State of Kansas Financial Management System Needs Assessment Steering Committee Meeting

1. State of Kansas Financial Management System Needs Assessment Steering Committee Meeting November 30, 2006

2. Meeting Agenda • Introductions • Project Overview • Project Accomplishments • Status and Preliminary Findings • Upcoming Activities • Questions

3. Project Overview FMS Needs Assessment – Key Activities • 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. Project AccomplishmentsRequirements Validation: Status • Conducted Focus Group Kick-Off Meeting • Held 10/09/06 - 75 participants • Total of 140 participants in various Focus Groups • Represents 25 agencies • Outreach sessions directed at non-Focus Group agencies • Held on 11/14/06 and 11/17/06 • 27 agencies in attendance • Final draft requirements under review by state agencies • Posted online on 11/17/06 • Input due by 12/04/06

5. Project Accomplishments Communication/Outreach • Individual visits with 17 stakeholder agencies • Presented project overview/status to: • Regents Council of Business Officers (COBO) – 10/04/06 • Regents Controllers – 10/06/06 • Information Technology Advisory Board (ITAB) – 10/24/06 • Small Agency Group – 10/25/06 and 11/29/06 • Agency STARS Rapport Association (ASTRA) – 11/09/06 • Project web site received over 2200 page views in the last 60 days

6. Project Accomplishments Business Case Validation: Status • Agency Systems Survey • Briefing to Agency CFOs on 10/03/06 • Received a total of 19 survey responses • Value Pockets Survey • Briefing to Agency CFOs on 11/02/06 • Received a total of 12 responses, several outstanding • Draft of business case report due 11/30/06

7. Preliminary Findings Systems Survey • Total of 238 systems identified as performing administrative functions within the scope of this project (e.g., GL, AP, Procurement) • Includes automated tracking tools such as PC-based spreadsheets and databases • 146 in Dept. of Administration alone • Total of $28,091,912 in Annual Systems Costs reported over 11-year estimating period • Only 9 agencies provided estimates of costs to enhance existing/implement new systems • Approximately $7.2 million in costs • $5.5 million from KDOT alone

8. Preliminary Findings Systems Survey • Comparables from Other States: • Kansas (25,000 employees) • Approximately $3 million per year in ongoing avoided systems cost (so far) • Minnesota (33,000 employees) • Approximately $5 million • Tennessee (41,000 employees) • Approximately $16 million

9. Preliminary Findings Value Pockets Survey • Comparables from Other States: • Kansas (25,000 employees) • Approximately $8.5 million in annual FTE-based Value Pocket benefits; no discounting of this amount has yet been applied • Minnesota (33,000 employees) • Estimated $4.6 million could potentially be realized annually in FTE-based Value Pocket benefits • Tennessee (41,000 employees) • Approximately $6 million in gross FTE-based Value Pocket benefits; assumed 75% or $4.5 million could be realized annually in time

10. Preliminary Findings Proposed Functional Scope • Driving Factors • Functional Needs • Value Proposition • Mandate / Strategic Initiative • Organizational Change Impact • Project Staffing Considerations • Risk Avoidance / Mitigation • Funding • Prior Track Record with Similar Projects

11. Preliminary Findings Proposed Functional Scope • Modules • General Ledger (including Grant Accounting and Cost Allocation) • Accounts Payable • Procurement • Asset Management • Budget Development Integration (3 options) • Reporting / Data Warehouse • Issues • SOKI • Set-Off

12. Preliminary Findings Proposed Deployment Approach “Big Bang” Deployment Pros • “True” enterprise focus as all agencies “go live” on all FMS functionality simultaneously • Reduced implementation timeframe • Potentially least costly strategy as all functionality is implemented in shorter time period • Most efficient approach to data migration from legacy systems • Eliminates the need for temporary interfaces that are required when deployment “phasing” is utilized • Less likely to have to implement a new software release before FMS has been deployed at all state agencies • State begins realizing the benefits and efficiencies earlier, potentially avoiding implementation of new shadow systems for those agencies with compelling functional needs and/or pending software obsolescence • Risk of project team member turnover is reduced substantially due to compressed deployment time period for all state agencies

13. Preliminary Findings Proposed Deployment Approach “Big Bang” Deployment (cont.) Risks • Greatest change management impact to organization due to all functionality going “live” simultaneously • Major training impact as high volume of end users must be provided with “just in time” training within a narrow window of time • May require largest project team size • User participation is required for a limited but intense period of time • Extensive data migration activities must be completed simultaneously • Higher risk of problems due to compressed timeline and large functional scope with less margin to correct / mitigate problems that arise • Inability to take advantage of lessons learned from previous phase(s) of deployment

14. Preliminary Findings Proposed Deployment Approach “Phased” Deployment Pros • Provides ability to validate the “proof of concept” • Provides the ability to fund project over multiple budgetary periods • Change management impact is dispersed across longer period of time – can be focused on only those agencies that are part of specific deployment phases • Knowledge gained and lessons learned from initial deployment phases can be used for remaining deployments of the FMS throughout state government • Project team focus is on a single phased deployment at a time

15. Preliminary Findings Proposed Deployment Approach “Phased” Deployment(cont.) Risks • Requires concurrent operation of legacy systems and new FMS for long period of time • Requires greater timeline to complete entire deployment across state government • Can be very costly to the State due to increased timeline • May lead to difficulties in completing deployments for agencies scheduled for deployment late in project due to possible loss of momentum, lack of funding, and other issues that may arise due to an expanded rollout schedule • Complex data migration from legacy systems and ultimate elimination of legacy system usage due to deployment “phasing” • Requires the use of temporary interfaces due to “phasing” • Will take a longer period of time to realize benefits and efficiencies • Need may arise to implement a new software release before FMS hasbeen deployed at all agencies due to extended deployment time period

16. Preliminary Findings Proposed Deployment Approach “Phased” Deployment(cont.) Risks (cont.) • Possible inconsistencies in enterprise data and reporting due to the continued use of the FMS for the agencies participating in the Pilot Project and continued use of legacy systems by the remaining state agencies until all agencies have been deployed on the FMS • All state agencies may be involved in the initial system design and configuration, but may have to wait a considerable period of time before they can actually access to the FMS • Numerous iterations of training must be provided concurrently with deployment phasing, and may require updating due to system enhancements/changes associated with new software releases and “fixes” that are applied during the extended deployment time period • Some agencies may have compelling functional needs and/or pending software obsolescence that may cause them to move forward independent of the FMS project due to lengthy deployment timeline • Major risk of project team member turnover due to lengthy deployment time period could cause problems for state agencies scheduled for the late phases of deployment

17. Preliminary Findings Proposed Deployment Approach • “Big Bang” deployment strategy recommended • Pre-implementation activities completed over period of 12-18 months • 21 – 24 month implementation period • Currently reviewing tentative go-live target (fiscal vs. mid-year)

18. Preliminary Findings Proposed Project Organization - State (49)

19. Preliminary Findings Proposed Project Organization - Consultants (30)

20. Preliminary Findings Pre-Implementation Activities • Formalize pre-implementation governance structure and organization as a project and staff appropriately • Perform organizational change readiness assessment • Develop and initiate staffing approach for implementation project • Benchmark existing financial management and procurement business processes • Document State’s “As Is” business processes • Development of existing legacy system reports inventory • Perform data cleansing activities • Review and evaluate existing chart of accounts

21. Preliminary Findings Pre-Implementation Activities • Conduct alternative solutions analysis to determine how best to address existing SOKI, Set-Off, and SHARP time and effort functionality • Develop RFP(s) for FMS software and associated implementation services, and evaluation process to be followed • Development of demonstration evaluation scripts to be followed by vendor finalists during their software demonstrations • Proposal evaluation and contract negotiations • Plan and prepare re: project logistics (physical space for project team, etc.)

22. Upcoming Activities • Review/Approve Business Case Analysis • Catalog Major System interfaces • Through December 11 • Finalize Stakeholder Input and Approval • Through December 4 • Deliver Updated Needs Assessment • December 15 • Conduct Final Steering Committee Meeting • January 2007

23. Project Information http://da.ks.gov/ar/fms/

24. Questions?