Realizing Additional Value from ERP Systems: Beyond Initial Implementation

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Realizing Additional Value from ERP Systems
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 Look

• Donald E. EdmistonSenior Government Advisor,
  BearingPoint

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Enterprise 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 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 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 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 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 Investment

• Improving cash management
• Earlier recognition of revenues
• Match current revenues with current accounts
  payables
• Longer term investments

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Return 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 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 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 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 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 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 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 Improvement

• Review of Policies/Procedures in Relation to ERP
  System
• Administrative or statutory based
• Focus on elimination of customizations/modificatio
  ns of initial ERP implementation
• On-going reengineering of business processes

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Business 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 Value

• William GreerDirector, 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

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(No Transcript)
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Public ROI Public Value
Operational ROI Financial cost / benefit
analysis Social ROIImpact of IT on society
and quality of life Political ROI the
impact of IT to policies, legislation
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What Enables Public Value?
Optimized
Responsive
Flexible
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Optimized Public AdministrationUnified core
solutions and shared services
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Responsive Line of Business SolutionsFulfill
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 Platform

• An enterprise system should really support the
  whole enterprise
• The benefit of a platform
• Adaptability and scalability

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Value Where We Are Finding It

• Harvey EckertCommonwealth Comptroller,Commonwea
  lth of Pennsylvania

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ERP 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 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 Initiatives

• Preparation of a more timely CAFR
• Reengineering Requisition to Check
• Implementing Revenue in SAP

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Preparation 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 (contd)

• Expedite the CAFR production and Audit Process
• Top Down Approach - Whats 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 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 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 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 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 Initiatives

• Implementation of SRM
• Strategic Sourcing
• Just-In-Time Inventory
• Shared Service Centers

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Implementing the Supplier Relationship Management
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 Management
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 Sourcing

• Consolidation of PAs 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 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 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 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 RFPs and RFQs and
  negotiating contracts

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Implemented 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 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 Transportation

• Major Project to integrate PA DOT maintenance
  management business into the Commonwealths ERP
  environment (sch. 7/9/2007)
• 11 Engineering Districts
• 58 maintenance organizations in 67 counties
• Annual budget gt 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 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