[Word]

TARGET CONCEPT OF OPERATIONS

Deliverable # 4

Submitted on July 30, 2004

To:Office of Management and Budget

New Executive Office Building725 17th Street, NW

Washington, DC 20503

By the:

Financial Management Line of BusinessEnterprise Architecture Working Group

http://www.egov.gov/

Version History

Description Date NameInitial draft June 23, 2004 ConOps Draft 1 as of 6-23-

04.docFinal June 30, 2004 FM LOB ConOps Version 5

as of 6-30-04.docFinal with addressed comments from OMB

July 30, 2004 FM LOB EAWG Deliverable # 4 Conops Final.doc

FM LOB Target Architecture Deliverable# 4: Target Concept of Operations July 30th, 2004

Table of Contents

i. Target Concept Of Operations Deliverable # 4 Traceability Matrix................................41. Introduction....................................................................................................................52. Target Enterprise Architecture.......................................................................................53. Common Solution..........................................................................................................9

3.1. EA Support of the FM LOB Goals..............................................................103.2. EA Support of the Common Solution.........................................................103.3. Standardization of Data Definitions and Processes...................................11

4. Conclusion...................................................................................................................115. Appendix: FM LOB Service Delivery Model.................................................................12

3 of 13

FM LOB Target Architecture Deliverable # 4: Concept of Operations July 30, 2004

i. Target Concept of Operations Deliverable # 4 Traceability Matrix

Deliverable Requirements Relevant section of this document

1. Description of (both in written form and graphically) the interactions of the major users of the target architecture and its associated common solutions.

Section 3, p. 9 - 11

OMB Recommended Upgrades Relevant section of this document

Comment

1. Add user types, roles and responsibilities and their interactions with both the common solution and the target architecture. Reference roles identified in the target business architecture.

Appendix, p. 13

2. Clearly identify how the CONOPS addresses the target business processes/components and how it enables the common solution and supports the proposed Centers of Excellence.

Section 2, p. 5 - 8

4


1. Introduction

In 2001, President Bush created the President’s Management Agenda to address the need for citizen-centered, results-oriented, and market-based federal government initiatives. The success of the President’s Agenda depends on agencies working as a team across traditional boundaries to better serve the American people and focusing on citizens rather than individual agency needs. Pursuant to the PMA, the Office of Management and Budget (OMB) created the Line of Business (LOB) initiative which addresses redundant IT investments and business process across the Federal Government.

The established LOB Task Forces and OMB are focused on a business-driven, common solution and target architecture developed through an architectural framework. The Lines of Business initiatives afford agencies an unprecedented opportunity to influence the direction of specific core business functions Government-wide. The vision of the Financial Management Line of Business (FM LOB) is to establish the framework for a government-wide financial management solution that is efficient and improves business performance while ensuring integrity in accountability, financial controls and mission effectiveness.

The concept of operations details both the common solution and the supporting target enterprise architecture for the FM LOB. The investment utilizes Centers of Excellence (COEs) to provide FM information technology (IT) hosting, while leveraging Government-wide standardized business processes. Additionally, in the long term, end-to-end financial services could be supported through COEs or could also be provided by other third party entities (government or private) using COE software. The target enterprise architecture for the common solution was developed based upon the Federal Enterprise Architecture (FEA) to ensure that it is a business and performance-based solution that supports cross-agency collaboration, transformation, and improves financial management government-wide.

2. Target Enterprise Architecture

The Federal Enterprise Architecture (FEA) is a business and performance-based framework to support cross-agency collaboration, transformation, and government-wide improvement (Figure 1). It provides Federal agencies with a new way of describing, analyzing, and improving the Federal Government and its ability to serve the citizen. The underpinnings for accomplishing the FM LOB goals is the development of an enterprise architecture that will use the FEA taxonomy to describe the FM target architecture in a consistent manner and provide sufficient detail within the architectural deliverables so that agencies can begin transition planning and analysis in support of the common solution. The FM LOB architecture will also ensure that proper security measures are in place.

5


Figure 1: Federal Enterprise Architecture

The FM LOB developed the target enterprise architecture to serve as the integrated framework for aligning core financial business processes, data, applications, and technology. At the highest level, the business architecture establishes a relationship between the FEA reference models and the core financial management functions as defined by the Joint Financial Management Improvement Program (JFMIP). In order to support the common solution, a government-wide set of common target business processes for each core financial sub-function has been identified. These business processes are mapped to the FEA Performance Reference Model and Service Component Reference Model to ensure alignment to the FEA and as other agency architectures.

There are six high-level sub-functions and corresponding business processes that support the FM LOB. These sub-functions represent the general activities that will be standardized and consolidated to support the common solution. The sub-functions will be further decomposed into generic work activities that are commonly applicable to all agencies, and those activities will be the focus of the service and technology component consolidation and cross servicing operations.

The FM LOB core operations baseline environment has been defined as:

General Ledger management. This process includes managing the accounting classification structure, recording the standard general ledger, controlling accounting transactions, performing archiving and purging, posting to general ledger, processing accruals, processing closing and consolidation, and supporting general ledger analysis and reconciliation.

Funds management. This process includes formulating the budget, executing the budget, allocating funds, controlling funds, and performing financial planning.

Payments Management. This process includes maintaining payee information, warehousing payments, executing payments, and confirming and following up on payments.

Receivables Management. This process includes establishing receivables, managing receivables, collecting on receivables, and recording referrals and offsets.

Cost management. This process includes recognizing costs, accumulating costs, distributing costs, and managing working capital funds and revolving funds.

Reporting. This process includes preparing financial system reports and providing access to accounting and system monitoring information.

6


Figure 2 provides a list of the six sub-functions with the associated business processes and detailed descriptions.

Figure 3 provides a list of core financial system interfaces as defined by JFMIP.

Figure 2: Sub-Functions with Business Processes and Descriptions

BRM Sub-Function

FM LOB “CORE” Sub-

Function

Target Business Process Name

Description

Accounting General Ledger Management

Manage GL Structure The Manage GL structure process involves receiving and implementing guidance. Establishing, maintaining and communicating general ledger and accounting practices including policy, timing, business rules, formats and closing instructions.

Manage GL Transactions The Manage General Ledger Transactions process involves the capturing, summarizing and posting of the financial impact of business events.

Budget and Finance

Funds Management

Construct Plan This process ensures that the Agency’s overall mission and plan is updated and in accordance with the present environment, and the supporting objectives and measurement indicators accurately support the achievement of the mission and plan.

Develop Program This process translates strategic objectives into specific initiatives and associated requirements.

Formulate Budget This process develops the Agency’s budget submission that supports the Agency mission and President’s budget.

Support Budget Execution This process enables the Agency to carry out the current year budget plan based on the enacted budget appropriation.

Evaluate Budget This process allows the Agency to gauge the efficiency and effectiveness of the budget lifecycle.

Accounting Cost Management

Define Model The Define Model process obtains the laws, regulations, standards, etc. from External Oversight, Internal Oversight and Other Domains, as well as the high-level framework established in the strategic plan and budget from Other Domains. In addition, this process acquires acceptance standards and methods from Industry Partners and External Oversight. Using these inputs, this process defines model structure and data requirements, relationships of responsibility segments and cost objects, the criteria for detecting business anomalies, and the methodology by which inputs will be traced to the model elements. Ultimately, it will produce an unpopulated model.

Populate Model The Populate Model process collects input data from Industry Partners, Government Partners and Other Domains and distributes it to the responsibility segments and cost objectives outlined in the model framework. This is accomplished according to the methodologies incorporated by the Define Model process and produces the cost and revenue measurements (populated model) to be consumed by user communities. The model results may also be utilized by the Perform Analysis process.

Perform Analysis The Perform Analysis process is initiated by a request for analysis being submitted from external or internal customers. Upon receiving this request, this process scopes the request, generates an action pan, and applies one or more techniques (forecasting, comparative analysis, or trending). After performing the necessary calculations,

7


BRM Sub-Function

FM LOB “CORE” Sub-

Function

Target Business Process Name

Description

the results are interpreted and packaged in such a way as to provide actionable information to the customer(s). This process may yield reusable techniques that can be applied to future requests.

Payments Payments Management

Manage Payment The Manage Payment process involves the administering and scheduling of payments to be made based upon predefined criteria (e.g. Contract Terms and Conditions, Prompt Pay), sending the payment file to Treasury, receiving the confirmation notification that the payment has been made, and recording the payment.

Manage Payable & Accrual

The Manage Payable and Accrual process involves administering the amounts that the Agency owes. This includes recording of the liability and the related asset or expense, establishing the account payable or accrual, and liquidating the liability.

Collections and Receivables

Receipts Management

Manage Receivable The Manage receivable process involves the administration of the monies owed to the Agency. This includes recording of the receivable, revenue when recognized, application of cash and the liquidation of the receivable. The Manage Receivable activity also includes billing, aging, dunning, write-off, adjustment, and the assessment of interest and penalties on outstanding receivable.

Manage Collection The Manage Collection process involves receiving, controlling, and recording monies owed to the Agency.

Manage Treasury Execution

The Manage Treasury Execution is the agreement of the Agency balances with Treasury balances, including the monitoring of collections and disbursements. This process also includes agreement of Trading Partner balances and determination of elimination entries.

Reporting and Information

Reporting Generate Financial Statement

The Generate Financial Statements process involves summarizing relevant information captured in the general ledger and other sources to produce mandatory reports in compliance with regulatory requirements.

Figure 3: Agency Financial Systems Architecture (core and feeder systems)

8

R evenueS yst em

B udgetFormulati on

Syst em

N on- fi nanc ialS ystem s

Tr ave lS yst em

S eized P roperty& For fe it ed

As s etS yst em

Guaran teedLoan

S ystem

I nven toryS yst em

GrantS yst em

F inanc ialR eport ing

S yst em

M anager ial Co st Ac co unting

De p a r t m en t a l E xe c u t i ve I n f o r m a t i o n S ys t e m

Human R es ourc es& P ayr ol lSys tem

P ropert yM anagement

S yst em

Direc tLoan

Syst em

Ac qu is it ionS ystem

C oreF inanc ialSyst em

Ins uranc e C laimSyst em

B enefi t S ystem


The need for confidentiality of information, integrity of information, accountability for the information, non-repudiation of the information, availability of information or the system, and/or reliability of the information or the system will all be factors applicable to the risk determination for the FM preferred solution. Conformance to A-130 and other appropriate security regulations and guidance will be used to ensure that the FM Preferred Solution is not only initially secure but is flexible enough to incorporate additional security if/when new requirements arise.

The Chief Information Officers Council and each partnering agency IT Security Manager, or associated staff, will review the security specifications. Conformance to A-130 and other appropriate security regulations and guidance will be used to ensure that the FM LOB is not only initially secure but is flexible enough to incorporate additional security if/when new requirements arise.

3. Common Solution

The solution is a market-driven approach based on a shared services model that will maximize economies of scale, scope, and skills while benefiting from the use of both government and industry best practices and technologies. The investment utilizes Centers of Excellence (COEs) to provide FM information technology (IT) hosting, while leveraging Government-wide standardized business processes.

The FM LOB issued a request for information (RFI) to both government and private industry seeking proposed solutions and implementation approaches for achieving the goals and objectives of the LOB. The COE model is consistent with RFI responses received from both private industry and government entities. Further, this model is effectively being deployed by several agencies to successfully consolidate internal financial management activities.

Centers of Excellence will be public, private, or public/private jointly managed financial management centers that service multiple agencies’ FM IT systems. COEs will provide IT hosting services including:

Software installation License maintenance Hardware and software upgrade management Enterprise Application Integration and Enterprise Information Integration Input and reporting services

Agencies will work together over the next 12 months to agree on government-wide standards for business processes and data definitions that will drive upgrades to systems and improve business process commonality and transactions across the lines of business. As COEs are identified the agencies will work with them to maintain and develop standard business processes and data definitions.

Centers of Excellence will meet the following criteria:

Comply with the Federal Financial Management Improvement Act (FFMIA) Operate JFMIP approved financial management software Support “clean” audit opinions Align practices with the 25 E-Gov initiatives (e.g., Common vendor file usage, intra-governmental

transaction processing using DUNS numbers, etc.)

9


Develop common data exchange interfaces – one set of interface development and support for all agencies (e.g., one common interface to the four E-Gov payroll systems providers)

Provide hardware and other IT infrastructure required to operate – scalability, portability and interoperability

Offer application management services to maintain and upgrade hardware and software for agencies serviced

Use “best practice” approaches and methodologies for standardized implementation tasks, (e.g., change management, project management, training, data conversion and interface development)

Offer data warehousing services for management information systems and cost accounting Adhere to the requirements outlined in ISO 15489 by supporting an electronic records management

system (ERMS) that has been certified under DoD Std. 5015.2. Support the FM LOB goals Follow the Financial Enterprise Architecture (FEA) Requirements

3.1. EA Support of the FM LOB Goals

The consolidation of FM services and IT hosting into multiple COEs, meets the overall goals of the FM LOB Target Architecture and provides real savings to citizens. The FM LOB has several goals that are satisfied by the defined Enterprise Architecture:

1) Achieve or enhance process improvements and cost savings in the acquisition, development, implementation, and operation of financial management systems through shared services, joint procurements, consolidation –a common EA architecture for financial processes provides the capability for shared services, as well as providing major savings in the acquisition of hardware and software through consolidation.

2) Provide for standardization of business processes and data – the EA provides a common technical architecture underlying the core business functions that allows the core processes to be re-engineered for “best in breed” that provides gains in both costs and productivity.

3) Promote seamless data exchange between and among Federal agencies – the EA enables consolidation of interfaces between external financial feeder systems and the core (see Chart 2, page 9).

4) Strengthen internal controls through interoperability of core financial and subsidiary systems – the EA promotes a common platform infrastructure that provides potential for “real-time” access between financial systems thereby enhancing internal controls.

3.2. EA Support of the Common Solution

The common solution – IT consolidation with standardized processes provides an opportunity for agencies to collectively identify and adopt best practices in an effort to standardize and eliminate redundant stove-pipe systems. The solution drives the standardization (at a minimum) of business process, data, and interfaces. An overall reduction in the number of redundant systems increases the government’s ability to audit and secure them while reducing licensing, acquisition, and operation costs through the utilization of programs like SmartBUY. Most importantly, the solution benefits citizens by redirecting savings toward mission critical programs.

Additional outcomes of the COE model include: The management of knowledge as a corporate asset using standard shared information drivers; The ability to enable a workforce of effective managers equipped with the correct information to

make effective business decisions;

10


The ability to provide information integrity by adopting leading practices to optimize business operation;

Emphasis on cooperative strategies for satisfying common needs across the enterprise; The ability to capture and validate information once and reuse across the enterprise; provide

security and protection of sensitive information; and Support for current E-Government initiatives.

3.3. Standardization of Data Definitions and Processes

There is a significant shortfall in government-wide standardization of financial data definitions and processes that may inhibit the successful implementation of “Centers of Excellence”. There are four areas of standardization that must be addressed immediately:

1) Transaction processing standards (JFMIP core data)

2) Data exchange standards (interfaces)

3) Data reporting standards (common reporting data – financial statements)

4) Standard business processes (JFMIP financial core functions)

The consolidation of government-wide financial systems will move agencies toward standardization and Government-wide standardization of core business processes would occur prior to the conversion to the new systems. Each agency will adopt the business processes concurrent with system implementation. The FM LOB is recommending a collaborative, cross-government approach to developing these standard business processes. Target business processes will be developed as a model for standardization and integrated across government.

4. ConclusionThe Center of Excellence Model will improve Financial Management across the Federal Government by establishing a market-driven approach to a shared services model, developing target architecture, and standardizing business processes. This model achieves the vision of the Financial Management Line of Business by improving business performance while ensuring integrity in accountability, financial controls, and mission effectiveness.

11


5. Appendix: FM LOB Service Delivery Model

Figure 4 is a graphical depiction of the FM common solution in the long term. All COEs, at a minimum, will provide IT hosting for core FM activities (orange hexagons). Additionally, COEs may provide some or all business processing services (blue hexagons) directly or via third party vendors. Dashed hexagons within the service centers indicate that the associated business process is provided outside of the service center. The COE will interface with E-Government initiatives relevant to FM (red boxes at bottom). The COE may also choose to provide additional non-core functionality, e.g. asset management and/or provide support for, and integrate with, other LoBs and eGov projects (green boxes at bottom).

Note: There will be a number of COEs. Each COE will serve multiple agencies and perhaps multiple LoBs.

Figure 4: FM LOB Service Delivery Model

Multi-Agency Executive Steering Committee

E-PayrollE-PayrollE-TravelE-Travel

Grants.govGrants.govIAEIAE

Center of Excellence(Public, Private, or Joint)

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting PaymentMgt.

PaymentMgt.

FundsMgt.

FundsMgt.

ReceiptMgt.

ReceiptMgt.

AGENCYAGENCYAGENCYAGENCY

AGENCYAGENCY

Public or Private Service Providers

General Ledger

Mgt.

General Ledger

Mgt.

CostMgt.

CostMgt.

ReportingReporting

FM LOB PMO

Multi-Agency Executive Steering

Committee

Center of Excellence

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.

CostMgt.


FundsMgt.

ReceiptMgt.


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.

CostMgt.


FundsMgt.

ReceiptMgt.


AGENCYAGENCY

E-RecordsE-Records

Non-Core Functionality




Multi-Agency Executive Steering Committee

E-PayrollE-PayrollE-TravelE-Travel

Grants.govGrants.govIAEIAE

Center of Excellence(Public, Private, or Joint)

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.


PaymentMgt.

FundsMgt.

FundsMgt.

ReceiptMgt.

ReceiptMgt.


AGENCYAGENCY

Public or Private Service Providers

General Ledger

Mgt.

General Ledger

Mgt.

CostMgt.

CostMgt.

ReportingReporting

FM LOB PMO

Multi-Agency Executive Steering

Committee


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.

CostMgt.


FundsMgt.

ReceiptMgt.


AGENCYAGENCY


General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.FundsMgt.

PaymentMgt.

ReceiptMgt.

CostMgt.

Reporting

General Ledger

Mgt.

CostMgt.


FundsMgt.

ReceiptMgt.


AGENCYAGENCY

E-RecordsE-Records





12

Business Processing

IT Hosting


Customers (“users”)Customers are potential “users” of services provided by the FM LOB. A group of potential “user” segments is listed below as determined by the Business Management Work Group (BMWG) of the FM LOB during identification of stakeholder groups. They include:

Accountants Accounting Control Board Accounting Technicians Billing Technicians Budgeting Officers Certifying Officials Cost Revenue Analysts Cost Revenue Managers Cost Revenue Modelers Evaluation Analysts Execution Officials Formulating Officials Office of the Chief Financial Officer Planning Analysts Potential Awardees Program Budget Review Board Program Analysts Public Affairs Plan Reviewers

A role-based perspective in segmenting stakeholder groups is important. As the target architecture is further developed, it will help to define controls for access and use.

13

Technology

[Word]