finance & administration committee action item iii-a may ... · fy 2010 metro matters -...
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Finance & Administration Committee
Action Item III-A
May 13, 2010
Financial Systems Integration
TITLE:
Financial Systems Integration Project
PURPOSE:
To obtain Board approval to initiate and award, under GSA or through competitive procurements, contracts to implement the Financial Systems Integration Project for better integration and optimization of current applications, subject to the Board`s annual approval of the operating and capital budget and the receipt of the funds.
DESCRIPTION:
WMATA implemented PeopleSoft`s Enterprise Systems (Financial and Human Resource) in 2005 expecting to have fully integrated, cost-effective business systems that provide timely and accurate information in a centralized, usable format; eliminating unnecessary manual touch points and incorporating best business practices. That goal was not fully realized. Although the system overall is functional it requires manual intervention and data corrections to ensure data integrity and the current processes do not line up with best business practices to allow the efficiencies supported by an enterprise system. This lengthens the time it takes to perform transactions including procurement, payable, revenue and receivable as well as project management and reporting and analytical activities. Since 2005 Metro has undertaken a series of projects to update the necessary hardware, infrastructure and system change management processes to support this enterprise system. In February 2010 an assessment of the Financial system components was completed. The findings in this first phase were that the system itself is functional but in need of upgrade and overall re-integration and re-architecture of certain modules for optimal system performance. An assessment of the Human Resource Components is currently underway and scheduled for completion in September 2010. This request relates to the implementation of the assessment recommendations for the financial components. It will allow Metro to perform the upgrade and the re-integration and re-build required to optimize the financial applications of this enterprise system. This will also allow Metro to correct control weaknesses identified in its single audit reports that relate to the manual intervention required as a result of the lack of integration and of certain modules in the current system configuration. FUNDING IMPACT:
Washington Metropolitan Area Transit Authority
Board Action/Information Summary
Action InformationMEAD Number:
100641
Resolution: Yes No
RECOMMENDATION:
To approve the initiation and award, under GSA or through competitive procurements, contracts to implement the Financial Systems Integration Project for better integration and optimization of current applications, subject to the Board`s annual approval of the operating and capital budget and the receipt of funds.
Action for Multi-Year Funded Contract Capital Improvement Program
Financial Systems Integration
Budget:
ARRA- Financial Systems Integration (CL_FNSY)
FY 2010 Metro Matters -Information Technology
UCN (CE_ITUP) $5,000,000 $21,046,484
This Action: $4,743,200 $4,256,800
Prior Approval:$256,800 $13,394,469
Remaining Budget:
0 $3,395,215
Remarks:
Additional funding for this project is included in the proposed FY2011 capital program. The budget and funding beyond FY2010 are subject to approval by the Board
Operating BudgetImpact:
Positions: The goal is that although there will be some realignment there should not be an increaseAnnual Expense: This process should streamline processes including procurement, payment and receivable processes.
Fi i l S t I t tiFinancial Systems Integration Project (FSI)
Finance and Administration Committee
May 13 2010May 13, 2010
PurposePurpose
Approval to:• Initiate and award contracts to implement the p
Financial Systems Integration project for better integration and optimization of current applications.
Enterprise Systems BackgroundEnterprise Systems - Background
2010 Need: Upgrade and better integration for2010 Need: Upgrade and better integration for optimal system performance
Approach to Integrating Financial SystemsApproach to Integrating Financial Systems
Assess Current State – Completed Finance, Starting HR – Focus On Business Process TechnologyBusiness Process, Technology, Operations
2010 ‐2011
Plan/Organize – Build Internal Metro Team, Select Integration Partner, Engage All Parties
Execute Change – Upgrade And I t t S t U d t /St th
2011 –2012
Integrate Systems , Update/Strengthen Policies, Train Workforce On New Business Processes
2010 PeopleSoft Suite Current Modules
Financials Human Capital
2010 PeopleSoft Suite – Current Modules
Financials Human Capital
Financial Management
A G l A
Payroll
Time & Payroll CompensationAccounts Receivable
GeneralLedger
Accounts Payable
Cash Management
CommitmentControl Billing
Labor Payroll p& Benefits
Human Resources
Fixed Assets Procurement Strategic
Sourcing
Supply Change ManagementRecruitment Training Labor
Relations
PerformanceManagement
AbsenceManagement
WorkforceAdministration
Contracts Project Costing
Management Management
Customer RelationshipEnterprise Performance
Budget Analytics Data Warehouse
CustomerService
ContactCenter
Current Future
Financial Systems - 2010 Assessment Findingsy g
T h i l C bilitiTechnical Capabilities• Hardware, infrastructure, change management procedures are
adequateDi t d d d t ti d i t• Disaster recovery procedures and documentation needs improvement
Automation • Budgets, cash management, procure-to-pay processes are manually
intensive due to complexity
Data Value and Data Integrity• System inefficiencies cause manual intervention and data corrections in
budgets, cash management, general ledger and grants management
Integration• Lack of integration and comparison to best business practices highlightLack of integration and comparison to best business practices highlight
a need to improve finance operational processes
Operational Challenges and RemedyOperational Challenges and Remedy
Challenge Remedy• Constant reorganization • Plan reorganizations to maintain consistent
processes, reporting and information standards
Challenge Remedy
• Focus on technical management and solutions
• Focus on business process and functional use of PeopleSoft solution
• Severe issues with data value
• Complex budgeting and cost
• Establish data standards at source of transaction
• Decentralize capital cost tracking at• Complex budgeting and cost tracking process
• Significant workflow and data i
• Decentralize capital cost tracking at operational units enforcing accountability
• Establish clear roles and responsibilities for t d i t t l f tiissues
• Highly manual, inconsistent Procurement and payables process
procurement and inventory control functions
• Simplify capital request and approval (MEAD) process and automate manual p y pinteractions between inventory and accounting systems
Enterprise Solutions Group OrganizationEnterprise Solutions Group - Organization
Key Requirements for Success:
- Consistent executive leadership- Cross-functional participation from Finance, HR, IT and
Operations departmentsp p- Execute project based on IT governance methodology and IG
recommended standards- Dedicated project team augmented with skilled contracted
resources
Considerations in Selection of ImplementerConsiderations in Selection of Implementer
• Speed of implementationUnless the implementer is in place by June 2010, there is a high risk that the project rollout will be delayed into FY2013 prolonging closure ofthe project rollout will be delayed into FY2013, prolonging closure of existing audit issues
• Contractor track record of success in PeopleSoft re-architectureContractor track record of success in PeopleSoft re architecture projects Seek references from other government entities in similar states of crisis
• Knowledge of Metro culture and challenges
• Fixed price, milestone-based contract structure p ,
FundingFunding
• Funding requirement in FY2011 for FSI project to meet the July 1, 2012 implementation date is $12 million – Includes $4.7 million of ARRA funding– $3 0 million is for the Metro staffed project organization– $3.0 million is for the Metro staffed project organization– $9.0 million is for outside contracts
RecommendationRecommendation
Approval to:• Initiate and award contracts to implement the p
Financial Systems Integration project for better integration and optimization of current applications.
APPENDIX
Glossary of TermsGlossary of Terms
ERP Systems (Enterprise Resource Planning) - a way to integrate data andERP Systems (Enterprise Resource Planning) a way to integrate data and processes of an organization into one single system. Most ERP systems use a common database to store data for various functions found throughout the organization
Stand-Alone Application- a computer system that is operational, is not connected to any other system and functions independently
System Integrator - a person or company that specializes in bringing together variousSystem Integrator a person or company that specializes in bringing together various subsystems into a whole and ensuring that those subsystems function together as one
COTS Product - commercial, off the shelf, ready-made software
Business Process - a collection of related, structured activities that produce a specific service or product (serve a particular goal) for particular customers. It often can be visualized with a flowchart as a sequence of activities.visualized with a flowchart as a sequence of activities.
PS-Maximo Integration - the flow of data between Metro’s accounting, procurementand inventory management system
Glossary of Terms (cont )Glossary of Terms (cont.)
Procure to Pay - the process of obtaining and managing all raw materials needed for running Operations. This cycle starts with the source selection, followed by procurement of goods and services. Demand for items are converted to procurement requirements through purchase orders and confirmation of goods receipt. The incoming materials are then inspected and posted into inventory as part of managing the warehouse. The last activity in this cycle is payment of the suppliers which consists of receiving entering and checking vendor's invoice for correctnessconsists of receiving, entering and checking vendor s invoice for correctness.
z Future State of Financial Systemsz Future State of Financial Systems
Area Current Issues Desired StateArea Current Issues Desired State
General Ledger - Fixed Assets
On out-dated mainframe, no integration with any other system
Becomes part of enterprise financial system, retire mainframeother system mainframe
General Ledger -Allocations
High volume and complex Streamlined process, spread across organization
General Ledger- Monthly closing
Compensate for poor data quality with highly manual, labor intensive process
Integrates with revenue systems, labor cost and receipts; improve datalabor intensive process receipts; improve data quality with control accounts
Position Budgeting Budgeting is performed at Integrates with HR positionPosition Budgeting Budgeting is performed at FTE rather than by positions
Integrates with HR position management to properlyreflect budgeted positions and retire the exchange of PCN process
z Future State of Financial Systems (cont )z Future State of Financial Systems (cont.)
Area Current Issues Desired StateGrants management Managed by spreadsheets
and manual, ad-hoc process
End-to-end grants management by implementing four unused modules of current financial system
Capital projects Reliant of General Ledger f f ll j t t
Capture and report on all cost b i l ti th j tfor full project cost; no
easy way to calculate work-in-progress
by implementing the project costing portion of the system properly
Accounts payable Every process requires Best practice methodsAccounts payable, Accounts receivable, cash, revenue
Every process requires manual intervention and multiple corrections
Best practice methods understood and implemented; workforce uses systems accurately
Purchasing integration with Inventory system
Interface issues cause errors in both systems
Clear ownership established for all source transactions and automation corrected in the
h i tpurchasing system
Financial Systems Road mapFinancial Systems - Road map
• Assessment complete (Feb 2010)
• Pre-upgrade tasks to mitigate risk (Mar 2010 – Dec 2010)pg g ( )
• Create business architecture maps (June 2010)
• Database and PeopleTools upgrade (May 2010)
• Formation of Enterprise Solutions project team (June 2010 Milestone)
• Re-architecture effort begins (June 2010 to July 1, 2011 Milestone)
• Stabilization and support period (July 2011 to June 2012)• Stabilization and support period (July 2011 to June 2012)
• Milestone – Project completion and ability to make ROI-based decisions