How To Run People First

Transcription

1 THE FLORIDA JOURNEY By David R. DiSalvo The Florida Journey is a story one of the largest human resource (HR) outsourcing initiatives in the public sector. The initiative (also called People First ) has had its share of ups and downs, and industry analysts, state and local governments, and many others have watched and inquired about its progress. Most recently, on December 8, 2009, the State of Florida Department of Management Services (DMS) signed a five-year contract renewal with Convergys Customer Management Group, Inc. (Convergys) to continue providing human resource services for the state (Convergys was recently acquired by NorthgateArinso, Inc., on June 1, 2010). This article provides an overview of the People First initiative and addresses those questions on how HR outsourcing has fared in the State of Florida. What is People First? People First is the state s self-service, secure, Web-based human resource information system and enterprise-wide suite of human resource services as performed by service center staff. The main website used to access the People First system is The system streamlines and automates many of the state s HR functions and promotes paperless work processes (e.g., timesheet submission, benefits transactions, and direct deposit). The system is comprised of the following modules: payroll preparation, attendance and leave, recruitment, benefits administration, human resources management, and organizational management. The recruitment module enables state agencies to post job advertisements online and allows applicants to search and apply for positions and maintain their applications online. Employees, retirees, and benefits participants have access to their own personnel information at any time or can call an HR advisor (service provider employee) at the People First Service Center (service center) to receive additional assistance. Prior to the implementation of People First, the state s human resource information system was built on a 20-year old legacy system called COPES (Cooperative Personnel Employment System). It was used by state human resource (HR) professionals only and did not allow for employee/manager self-service or 24/7 web access. People First is used by not only HR professionals, but also by state employees, managers, and former employees (retirees). On July 19, 2010, the system was successfully upgraded from an older SAP HR software version 4.6c on the R/3 platform to SAP version ECC 6.0 HR and Net Weaver software. The system utilizes three tiered architecture (web, application and database), and the 3.2 terabytes of data is maintained in an Oracle database, which extracts data to an Oracle data warehouse 1 P a g e

2 on a nightly basis. Also, the system has integrated a recruiting solution -- the Authoria Talent Management product, version 10.12, from PeopleClick Authoria. This outsourcing arrangement requires NorthgateArinso (service provider) to develop and maintain the People First system and to properly staff two service centers to effectively meet customer needs. The two service centers are located in Tallahassee and Jacksonville, Florida. A computer telephony integration tool is used to validate callers and the interactive voice response system routes calls evenly through the two service centers. All calls are recorded and the calls are stored in a call recording database. The HR advisors use a custom-built system to notate calls, and to track, route and monitor pending cases. Another custom-built system is used to provide answers and information to HR advisors as they assist callers. HR advisors provide navigational and transactional assistance, issue resolution, and perform other specific duties that state agency human resource offices and the DMS formerly handled, such as benefits enrollment, appeals, refunds, reinstatements, job postings, and job application assistance. Employees and managers are now able to complete many actions themselves because of the self-service functionality features of the system: Employee Complete timesheets View leave balances Establish and maintain direct deposit authorization Maintain W-4 elections Enroll and elect benefits View and update personal information Manager Process timesheets for their employees Initiate personnel actions (hiring, promoting, separating) Advertise job vacancies Execute management reports View their employees personnel information In addition, the service provider subcontracts with other companies to supplement the SAP platform and Oracle database that make up the foundation of the People First system. The recruitment solution is hosted by Peopleclick Authoria Corporation and the flexible spending account processing is managed by Fringe Benefits Management Corporation, a Division of WageWorks, Inc. The service provider integrated these solutions into the People First system and uses single sign-on technology to ensure transparency to the user. The service provider also contracts with Horizon Health (an Aetna company) for employee assistance program services. The concept of best-of-breed is alive and well, but adds to the complexity of managing an outsourcing model. 2 P a g e

3 Below is a description of the various components that make up People First: State of Florida Human Resource System and Services NorthgateArinso Service Centers Client Services Technology Staff Operations Interfaces State Payroll State Group Insurance Retirement Insurance Carriers Universities Employee and Manager Self-Service Customers Employees Managers HR Staff Retirees Job Seekers Stakeholders Governor s Office Legislature Media Human Resource Application People First Secure Web-Based DMS Strategic Planning Contract Manager Service Center Oversight System and Data Warehouse Design Customer Support and Issue Resolution Training and Communication Subcontractors PeopleClick Authoria WageWorks TSYS Aetna/Horizon Health Wachovia/Wells Fargo Xerox Who We Serve People First supports more than 240,000 users. A user is defined as an active or retired state employee that has personal data and/or work information stored in the People First system and has received a unique user I.D. to log into the system to view, retrieve, or edit personnel information. The group includes all 34 state agencies (133,000 employees), all 11 state universities (44,000 employees), all state retirees who have elected to continue with pre-tax health insurance benefits (54,000 retirees), and other users. It is important to point out that these users use different solutions offered by the People First system, which has required additional customization and special interfaces to be built to capture and exchange data between various systems. For example, 32 state agency employees are considered full service users, which means they have access to and use the system for all traditional employee and manager self-service functions (i.e., payroll, time, leave, benefits, recruitment, etc.). However, two of the 34 state agencies are partial users and use the system for all functions except for timekeeping; instead, they use their own timekeeping system. The university and retiree groups are considered benefits-only users and only use the system to elect and manage their benefits. 3 P a g e

4 Other People First system customers include job applicants that search and apply for state positions and maintain their applications online. Job applicants do not have to be state employees nor are they required to log into the People First system to view or apply for a job. Since May 2003, more than 111,000 State of Florida positions have been posted in People First, and approximately 7.8 million employment applications have been submitted for those positions. How It All Started In early 2000, the State of Florida embarked on one of the largest public sector HR outsourcing initiatives in the country. The Governor at the time directed all state agency heads to explore private and public sectors to identify best practices and determine their applicability to state government. The state explored the potential outsourcing of personnel functions, which had become a trend in many businesses. As with many large projects, the state went through a series of analyses and feasibility studies to determine whether HR outsourcing was the right choice for the state. This included a Request for Information document, a business case study, and a business plan. The business case concluded that Florida would reap significant savings through eliminating state positions, eliminating the cost of re-building the legacy HR system, and achieving additional efficiencies. The DMS released an Invitation to Negotiate in 2001, and through a competitive procurement process, selected Convergys the following year as its service provider and SAP as the software of choice. The contract was signed on August 21, 2002, for seven years at a cost of $278 million with up to a seven-year renewal option. The contract required the service provider to deliver three key services (recruitment, payroll, and human resources administration) within the next nine months. The fourth service deliverable, benefits administration, was to come online in January This timeframe was overly-optimistic given the system s complexity and the high degree of SAP customization required. The recruitment module was released on time, but the other three modules were delayed approximately one year. The as is assessment, blueprinting, system development and implementation period (August 2002 to January 2005) was completed in 28 months. At the same time, 862 state agency HR positions were eliminated and the associated salary dollars were redirected to fund the contract. State agencies now had 70 percent less positions on average in their HR offices, but the new People First system had not been made fully operational. The employees remaining in the HR offices not only had to perform their own work on the legacy HR system, but also had to perform the work of those who had departed. The State of Florida Office of Efficient Government Report No. R08-002, dated January 17, 2008, reported; The state experienced implementation related problems due to poorly defined service requirements, lack of proper agency training, attempting to implement a system that was not fully functional and a compressed implementation schedule. 4 P a g e

5 The high degree of SAP customization required by the state added to the challenges. The People First system has been built to support six different personnel systems (Justice Administrative Commission, Legislature, Lottery, State Courts System, State Personnel System, and Universities) and each personnel system has its own set of business rules that have been coded in the system. The system supports four pay cycles, seven collective bargaining units, and nine variations of the Fair Labor Standards Act (FLSA) work schedules (timesheets). To date, the service provider has performed over 12,000 customizations to the system platform (back-end solution) and web application servers (front-end solution), and over 200 special interfaces have been built to exchange data between the People First system and external systems (e.g., State of Florida Department of Financial Services, university personnel systems, insurance carriers). In fact, the State of Florida Office of Program Policy Analysis and Government Accountability (OPPAGA) People First Assessment Final Report, dated January 20, 2009, recommended standardization of the different rules and regulations that govern personnel practices at the State today. As an example, People First must administer varying leave and attendance policies across six different personnel systems that exist today within the State, adding considerable complexity to personnel service delivery. Post-Implementation Period ( ) From 2004 to 2006, People First experienced its most difficult times. In the fall of 2004, state agencies came online to People First. The state took a staggered implementation approach between monthly and biweekly pay cycle agencies in an attempt to minimize disruption. Unfortunately, the system was not fully functional and employees experienced various issues, such as salary under/over payments and health insurance cancellations. The DMS and service provider were now in crisis mode and were forced to address daily operational issues, instead of planning for the next stage of system enhancements. Employees were complaining and the media was reporting one story after another. In July 2004, the DMS and the service provider agreed to a contract amendment in an effort to resolve differences between parties. The amendment gave the DMS a credit against outstanding invoices and waived certain implementation costs, but also extended the contract from seven to nine years. The contract expiration date was extended to August 2011 with a new estimated total cost of $350 million. In 2005, the DMS created a People First Team (funded out of existing DMS positions) to act as the contract manager (and in many ways a project manager) over the People First contract. Existing DMS staff resources were few and far between, and in fact, there had never before been an official contract management unit created to oversee the nine year, $350 million contract. The DMS People First Team still exists today and is responsible for contract management, procurement management, strategic planning, service center oversight, system and data warehouse design (developing the state s business requirements), and customer support, communication, and training. The People First initiative is considered a true 5 P a g e

6 outsourcing model where positions were eliminated and the execution of state business processes were delegated to a third party outside of state government; while, the State of Florida retains the responsibility and accountability for the services. Creating a DMS People First Team was essential in laying the groundwork in turning the ship around. Perhaps the most controversial issue of the People First Era raised its head in December The service provider notified the DMS that a subcontractor had outsourced the indexing of imaged state employee personnel records that contained confidential information to a company operating in India. This activity was known as off-shoring, which was not an acceptable practice in the State of Florida. The DMS hired an independent consultant to focus an audit on this allegation. In January 2007, the audit determined deficiencies existed, but found no evidence that any State of Florida confidential or personal employee data was compromised or breached as a result of this off-shoring incident. Although that was welcomed news, the trust necessary to forge a successful partnership was at an all-time low. Stabilization Period ( ) It was now time to stabilize People First and move forward to the path of recovery. The DMS People First Team was fully in place and a formal system release life cycle was now being used between both parties. This process was a key component in clearly identifying the state s business needs and ensuring that the service provider developed system improvements to meet those needs. The system release life cycle process begins with a thorough needs assessment and ends with deployment of a system enhancement. Prior to the stabilization period, the DMS had not taken a leadership role of standardizing and re-engineering business practices, or defining clear business requirements. This resulted in inefficiencies and difficulties in maintaining a very complex system. Defining clear business requirements required a thorough customer needs assessment. The DMS People First Team (Team) embarked on an aggressive plan to meet with all state agency and university customers and get their input on the status of the system and service centers, and to identify what changes were necessary to truly meet their needs. It was a chance for customers and stakeholders to identify problem areas and successes in a system that they had now been using for over two years. At the conclusion of this needs assessment, the Team logged customer comments and balanced individual agency needs against the larger enterprise view. The system was already highly customized and it was important going forward to standardize business rules and practices as much as possible. The needs assessment also included agency focus groups on specific issues, surveys, and other tools to capture and track user needs. From 2004 to 2010 (after state agencies came online), over 700 system enhancements were implemented. 6 P a g e

7 Below is a description of the system release life cycle: Needs Assessment (Liaison, Issue Resolution, Focus Groups, Surveys) Deploy Enhancements System Release Life Cycle Business Requirements Training and Communication User Acceptance Testing The stabilization period is marked by three significant events: (1) executing the 10 th amendment to the contract, (2) renegotiating the contract and executing the last five years of the renewal option; and (3) completing the July 2010 system upgrade. The first key milestone, the 10 th amendment to the contract (Amendment 10), was a 20-month negotiation between both parties and resulted in significant changes and improvements to the contract. Amendment 10 was executed in May 2008 and included the following achievements at no additional cost to the state: License to Intellectual Property 135 System Enhancements & Upgrades Security Improvements Transition Planning Past Claims Settled The long-term impact of Amendment 10 will be measured throughout the life of the contract, but in the short-term, the new system enhancements will be immediately felt by system users. In July 2010, the SAP, Oracle and recruiting software was upgraded to the newest software version and the 135 system enhancements were deployed. Upon contract expiration, the state now has options that it never had before. These new options (e.g., in-sourcing or a new vendor hosting People First) were not real possibilities under the original contract, since the state did not have the ability to license the intellectual property. The second key milestone during the stabilization period was renegotiating the contract and executing the last five years of the renewal option. During the 2008 Legislative Session, the Florida Legislature appropriated funds to the State of Florida Office of Program Policy Analysis and Government Accountability (OPPAGA) to conduct an independent study of People First. The purpose was to examine the system s cost effectiveness, efficiency, staffing needs, 7 P a g e

8 functionality, and alternative solutions for service delivery. The state was three years away from the expiration of the contract and needed to make a decision on the direction of People First. In January 2009, OPPAGA recommended that the DMS renegotiate the contract and keep all currently outsourced components outsourced. Should the renegotiation efforts with the service provider not move quickly or in the desired direction, OPPAGA recommended an alternative recommendation to keep the People First system, but to contract with a new provider to host the system. In March 2009, the DMS and the service provider began formal negotiations to renew the contract. Both parties agreed to a shared vision for contract discussions that included reducing contract costs, enhancing the comprehensive offering of HR services, and improving accountability. On December 8, 2009, the DMS and the service provider agreed to execute the remaining five-year renewal option, which extended the contract expiration date to August The negotiation objectives of the shared vision were met and the main achievements were: Reduces contract cost by $45 million over the remaining life of the contract. The contract savings began immediately (January 2010) and exceeds OPPAGA s maximum expected cost savings of $40.25 million. Avoids annual escalation costs. Improves services at the People First Service Center, improves People First system performance and strengthens the service provider s performance metrics. Includes 22 major system enhancements and provides system development hours allotted for future system improvements. Avoids significant risk of service disruption to more than 240,000 users. Avoids significant implementation and transition costs. The third major event during this period was the July 2010 system upgrade. For over two years, the DMS People First Team partnered with the service provider to develop state business requirements, make system code changes, perform user acceptance testing, deliver communication and training materials, and deploy over 135 new system enhancements. The enhancements resulted from the May 2008 contract amendment 10 negotiations. Highlights included new branding, images and navigation links, improved security logging, new timesheet, and upgraded SAP, Oracle, and Talent Management software. The entire 26-month period (May 2008 to July 2010) rivaled the initial go live period in terms of complexity. First, the People First system was upgraded from older technology to the latest SAP software. Second, hundreds of batch jobs moved from the development environment to the production environment in a compressed time frame, as opposed to spreading the enhancements over a longer period of time. Third, the system was off-line for an extended period (one work week) for the upgrade to occur. Finally, the release affected all 240,000 People First users, with a new login screen, home page, and timesheet. 8 P a g e

9 With any major system upgrade, adequate planning can significantly improve the opportunity to hit a home run, and in this case, successful implementation depended largely on the commitment and partnership between DMS, the service provider, and the state agencies. The system upgrade process went extremely well, allowing the People First system to come online one day earlier than planned. It s not every day that one can describe a system upgrade as going better than expected, but that is exactly how this scenario played out. During the stabilization period, communication and training played a significant role in overcoming the challenges of the post-upgrade period. The DMS People First Team provided clear, consistent, and repeated communication to users and stakeholders. The Team streamlined the communication process to better meet customer needs, and sent employee e- newsletters, alerts, general correspondences items, system enhancement documents, and benefits-related communications to users. From 2005 to 2010, the Team provided over 500 different communication documents and materials to users. Regular updates were also sent to the DMS Secretary and other stakeholders. As the DMS People First Team focuses on the implementation of new system enhancements and the next contract cycle, excellence in communication will continue to be a priority. The DMS People First Team also provided People First training and data warehouse workshops to human resource professionals and data warehouse users across the state. Customized data warehouse materials were developed so that the data warehouse workshops provided beginning and advanced users with practical, hands-on training. This training enabled users to write reports from the data warehouse, a task critical to the functioning of state human resource offices. Additionally, the Team provided classroom system training and train-thetrainer workshops for major system releases. One of the challenges has been, and will continue to be, the DMS People First Team s ability to provide training on specific system enhancements to all 240,000 users. The Team generally relies on state agency HR professionals (via train-the-trainer) to provide the necessary training to its own employees; however, the Team in partnership with the service provider, has developed system training online videos and instructional guides, with more planned as the system is further enhanced. Developing and deploying human resource system training is critical to a high performing workforce. Trained professionals gain system proficiency, maximizing time and resources, and users who are comfortable with the system have a higher level of customer satisfaction. Measuring Customer Satisfaction The Department of Management Service s number one priority for the past few years has been to increase customer satisfaction. The DMS People First Team makes every effort to deliver innovative, resource-saving and quality solutions to customers by designing and supporting a user friendly, reliable, online personnel system and related services. In an effort to constantly 9 P a g e

10 gauge customers satisfaction with People First, three customer satisfaction survey tools are utilized in assessing users experience and satisfaction with the system and related services. The first, and most important survey tool, is the DMS Annual Customer Satisfaction Survey. The survey is administrated in March and provides valuable information on the customers overall experiences with People First. The results are analyzed annually and subsequently discussed with the service provider to formulate an action plan to address issues and implement improvements. Results from the March 2011 survey demonstrates that 76 percent of respondents are satisfied with the overall performance of People First. This satisfaction rate is an increase from the 72 percent satisfaction rate from the 2010 survey and 59 percent satisfaction rate from the 2007 survey. However, the long-term goal is to move that number to 90 percent or higher. The second survey is the DMS Open Enrollment Survey. Open enrollment is the time period each year (four weeks in the Fall) when People First users can make health and insurance benefits changes to their benefit elections via the People First system or by calling the service center. After the open enrollment has ended, the DMS Division of State Group Insurance surveys eligible benefits participants. The purpose of the survey is to gauge participants experiences with open enrollment to improve the process and to make it as user-friendly as possible. In 2010, 60,256 participants made Open Enrollment benefits changes. The online survey results indicated that 81 percent of the respondents were overall satisfied with open enrollment (a 33 percent increase over the 2007 benchmarking period). The third survey tool is conducted by the service provider and is administered through the People First Interactive Voice Response system. People First users can elect to complete a customer satisfaction survey at the end of their service center call and express their satisfaction level with the People First website or their experience with the HR advisors in real time. The survey is administered by the service provider and the results are reviewed by the DMS People First Team regularly. For fiscal year , 90 percent of survey respondents rated their experience as satisfied (i.e., extremely satisfied or satisfied ) with regard to the overall quality of user s experience survey question as compared to 89 percent for fiscal year and 86 percent for fiscal year For the website ease of use survey question, similar improvements were noted during the same periods. The customer satisfaction survey tools provide an excellent way to monitor the positive progress that is being made, but the DMS also uses another barometer to gauge progress and improvements in a maturing system: the number of customer calls to the service center. A customer will call to receive assistance in such areas as resetting a password, navigating the People First system, and enrolling in benefits. The number of calls to the service center in calendar year 2010 was 48% less than 2005 (see below). The decrease is a result of the many system enhancements and service center improvements over the past few years. It is anticipated that the number of calls to the service center will continue to significantly decrease once the July 2010 system upgrades take effect. 10 P a g e

11 The Future ( ) The future is bright and the partnership with the service provider is healthy, but now is not the time to become complacent. There is still a lot of work to be done. The DMS People First Team keeps an updated People First Timeline to plan at least five years out. Since the contract renewal extended the contract expiration date, the Team has mapped out key milestones through In January 2011, the state moved from a paper-driven medical reimbursement process to a flexible spending account debit card. In 2012, it will release a new performance and succession module that will require its own project plan and significant change management activities to ensure successful implementation. Also in 2012, DMS and the service provider will implement the system release life cycle for the remaining 20 system enhancements from the contract renewal negotiations. Soon thereafter, and with the end of the contract drawing near (August 2016), the DMS will begin planning and procurement activities. These activities will likely include developing a business case, obtaining funding, preparing and managing the procurement process, and possibly managing a transition. The state has many options to choose from: maintaining a 100 percent outsourced model, insourcing the program, or somewhere in between. The State is also getting close to having a state-of-the-art human resource information system that should rival any other similar system in the industry. The customer satisfaction ratings are moving in the right direction, which should continue for the foreseeable future. All indications point to an outsourcing model that is working in the State of Florida. It has taken longer to get to this point than what was originally envisioned and it was not without its bumps in the road. But it comes with the territory of being one of the first and largest true HR outsourcing initiatives in the public sector. 11 P a g e

12 NOTES: Biography: David is the People First Director for the State of Florida Department of Management Services and manages the state s human resource outsourcing contract with NorthgateArinso. Prior to joining DMS in September 2006, David was the human resources director for a Florida state agency. He has served in various positions in state government for the past 20 years and lives in Tallahassee, Florida. David has a Masters in Business Administration, and is a certified Project Management Professional (PMP) and a Florida Certified Contract Manager (FCCM). Contact Information People First Team David DiSalvo, Director Department of Management Services 4050 Esplanade Way, Suite 235 Tallahassee, FL Phone: (850) Facsimile: (850) People First Service Center (PFSC) Phone: P a g e