Financial Management System Agency Requirements Outreach Briefing November

Financial Management System Agency Requirements Outreach Briefing November

Financial Management System Agency Requirements Outreach Briefing November 14 and 17, 2006 Agenda Welcome and Introductions Background / Purpose of Study Project Governance Preliminary Findings Requirements Functional Scope System Requirements Validation Questions

2 FMS Needs Assessment Update Background FMS Needs Assessment performed in 2001 by Accenture. Overseen by steering committee made up of state agency representatives, including Judicial, Legislative branches Recommended centralized system with two agency copies. Project costs estimated between $24.5M $36.5M Decision made not to move forward due to lack of funding related to economic downturn. Began effort in April 2006 to revisit FMS needs in light of changes in administrative philosophy, business practices, changes in technology, and improved economic outlook RFP opened in July 2006 for consulting services to assist in update. Awarded in late August to Salvaggio, Teal and Associates who have performed similar work in six states. 3 FMS Needs Assessment Update Purpose of Study Update the system requirements for a new

integrated FMS Update the business case analysis associated with implementing a new FMS Determine whether there is a compelling business case for procuring/implementing an integrated statewide FMS Submit recommendations regarding: Organizational best practices Implementation best practices 4 FMS Needs Assessment Update What is FMS? Financial Management System (FMS) A comprehensive suite of integrated modules delivered by a single software vendor that provides end-to-end support for statewide administrative business functions (e.g., financial accounting, procurement, asset management). FMS is a proposed solution that provides functionality similar to STARS, SOKI,

Central Setoff System, and other agency administrative systems, but in a fully integrated manner. 5 FMS Needs Assessment Update Key Activities and Timeline Validate Functional / Technical Requirements Project StartUp Sep t Validate the Business Case Oct

Key Deliverables Nov Dec Business Case Analysis Report Updated Needs Assessment Organization / Implementation Best Practices 6 Project Governance Organizational Structure EXECUTIVE SPONSORS ELECTED OFFICIALS

STEERING COMMITTEE PROJECT DIRECTOR Duncan Friend PROJECT CONSULTANTS Salvaggio, Teal & Assoc. AGENCY CFOs AGENCY CIOs ACCOUNTING TEAM Bob Mackey/Martin Eckhardt, Manager PROCUREMENT TEAM Chris Howe/Angela Hoobler, Manager TECHNOLOGY TEAM Cathy Jones/Jay Coverdale, Manager

ACCOUNTING FOCUS GROUP PROCUREMENT FOCUS GROUP TECHNOLOGY FOCUS GROUP AGENCY SUBJECT MATTER EXPERTS 7 Project Governance Project Sponsors Duane Goossen Secretary of Administration Carol Foreman Deputy Secretary of Administration

Denise Moore Executive Branch Chief Information Technology Officer 8 Project Governance Steering Committee

Chair - Carol Foreman, Deputy Secretary of Administration Mary Blubaugh, Board of Nursing Alan Conroy, Legislative Research Department Gary Daniels, Department of Social & Rehabilitation Services Elaine Frisbie, Department of Administration; Division of Budget Kathy Greenlee, Department on Aging Mike Hayden, Department of Wildlife and Parks Lynn Jenkins, State Treasurer Deb Miller, Department of Transportation Reginald Robinson, Board of Regents Howard Schwartz, Judicial Administrator Joan Wagnon, Department of Revenue Roger Werholz, Department of Corrections 9 Project Governance Stakeholder Agencies

10 Adjutant General Department on Aging Department of Agriculture Department of Administration Department of Health and Environment Department of Transportation Highway Patrol

Department of Labor Department of Commerce Juvenile Justice Authority Department of Corrections Department of Revenue Social and Rehabilitation Services Kansas Health Policy Authority Judicial Branch Department of Wildlife and Parks State Treasurer Preliminary Findings Lack of Integration Financial Accounting (STARS, SOKI) Purchasing (Procurement Manager Plus) Asset Management (various agency systems) Budget Development (BMS, various agency systems) Accounts Receivable (various agency systems)

11 Preliminary Findings Functional Challenges Procurement Grant and Project Accounting Fleet Management Inventory Management Time and effort reporting in SHARP Agency operating budget vs. appropriation budget Real-time budget checking 12 Preliminary Findings

Functional Challenges Agencies need ability to establish lower level of detail in chart of accounts Robust ad hoc reporting More efficient processing of employee travel authorizations and payment Comprehensive accounts receivable functionality including Set-Off capabilities Lack of enterprise Asset Management system for assets and controllable items 13 Preliminary Findings Other A number of agencies are either ready to seek replacement financial management systems or acquire a new system Evaluation of Chart of Accounts Needed Financial Accounting Coding Structure Budget Coding Structure Procurement Commodity Code Structure

Difficult to obtain true data on statewide spend 14 FMS Needs Assessment Update Functional Requirements Scope PROCUREMENT/LOGISTICS Purchasing Inventory Management Fleet Management HR / PAYROLL Automated Interfaces to/from SHARP Common Database BUDGET DEVELOPMENT INTEGRATION Appropriation Budget

Agency Operating Budget 15 CORE FINANCIAL General Ledger / Budgetary Control Accounts Payable Accounts Receivable & Cash Receipting Cash Management Cost Allocation Grant Accounting Project Accounting Asset Management Accounts Payable The Accounts Payable module will be used to process payments to vendors for goods and services. Major business functions included in this module are:

16 Vendor maintenance 3-way matching process Payment processing 1099 processing Payment cancellation Vendor self-service Employee travel authorization and payment processing Accounts Receivable Accounts Receivable provides proper recording of revenue against all segments in the Chart of Accounts to enable the State to report and monitor actual revenue against budgeted revenue. This area addresses the following functions:

17 Customer maintenance Accounts receivable processing Billing Cash receipting Dunning notices Interest / penalty calculation General Ledger & Budgetary Control The General Ledger & Budgetary Control Module provides an integrated central repository of statewide financial data. All subsidiary functions (e.g., Accounts Payable) update the General Ledger with financial data. Budgetary Control is used to control spending to

ensure that spending is in accordance with the Appropriations Bill. Major functions of this module include: 18 Chart of Accounts Structure Basic Fund Accounting Corrective or Adjusting Journal Entries Interfund/Interagency Transactions General Ledger & Budgetary Control

19 Month-End and Year-End Closing State and Federal Reporting Real-time Budgetary Control Budget Maintenance and Monitoring Budget Adjustments Cash Management Cash Management provides an integrated central repository of deposit transactions for reconciliation of the various state bank accounts. In addition, payments issued are tracked to validate against the redemption of these items: Issuance and redemption of payments Bank reconciliation 20 Cost Allocation Cost Allocation aids management in making costeffective and informed decisions about projects and programs by assessing the entire monetary cost of

resources used or committed to projects and programs. By providing financial allocation and distribution functionality, the FMS offers the ability to accumulate and measure the true cost of organizational activities. Cost Allocation Labor Distribution Billing 21 Project Management Project management addresses the recording, tracking, and reporting of financial data for a variety of State projects and contracts. This module addresses the following: Key processes for operating and capital projects, including project development, execution, and the project close process. Tracking of project progress using work plans, tasks, resource assignment, controlled critical path, and deliverables.

22 Grants Management Grant accounting enables the recording and monitoring of all grant activity. Grant accounting functionality includes: 23 Grant award Grant billing and draw processing Grant reporting Sub-grantee accounting Asset Management Asset Management addresses the need for the State to track and account for all capitalized assets.

Additionally, Asset Management performs the following: The ability to produce reports in accordance with GASB 34 for inclusion with the CAFR. Allows the agencies to track other items as needed, including sensitive items and other controlled assets (e.g., guns, PDAs, digital cameras). Processing of surplus assets Processing of lost and stolen assets 24 Procurement Procurement includes the traditional solicitation process used for purchasing goods and services, as well as new eProcurement functionality:

25 Catalog procurement Reverse Auctions Vendor registration and other self-service Commodity maintenance Vendor performance management Procurement Best Practices Traditional Procurement Process Requisitioner initiates purchase requisition Approvals provided via automated workflow Solicitation initiated based on pre-defined business rules: Posted to State Procurement Web Site Automatically pushed to vendors registered to service specific commodity(s) Solicitation responses received from vendors Responses tabulated, evaluated and awarded 26

Procurement Best Practices Traditional Procurement Process All vendors submitting bids receive email notification of award Purchase order created and issued Goods receipt entered Invoice receipt entered Automated three-way match performed If no exceptions, payment request generated If exceptions exist, they must be resolved 27 Procurement Best Practices Catalog Procurement Requisitioners procure goods and/or services from vendor catalogs at the States pre-negotiated prices via the Internet Types of catalogs available may include: Catalogs that reside inside the States firewall (e.g. statewide or agency contracts) Catalogs that reside at the vendors site requisitioners punch-out to vendor web sites to configure and price items;

this information is then retrieved and used in building a requisition Catalogs for goods or services purchased from other organizations within State government 28 Procurement Best Practices Catalog Procurement Purchase order created and issued Approvals provided via automated workflow within agency or across agencies Goods receipt entered Invoice receipt entered Automated three-way match performed If no exceptions, payment request generated If exceptions exist, they must be resolved 29 Procurement Best Practices Reverse Auctions Typically performed for certain types of purchases (e.g., bulk commodity purchases, big-ticket items)

State notifies prospective vendors of upcoming auction, including auction start and end dates / times Vendors registered with the State to provide specified commodity(s) are invited to participate in the auction Notice of auction posted to Division of Purchasing Web site Vendors log in, view and accept terms and conditions, target bid price, specifications, and enter their respective bids in online, real-time mode Vendors can view other bids and submit lower bids to stay competitive 30 Procurement Best Practices Market Place Examples Catalog procurement = Reverse auctions = 31

Procurement Best Practices Vendor Self-Service Vendor registration Special certifications can be captured (e.g., Small Business, Woman Owned, Minority Owned) Maintenance of basic vendor information (e.g., contact information) Maintenance of commodities serviced Automatic pushing of bid opportunities to vendors that service specific commodities Inquiry into status of transactions with State 32 Procurement Best Practices Vendor Performance Management Track contacts with problem vendors (phone calls, written contacts regarding problem orders/delivery of goods and services) Automatically track and report/inquire on vendor performance, including:

33 Orders Delivery Returns Bid history Payment history Complaints and resolution Inventory Inventory Management addresses the need for selected agencies to purchase, store and distribute, and replenish goods within a warehouse or central stores operation. Additionally, this module provides the following functions: Ability to provide inventory data for inclusion with the

CAFR Allows the agencies to effectively manage inventory cost and quantities Provides a mechanism to allocate inventory costs to programs and organizations Provides reordering process or replenishing inventory when specific reorder points are met Provides for full integration with Procurement module Supports the use of bar coding technology 34 Fleet Management Fleet Management addresses the need for the State to manage and efficiently maintain its investment in vehicles and other motorized equipment. Additionally, Fleet Management performs the following:

35 Reduces vehicle downtime to the State through the use of effective preventive maintenance Provides the ability to manage vehicle assignments and the proper allocation of the cost within the organization Provides the ability to track and manage fuel cost System Requirements Validation Objectives It is essential that a comprehensive set of detailed requirements be developed as they will:

36 Identify the system requirements necessary to support the States business processes Be included in Request for Proposal and used as a checklist against which to evaluate vendor offerings Become part of the contract entered into with the selected vendor(s) Monitored during implementation to ensure all requirements were met, and that work was not performed to develop functionality that did not support the documented requirements System Requirements Validation Process Used Functional and Technical Requirements Development Process Requirements from 2001 Needs Assessment Study

Project Team STA Requirements Toolkit 37 Baseline Focus Requirements Group Draft Requirements End User Community Final Requirements System Requirements Validation

Accomplishments Focus Group Kick-Off Meeting on 10/09/06 with 75 agency participants Over 130 participants representing 25+ agencies in various Focus Groups to-date Requirements cover 14 functional areas Final draft requirements are almost complete. Will be posted to the web for review by all state agencies by late next week (Nov. 17). 38 System Requirements Validation Where We Are? Requirements from 2001 Needs Assessment Study Project Team Baseline

Focus Requirements Group Draft Requirements End User Community Final Requirements STA Requirements Toolkit Attend Agency Requirements Outreach Briefing (November 14 or 17)

Conduct Conductstatewide statewidestakeholder stakeholdermeetings meetingsEarly EarlyOctober October(Human (HumanResources, Resources, Payroll, Budget Development) Download and review applicable to(Purchasing) your agencys Payroll,Financial, Financial, Budgetrequirements Development)and

and9-28/10-6 9-28/10-6 (Purchasing) Stakeholders download requirements and response templates business functions Stakeholders download requirements and response templates Stakeholders email template totous 10/14 Stakeholders emailthe theresponse response templateback

back usby by Email completed Feedback Response Template by10/14 12/04/06 39 System Requirements Validation Process for Obtaining Agency Feed back Download the following files from the FMS Web site (the URL is http://da.ks.gov/ar/fms/): Functional requirements Requirements Feedback Template (Excel file) Enter your recommended additions, changes, and deletions to the requirements in the Requirements Feedback Template Save the template using the following naming

convention: Abbreviated Agency Name + Your Last Name Example: KDHE Smith Email the completed template as an attachment to: Noelle Jones at [email protected] 40 System Requirements Validation FMS Web Site http://da.ks.gov/ar/fms/ 41 System Requirements Validation Sample Functional Requirements Reference Number PU 19.00

PU 20.00 PU 21.00 PU 22.00 PU 23.00 PU 24.00 PU 25.00 PU 26.00 PU 27.00 PU 28.00 PU 29.00 42 Business Requirements Vendor Files System provides the ability to track and to report/inquire on vendor

performance including delivery, complaints (including complaints about discrimination allegations) and resolution. System provides the ability to search for a vendor by commodity code/number/description and by vendor number/name. (Attach vendor to commodity). System can infer default vendor information from the vendor master file when creating requisitions and purchase orders. System provides the ability to automatically carry forward a vendor number to the next transaction (i.e., requisition to PO and PO to invoice), optional on requisition. System provides the ability to assign status codes to vendors (i.e., inactive) and this status can vary by agency or facility (i.e., a vendor can be blocked from use by certain agencys/facilities but not blocked for other agencys/facilities). System maintains pricing information, quantity breaks, freight terms and shipping information for each vendor. System tracks vendor by performance / history, date added / deleted or inactivated and reason. System provides the ability to classify one-time vendors and to check whether already on file based on multiple criteria (e.g., FEIN, SSN, etc.). System can delete or deactivate vendor from vendor listing by date with reason. Historical data would be retained.

System rates vendor at each event point based on user-defined criteria and these ratings are displayed at each point in the procurement process. Vendor numbers (numeric and alphanumeric) can be system generated or assigned manually. Vendor Response Comments System Requirements Validation Vendor Response Codes

43 SF = Standard functionality NR = Provided in Next Release MI = Minor Modification MA = Major Modification to Source Code Required RQ = Provided through Reporting or Query Tool CD = Custom Development TP = Third Party Software Required NA = Cannot Meet Requirement System Requirements Validation Requirements Feedback Template State of Kansas FMS Requirements Validation Requirements Feedback Template Date: Name: Agency:

Reference Number 44 Business Requirements Add/ Change/ Delete Comments System Requirements Validation Adding a Requirement State of Kansas FMS Requirements Validation Requirements Feedback Template Date: Name: Agency:

Reference Number Business Requirements Add/ Change/ Delete To add a requirement: Enter the reference number of the requirement you would like the new requirement to follow Enter the requirement Enter an A in the Add/Change/Delete column Provide additional explanation in Comments column if needed 45 Comments

System Requirements Validation Changing a Requirement State of Kansas FMS Requirements Validation Requirements Feedback Template Date: Name: Agency: Reference Number Business Requirements Add/ Change/ Delete To change a requirement: Enter the reference number of the

requirement you would like to change Enter the requirement as changed Enter a C in the Add/Change/Delete column Provide additional explanation in Comments column if needed 46 Comments System Requirements Validation Deleting a Requirement State of Kansas FMS Requirements Validation Requirements Feedback Template Date: Name: Agency: Reference

Number Business Requirements Add/ Change/ Delete To delete a requirement: Enter the reference number of the requirement you would like to delete Enter the requirement to be deleted Enter a D in the Add/Change/Delete column Provide additional explanation in Comments column justifying why the deletion is required 47 Comments System Requirements Validation

Guidelines for Reviewing Requirements Do not attempt to document your existing systems/ processes describe your future requirements Focus on what the system must do not how. System design will be completed after product selection Ensure that the requirements are documented in clear and concise statements (single requirement -- dont blend multiple requirements together) Focus on requirement content, not wordsmithing Remember that considerable work has already been put into validating the requirements by the Focus Groups We need all Requirements Feedback Templates returned to Noelle Jones by December 4th 48 Questions? 49

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