Financial Systems Integration

Transcription

1 Finance & Administration Committee Action Item III-A May 13, 2010 Financial Systems Integration

2 Washington Metropolitan Area Transit Authority Board Action/Information Summary Action Information MEAD Number: Resolution: Yes No 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 rearchitecture of certain modules for optimal system performance. An assessment of the Human Resource Components is currently underway and scheduled for completion in September 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:

3 Action for Multi-Year Funded Contract Capital Improvement Program Financial Systems Integration ARRA- FY 2010 Metro Matters - Financial Systems Information Technology Budget: Integration (CL_FNSY) 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 Additional funding for this project is included in the proposed FY2011 capital program. The budget Remarks: and funding beyond FY2010 are subject to approval by the Board Positions: The goal is that although there will be some realignment there should not be an increase Operating Budget Annual Expense: This process should streamline Impact: processes including procurement, payment and receivable processes. 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.

4 Financial i Systems Integration ti Project (FSI) Finance and Administration Committee May 13, 2010

5 Purpose Approval to: Initiate and award contracts to implement the Financial Systems Integration project for better integration and optimization of current applications.

6 Enterprise Systems - Background 2010 Need: Upgrade and better integration for 2010 Need: Upgrade and better integration for optimal system performance

7 Approach to Integrating Financial Systems Assess Current State Completed Finance, Starting HR Focus On Business Process, Technology, Operations Plan/Organize Build Internal Metro Team, Select Integration Partner, Engage All Parties Execute Change Upgrade And Integrate t Systems, Update/Strengthen th Policies, Train Workforce On New Business Processes

8 2010 PeopleSoft Suite Current Modules Financials Human Capital Financial Management Payroll Accounts General Accounts Receivable Ledger Payable Time & Labor Payroll Compensation & Benefits Cash Management Fixed Assets Commitment Control Supply Change Management Contracts Procurement Project Costing Billing Strategic Sourcing Recruitment Performance Management Human Resources Training Absence Management Labor Relations Workforce Administration Enterprise Performance Budget Analytics Data Warehouse Customer Relationship Customer Service Contact Center Current Future

9 Financial Systems Assessment Findings Technical Capabilities Hardware, infrastructure, change management procedures are adequate Disaster recovery procedures and documentation ti 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 highlight a need to improve finance operational processes

10 Operational Challenges and Remedy Challenge Constant reorganization Focus on technical management and solutions Severe issues with data value Complex budgeting and cost tracking process Significant workflow and data issues Highly manual, inconsistent Procurement and payables process Remedy Plan reorganizations to maintain consistent processes, reporting and information standards Focus on business process and functional use of PeopleSoft solution Establish data standards at source of transaction Decentralize capital cost tracking at operational units enforcing accountability Establish clear roles and responsibilities for procurement and inventory control functions Simplify capital request and approval (MEAD) process and automate manual interactions between inventory and accounting systems

11 Enterprise Solutions Group - Organization Key Requirements for Success: - Consistent executive leadership - Cross-functional participation from Finance, HR, IT and Operations departments - Execute project based on IT governance methodology and IG recommended standards - Dedicated project team augmented with skilled contracted resources

12 Considerations in Selection of Implementer Speed of implementation Unless the implementer is in place by June 2010, there is a high risk that the project rollout will be delayed into FY2013, prolonging closure of existing audit issues Contractor 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

13 Funding 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 $9.0 million is for outside contracts

14 Recommendation Approval to: Initiate and award contracts to implement the Financial Systems Integration project for better integration and optimization of current applications.

15 APPENDIX

16 Glossary of Terms ERP 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 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. PS-Maximo Integration - the flow of data between Metro s accounting, procurement and inventory management system

17 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 correctness.

18 z Future State of Financial Systems Area 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 mainframe General Ledger - Allocations General Ledger- Monthly closing High volume and complex Compensate for poor data quality with highly manual, labor intensive process Streamlined process, spread across organization Integrates with revenue systems, labor cost and receipts; improve data quality with control accounts Position Budgeting Budgeting is performed at Integrates with HR position FTE rather than by positions management to properly reflect budgeted positions and retire the exchange of PCN process

19 z Future State of Financial Systems (cont.) Area Current Issues Desired State Grants management Capital projects Managed by spreadsheets and manual, ad-hoc process Reliant of General Ledger for full project cost; no easy way to calculate work-in-progress End-to-end grants management by implementing four unused modules of current financial system Capture and report on all cost by implementing the project costing portion of the system properly Accounts payable, Every process requires Best practice methods Accounts receivable, cash, revenue manual intervention and multiple corrections 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 purchasing system

20 Financial Systems - Road map Assessment complete (Feb 2010) Pre-upgrade tasks to mitigate risk (Mar 2010 Dec 2010) 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) Milestone Project completion and ability to make ROI-based decisions