SUMMARY MINUTES OF THE INFORMATION SYSTEMS ADVISORY COMMITTEE MEETING Friday, September 12, 2014

Transcription

1 CITIZENS PROPERTY INSURANCE CORPORATION SUMMARY MINUTES OF THE INFORMATION SYSTEMS ADVISORY COMMITTEE MEETING Friday, The Information Systems Advisory Committee (ISAC) of Citizens Property Insurance Corporation (Citizens) convened telephonically on Friday, at 10:30 a.m. (EST). The following members of the ISAC committee were present telephonically. James Holton (Chairman) Freddie Schinz (Board) Juan Cocuy (Board) Jim Harty (Technical Advisor) Brian Foley (Technical Advisor) Nancy Sampson (Technical Advisor) Kelly Booten (staff) Roll was called. Call Meeting to Order 1. Approval of Prior Meeting s Minutes (June 3, 2014) Chairman Holton asked for a motion to approve the minutes from the June 3, 2014 meeting. Freddie Schinz made a motion and Juan Cocuy seconded to approve the minutes as presented. The minutes were unanimously approved. 2. Core Program Update Kelly Booten began by directing attention to the conversion statistics for Claims. She shared that as of September 5 th, personal lines claims conversion completed six migration cycles. Remaining conversion activities are planned to be completed by the end of September with complete conversion of all legacy claims by the end of September. Kelly continued with the personal lines policy billing status update. At the last ISAC meeting she reported the replanning of the stabilization testing strategy in order to maintain the early November Go Live. As a result of that replanning and based upon the stability of the product, it was necessary to delay the start of Model Office Testing which then impacted the implementation date. New milestones were set with implementation now scheduled for the week ending December 6 and 7 for Go Live December 8. A tremendous amount of hard work that defect remediation, issue resolution and overtime has taken place in the last few months in order

2 to maintain the new schedule. Various testing phases are now wrapping up, and Model Office is scheduled to begin on Monday, September 15, and run through the end of October. Model Office participants include representatives from all business units and business partners, such as McNeil. Agent participation will begin in mid-october. Activities will include policy conversion testing, training development, workforce transition and report development. Kelly also updated on a project to track knowledge transfer to assure that the activities necessary to ensure a successful transition to normal operations that can be managed by Citizens employees. The knowledge transfer tasks are actively being tracked and are progressing. Kelly then turned to the budget highlights included in the presentation. She shared that the 2014 projected column of the budget has been updated to coincide with the schedule update utilizing approved contingency reserves. Additional Guidewire resources were added, contractors were extended and overtime was instituted during July through September. Also included for Committee members awareness is information regarding an RFQ being conducted to procure post-core resources as a risk mitigation measure should highly qualified technical resources be needed to supplement employee resources. All Core contracts will come to closure at the end of 2014 when the Core program finishes, so this would be a 2015 budget item. Brian Foley asked for clarification as to whether or not the RFQ would go out to current companies that are providing resources, and Kelly responded that the RFQ would go to contractors off of state term contracts that are Guidewire-capable partners, three or four of whom have already been utilized. Juan Cocuy then asked for clarification regarding the negative variances on salaries and contingent staffing vs. positive variance on professional consulting. Kelly explained that early on in the year, approximately 15 contractors were converted which bumped the salary allocation up. She continued that there has been a lot more business user involvement with the Personal Lines release so the number estimated was likely low. The Jacksonville consolidation has changed things a bit, also, reversing the trend toward the end of the second as well as the third quarters. Kelly next shared that there will be an Office of Internal Audit Monitoring Quarterly Report included in the Audit Committee packet related to the Core Program. The report is very positive and outlines monitoring that is conducted on program governance. It includes a summary of effective governance processes and states that the project has been successfully managed by the Core program team. Lastly, Kelly shared that the audit packet will also include the data warehouse audit in the listing of new audits. It does have some recommendations related to the data warehouse in the Core program, primarily around documentation and reconciliation. 3. Enterprise Resource Planning Strategy (ERP) Kelly Booten began the ERP presentation by sharing that in support of Citizens goal to assure a strong financial operating environment, a 2014 annual plan initiative was established to Citizens Property Insurance Corporation ISAC 2

3 define a long term Enterprise Resource Planning Strategy. The strategy is intended to address Citizens financial and human resource management administrative processing needs and was developed by conducting a market scan through RFI of suitable software solutions and assessing estimates of associated costs and benefits. Doug Sherwood, Director - Enterprise Program, continued the presentation by explaining why an ERP strategy is needed now. He explained that Citizens current environment is made up of dozens of fragmented systems, both internally and externally. As a result, there are significant risks resulting in the potential for erroneous decision-making as well as potential loss of data due to having so many different Access databases in use. There are also existing systems that are going to become architecturally obsolete over time resulting in additional costs to continually upgrade the current environment. At some point they will become outdated and unsupported by the vendors and will have to be updated on the vendors timeframe. Doug continued that those involved with ERP tend to think of these as gigantic systems that need to be installed, but Citizens is not an international company dealing with multiple currencies or multiple locations or subsidiaries, etc. There is a simplified version of those products that is referred to as Tier II that is believed will address the needs of Citizens. After looking at the potential costs of the solutions of licensing and implementing them compared to the benefits that are anticipated, it is estimated that a payback would be seen within four to six years. The current information provided is based on general, generic assumptions and show cumulative benefits. Once a particular product is selected, the information will be updated to reflect that specific arrangement. Next, there was discussion among committee members about net benefit that resulted in an explanation by Doug that the benefits are essentially in three categories - operational efficiencies that would eliminate much of the re-keying of information, self-service components that would automate many processes that are currently very manually intensive leading to errors, and the addition of a virtual close capability that would lead to a reduction in the amount of cash on hand for operating expenses to 45 days and the ability to move money into investments more quickly would be possible. Doug continued that the overall timeline would be solicitation in early 2015, vendor selection by the middle of 2015 and implementation commencement in the third quarter Implementation timeframe would depend on many different components and could go over a couple years. Intangible benefits would include the ability to have a soft close and to have the pulse on the current financial situation, which would contribute to better decision-making. There would also be a better understanding of all of the relationships a particular vendor has across the organization and support for improved contract management. The system would also have automated alerts built in that would track spending under authorized action items. Doug concluded his presentation with the recommendation that Citizens pursue an integrated system with these various products through competitive solicitation and with the assistance of a third party to develop it. Going forward into 2015, budgetary expenditures in an Citizens Property Insurance Corporation ISAC 3

4 estimated $3-5million would need to be established for the upfront licensing and professional services. 4. IT Update Curt Overpeck, Chief Information Officer, shared that at the June 3 rd meeting he reported that the May disaster recovery test was not entirely satisfactory due to disk sub systems not performing as expected. In August the test was repeated successfully. Curt then moved to an update about the Jacksonville consolidation. In late March, the strategic direction to consolidate Systems and Operations in Jacksonville was announced, which impacted 149 employees in Tallahassee, primarily, but also in Tampa. The primary goals of the consolidation were overall IT effectiveness, routine co-location and effectiveness related to proximity to the primary business units being served by IT. It was recognized that a primary risk of the consolidation would be staff attrition, and early estimates were that two-thirds of employees would choose to relocate to Jacksonville, onthird, 50 employees would not move. To date, since April 1, there have been a total of 27 employee resignations in Tallahassee and Tampa. Twenty of those departures were specifically identified as being related to the consolidation. We feel we are on forecast for the number of impacted employees that will relocate. On a positive note, there have been 29 new hires over this same period (since April 1). With very good HR support in developing candidate pools, we have hired high-qualified new employees in Jacksonville. As a risk mitigation strategy, with executive support, 15 high risk positions have been identified for recruitment for overlap in Jacksonville. 26 positions are currently open across all of Systems and Operations with five of those positions being additional overlap positions. The impact of the resignations has been mitigated with reassignment of staff based on priorities. It is estimated that there will be approximately 20 more resignations before the consolidation is accomplished in July Robert Sellers, Vice President of Infrastructure and Operations, then moved on to the Data Center Update. He explained that the long term data center facilities program is an initiative of a prior-approved data center strategic plan to consolidate Citizens data center operations into a purposed and protected environment. Success of this program will ensure the long term survivability and sustainability of Citizens data center environments. To achieve the needed improvements, the plan has prioritized key objectives and set road maps for transition of data center operations. Another goal is decoupling data centers from the Citizens leased general office space. Over the past two years the migration of the production and development systems to a co-location facility has been ongoing and is now in the final phases with conclusion planned in Robert continued with an update in answer to a question posed by Governor Cocuy at the previous ISAC meeting regarding estimated financial impact of the data center strategy. The Citizens Property Insurance Corporation ISAC 4

5 15-year projects expenditures of approximately $34 million. Remaining in existing facilities (as opposed to executing the strategic plan) would have resulted in an estimated spend of $48 million over the same 15-year period. The strategy, then, yields over $14 million in savings over 15 years, nearly a million dollars a year. Importantly too, if we had not moved Jacksonvillebased data centers to the external location, we would now be in a struggle to accommodate the Jacksonville office space relocation that is now planned, and underway, with competitive procurement. 5. Action/Consent Items a. ERP Solicitation Consulting Kelly Booten explained that this contract would be funded by 2014 budgeted spend that had been set aside in the procurement area for targeted solutions and repurposing them for use in this solicitation instead of going forward with a separate procurement system on its own. The action item is seeking approval for budgeted spend of $430,000 to engage Gartner Incorporated to assist Citizens with development of requirements, evaluation criteria and demonstration scripts to be utilized during the competitive solicitation process. At Citizens discretion, the engagement may be concluded at the end of each phase with no further obligation. Doug Sherwood continued by explaining that there were several responses to the RFQ off state term contract that were evaluated, and Gartner s is recommended because their approach is the most thorough. They have a very robust requirements repository that is updated after every engagement; and they are independent, unlike other firms that have relationships with ERP vendors to become implementation partners. Gartner does not do implementations, and so a separate RFQ will be needed at a future time for a consulting partner for implementation. Brian Foley made a motion and Freddie Schinz seconded to approve the Action Item for ERP Solicitation Consulting. The motion carried unanimously. b. IT Technology Infrastructure Robert Sellers explained that this consent item is an amendment to a consent item that was brought to the Board of Governors in December 2014 as part of the annual budgeting cycle. The consent item is seeking Board approval to amend and increase the 2014 amount of technology infrastructure with covers hardware, software and professional services and spend authorization. He added that it is important to understand that this is spend authorization, not an additional increase in request for budget, by $3,675,000, which is included within the 2014 IT budget previously approved in December for $8,405,000. True up activities have indicated that in order to complete the remaining projects through the end of 2014, this spend needs to be authorized underneath a number of State and Federal contracts that will be listed in the consent item. Freddie Schinz made a motion and Brian Foley seconded to approve the Consent Item for IT Technology Infrastructure. The motion carried unanimously. Citizens Property Insurance Corporation ISAC 5

6 6. New Business Barry Gilway gave a brief explanation on the difference between an action item and a consent item. Chairman Gardner challenged staff to come up with a process for the action and consent items that would be smoother and eliminate duplication of discussions at the board meetings for budget, previously budgeted and approved, while making sure that there is ample opportunity at both committee and board levels for members to comment and weigh in on various issues. Action items are designated as those items requiring initial board approval for spend or a procurement. A consent item is an item that already has initial board approval for actions like contract extensions, addendums, etc. The intent would be to have a full discussion at the committee level so that professional advisors can weigh in appropriately, but at the board level, they would be accumulated under one consent item and voted on by the board in total as opposed to independent discussions. 7. Addendums Curt Overpeck reported that there are currently 10 open audit items and several audits currently in process, some of which should be completed prior to the Board of Governors meeting. Specifically, an audit is being conducted by the Auditor General of the State of Florida. There is also internal audit activity in some cases outside of IT that could result in findings as well as a regulatory review by the Office of Insurance Regulation that is in process but will not be complete by the next Board meeting. [Meeting adjourned] Citizens Property Insurance Corporation ISAC 6