Slides for the course "Technology in the Public Sector" at Northwestern University, MPPA program, Summer 2012

1. technology in the public sector
week 2: ERP and shared services
Northwestern University MPPA 490
Summer 2012 - Greg Wass
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2. Technology priorities for public sector CIOs
1. Virtualization (storage, computing, data center)
2. Document/Content/E-mail management (active, repository,
archiving, digital preservation)
3. Legacy application modernization and upgrade (ERP)
4. Networking, voice and data communications, unified
communications
5. Web 2.0 (services, collaboration technologies, social
computing)
6. Green IT technologies and solutions
7. Identity and access management
8. Geospatial analysis and Geographic Information Systems
9. Business Intelligence (BI) and analytics applications
10. Mobile workforce enablement
Source: National Association of State CIOs, 2011
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3. Policy priorities for public sector CIOs
1. Consolidation: centralizing, consolidating services, operations, resources,
infrastructure
2. Shared Services: business models, sharing resources, services,
infrastructure
3. Budget and Cost Control: managing budget reduction, strategies for
savings, reducing or avoiding costs, activity based costing
4. Security: security safeguards, enterprise policies, data protection
5. Electronic Records Management/Digital Preservation/E-discovery:
strategies, policies, legal issues, opportunities for shared services,
emergency preparedness
6. ERP Strategy: acquisition, implementation, expansion, upgrade
7. Green IT: policies, energy efficiency, power management, green
procurement, e-waste
8. Transparency: open government, performance measures, accountability
9. Health Information Technology: assessment, partnering, implementation
10. Governance: improving IT governance, data governance
Source: National Association of State CIOs, 2011
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4. ERP
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5. Business functions before ERP
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6. Business functions after ERP
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7. Brief history of ERP systems
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8. Public sector financial processes for ERP
• Revenue and accounts receivable
• Grants management and accounting
• Budgeting and planning
• Requisitions and purchasing
• Contract management
– Contract compliance
• Supply chain management
• Governance (legislative approvals)
• Financial accounting and reporting
• Performance management/SEA
• Payroll
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9. Public sector HR/HCM processes for ERP
• Recruiting
• Onboarding
• Time and labor
– Timekeeping
– Business rules
– Absence management
– Dual employment
• Employee performance
• Benefits management
• Training and development
• Ethics/disclosure
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10. Other considerations for ERP
1. Major vendors
2. On-premise vs. hosted solutions
3. ROI/business case (legacy systems, BPI, FTE)
4. Scope decision
5. BPR, RFP and fit-gap analysis
6. Configuration, customization and business process change
7. Implementation and project management (executive
steering committee, QA, change management)
8. Critical success factors
9. Opportunity for organizational transformation (BPI)
10. Shared services concepts (HR, fiscal)
11. Alternative sourcing (payroll, HR)
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11. ERP components / scope
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12. Typical ERP architecture
Communication
The Presentation Layer
collects user input and
creates process requests.
The Application Layer
uses application logic to collect and
process the process requests.
The Database Layer
stores and retrieves all data.
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13. Typical ERP project costs
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14. ERP implementation issues
Source: Paul Scherer, IBM, from Innovation for the Midsize Enterprise, white paper, 2008
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15. Shared services
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16. Public sector shared services models
Source: Deloitte, 2011
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17. Shared services structural decision: example
Shared Service Benefits
Decentralization Shared Centralized
Lean, Flat Unresponsive
Higher Costs Organization
Independent Common No Business Unit
Variable Business Systems & Control of Central
Standards of
Units Retain Businesses Support Overhead Costs
Control
Different Control Identification Efficient Inflexible to
Environments Recognition of Efficiencies Knowledge Business Unit
of Local Between Transfer, Needs
Priorities Business Units Standards &
Duplication of Tools
Efforts Disconnect from
Understanding
Business Units
of Group Functions Economies
and Missions of Scale
Dissemination of
Best practices
Source: State of Illinois, 2009
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18. Shared services organization structure: example
Environmental
Social Public Regulatory, Higher
Healthcare and Economic
Services Safety G&A Education
Development
DCEO
DHFS
DCFS
DFPR
IDOT
ICCB
IBHE
ISAC
DMA
CMS
DOC
DOR
DHS
DPH
DNR
EPA
ISP
Support Support Support Support Support Support
Center Center Center Center Center Center
Agency Employees Served
17,600 4,300 9,700 17,800 7,100 500
Employees Employees Employees Employees Employees Employees
• Deaf Hearing • Comp. Health • Agriculture • Prisoner Review • DOL
• Violence Insurance Plan • Arts Council Bd. • ICC
Prevention Bd. • Fire Marshal
• Historic Preservation • OMB
• Aging, • Illinois Medical Agency • IEMA
District • WCC
• Developmental Commission • CDB • Law Enforce’t • IDES
Disabilities training Std
• Veterans Affairs Board • Labor Relations
• Guardianship
• Criminal justice • Property Tax Appeal
Info’n Authority • Dep’t of Human Rights
• Human Rights Comm’n
• Civic Service
• Inspector General
• Ed. Labor Relations
Source: State of Illinois, 2009
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19. The scope decision: example
Legal, Legislative,
• Identify and bring other processes
Facilities, Other into the shared service
organization
Grants
• Bring in Grants processes
• Provide tools and system modules to
HR and support Grants management activities
Fiscal
sh
bli
• Begin with HR / Fiscal transactional processes
ta • Implement integrated systems to support HR / fiscal
Es SSO • Bring in other specialized HR / Fiscal processes
• Create Shared Services Vision, Structure and Governance
• Identify scope and plan for bringing processes into shared
services
Source: State of Illinois, 2009
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20. The scope decision: example
Options to expand
Shared services
State services on previous
vision
initiatives
Administrative Services
√
(e.g., Human Resources (incl Timekeeping)/Payroll/Fiscal)
Grants Management (e.g. grant application, monitoring and reporting) √
Customer Service (e.g. State-wide call center, consolidated front-office service
√
locations)
Business Portal (e.g. business application and authorization) √
Information Technology Infrastructure √
Fleet √
Facilities Management √
Other Services (e.g., Communications/Media, Legal, Internal Audit) √
Source: State of Illinois, 2009
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21. Shared services/ERP business case: example
Item Description
Estimated Savings $229 Million in estimated total estimated savings over five years. This
amount consists primarily of savings generated through increases in
the efficiency of administrative functions and the elimination of
maintenance costs of computer systems identified for replacement.
Estimated Costs $108 Million in total estimated costs over five years. This amount
consists primarily of costs associated with implementing integrated
administrative systems (e.g. purchase of software, hardware,
implementation services, contractors and training). The quantitative
and qualitative benefits described below are dependent on
deployment of this technology.
Estimated Net $121 million in estimated net positive cash flow over five years.
Benefits
Net Annual Benefit $110 million in estimated reduced operating costs, recurring annually,
(after five beginning in Year 6.
years)
Estimated Payback 3.3 years
Period
Project Duration 5 years (plus initial six month planning phase)
Source: State of Illinois, 2009
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22. Shared services project governance: example
Cluster Chairs sit on the State-wide
Board that is chaired by the COO /
Head of Shared Services
COO / Head of
Shared Services Statewide Support Services Board
(Governor’s Office)
Cluster Chair represents other cluster
agencies on the State-wide Board
Support Services Director Customer / Client Support Services Board
reports to the COO / Head
of Shared Services Cluster
Host
Agency B Chair Agency C Agency X
Agency A
Agency
Cluster Board is comprised of agency
representatives
Cluster SSC
Support Services Director
Support Services
Center Staff
Source: State of Illinois, 2009
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23. Shared services critical success factors
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