

. . . And then more budget challenges

Approaches to address organizational challengesJoan SullivanExecutive Deputy Comptroller for OperationsNew York State Office of the State Comptroller

Don EdmistonAdvisorDeloitte Consulting LLP


Statewide financial systems governance (2010–2012)

Executives from the State Comptroller and Division of the Budget comprise the Joint Governance Board (GB)

Joint Governance Board (JGB)

Legislature

Steering Committee

BusinessDomain Owners

AccountingBudget

Procurement

Information Technology

Domain Owners

QualityAssurance (QA)

Business/Design Decisions

IT Architecture/ Design Decisions

Operating Decisions

Op

era

tin

g

De

cis

ion

s

Statewide Financial System

Project Team

Agencies under Governor’s Jurisdiction

Judicial Branch

OSC


Desired enterprise approach . . . DOB, OSC, Agencies and SFS should work closely together with an enterprise view

GB

Agencies

SFS

OSCDOB


GB

OSCSFS

Agencies

DOB

• 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

. . . . The reality

Treasurer

Legislature


• 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

Allow time for the organization to adapt


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

In search of the program director


• 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

Changes to the team


Potential SFS organizationSeparates 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 BoardUser Groups

Admin overhead is minimized

Customer Service focus

Planning Business Technology Service Delivery

Integrating business processesSimhadri BasavaSpecialistDeloitte Consulting LLP


Stakeholders, ownership and relationships

Banks

OSC

Agencies

Media

Treasury

Vendors

DOB

LegislatureSFS


Examples of integration of business processes

Business process 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

Lessons LearnedJoan SullivanExecutive Deputy Comptroller for OperationsNew York State Office of the State Comptroller

Terry BlakePrincipalDeloitte Consulting LLP


• 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

Enterprise change requires leadership


1. Make sure all stakeholders are identified, involved and managed. Preach and live the enterprise gospel

2. Be adaptable and flexible about how you get there, but drive to get there

3. The governance structure can’t be too bureaucratic — it must be action oriented

4. 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

5. It takes one set of people to implement the change, it may take another set to maintain the change

6. Be sure to have Trusted Advisors that bring the needed experience and insights

Six lessons learned


Questions?

Joan SullivanExecutive Deputy Comptroller, Office of the State Comptroller,State of New [email protected]

Terry BlakePrincipal Deloitte Consulting [email protected]

Don EdmistonSenior AdvisorDeloitte Consulting [email protected]

Simhadri BasavaSpecialist LeaderDeloitte Consulting [email protected]

mailto:[email protected]




AppendixIntegrating business processes — Details


Integration for reconciliationUsing 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.


Integration for payment releaseNew processes provide better controls between OSC and Treasurer for the release of big money items such as investments and funding transfers.


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.


Integration for payment statusUsing one online system for payment status, including cancellations, reconciliations, and escheatment processes, provides up-to-date information to the agencies.


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.


Integration for budgets and approvalsSFS greatly simplifies budget checking and approvals through automated workflow, multiple levels of budget control and reduction in paper processing for agencies, OSC and DOB.


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.


Integration for vendor paymentsAn online, accessible statewide vendor file streamlines processing and provides additional information to vendors on their payments.


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.

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

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Making enterprise systems work for State Government NASACT — Concurrent session #15 August, 2012