What Does It Take for State Government to Consistently Deliver High Performance?

October 23, 2013

Kinney Poynter, NASACT

Keith Johnson, Oracle

Michelle Strauss, State of Delaware

PN Narayanan, Pennsylvania Treasury

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.2 2

Opening Remarks

ModeratorR. Kinney PoynterExecutive Director

NASACT

SpeakerKeith Johnson

DirectorState and Local Government

Public Sector Industry Business UnitOracle

SpeakerMichelle Strauss

Assistant Director of Financial SystemsDepartment of FinanceDivision of Accounting

Delaware

SpeakerPN Narayanan

Chief Information OfficerPennsylvania Treasury

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.3 3

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Reaching New Heights: Providing Consistent and Sustainable High Performance at the State Level

Report Summary by Oracle and the National Association of State Auditors, Comptrollers and Treasurers (NASACT)

Keith JohnsonOracle Public Sector IBU

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Introduction

• It’s no secret these are challenging fiscal times – state governments face deep budget cuts, eroding tax bases and declining property values

• It is more important than ever for state governments to create a high-performing system that consistently

maximizes public value   • So what does it take for state

government to consistently deliver high performance?

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Why Look at High Performance Government?

• Improving Performance not new – took on new urgency during fiscal crisis– Performance Stat, CopStat became popular in 90’s.

Focused on operational efficiency– Performance Based Budgeting, Benchmarking, Lean,

Six Sigma and other techniques

• Wide variety of tools, techniques used. Limited “COTS” capabilities

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“High Performance” includes many areas

• Operational efficiency such as scorecards, process improvement, quality

• Community Conditions – Becoming more widely used measure of how to gauge citizen perception and view of service quality/deficiencies.

• Efficient deployment of technology resources. Cloud computing, Infrastructure as a service, Shared Services.

• Guarding against Fraud, waste and abuse. • Transparency – providing data to citizens and getting

feedback.

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.8

Survey Results:

Talent ManagementCloud ComputingComplianceTransparency

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Survey Results18 States, 2 US Territories Responded

+ Puerto Rico & Guam

Before states can take steps to improve systems and more efficiently deliver services, they need to evaluate how programs perform today.

33% track performance in spreadsheets

29% track with legacy, homegrown analytical tools

8% use COTS analytical tools

17% do not measure program performance

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1. Aiming High - Talent Management

States rank recruiting, training, retraining talent as the most important thing to support High Performance

Less Than 10%

10% to 20%

30% to 50%

28%

37%

9%

50%+ 2%

What % of your departments workforce will retire in the next 5 years?

48%Yes

52%No

Does your department have adequate staff to perform its job?

Can you attract and retain younger employees to meet your workforce needs?

Yes – 46%No – 38%? – 16%

eRebublic Survey June 2013

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.11

Aiming High - Talent Management

Develop a Social Recruiting Strategy Engage Your Line Managers Prepare Now for Upcoming Talent Shortage Take Stock of Internal Talent Line Up Future Leaders Automate Talent Management Manage Talent Anytime, Anywhere

Some Talent Management Best Practices

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2. Aiming High - Cloud for High Performance

States are split on the use of cloud-based solutions. Of those using cloud:

17% for technical applications i.e. email, SharePoint in the cloud

13% for business applications i.e. finance,

HCM

25% using for a variety of purposes applications

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Overcoming Cloud Hurdles

Despite challenges, many states have plans to adopt cloud solutions in the next five years. What cloud solutions are they considering?

42% email

38% document management

25% human capital management

17% financial management

Take Away: Cost savings and efficiency as the primary reason for adopting cloud services

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3. Keeping Score – Tracking Compliance

Internal Controls

50% tracking is not automated 0% full automation

Improper Payments Act 42% don’t automate tracking

Segregation of Duties 25% tracking is partially automated 58% no automation

States must comply with legislation and mandates, but a majority of states are not leveraging automated tracking.

Take Away: Automating administrative processes saves time and budget, and provides real-time information on compliance status

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Foul Ball – Identifying Fraud, Waste and Abuse

Fraud, waste and abuse lead to inefficient spending, misuse of tax dollars and public distrust. Unfortunately, many states fall victim to fraud, waste and abuse

each year.

What type of fraud are organizations experiencing?

71% say employee fraud

67% indicate recipient fraud

63% site expense related fraud

50% say provider fraud

Take Away: States should consider technology tools to help establish better tracking systems to detect fraud and identify the sources of waste

What are organizations doing about fraud?

33% are using or implementing systems to detect fraud

29% are using fraud detection software

25% are enhancing reporting systems

25% are requiring recipients to take action when fraud occurs

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4. Visualizing a Win – Government Transparency

Transparency is critical to ensuring tax dollars are spent appropriately, establishing public participation and collaboration

Take Away: A comprehensive government transparency website is important for states

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Charting a Path

•Evaluate current programs•Examine technology options•Educate and share best•Automate•Eliminate fraud and abuse

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Reaching New Heights: Providing Consistent and Sustainable High Performance at the State Level

•PN Narayanan, Chief Information Officer, Pennsylvania Treasury

•Michelle Strauss, Assistant Director of Financial Systems, Department of Finance, Division of Accounting, State of Delaware

•Bob Sabo, Executive Director Oracle Public Sector Industry Business Unit

STATE OF DELAWARE

Delaware’s Financial SystemFirst State Financials (FSF)

Legacy System DFMS – State System for 20+ years

PeopleSoft Implemented 8.9 in July 2010 with Integration

to HCMS Upgraded to 9.1 in October 2012 Project and Executive Sponsor Support Working with the State Technical and Change

Management team

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Delaware’s Background

State of Delaware 77 Organizations

• 33 State Agencies• 19 School Districts• 23 Charter Schools• 2 Higher Education Institutes

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Financials GL & KK AP, PO & ePro Billing & Accounts Rec Asset Management Project Costing Grants Contracts Cash Management Bolt-on

Modules Implemented

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Transparency http://www.delaware.gov/topics/transparency

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Transparency http://www.delaware.gov/topics/transparency

Web CheckbookState Employee Credit Card Transactions

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Improving Processes

Hackett Benchmarking 2006 in old system 2013 after upgrade

Communication with Organizations Financials Advisory Committee (FAC) Presence at School Business Manager (BM)

Meetings Notifications and Alerts

Interfaces Reporting Contact with Oracle & other State’s

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Hackett Benchmarking

Improvement seen from 2006 to 2013 Looking at other areas for improvement

Reviewing organization’s workflow Expense Module Scanning Ghost Card

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Communications

FAC Meet bi-monthly Controllers from all organizations invited Discuss any upcoming items & any issues

School BM Meeting K12 Group Charter School Meeting & Local School District

Meeting

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Communications Continued

Service Desk Notifications Alerts Available for end users to report issues and

receive assistance

Communicate! Communicate! Communicate!

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Interfaces

Standard Interfaces Time saved from dual data entry Interface file formats posted on the extranet Work with the organizations on testing Insert job into our cybermation schedule

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Reporting

Current reporting Mobius/Document Direct

Other reporting tools Query nVision

RFP Issued Expectations

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Know Your Resources

Oracle Other States Alliance Conference HEUG/PSUG Calls

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Interactions

End Users Key User Groups Hackett Oracle Other States

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y

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GRC Advance Controls Project at PA Treasury

PN NarayananChief Information Officer

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Copyright The Pennsylvania Treasury Department. All Rights Reserved 35

Organization Overview• Processed about 35 million payments worth more

than $75 billion last fiscal year.

• IT systems manage about $15 billion in State assets.

• Unclaimed Property program collected $300 million and returned over $100 million, generating nearly $200 million for the General Fund in FY 12-13.

• PA 529 College Savings Program is setting new records: nearly $3 billion in assets, serving 177,000 accounts as of June 30, 2013.

• Prevents an average of $100 million in erroneous payments annually through pre-transactional audits.

Rob McCordState Treasurer

GRC Advanced Controls

Copyright The Pennsylvania Treasury Department. All Rights Reserved

• All payments by the Commonwealth of PA reviewed by Fiscal

Review

• 35 million transactions per year; $75 Billion in spend per year

• Detect duplicate and incorrect payments

• Maintain audit checklists

• Collect metrics

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Fiscal Review

Copyright The Pennsylvania Treasury Department. All Rights Reserved

• All payments by the Commonwealth of Pennsylvania to be reviewed by GRC Advanced Controls

• Detect Duplicate and Incorrect Payments

• Two phase implementation –

• Phase 1: 5 Controls with current legacy system

• Phase 2: ERP+GRC Go live July 2014 (70 analytics - 25 controls)

• Deploy additional controls planned for CY14

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Adv Controls – Project Objectives

Copyright The Pennsylvania Treasury Department. All Rights Reserved 38

Two Phase Strategy

Phase 2 PeopleSoft Go-Live

Jan 2013 July 2013 Jan 2014 July 2014July 2012

Phase 1 GRC Project kick off

Phase 1 GRC- 5 controls

Copyright The Pennsylvania Treasury Department. All Rights Reserved

Before GRC Advanced Controls

Payment Requests

SQL /Legacy

Fiscal Review TeamAgencies Payment Requests Current Payment System

• Sampling• 100% over threshold

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Custom builtSQL system

E-Business

Copyright The Pennsylvania Treasury Department. All Rights Reserved

Phase 1 – GRC Advanced Controls

SQL/Legacy

Fiscal Review Team

Daily Graph Update Job

~20 mins

Agencies Payment Requests Current Payment System

• Risk Graph• Map Reduce Enabled –

4 dedicated machines• Control Analysis 15-20mins• Linux• Oracle DB

GRC Advanced Controls

Custom Business Objects to payment

tables using GRC Extensibility Framework

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Payment Requests

GRC

E-Business

Copyright The Pennsylvania Treasury Department. All Rights Reserved

Phase 2 – GRC + PeopleSoft

Fiscal Review TeamAgencies Payment Requests PeopleSoft Financials (New Payment System)

• Risk Graph-updates • Map Reduce Enabled –

4+ dedicated machines• Control Analysis • Linux• Oracle DB

GRC Advanced Controls

Daily Graph Update Job

Standard GRC Connector for

PeopleSoftAuto Payments

on Hold

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SQL/Legacy

Payment Requests

PeopleSoft GRC

Release Payments on Hold not selected for audit

E-Business

Copyright The Pennsylvania Treasury Department. All Rights Reserved

1. Phase 1 Pilot Project

a. Split Payments

1. Using Vendor payments – PA 0006

2. Using Advance accounts – PA 0007

b. Payment over a threshold value. PA 0008

c. Payment with missing TIN PA 0009

d. First Payment – PA 0011

2. Phase 2 ERP Integration

70 analytics – 25 Controls

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Key Controls - Examples

Copyright The Pennsylvania Treasury Department. All Rights Reserved

Partial Definition

Split Payments

4 Business Objects

10 filters

2 Functions

9 Attributes

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Copyright The Pennsylvania Treasury Department. All Rights Reserved 44

Project Results/Benefits

1 Sample weekly data, 2 Ready for Fiscal Review – not actual savings

ControlSelected by

Control $ Value2Selected by

Control $ Value2

PA 0006 1689 2.26 million 3624 3.98 million

PA 0007 229 60K 244 108K

PA 0008 190 48 million 240 38 million

PA 0009 579 368K 520 390K

PA 0011 801 14 million 1168 20 million

Week 1 - Total Payments1 : 92,613 = $1.85 billionWeek 2 - Total Payments1 : 91,068 = $580 million

1 Sample weekly data,2 Ready for Fiscal Review – not actual savings

Copyright The Pennsylvania Treasury Department. All Rights Reserved

• Complete the Integration with PeopleSoft

• Build Analytics out of GRC Results

• Help Agencies to identify the problems at source

• Refine controls to meet changing needs of government regulations and code.

• Develop a dashboard for executive overview

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Future Expansion Plans

Copyright The Pennsylvania Treasury Department. All Rights Reserved

Treasurer Rob McCord:

“We are a fiscal watchdog that ensures tens of billions of dollars in payments are lawful and correct.”

• Fiscal review is ‘Mission Critical’ business process for Treasury• $75 billion spend & 35 million transactions mandated to be reviewed• Enable continuous improvements for upstream Agency processes• Realized value before ERP go-live with GRC Advanced Controls

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Summary

<Insert Picture Here>

The Path to a High Performing GovernmentKeith JohnsonOracle Public Sector IBUOctober 24, 2013

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Questions

• How closely aligned is the budgeting and performance management process at your organization? How closely aligned should it be?

• What process improvement methodologies turn ideas into implemented savings in a culture resistant to change?

• How do you overcome resistance / lack of acceptance?

• How can you manage performance improvement programs that cross departmental lines?

• What tools should you invest in to support high performance?

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Things are changing!

• Economic/budget crisis– Fewer resources – greater demand

for efficiency• Internet savvy citizens demand more

– Demand “commercial” like access to government

• Demands for transparency– What is my government doing?

• Demands for accountability– How is my government doing?

• New technology options– Cloud – Advanced Web – Social

Networking• Private Sector Techniques

– Six Sigma, Lean, TQM etc.

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Why can it be difficult?

•Resistance to change• Different way to make decisions• Agency resistance• Political Agendas

•Methodology paralysis• (So many choices, where do we start?)

•Change costs money (at least up front)•Who has time to do this!

“Why is performance information often least used in the worst fiscal times?” Scott Pattison – Executive Director, National Association of State Budget Officers – March 2012

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Better, Faster, Cheaper Techniques• Use Budget and Accounting as Structural Tools to Drive Change: Reward Results

Not Effort (Ex. Performance Budgeting)• Enhance Program Management Through Dynamic, Transparent

Dashboards (Ex. Data Warehouse, Business Intelligence)• Understand True Costs as Gateway to Competition/Outsourcing (Ex. Cost

Analysis/Activity Based Costing)• Change Incentives for Consumers: Drive Efficient Behaviors (Ex. Workforce

Analysis and Incentives)• Measure and Reward: Use Stat Programs That Include Costs (Ex. Performance

Analysis)• Leverage Technology and Digital Solutions (Ex. Cloud, BI, Social Media, Risk

Analysis)

Better, Faster Cheaper – A Framework for Operational Efficiency.Stephen Goldsmith – Harvard Kennedy School of Government

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Better, Faster, Cheaper Techniques• Use Data Analytics and Big Data to Unlock Value (Ex. Data Warehouse, Cross

source analysis – warehouse, social media)• Apply New Rules for the Labor-Management Game (Ex. Job analysis, business

process changes)• Structure Shared Services Correctly (Ex. Business Process Analysis, standardize

processes where possible)• Governing by Network: (leverage private sector, philanthropy, nonprofits, citizen

volunteers)

Better, Faster Cheaper – A Framework for Operational Efficiency.Stephen Goldsmith – Harvard Kennedy School of Government

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Best Practices

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Performance Management

• Systematic approach to improving results through evidence-based decision making, continuous organizational learning, and a focus on accountability for performance.

• Integrated into all aspects of an organization’s management and policy-making processes, transforming an organization’s practices so it is focused on achieving improved results for the public.

A Performance Management Framework for State and Local Government - The National Performance Management Advisory Commission - 2012

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• Performance Management ensures public funds are effectively used

• Budgeting and Planning ties in performance objectives with expenditure goals

• Cost/Risk analysis identifies elements for detailed improvement/fee structures/procurement options and audit/control optimization.

Elements of High Performance

Solutions

Cost/Risk Analysis

Public Transparency

Performance Management/Techniques

Budgeting and Planning

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How do you start?

•You must have both executive and legislative buy in!*

•Get educated – there is no shortage of information and examples

•Determine what your jurisdiction needs• How adaptive is your existing culture?• What shape are your systems in today?• What pace of change can you handle?• Can hot button issues hinder/help progress?

*I know. Every presentation says this. That’s because it its true.

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How do you start?

• Incremental or transformational change?• Look across multiple budget cycles/fiscal

years to fully implement• Fully plan your work and work your plan!

•Define technology infrastructure• Remember - this is not a technology

project!

•Sell the benefits• Develop wide support by emphasizing

how this will help legislators and citizens.

• Include transparency

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Getting Started – No Shortage of Sources•Research Performance Management methodologies

– NPMAC Framework – National Performance Management Advisory Commission

– Performance Management Sourcebook (GFOA)– Rutgers, Public Performance Measurement and Reporting

Network– Collins Center for Public Management - University of

Massachusetts Boston– The Performance Institute– Government Performance Project – Pew Center for the

States– Government Accounting Standards Board – Service Efforts

and Accomplishments Guide– Alliance for Innovation – Arizona State Univ/ICMA.– Many Federal, State and Local Websites

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Federal Performance Management Sources

• OMB Circular A-11, Part 2, Preparation and Submission of Strategic Plans, Annual Performance Plans, and Annual Program Performance Reports

• Government Performance and Results Act of 1993 (GPRA) • Government Performance and Results Modernization Act of

2010 ( On January 4, 2011, President Obama signed the GPRA Modernization Act of 2010) 

• OMB Testimony on GPRA Modernization Act  • Memorandum: Delivering on the Accountable Government

Initiative and Implementing the GPRA Modernization Act of 2010 (04/14/2011)

• Senate Committee on Governmental Affairs GPRA Report

 

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Additional Resources

• Report: Reaching New Heights: Providing Consistent and Sustainable High Performance at the State Level

• Resource Center: Public Sector Enterprise Performance Management

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Questions?

ModeratorR. Kinney PoynterExecutive Director

NASACT

SpeakerKeith Johnson

DirectorState and Local Government

Public Sector Industry Business UnitOracle

SpeakerMichelle Strauss

Assistant Director of Financial SystemsDepartment of FinanceDivision of Accounting

Delaware

SpeakerPN Narayanan

Chief Information OfficerPennsylvania Treasury

6262

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