CHIEF FINACIAL OFFICER BRANCH (CFOB) TRANSFORMATION AT HEALTH

CANADA

Jamie TibbettsAssistant Deputy Minister

Chief Financial OfficerHealth Canada

Financial Management InstituteProfessional Development Session October 2015

To share CFOB’s progress on transforming our organization to improve and strengthen our operations and services.

Sharing our transformation vision How we leveraged the Deficit Reduction Action

Plan (DRAP) to chart a new and necessary course for the Health Canada (HC) finance function

Where are we in our journey

2

Purpose of Presentation

Chief Financial Officer Branch (CFOB) of Health Canada operates within a demanding and complex financial environment, comprising:• A large, decentralized department ($4B and 9,000+ FTEs)

with financial offices supporting multiple regions and branches

• A sizable Grants and Contributions program (44%) and an advanced user fee revenue regime

• Substantial First Nations and Inuit health programming (65%)

• Shared jurisdiction between federal/provincial/territorial governments and new partnerships

• Significant long-term issues of affordability and sustainability• Significant portfolio responsibilities

3

Health Canada Context

The Health Canada Portfolio:• Health Canada (HC)• Public Health Agency of Canada (PHAC)• Canadian Food Inspection Agency (CFIA)• Canadian Institutes of Health Research (CIHR)• Patented Medicine Prices Review Board (PMPRB)

Key areas of responsibility:• Providing access to quality health services for First Nations and

Inuit• Regulating the safety of products, food, contaminants, pathogens • Anticipating, preparing for, responding to and recovering from

public health threats• Providing leadership on health promotion, protection, and capacity • Contributing to research and knowledge development • Supporting provincial/territorial health systems

4

Health Canada Context…(Continued)

DRAP was based on reductions of up to 10%:• For Health Canada: about $200M (ongoing)• For CFOB: $2.9M (ongoing)

By any standard, this is substantial• All the more so given the seemingly continuous increase in

demand / workload in most sectors including Finance

CFOB’s Strategy to address its on-going reduction: • Developed a unifying vision and a change agenda for CFOB• Consulted portfolio partners for shared services potential• Consulted IFMS Management and Operations Boards• Crafted a Transformation Roadmap to guide our evolution

5

DRAP Financial Implications on CFOB

6

Financial Management Transformation

Target State Model• Services are optimized for the needs of the front office, giving managers direct access

to information, services and tools needed to manage resources.• CFO organizations spend less time on routine operational transactions, freeing them up

to increasingly focus on higher-value strategic and analytical services.• Services are enabled through a business model based on streamlined, standardized

business processes and information, and rationalized applications.

Strategic ServicesStrategic direction, business

planning, and performance measurement.

Analytical ServicesExpertise-related. Advice and

direction, reporting, control and audit.

Operational ServicesProcess and transaction oriented (e.g.

AP/AR). Range from simple to complex.

Applications Application

ManagementServices

Business Process

Information

IT Infrastructure

Focus of CFO Organization

Candidates for consolidated/ shared delivery

Advisory

Assisted

Self- service

Front Office Managers

Source: Treasury Board

7

CFOB’s transformation focuses on the following: Organizational Vision

• Design a leaner, highly efficient, more integrated and responsive organization, demonstrably further along the shared services continuum, with clearer accountabilities

• Incorporate a re-balancing of financial management responsibilities and a standardization of financial management practices consistent with the nationalization of the CFOB mandate

People• Maintain an adequate, effective and sustainable level of resource

capacity across our organization• Develop a dedicated, service oriented, strengthened, high-value

resource management, internal control, and corporate planning and reporting capability for Health Canada

“Transformation Without Disintegration”

8

What We Set Out to Do – Key Initiatives

Shared Services with PHAC

P2P Project

Improve reporting and internal controls

RMD Transformation- Improve financial advisory services

Provision of the HC SAP system to AANDC

Adoption of AANDC Grants and Contributions Information Management System

Planning for Enterprise Performance (PEP) Project

9

What Have We Done

Implemented Procure to Pay System (P2P)– Centralized end to end electronic processing for AP and procurement. Reduced processing centres from 26 to 2.

Established Shared Services Accounting Hubs – 2 Hubs are now operational servicing both PHAC and HC. One in the Ottawa and one in Winnipeg.

Realized Clustering Opportunities • HC hosting both PHAC and AANDC on SAP. • HC and PHAC adopting the AANDC G&Cs Information

System (GCIMS).

Resource Management Directorate (RMD) Transformation Initiative

Enhancement of our Systems and Tools - Planning for Enterprise Performance (PEP) Project

Continuous Business Process Improvement

10

What Still Needs to be Completed

RMD Transformation: Vision

Design and implement a streamlined, integrated, standardized and consolidated RMD organizational structure that will:• Strengthen Advice Capability and improve Oversight and

Accountability by re-defining the FMA role to be more strategic, value added insight, and less focused on transactional activities.

• Strengthen Corporate Reporting and Analysis and increase access to corporate information; and

• Make better use and Leverage Technology in SAP for operational planning, budget and forecast information

Overall to be a Trusted Business Partner

11

12

6. Strengthened

Corporate Reporting &

Analysis

RMD Transformation Drivers

1. HC Restructuring

Client

Servi

ce

2. G&Cs Management

3. FN Programs Financial Support

4. Aftermath of Tripartite Agreement

5. Aftermath of FOD

Transformation6.

Strengthened Corporate

Reporting & Analysis

7. Investment Planning

8. Costing

9. CFO Attestation

10. OCG-FMBP

Central Agency Driven

HC Business Improvement

Decisions

Executive Requirements

Client

ServiceClientService

ClientService

Clien

tS

ervice

Client

Service

Client

ServiceClient Service

Client

Service

Clie

nt

Ser

vice

Execution

Infrastructure

Organizational

13

RMD Provides Support Services to Clients - What Needs to be Different?

There are transformation drivers that we must respond to in order to serve

all our clients appropriately.

BusinessPartner

-Value Creation

Business AnalyticsDecision Support Services

Expertise Based ServicesSuch as Costing

Stewardship & GovernanceDrive the Delivery of the financial

Policies

Finance ProcessesDelivery of Transaction Processing

We need to be doing much more of this –better and faster

We have been doingthis in a decentralizedand varied fashion for years

• RMD structure is realigned to meet the need of Senior Management and efficient operations of RMD

• Financial system capability is leveraged to provide timely and accurate financial and non financial information

• Advice capability and oversight is strengthened. FMA role is more strategic and provide more value added insight. Financial information is available at finger’s tip

• Management practices, roles and business processes are consolidated and made more efficient through technology with a focus on the comptrollership function

• More corporate focus for horizontal management.

• Leveraging SAP for planning, budgeting, forecasting and integrated performance report

14

RMD Target End State

• Costing activities are standardized and operate within a known business process and clear roles and responsibilities

• HC’s roles are realigned to promote efficient and effective G&Cs management

• Four clear organizational segments established:1. Financial Management Services – for Branches and Regions

with co-location2. Corporate Resource Management Services – for

departmental and horizontal needs3. Investment Planning Services – for integrated resource

management4. Policy and Infrastructure Services – for continued capacity

building as we undergo this and further transformation• Dedicated FMA presence maintained• Enhanced organizational alignment• Corporate Performance Measurements (CPM)

improvements with focus on non-financials

15

RMD’s Model - Highlights

Took stock of CFO accountabilities: reviewed OCG/TBS/FM-BP policies, directives and competencies

Set a Functional Framework and redefine the Functional Business Model: defined RMD key functions and activities

Redefined RMD Roles & Responsibilities Stakeholder engagement Designed a flexible organizational chart to support DM

& CFO accountabilities and responsibilities Leveraging technology - SAP for analytics - Business

Requirements

16

Methodology

OCG

Fin

anci

al M

anag

emen

t – B

usin

ess

Proc

esse

s Policy Framew

ork for Financial Managem

ent

Financial Administration Act

• FMCF (BMF)

• Internal Financial Monitoring & Reporting

• Revenue Management

• Grants & Contributions Management

• FI Development

• Business Requirements for Financial Systems

• Continuous Improvement and Change Management

• Relationship Building

• Financial Analysis & Advice

• Resource Supply

• Financial Planning & Budgeting

• Forecasting and Budget Review

• Investment Proposal & Challenge

• Costing, User Fee and Cost-Benefit Analysis

• Preparation of TB Submissions and MCs

• Strategist Responsibilities

• Management of Expenditures

• Internal Controls

• Internal Audit

• Performance Measurement Processes and Methods

• Financial Statements

• Statutory Reporting: RPP, DPR and Proactive Disclosures

• Asset Management

• Strategic Risk Management

Primary Contributory

Policy & frameworks

Trusted Business Partner

Service & Transactions

Business Analytics & Advice

Roles: Steward , Operator, Catalyst, Strategist

Financial Management Competency Model

RMD Functional Framework

17

On the Road To Success

Budget ManagementFramework

Salary Management

Grants & Contributions

Costing

CFO Attestation

Define FMA Responsibilities

RACI

Leveraging Technology

FMAs will use a risk-based approach with better tools in the challenge of the MVR information

Streamline and standardize SM towards a National Salary Management Strategy and clear roles and responsibilities

Strong financial oversight on G&Cs and clear roles and responsibilities

Costing Instruments for IP purposes; Costing User Guide

Improved workflow processes and regular review meetings with programs; guidance, instruments and clearer roles and responsibilities

Functional Framework, Clarification on core financial management roles and responsibilities.

RMD and clients will benefit from clearer delineation of roles and responsibilities under CFO Model

Maximizing use of technology via PEP Project, etc

18

19

On the Road To Success: How Did We Get Where We Are?

- Workshops for Task Teams

- RMD Staffing Strategy & Vacancy Management Strategy

All Staff Meeting

- Consultation with Clients & Stakeholders

- Announcement of RMD Transformation and Vision

- RMD Functional Framework

- Business Metrics

- Organizational Re-Structuring

- Launched eight Task Teams

- Transformation Drivers

- Lunch & Learn Sessions for Employees

- Final RMD OrganizationalStructure & Transformation Announcement

- Consultations with Human Resources

Change Agent

Network

we are here!

Started

here!

- Leveraging Technology: enhance systems and tools

PEP Project

Engagement and BR

gathering

20

PEP Project Vision

SAP - COSAP - FM

Business Warehouse

BPC

BI Tools

PEP SOLUTION

• Strategic and fact-based advice

• Integrated reporting – linking financial and operational data

• Data mining, data modeling & predictive analytics

• Enterprise resource planning

• Multi-dimensional reporting

• Business analytics• Single version of truth

RPPDPR

P2P

MVR

OPS PLAN

Performance Mgt. Indicator

HR – People

Soft

Investment

Planning

BMF

PAA

GCIMS

SFT

FINANCIAL NON FINANCIAL

PEP = Planning for Enterprise Performance

The Planning for Enterprise Performance (PEP) solution will: Transform existing planning and reporting business

processes, creating a standardized environment, fully integrating strategic, operational, and financial information needs

Implement common best practices and processes on a common technology platform, with a uniform data repository

Establish a standard set of intake, analysis and reporting tools

Serve as a trusted system of record

21

PEP Vision Statement

PEP Value Assessment

Opportunities & Benefits: Achieve department efficiencies and increase

productivity Integration of financial and operational data in unified

enterprise-wide solution Empower optimal decision making by improving financial

and operational data analysis Increase automation of manual processes Minimize the use of black books. Enhance visibility of performance information Eliminate the ‘wet-ink’

22

PEP Value Proposition

Consistency in planning, performance monitoring and reporting throughout the department. One version of the truth Reduction of duplicate information requests,

spreadsheet-farming and errors Improved operational communications, reporting, and

costing accuracy Leading Government

Continued HC leadership in innovative management practices

Next step in HC evolution to meet, and exceed, MRRS and MAF standards

Keeping pace with and inform GoC transformation

23

PEP Value Proposition….continued

Ability to respond rapidly to changing needs Flexibility and confidence in our information to respond

to increasingly complex reporting requirements Workforce Empowerment

Empowering staff to focus on higher value analytical and advisory activities

Reshaping HC as a forward-looking organization, Able to meet the expectations of a renewed Public

Service workforce (e.g. Blueprint 2020)

24

Potential Value of Performance Management & Budgeting

Delivering Public Service for the Future: Navigating the ShiftsAccenture study (2012)

PEP Project

National Accommodation Strategy

Shared Services

P2P

Cost Recovery

25

Project Overview – PEP Project Objectives

26

The objective of the PEP solution is to deliver a standardized planning and performance reporting environment that fully integrates:

• Strategic information, e.g., TB Submissions, Priorities, Risks

• Operational planning and reporting

• Financial planning and reporting

• Performance monitoring and reporting

Strategic and Operational Planning• ensure timely and integrated financial and non-financial performance information, clearly

linked to outcomes. • bring value to front line planners, managers and executives• integrate fully with the budget management process

Financial Planning and Management• replace the current suite of financial planning system modules• plan by PAA/program and functional areas/cost centres• supporting the alignment of financial and non-financial information, budget development,

and in-year reconciliation of adjustments

Performance Planning and Business Analytics• provide improved tools for performance reporting and an extensible platform for business

analytics• better access and alignment of priorities and strategies• improved transparency and accountability• analytical tools will assist managers to integrate resources and deliver performance• replace inefficient and disconnected tools (e.g. spreadsheets).

27

Project Overview – ScopeThe scope for this project is clear and touches on every business line in Health Canada.

Expanded HC SAP Architecture

Business Objects Business Intelligence (BI) Suite 4.0

• Dashboarding• Self-Serve Interactive Analysis• Exception & Customized Reporting

Strategy Management (SSM)

• Alignment Visualizations (PAA/PMF > Risks > Logic Models)• Scorecarding of Expected Results/Initiatives/Deliverables• Performance Commentaries/Notations

NotesManagement

(NM)

Business Planning & Consolidation

(BPC)

• Multi-Dimensional Planning & Budgeting (i.e. CC, PAA, Fund, Work Plans)• Salary/Headcount Planning, • Qualitative Operational Info/Forms Management (Deliverables, milestones)• Traceability of Funding Sources• Workflow, Version Control, Document Management, Attestation

Planning Application Layer

ERP Layer

Information Presentation Layer

SAP - COFM

• Cost Centre Accounting• Project Systems MDM

• Funds / Budget Mgmt & Control (CCM Level)

SAP NetWeaver Business Warehouse

• Data Models• Data Integration• Data Mining & Predictive Analytics

Data Management Layer

• Cost Centre Accounting• Project Systems MDM• Operational Budgeting

(CCM/Bureau)

28

Part of PWGSC Contract for SAP EIISS

SAP Technology outside of EIISS Offering

What it Means to Our People

Access to enhanced systems and tools that enable timely reporting and business analytics

Ability to respond to the needs of their clients at all levels

Standardized and automated processes A redefined role to be more value added and less

focused on transactional activities Established employees competency profiles :

provide insights into employee career aspirations matching of employees skills with available jobs

Talent Management Strategy to facilitate career development opportunities to help employee advancement

29

CFOB is leading the way in transformation:• Integrated performance reporting - linking financials and

operational information• Increasing focus on higher value analytical services• Enabling services are enabled through a business model based on

standardized business processes and information (i.e. single version of truth)

CFOB is already leaner, more integrated, more standardized, more automated, and demonstrably further along the shared services continuum, with:

Clearer accountabilities and strengthened capability A more streamlined, technology-based, standardized, transaction-

oriented, accounting and procurement shared service Effective ongoing Internal Controls over Financial Reporting Continued leadership by building upon cluster foundation to offer

financial and program reporting and analysis improvements for HC, its partners and the GoC at large

Strengthened financial management advisory functions

30

The Bottom Line

31

? Questions

Comments

Thank You