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State of OhioState of OhioOAKS ProjectOAKS Project
Presented by Nola Haug, OAKS Program ManagerPresented by Nola Haug, OAKS Program Manager
January 10, 2003
Presented to CIOs Presented to CIOs
2
Mission Statement
Select and implement an Enterprise Resource
Planning (ERP) solution for state government that
provides an automated and integrated financial,
procurement, asset management, capital
improvement projects, human resources, and
payroll system that significantly improves the
efficiency and effectiveness of the State of Ohio’s
administrative processes.
3
OAKS Journey Milestones
Project Complete
(6/06)
Develop/Release/Award Integrator RFP
(1/03-8/03) Conduct Integration
Phase(9/03-6/05)
Conduct Business Needs Analysis
(1/02-10/02)
Establish & Implement Program Management Office
(10/00-5/01)Begin Phased
Implementation(7/05-1/06)
• Financials (7/05)• Procurement (7/05)• Fixed Assets (1/06)• HR/Payroll (1/06)• Capital Proj. (6/06)• Self-Service (6/06)
Develop/Release/Award Business Needs Analysis
RFP (2/01-01/02)Develop/
Release/Award Software RFP(11/02-5/03)
Financials & HR:• Configure/Design• Convert Data • Test• Train
4
Business Needs Analysis
MarMar AprApr MayMay JunJun JulJul AugAug SepSep OctOctJanJan FebFeb
Cost/Benefit Analysis
Gap Analysis
2002
Technical Solution Evaluation
Requirements Evaluation
Software Demos
NovNov
5
Requirements Evaluation
Approach • Covered five core business areas: financials, human resources,
fixed assets, procurement, and capital improvement projects• Conducted joint application development (JAD) sessions
– 50+ JAD sessions and focus group meetings– Invited 83 agencies/organizations– 76 agencies/organizations attended (52 agencies and 24
organizations/vendors)– 92 percent participation rate– 521 individual participants
• Followed a formal review process
Findings• Approximately 2,100 business requirements defined• All agencies were very supportive of OAKS providing that
OAKS meets their administrative needs in the five core business areas
6
Technical Solution Evaluation
Approach
• Identified six ERPs: AMS, JD Edwards, Lawson, Oracle, PeopleSoft, and SAP
• Short-listed Oracle, PeopleSoft, and SAP based on five criteria: broad functional fit, scalability, technical fit, R&D investment, and public sector experience
• Conducted as-is and visioning sessions with technical team
• Reviewed the existing environment and tools
• Collected agency-specific information through surveys and outreach meetings
7
Technical Evaluation - The Short List
AMS
JD Edwards
Lawson
Oracle
PeopleSoft
SAP
AMS
JD Edwards
Lawson
Oracle
PeopleSoft
SAP
•Functionality•Scalability•Technical Fit•R&D Spending•Public Sector
Experience
The vendors further evaluated during the OAKS Business Needs Analysis were Oracle, PeopleSoft, and SAP.
Oracle
PeopleSoft
SAP
Oracle
PeopleSoft
SAP
8
Functionality
AMSJD Edwards
Lawson Oracle
Peoplesoft
SAP
0
20
40
60
80
100
Weighted Score
Functionality
The requirements were categorized into five software modules identified by the state.
• Finance
• Human Resources/Payroll
• Procurement
• Fixed Assets
• Capital Projects
9
Scalability
AMS
JD Edwards
Lawson
Oracle Peoplesoft SAP
0
20
40
60
80
100
Weighted Score
Scalability
To measure the level of scalability achieved by each software product, vendors were asked to demonstrate where their systems have been implemented for business entities equivalent in size to the State of Ohio regarding the two areas listed below.
•Finance and Procurement systems for organizations with annual budgets in excess of $50B
•HR / Payroll systems for organizations with more than 65,000 employees
10
Technical Fit
Technical Fit
AMS
JD Edwards
Lawson
Oracle Peoplesoft SAP
020406080
100
Weighted Score
To assess technical fit, the team evaluated each of the software packages in the five areas listed below:
•Ability to supplement package functionality with bolt-on software packages such as budget preparation, sales and use tax, time entry, bar
coding, point of sale, and procurement•Ability to use technical support tools for scheduling, software
distribution, event management, etc.•Ability to provide data warehousing capability•Ease of customization and the ability to maintain the customizations
during upgrades•Ability to work within the state’s technology strategy
11
Research and Development Spending
R&D Spending
AMSJD Edwards Lawson
Oracle
Peoplesoft
SAP
0
20
40
60
80
100
Weighted Score
To determine the level of investment that each software vendor makes in research and development, we gathered information on the R&D spending for each ERP vendor. As a result, we then rated each vendor based upon total dollars spent on research and development.
Research and development spending contributes to the future viability of the ERP package and is an indicator of the ability of the ERP vendor to continue to provide timely and frequent technological and functional upgrades to their product.
12
Public Sector Experience
Public Sector Experience
AMS
JD Edwards
Lawson
Oracle Peoplesoft SAP
0
20
40
60
80
100
Weighted Score
It is important for a large complex government organization like the State of Ohio to acquire an ERP package from a vendor that has a dedicated public sector development organization. In this way the State of Ohio, along with other government customers, will have the ability to help shape the future direction of the public sector software package.
13
Consolidated Scoring
Combined Weighted Score
AMS
JD EdwardsLawson
Oracle Peoplesoft
SAP
0
20
40
60
80
100
Weighted Score
The Deloitte Consulting project team followed a structured four-step process to develop conclusions for the package short list.
•The Deloitte OAKS team developed a software survey addressing each of the five evaluation criteria and submitted it to the Deloitte Consulting package experts.•Each of the Deloitte package experts completed the survey for their respective
software packages.•As appropriate, the package experts reviewed their responses with the software
vendors to confirm their accuracy and submitted the completed surveys to the Deloitte Consulting OAKS project team.
•The Deloitte project team analyzed the survey results and developed a short list of three software packages.
14
Technical Solution Evaluation
Findings• All three ERP products are industrial strength – can support
“Fortune 20” size organization
– All three ERP products:
– operate on mainstream hardware and database
– operate on the UNIX
– support multi-tier architecture
– offer pre-integrated data warehouse solutions
– Existing/statewide technical tools can be used for operations and network monitoring (ESM)
15
Gap Analysis
Approach
• Evaluated the three ERP products against the 2,100 requirements
• Vendors did self-evaluation on requirements
• Vendors invited to discuss product gaps
• Identified possible resolution for remaining gaps
– Technical solution, process change or both
• Identified process changes based on best practices
• Final scoring was based on state-assigned weights, extent of gap and effort to close the gap
16
Software Gap Analysis Findings
The State of Ohio defined 2,098 business requirements necessary to meet current and future business processes. Each requirement was compared to the capabilities of each software package. Requirements not fully supported by the base software will entail gap-closing solutions to include software modification, business process change, or a combination of both.
This chart shows the number and the percentage of defined business requirements met by the Oracle, PeopleSoft, and SAP software packages.
Summary Conclusion: All three ERP software packages satisfy the majority of the state’s requirements with standard configuration.
RequirementsRating
Oracle % PeopleSoft % SAP %
Number FullySupported 1,721 82.0% 1,680 80.1% 1,698 80.9%
NumberPartiallySupported
145 6.9% 177 8.4% 162 7.7%
NumberRequiringCustomization
232 11.1% 241 11.5% 238 11.3%
TOTAL 2,098 100.0% 2,098 100.0% 2,098 100.0%
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Cost / Benefit Analysis
ApproachBenefits• Calculated benefits over a five-year period beyond full
implementation of OAKS • Gathered data from:
– Meetings with representatives – Agency surveys – Agency CIO meetings
• Validated benefits with businessprocess owners
Costs
• Obtained estimated costs for hardware and software directly from vendors
• Documented estimated cost and required resources to implement the OAKS system
• Prepared summary information regarding a reasonable approach for funding and implementation
18
Benefits Overview: Intangible
Improved tracking of capital project schedulesReduced efforts for budget control and maintenanceBetter outcomes related to vendor/contractor selectionBetter analysis of statewide procurement
Increased EfficiencyOne system can address agency needsReduce approval times via workflowFaster procurement of needed supplies, commodities and servicesEasier for vendors to do business with Ohio
Improved Process Integration and ControlsIntegrated processes across functional areasIncreased standardization and consistency across agenciesImproved payroll position control information allowing better control of expendituresConsolidate vendor information into one system, eliminating redundancy and effortsImproved tracking on all processes supported by OAKS
Improved Service LevelsMultiple channels of service to vendorsImproved workforce development opportunitiesIncreased self-service for employees
Increased Decision-Making
Potential Intangible Benefits
Intangible benefits are OAKS-enabled strategic achievements that further a management direction, allow the state to better manage relationships, or allow the state to achieve qualitative improvements in processes and functions.
The intangible benefits are not quantified in the business case because of the difficulty in attaching meaningful dollar values to such broad, transformational achievements or because the information is not currently tracked.
19
Potential Tangible Benefits
Procurement
• Achieve higher volume of purchase discounts and improve consistency of purchases within guidelines by 40%
• Increase savings achieved from vendor payment discounts
• Decrease by 50% the cost to create purchase orders
• Reduce time required to add vendors, maintain vendor information or respond to vendor inquiries
TOTAL PROCUREMENT BENEFITS
Finance and Budget
• Decrease by 16% the effort for accounting and transaction processing
• Decrease arbitrage rebate payments by 75%
• Decrease by 50% manual effort on previously authorized payments
• Decrease the cost of printing and shipping reports
• Decrease effort related to automated and manual data reconciliation
• Decrease by 43% reduction the expenditures on warrant processing
• Reduce by 75% the time required to respond to agency inquiries
TOTAL FINANCE AND BUDGET BENEFITS
$ 45.0
$26.2
$4.2
$1.6
$77.0
Benefits(in Millions of Dollars)
$24.0
$18.6
$8.7
$5.2
$3.6
$3.1
$0.8
$64.0
Cost / Benefit AnalysisTangible benefits are those potential benefits where a firm estimate of dollar or time savings may be attributed to the benefit based on a proper set of assumptions.
20
Human Resources and Payroll
• Decrease cost of processing applications by 74%
• Decrease effort for disability claims by 28%
• Decrease time require in researching employee requests by 66%
• Decrease cost of processing Personnel Actions by 75%
• Decrease time spent processing employee data by 50%
• Decrease by 70% benefit enrollment administration costs
• Decrease payments to non-eligible participants of benefit plans by 100%
• Decrease by 50% the cost for recruiting advertising
• Decrease off-cycle payments by 75% and reduce payroll errors by 50%
TOTAL HUMAN RESOURCES AND PAYROLL BENEFITS
Benefits(in Millions of Dollars)
$15.3
$41.3
$10.9
$8.5
$6.3
$3.7
$3.1
$2.0
$1.9
$93.0
Potential Tangible Benefits
Fixed Assets and Others
• Decrease by 67% the cost of physical inventory by the use of bar-coding technology
• Decrease by 50% time spent recording new fixed assets
• Decrease the cost of printing 200 forms
• Decrease by 80% time on central review of fixed assets
TOTAL FIXED ASSETS AND OTHER BENEFITS
TOTAL POTENTIAL BENEFITS FOR ALL BUSINESS AREAS
$11.4
$4.6
$0.8
$0.4
$17.2
$251.2
Cost / Benefit Analysis
21
Better Leverage for Purchasing Power (Procurement)As Is
• Insufficient use of previously negotiated state contracts
• Purchasing volumes underestimated due to inaccurate data
• State is not leveraging its purchasing power
OBM State
Accounting
CAS
Request purchase information
Consolidate & analyze
purchase history
State of Ohio Agencies
DAS State Procurement
Locate desired item
• Generate P.O.• Print P.O.• Maintain
purchase data
Order desired item
Vendor source information
Agency source
information
Bid and negotiate contract
Vendor Catalogs
21
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Better Leverage for Purchasing Power (Procurement)To Be
• Improved search capabilities and more effective controls will increase utilization of state contracts
• Single source of purchasing information allows accurate retrieval of state contract purchases
• Vendors bid lower prices resulting in an estimated $45 million in savings for the state
OBM State
Accounting
Request purchase information
State of Ohio Agencies
DAS State Procurement
Locate desired item Order desired item
OAKS
Bid and negotiate contract
• Search wizard
• Electronic catalogs
• Manage purchase order
• Workflow routing for approvals
• Maintain data warehouse
22
23
Accounts Payable Processing (Financials)As Is
• A 21-step, 28-day process currently used by 144 entities
• No automatic electronic matching of receipt/invoice to purchase order
• Not optimizing vendor discounts
• Vendor payments not consolidated
Send invoiceShip goods
Receive invoice
Create voucher in CAS
OBM State
Accounting
Record & file receipt info
Match invoice to receipt info
Print voucher (3 copies)
Voucher
Record approval in CAS
CAS
Receive voucher &
support
Sort & deliver to reviewer
Review voucher & support
Vendor copy (voucher & support)
Forward voucher & support
Approve voucher
• Post vouchers
• Create warrant writing file
State Agencies
Vendor
Agency copy (voucher & support)
OBM copy (voucher & support)
Voucher
Voucher
Voucher
Voucher
Payto $
Payto $
Payto $ Pay
to $
Payto $
------------------------------------------------------------
------------
Auditor of State
Warrant Writing System
• Create warrants
• Create remittance advice
Print warrants & remittance
advice
Ship to warrant desk
Separate & sort by agency
Payto $
Receive warrant
Payto $
Retrieve warrants
Match & attach warrants to detail
Stuff envelope &
Payto $
------------------------------------------------------------
------------
Payto $
Receive goods
23
24
To Be
• Leverage a variety of best practices to reduce process time to 5 steps over 10 days
• Utilize electronic matching
• Optimize vendor discounts with payment scheduling
• Eliminate up to 260,000 warrants per year through consolidated payments
• Realize an estimated $38 million in savings
Scan goods received
Send invoiceShip goods
Record invoice
OAKS Match receipt information to PO Match invoice information to PO Create payment request Apply vendor discounts Create warrant writing file
Warrant Writing System
Create warrants Create remittance
advicePrint warrants & remittance advice
Payto $
Payto $
Payto $
Ship to central mailing center
Automatically stuff envelope and mail
Payto $
Receive warrant & remittance advice
Auditor of State
State Agencies
Vendors
Central Mailing Center
Accounts Payable Processing (Financials)
24
25
Hiring a Full-Time State Employee (HR)
• A 22-step process requiring multiple manual approvals taking an average of 5-6 months to complete
• Duplication of advertising costs
• 200,000 applications manually screened and ranked each year
As Is
25
State Agencies
Applicant
Query OLEAP for applications
OLEAP
Screen/rank applications
Print applications
Process apps
Develop schedule / record
interview date
Prepare apps for interview team
Schedule / Co-ordinate interviews
Recommend hire
Management approval 3Research and
report
Complete Personnel Action form
Create and present offer
Interview results
New HireRecordNew Hire
Record
HR2K
Data entry from app & PA forms; Create new hire record in
HR2K
Distribute new hire notification
File interview notes, apps
and PA forms
Submit applications online (OLEAP)
Confirm interview schedule
Inquiries: interview / application status
Accept offer
Media
Create media ads
Media ads edited / approved by centralized
recruitment office
Agencies place Media Ads
Advertising coordinator places advertisement
Search for job postings
Management approval 1
Management approval 2
Personnel Officer
Time Line
20 Days
Advertise
30 Days
Screen/Rank Applications
30 Days
Interview / Recommend Hire
20 Days
Approvals
12 Days
Updates
Total
112 Days
Start employment
Post jobs
26
Hiring a Full-Time State Employee (HR)To Be
• Reduce the number of steps to 7 and the hiring timeline to 3 months on average
• Use ad-sharing techniques to reduce advertising expenditures by 50%
• Realize an estimated $25.7 million through time and cost savings 26
Personnel Officer • Initiate advertisement• Review and approve list
OAKS
Self-Service via Portal• Search for Job posting • Submit Application• Inquire on application & interview status• Schedule/accept interview•
Recommend hire
• Combine advertisements
• Screen, rank applications
• Schedule interview
• Extend offer
• Create Employee Record
• Hire / status change
• Communicate status change via Workflow
Notify Interview Team of interviews
Interview Result Approve Personnel Action via Workflow
Posting placed on Job Boards
Media Ads Created
Advertisements Edited / Approved by Centralized Recruitment Office
Time Line67 Days - Start to Finish
State Agencies
Applicant
Personnel Officer • Initiate advertisement• Review and approve list
OAKS
Self-•••• Schedule/accept interview• Review and accept offer
Recommend hire
• Combine advertisements
• Screen, rank applications
• Schedule interview
• Extend offer
• Create employee record
• Hire / status change
• Communicate status change via workflow
Notify interview team of interviews
Interview result Approve personnel action via workflow
Posting placed on job boards
Media Ads Created
Advertisements edited/approved by
centralized recruitment office
67 Days - Start to Finish
Start employment
Media
27
Performing Physical Inventories (Fixed Assets)As Is
• 1.8 million assets need to be inventoried every two years using a manually intensive and redundant process
• At 3 minutes per asset, the inventory requires 90,000 hours of effort
• Bar-coding not feasible in today’s environment (27 agency-owned systems; 1 central system)27
Travel to location to be inventoried
Create a list of assets to be inventoried
Visually locate the tag on each asset
Find the asset tag number on the list
AssetListAsset
ListList
ListNot FoundFound
Create list with assetsNot Found at location
Annotate list with assets Found
This process can be repeated at each of the over 100 agencies based on the organizational structure. For a large agency such as DRC, DOT or DNR, this process may be repeated 30 -50 times.
Asset Management
System
Research and resolve all exceptions
Reconcile all lists and create master list of
exceptions
Master List
NotFoundListFound
ListAsset List
There are approximately 27 agency systems and 1 central system (FAMS)
Found
Create list with assets Found, not
on original list
28
Performing Physical Inventories (Fixed Assets)To Be
• Increased accountability possible with more frequent inventories
• Two-thirds reduction in time, saving 30,000 hours each biennium
• Easier CAFR reporting, stronger balance sheet, and improved debt ratings
• Realize estimated $4.6 million in savings
Travel to location to be inventoried
Download a list of assets to be inventoried into
bar-code scanner
Scan all the assetsin the location
Download
This process can be repeated at each of the over 100 agencies based on the organizational structure. For a large agency such as DRC, DOT or DNR, this process may be repeated 30 - 50 times.
List
Research and resolve differences, make
corrections in OAKS
Upload all data scanned into system
OAKS
Exception Reports
28
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ProcurementFixed Assets CIP
CAS - StatusAuditor of the State - WarrantsCAS Extracts - BudgetCAS Extracts - Encumbrance & SpendingCAS Extracts - RevenueCAS Workflow ReportsDAS / Payroll Extracts
DMHDAS Oracle Fixed Asset v11 *
JBUD - Budget TrackingMIS Budget TrackingOBW DB2 Data FeedsOracle Financials 11i *Paycard - credit card purchase trackingAutomated Performance Evaluation sys *Time keep - Time entry. RFL entryPurchase Tracking System
JFS
Asset & Inventory Management *Budgeting - Excel SpreadsheetsHours Management SystemUnisys Proprietary Database
DPS
CAS ExtractDAS HR Extract
DRC
Appropriation Account'ingPayroll System ReportsPersonnel System ReportsTrainingAPS - Automated PurchasingSystem *
DOT
Oracle Fixed AssetsCAS Plus DatabaseHRIS maintains agencypersonal data includingdemographics, payroll,benefits & training
BWC
CAS Extract
AGR
Oracle 10.7 or 11i *Interfacing Time System *
AOS
GFAMS*CASHR 2000 - Access & Excel
AGO
CAS ExtractsTurn key application *HR Files - Cobol batchreports *
EPA
CAS Extracts
AGE
CAS Extract
ADA
FAMS *Oracle *Oracle HR *
EDU
Agency Report DB - Power BuilderAgency Report DB - HR2K
DOH
CAS Extract
DYS
Financial System *SFYXX - Vouchers *Paylock 2000 *
NUR
CAS extract - BudgetsINS
Filemaker Pro
OIG
Fixed Asset Reporting *COM
Access DatabaseFoxpro
ART
CAS ExtractAccess & VB
PUC
COBOL Accounting sysBDD Attendance - InternalSystem *Payroll Masterfile Access
RSC
CAS - ExcelExcel
MED
CAS, Access & Excel
ETH
CAS Extracts -Expenditure ReportCAS Extract, Excel &Filemaker
BOR
CAS Progress Database -Excel Quattro Pro
CLA
Payroll Earning Statement- Excel
ACC
CAS ExtractJCO
CAS ExtractCAS Extract
JSC
Windows PeachtreeSoftwareCAS Extracts
CSR
FA Inventory System *
DMR
CAS
OBM
Interfacing time system *DOD
CAS - Excel Data EntryData Entry - Word & Excel
TTA
HR2K
CAS
Fixed Assets - AccessInventory - AccessInventory - Clear AccessInventory Database - AccessODNR Land Inventory - AccessOIT - Inventory - Access / Oracle *Biennial Budget - MS OFFICEComputer Software & Hardware InventoryGERBS - Grant Tracking for AP/AR *Budget - ExcelBudget DatabaseBudget Planning & Analysis Software Tool *CCC AccountingContracts - AccessDaily Invoice Record - Clear AccessDivision of Engineering - Budget - Word & ExcelEnforcement - AccessExpenditure Database - AccessExpenditures Tracking - ExcelFiscal Bundle - Reconciliation of WorksheetsInternal Accounting System - AccessInternal Reporting System - Oracle *Mineral Resources Budget - Clear Access, ExcelODNR - CAS Loading - Oracle *Operating budget - Field Offices - QuickenQuicken Ledger - QuickenRevenue Report / tracking - Access D/BRevenue Tracking - QuickenSubsidy Tracking - ExcelTransactions - AccessWildlife Internal Accounting System - AccessGrant 7 Contract Management Systems - ExcelGrant Draw Utility - Clear AccessGrant Reporting - ExcelGrant Reporting - ExcelLand & water Conservation Fund GrantsNature Works Grant - Access & ExcelClean Ohio Trails Grants Program - Access,Operational plan - Project Planning Application *Project Management - AccessCapital Improvement - AccessCorpsmember Database - AccessPay estimate system - AccessPayroll Expenditures & Balances - ExcelNatureworks Payroll Tracking - MS AccessPersonnel Action systemWage / Pay Period Ending Report (TARS)
- AccessTime & Activity - AccessTime & Activity Reporting System - AccessTime & Activity Reporting System (TARS) *Time & Attendance - AccessTransactions - Access & Excel
DNR
FAMSAccess Oracle ContractTracking
SFC
DASAccounts Receivable System - LN/Crystal *Accounts Receivable Tracking - ExcelAccounts Payable Tracking - ExcelAdhoc Reporting Against Payroll SummaryAmount Owned by Vendor for Contract useAnnual Payroll Summaries - excelAnswer DB & Micro Answer reportingBilling Processing for the Copy Center -
AccessBilling Processing for Arbitration *Billing Processing for Computer Services *Billing Processing for Fleet Rental - Access *Billing Processing for Mailroom *Billing Processing for Presort /Ppostage *Budget Allotment Management System *Budget Preparation *Chart of Accounts - ExcelAccident Tracking Database - Access/VBAdhoc Mail to Employees - Word / ExcelMail / Merge Create Letters & Forms - Word/Ohio Construction Opportunities - Web *Suretrack - Cap Project Scheduling System *Building Database for Risk & EnergyFixed Asset Management DB - AccessMonitor Cancelled ChecksFixed Asset Management System *Biennium Budget Processing - COBOL *Land Tracking - ExcelComplaint TrackingCost Projections - COBOL *Fundable Table of OrganizationGrievance Tracking System - DB3/ AccessSalary Cost Projections - ExcelSWCAP Reporting System - Excel / AccessAttendance Tracking Database - Access/VBBenefit Provider System - AccessCobra Tracking System - Travisoft *County Class Plan Support - VB, SQLDisability Tracking - AccessDisability Tracking and Reporting - AccessDisability Tracking Database - Access/VBDiscipline Tracking Database - Access / VBEEO Tracking - ASP/HTML, SQL *Emergency Contact DatabaseGrievance Tracking DatabaseHR2K Maintenance CostsHR2K Maintenance CostsOnline Employment Application System *Online Open Enrollment *Payroll Statistics - SQLProfessional Development Fund Tracking *Time & Attendance System - Fox Pro *Unemployment Tracking - ExcelWorkers Compensation Incident Tracking *Workforce Development Tracking - AccessCapital Improvement Project Tracking - VAX *Contract Reporting and AnalysisDesign Project TrackingBuyspeed and Directors Chair *Complaint to Vendor System - Access / ASPFleet Management and Tracking- ClarionPurchasing ServicesInventory Tracking System *Invoice Tracking - AccessPaperless Procurement System *Printing Customer ServiceRisk Management of Commercial LeasesRisk Management of EndorsementsRisk Management of Vehicle LiabilityRelease & Permit Billing - Filemaker ProRelease & Permit Tracking - Filemaker ProRelease and Permit Tracking - Access/WebState purchasing Acquisition Mgmt -Web *Surplus Management - Foxpro *
Cabinet Boards/Commissions
ElectedOfficials Education Judicial OtherLegend
DAS
* - Packaged or in-house systems, not spreadsheets or databases (Excel, Access, etc)
Redundant
Administrative
Systems
29
30
OAKS: Five Business Processes Integrated
Reduce Processing Cycle Times
Reduce Manual Reconciliation
Reduce Manual Effort
Increase Fiscal Accountability and Control
Better Decisions
One System – Consistent Data
Modern Technology Environment
Integrate Data Sharing Across State Government
Integrate Business Processes Across Operations
Accounting and BudgetingAccounting and Budgeting
HR / PayrollHR / Payroll
ProcurementProcurement
Capital ProjectsCapital Projects
OAKS
Fixed AssetsFixed Assets
One OAKS System
$90 Million Savings
By reducing the number of disparate systems containing redundant and fragmented information, the state will not only reduce the IT costs of running multiple systems, but will also reap the benefits of error reduction, process efficiencies, and tighter controls that accompany vendor self-service.
31
Avoided Costs of the Status Quo
Totals(in Thousands of Dollars)
Central Administrative CostsCentral Accounting and Procurement Systems $16,903Human Resources Systems $22,299Asset Management Systems $1,687Capital Improvements Tracking System $470 Total Costs Central Administrative Systems $41,359 Estimated Cost of Central System Upgrades or Replacement $63,749 Total Central Administrative Systems $105,108
Redundant Agency Administrative SystemsAccounting and Procurement Systems $57,395Human Resources Systems $12,320Project Management and Tracking System $1,828Grant Management Systems $3,159Asset Management Systems $6,161Accounts Receivables Systems $6,005 Total Costs of Redundant Agency Systems $86,868 Estimated Costs of Agency System Upgrades or Replacement $3,154 Total Agency Administrative Systems $90,022
Total Avoided Costs of the Status Quo $195,130
The state is currently incurring or will incur these costs over the next five years even if OAKS is not implemented.
32
“…business processes should be re-engineered to utilize best practices built into ERP software. This process could reduce operating costs by 10% to 15% in large agencies…” MIC 2002
Estimated OAKS Tangible Benefits
Benefits reflect hard dollar savings in external payments. The integrated OAKS solution is expected to generate cost-effectiveness and other positive impacts. These potential benefits are valued at $251 million in time savings and reduced expenditures. Also, OAKS could allow the state to avoid an additional $195 million in expenditures due to the replacement of current statewide and agency administrative systems.
Totals (in Millions of Dollars)
Calculated Benefits of Improvements
Improved Decision-Making $64.9 Increased Efficiency $119.6 Improved Process Controls $49.9 Improved Service Levels $16.8 Total Potential Benefits $251.2 Calculated Cost of Status Quo Savings Upgrade Current Central Systems $63.7 Agency System Upgrade/Enhancements $3.1 Ongoing Costs of Central Systems $41.4 Ongoing Costs of Agency Systems $86.9 Total Potential Avoided Cost of Status Quo $195.1 Total Potential Benefits/Savings $446.3
33
Estimated Costs
• One-time integration contractor costs– Hardware acquisition– Software license– Integrator staffing
• One-time state costs– Hardware maintenance during implementation– Software maintenance during implementation– State staffing to support implementation
• Ongoing production costs– Production cost associated with implemented modules– Five-year production costs after full implementation
One-time and ongoing costs are based on the integration schedule, standard rates, and estimates from vendors.
34
Integration Timeline
Architect & Design
Budget Prep
HRPayroll
Human Resources Build
MonthMonth
FinanceFinance
Human Human ResourcesResources
Data Data WarehouseWarehouse
General LedgerAccounts PayableAccounts ReceivableProcurement
Fixed AssetsGrants
TrainingRecruitingHealth & SafetyComplaint MgmtEmployee Self-Service
ERP Data Warehouse
Finance Build
CommonCommonGo Live
Go Live
Data Warehouse Build
Vendor/Customer Self-Service
Capital Improvement Projects
Year-End
Mini Go Live
Mini Go Live Mini Go Live
Mini Go Live
Legacy Data Warehouse
2004 2005 2006JulJul SepSep JanJan JulJul SepSepMarMar MarMar JanJan JulJul SepSepMarMar JanJan JulJulMarMar SepSep
RFP & RFP & ContractContract Software Integrator
Year 2003JanJan
35
(In Thousands of Dollars)
FY 04 FY 05 FY 06 FY 07 TOTALExternal CostsIntegrator $19,202 $40,248 $38,910 $8,222 $106,582Software $24,939 $2,836 $0 $0 $27,776Hardware $2,752 $5,917 $2,830 $0 $11,498Subtotal $46,893 $49,001 $41,740 $8,222 $145,856
Internal CostsState Staff $3,437 $8,200 $7,883 $1,869 $21,389Facilities $850 $1,095 $825 $380 $3,150HW/SW Maintenance $5,117 $6,751 $3,599 $0 $15,467Subtotal $9,404 $16,046 $12,307 $2,249 $40,006Grand Total $56,297 $65,047 $54,047 $10,471 $185,862
Estimated One-time Costs to Implement
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Summary Business CaseFundamentally, the business case for OAKS is strong. The tangible benefits are estimated to be the same across all three ERP packages and total $446 million. This includes $251 million of benefits from organizational improvements and increased efficiencies and $195 million in avoided costs of continuing to operate and enhance existing systems, i.e., avoided costs of status quo.
The cost estimates are slightly different across the three ERP packages. The summary business case reflects average costs for the three packages. One-time project costs for software and hardware licensing and integrator costs are estimated to be $146 million. State staffing, overhead costs and software and hardware maintenance costs for the duration of the project are estimated at $40 million. Ongoing production costs are estimated at $96 million for the first five years following full implementation of OAKS, and at $17 million annually thereafter.
OAKS Potential Savings & Costs
• Tangible Benefits
• Status Quo Cost Avoidance (Savings)
TOTAL POTENTIAL BENEFITS/SAVINGS OAKS Costs
• Integrator Costs
• State Costs
TOTAL POTENTIAL AVERAGE COSTS
POTENTIAL SAVINGS
FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Total
$15,881 $36,397 $46,224 $48,902 $50,897 $52,932 $251,233
$41,056 $41,010 $42,650 $22,557 $23,459 $24,398 $195,130
$56,937 $77,407 $88,874 $71,459 $74,356 $77,330 $446,363
$41,740 $8,222 $0 $0 $0 $0 $145,856$46,893 $49,001
$12,307 $2,249 $0 $0 $0 $0 $40,006$9,404 $16,046
$64,347 $26,282 $19,632 $20,332 $16,928 $17,325 $286,190$56,297 $65,047
($7,410) $51,125 $69,242 $51,127 $57,428 $60,005 $160,173($56,297) ($65,047)
• Annual Production Costs $10,300 $15,811 $19,632 $20,332 $16,928 $17,325 $100,328$0 $0
(In Thousands of Dollars)
OAKS Potential Benefits/Savings
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OAKS Potential Payback
Average Payback Period for Oracle, PeopleSoft & SAP - Discounted
($250,000,000)
($200,000,000)
($150,000,000)
($100,000,000)
($50,000,000)
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
2004 2005 2006 2007 2008 2009 2010 2011
Fiscal Year
Do
lla
rs
• Payback achieved in the third year after full implementation
• Benefits far exceed costs in each year after implementation
• Cumulative savings will exceed $100 million five years after implementation
Costs
Benefits
Net Savings
Cumulative Savings
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Conclusion• Business case is compelling
– Significant tangible benefits of $446 million over five years
– Short-term investment payback (third year after full implementation)
– Dramatic increase in operational efficiencies, process controls and service levels (intangible benefits)
• Cost and risk of continuing operations is increasing– Aging central and agency systems (15 – 40 years old)– Investment continues in central systems– Agency spending on stand-alone systems will increase
• Timing is critical– Market conditions are ideal to obtain advantageous vendor pricing– Implementation now will position Ohio as a technologically advanced
and citizen-friendly state – Environment of greater public accountability necessitates increased
technological flexibility
“…we are the pioneers of Ohio’s third frontier – a frontier of exploration and discovery where knowledge is king.” Governor Taft, 2002 State of the State Address
Total Discounted Costs
The potential benefits of OAKS outweigh the associated costs.
Tangible BenefitsProduction Costs
State Costs
Integration Costs
Cost Avoidance Benefits
Tangible Benefits
$251 MProduction Costs$100 M
State Costs
$40 M
Integration Costs$146 M
Cost Avoidance Savings
$195 M
Total Potential Costs (average) = $286M
Total Potential Benefits = $446M
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Next Steps
• Obtain go/no-go decision
– Executive sponsorship
• Formal commitment from all key stakeholders within the state
• Commitment to make appropriate resources available
• Funding
• Release software RFP
• Prepare system integrator RFP
• Execute Change Management Activities
• Maintain agency involvement through meetings and communications
40
Questions
Please visit the OAKS Web Site: http://www.ohio.gov/oaks/
