Making the Business Case

Presented by: Art Holdsworth Deputy Director, Management & BudgetOakland County, Michigan

October 4, 2007

Economic and political trends driving theneed to justify technology investments• Economic times are getting tougher, so more

scrutiny will be given to Big Ticket projects…– Many State and Local economies are weakening– Programs and services are already being reduced in many

communities.– Federal and State budget challenges continue with the

resulting ripple effect for locals. – Healthcare and other cost increases continue to outpace the

inflation rate. – Infrastructure is aging.

• Privatization of governmental services and inter-governmental collaboration trends placing more pressure on IT Directors to be as cost effective and efficient as possible.

• Public is demanding more for less, i.e., improving / offering new services without raising taxes

Stakeholder Expectations…

• Constituents / Media• You’re wise stewards of the taxpayer’s money!

• Elected Officials (Board, Council, etc.)• You’re not going to embarrass them…You’re going to

help them get re-elected!

• Administration• “Show me!”

• Employees• “Why do I have to change?”

The Business Case…

• Demonstrates why the investment in new technology makes financial and public service sense

• Addresses the intangible / public service aspects of the technology’s application

• Starts with an ROI / Payback calculation…• Gap Analysis

• Interview all departments • Identify shadow systems and other redundancies;

quantify labor hours associated with same• Include the elimination of these shadow systems /

redundancies in the implementation work plan • Cost projection

• Work with IT and key vendors to identify all costs (hardware, communications, professional services, software licenses, annual support fees, etc.)

• Be sure to include internal labor and staff back fill costs

ROI and Payback

• Quantification of…• Cost savings/avoidances

• Gap Analysis results extrapolated into the ROI

• Efficiency enhancements • Service enhancements / Benefits (that are quantifiable) • Revenue enhancements

• Projecting the timing of the above “savings”• Juxtaposing “savings” with “costs” along the

same timeline• What is an acceptable payback period?

• Oakland Cty. accepts projects with a six-year payback or less

Case Study

Oakland County’s Presentation to the Board of Commissioners to Secure Approval for a New

Financial / Supply Chain / Time & Labor Management System

E-Financial System Implementation Project

Presentation tothe Board of

Commissioners

December, 2003

HistoryMigrated from a custom legacy mainframe

system to a client-server packaged financial software solution in 1997

Since implementation, the County’s operations have continued to increase in complexity and volume, yet the current Financial Software’s functionality has only moderately progressed and it’s technology platform has been diverging from the County’s standards

The objective now is to migrate to a thin-client, Web-based solution that adheres to current Industry best practices

Project Justification The County must upgrade the hardware and operating

software that the Financial Software makes use ofAcknowledging the need to be proactive, the Board

passed MR # 02043 providing funding to allow the undertaking of an E-Financial System Project implementation

A competitive bidding process was followed and the finalists were selected as implementers

Performed a gap analysis to refine proposed costs and identify implementation tasks necessary to achieve desired functionality

Identified key business process, reporting, and software configuration requirements necessary

• The “E-Financial System Implementation Project” has seven components that can be more cost-effectively performed together / sequentially than separately:

• Data Privacy/Security Technologies Implementation• Time & Labor Implementation• Human Resources Self-service • Human Resources Enhancements• Financials Management Implementation• Supply Chain Management Implementation• PeopleSoft Portals and Analytics

• The legacy financial software is becoming obsolete and lacks sufficient feature advancement. Long-term viability is a concern.

Project Justification

• Data privacy, infrastructure security, and information integrity is of paramount importance:

• Management discussions with the County’s contracted Auditors have included concerns over future data security as hacking and national security issues have increased

• County receives hundreds of virus and hacking attempts daily

• Homeland Security bulletins consistently warn of the growing likelihood of future Cyber-Terrorism

• Acknowledging the need to be proactive, the BOC passed an earlier resolution allowing the acquisition of new software

Project Justification

• A competitive bidding process was then followed and an implementer was selected

• Detailed Return on Investment (ROI) analysis for the E-Financial System Implementation Project yielded a likely 6 year payback

• The E-Financial System Implementation project will be undertaken in three phases:

• Phase I - Data Privacy/Single Sign-on (SSO), HR Self-service and Enhancements, Time & Labor; Estimated cost: $4.9 million

• Phase II - Financial System and Supply Chain Management; Estimated cost: $6.1 million

• Phase III – Portals, Budgeting, and Analytics; Estimated cost: 3.9 million

Project Justification

• Each Phase is independent from its predecessor• After each Phase, a report will be provided to the

Board• Subsequent Phase appropriation requests will be

contingent on the County’s budget situation• The License Agreement positions us to be an

Application Service Provider (ASP): Our Cities and Townships can access the County’s financial / supply chain / HR system, via OakNet (Countywide fiber optic network linking all public offices), for their own use! This decreases their licensing, implementation, and support costs. It also facilitates intergovernmental cooperation in other areas (e.g., broad-based purchasing of products and services; countywide requests for service management; countywide web-based billing and collections; etc.)

Project Justification

Anticipated Benefits & Measurements

• “Self-service” access to information by staff and constituents via portal

• Elimination of Legacy System administration and support costs

• Reduction in hardcopy reporting and distribution costs

• Increase in usage of self-service portal

• Expenditure reduction for support services

• Reduction in printed reports

• Increase in downloads of reports from the portal / new systems

Anticipated Benefits & Measurements (cont.)

• Elimination of standalone and shadow (duplicative) systems to reallocate staff time

• Elimination of custom systems

• Reallocation of staff time from portal use

• Checklist of systems to “turn-off”

• Checklist of systems to “turn-off”

• Reduction in security administration databases

• Reduction in Support Center calls

Anticipated Benefits & Measurements (cont.)

• Enhanced, proactive supply chain management

• Increased number of bidders

• Increased % of purchases via Web

• Enhanced turnaround time for RFP/bid process

• E-catalog purchasing by departments

• Statistical analysis-based reduction in poor performing vendors

• Enhance early payment discount realization

• Optimization of purchase quantities

Return on Investment Analysis – Benefits/Savings

See attached spreadsheet

Return on Investment Analysis - Benefits/Savings

• Examples of “Savings:”– Cost savings/avoidance from better tracking and

monitoring of historical vendor performance, enhanced competitive bidding, proactive contract/vendor performance monitoring, improved vendor selection

– Avoidance of postage and pre-printed forms costs – Staff time reallocation due to efficiency enhancements

via real-time remote access to data; enhanced access to more helpful data on-line; reports viewable on-line locally, real-time; elimination of "Shadow Systems" and processes; interfaces with user-department systems to eliminate duplicative data entry and/or report preparation time

– Savings of incremental annual support cost from licensing a different financial system

– Elimination of annual support and professional services costs of legacy system

Return on Investment Analysis – Costs

See attached spreadsheet

Return on Investment Analysis – Costs

• Examples of “Costs:”– IT and End-user Labor– Server and Database Software License Acquisitions and

On-going Support– Professional Services for Hardware, Database, and

Application Software Implementation– Project Manager– Project Staff Training– Travel Costs– Contingency

Return on Investment Analysis – Payback

• Six-year payback…

Project Results

• The Board unanimously approved the resolution appropriating the necessary funds.

• Phase I went live as scheduled with $802,990 of its appropriation remaining.

• Phase II went live as scheduled with $281,000 of its appropriation remaining.

Lessons Learned

• Adoption/pushback (passive/aggressive)• Aggressive timeline/stressed operations• Knowledge transfer (business/technological)• Ongoing costs/funding methodology• Dependency on implementer• Leverage technology dollars across entire

enterprise• Focus on business re-engineering, not technology

implementation• Business drives technology,

technology does NOT drive business

For copies of the ROI Tool or this PowerPoint presentation, contact:

Wm. Art Holdsworth holdswortha@oakgov.com

Questions & Answers