Status Report on ERP-Finance ERP-Human Resources
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1 Status Report on ERP-Finance ERP-Human Resources Presented to the Audit, Business, Technology Committee of the Board of Education January 8, 2004
2 Agenda! What is an ERP?! Why is the District pursuing an ERP?! Where are we in the process?! What have we accomplished?! What next?! Questions??
3 What is an ERP?
4 Enterprise Resource Planning-ERP E = R = P = Enterprise (organization-wide) Resource (people, money and things) Planning (and control) Software to plan and control resources across the entire business
5 Why is the District pursuing an ERP?
6 What is the need?! Principals and administrators need to be able to procure items and handle staffing issues locally with appropriate tools to do their work and manage their resources! Managers need daily operational data regarding finances and transactions in their business areas and schools! The public needs accurate, understandable information about our resources including people and dollars and the performance associated with them! Policymakers need accurate, timely, current and historical data to make informed decisions
7 We can t deliver EFFFICIENCY with our current systems.! The District s business/finance/hr technology is old, fragmented, and either home grown or highly customized (e.g., Payroll is 35+ years old!)! Workflow is not supported (e.g., hiring or procurement)! These old systems are manpower intensive and do not use labor savings technologies such as the Web.! Modern business software packages: " Are based on best business practices " Provide easy flow of business transactions from one desk to another! The District cannot improve efficiency in business operations without changing out both systems and processes
8 Others have reached the same conclusion...! OIG reports highlight the issues: " Americans now expect to solve a problem with one telephone call, obtain customer service 24 hours a day, withdraw cash from automated teller machines around the country, and get products delivered almost anywhere overnight. Yet LAUSD uses pencils, pens, and white-out to record payroll information and a 30-year old computer system to process that information.
9 ! OIG on payroll... " As a result, the District is continuing to waste millions of dollars a year on its outdated, cumbersome and inefficient payroll process. These inefficiencies deplete valuable labor and financial resources from the District that could otherwise to be used to meet its strategic goals.! OIG on accounts payable... " With the accounts payable workload expected to increase significantly in the coming months due to the District s $5 billion school construction and modernization program, it is imperative that a state-ofthe-art accounts payable process be designed and implemented.
10 The Current HR System as an Example
11 What Do Public Sector ERPs Offer? Fast & accurate Financial statements Auditability Real time financial validation & update Lower administration and acquisition costs Financial Mgmt. Procurement Budgeting and Control ERP Human Resources & Payroll Better resource allocation What-if analysis Performance measures Grant Mgmt. Job Cost Multi-year grant management Accurate & timely reporting Multiple funding sources Flexibility in reporting Integrated database System wide workflow Employee Self-service Position control
12 Critical Success Factors for Software Systems Replacement! Change Management impacts how the District does business. Resistance to change! Must have support from the Board and upper management that this is a must do! State of the Art enterprise software systems reflect best business practices. Need to modify District business practices to best practices! Must do this with a manageable approach reasonable risk! Must involve the user community in the change management efforts! Must employ rigorous project management
13 Where are we in the process?
14 ERP Project Plan Project Initiation and Planning Process Mapping and Requirement Definition RFP Issuance and Evaluation of Responses Contract Negotiation and Board approval Phased Implementation 3-4 years Process Reengineering Training Short-term Improvement Strategies December 2003
15 Three simultaneous strands Select and Implement the Systems Change Management Short-term Improvement Strategies
16 Three simultaneous strands Select and Implement the Systems Change Management # Understand current environment # Develop a vision for the future # Develop requirements! Issue RFP for software! Issue RFP for Implementation Partner! Development Phased Implementation Schedule! Procure Hardware Configure Modules! Test! Rollout Short-term Improvement Strategies
17 Three simultaneous strands Select and Implement the Systems Change Management Short-term Improvement Strategies # Understand current environment # Understand what keeps us from operating more effectively # Select and implement immediate changes in the processes, policies, and organizations needed to be more effective or to get ready for the ERP! Actively engage in challenging of assumptions in selecting and configuring the software! Identify the skills needed to engage in this work (payroll, procurement, budgeting) at the end of the implementation! Communicate, communicate, communicate with stakeholders! Develop and deploy training to effectively prepare employees to take full advantage of the new systems and technology
18 Three simultaneous strands Select and Implement the Systems Change Management Short-term Improvement Strategies # Understand current environment # Understand our biggest pain points # Understand where the ERP is going. # Select a very limited number of short-term (6-8 months) improvements which: " address pain points " increase efficiency " move toward ease of implementation in the ERP
19 A note about what we have learned
20 We ve studied ourselves to death, why are we just figuring this out?! We ve approached the data gathering with cross-functional sessions! We ve insisted on a broad representation from both those who DO the work and those who MANAGE it! We ve created a climate of openness to share our most dysfunctional processes in a collegial environment focused on identifying and removing obstacles! Management supports the discovery process and risk-taking thinking and behavior! We always ask why
21 Understanding the current environment has been tremendously valuable The Four Week Payroll Cycle! Process: Nine payrolls are run every four weeks! Volumes: There are more than 20,000 checks written just in the supplemental payrolls each cycle! Systems: There is no test environment so all testing is done in the live payroll system! Policies: No other school district does annualized pay the way we do
22 Some examples of how we are currently using this information! Process Reengineering " Accounts Payable Improvement Task Force! Reorganization! Changes in Procurement Policies and Tools! Technology! Data-driven action plans! Communication and Training " The ultimate solution is ERP-style integrated tools for shopping cart procurement, on-line receiving, electronic (or imaged) invoices, real-time reporting, trend analysis, etc. # of Invoices # of Invoices 16,000 16,000 14,000 14,000 12,000 12,000 10,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2, /29 7/298/5 8/5 8/12 8/12 Accounts Accounts Payable Payable Invoice Invoice Work-in-Progress Work-in-Progress 8/19 8/19 8/26 8/269/2 9/29/9 9/9 9/16 9/16 9/23 9/23 9/30 9/30 10/7 10/7 10/14 10/14 10/21 10/21 10/28 10/28 11/4 11/4 11/13 11/13 11/20 11/20 Time Time Backlog # invoices Backlog $ Backlog # invoices Backlog $ 12/4 12/4 12/10 12/10 $60 $60 $50 $50 $40 $40 $30 $30 $20 $20 $10 $10 $0 $0 Millions of $ M illions of $
23 On Short-Term Improvements...! There is no shortage of candidates! Focus of the analysis is on " Efficiencies that can contribute to alleviating the budget shortfall " Steps toward ERP implementation (cleaning data, consolidating standalone systems) " Reducing paperwork burden and manual processes for schools
24 Examples of Short-Term Improvement Potential Projects! Convert Health Benefit System to current District standard HR package (in progress)! Payroll Improvement Task Force: Better timereporting tools and processes! Accounts Payable Task Force: Workflow tools for invoices (imaging)! Implement Absence Management processes and tools! Data analysis tools in all business transactions in all areas including payroll, procurement, employee assignments, etc. (measurement is key to both tracking progress and identifying opportunities/problems)
25 What Next?
26 Immediate Next Steps! Write RFP; select software! Write RFP; select implementation partners! Continue process improvement work! Finalize Short-Term Improvement action plans! Build the Change Management Team
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