KPMG Business Case Final Report 02-15-00 - Florida's Department

Business Case Study Executive Summary

Final ReportPage ES-1 kpmg

Executive SummaryThe State of Florida engaged KPMG to conduct the Modernization of State Government Financial

Management Business Practices Study (hereafter referred to as the “Business Case Study” or the

“Study”), which considered contemplated changes to the subsystems it refers to collectively as the

Florida Financial Management Information System (FFMIS). KPMG assessed the costs and risks as well

as the financial and other benefits that the State can expect from a new or enhanced financial

management system. The Study began August 2, 1999, and the final report was submitted February 15,

2000.

Background

For the past two decades, the State of Florida has accomplished its budgeting, cash management,

accounting, purchasing, payroll, and human resource functions using five stand-alone, stovepipe, legacy

management information systems. Although these FFMIS subsystems have been maintained and

incrementally upgraded, the State of Florida has neither modernized nor replaced the subsystems in a

structured and coordinated manner to meet its changing and growing needs. The five functional FFMIS

subsystems and their agency “owners” are identified in Exhibit ES-1:

Exhibit ES-1FFMIS Subsystem Owners

Function Name Owner

Accounting Florida Accounting Information Resource (FLAIR)Subsystem

Department of Banking and Finance

Human Resources Cooperative Personnel Employment Subsystem(COPES)

Department of Management Services

Purchasing Statewide Purchasing Subsystem (SPURS) Department of Management Services

Budgeting Legislative Appropriation System - Planning andBudgeting Subsystem (LAS/PBS)

Executive Office of the Governor

Cash Management Cash Management Subsystem (CMS) Department of Insurance, Treasuryand State Fire Marshal

Issues and concerns with the FFMIS subsystems, including the lack of integration and incomplete

reporting capabilities, have developed over the years since the system was implemented. After several

years of research and assessment, the State decided to pursue implementation of a commercial off-the-

shelf (COTS), Enterprise Resource Planning (ERP) system to support its core business functions. The

implementation of a purchased ERP system anticipated extensive reengineering of State agencies’

business processes to ensure that the benefits of the system would be realized.

Executive Summary Business Case Study


In 1997, a pilot project was initiated to replace the State’s COPES and payroll portions of FLAIR with a

COTS solution. In 1998, SAP R/3 was selected as the ERP package for the State. After completing the

scoping and planning phases, the State discontinued the project in March 1999. The State was concerned

about escalating cost estimates and the ability of the system to meet the State’s functional and technical

requirements. The State was also concerned about the magnitude of the projected benefits associated

with continuing its ERP implementation.

Although the pilot project was discontinued, the need to enhance or replace the FFMIS subsystems was

still apparent. With the support of newly elected Governor Jeb Bush, the Florida Legislature passed

legislation in 1999 to carry out the Business Case Study.

Vision for FFMIS

A clearly defined vision is critical for making an important decision such as the one contemplated by the

Business Case Study. One of the first steps taken by KPMG in the Study was to understand the vision

that the State of Florida has for FFMIS. KPMG interviewed stakeholders of FFMIS in senior leadership

positions at the project inception and found that the State has a clear vision for its financial management

systems. The recurring themes that together constitute the State’s vision are summarized in Exhibit ES-2.

Exhibit ES–2Vision for FFMIS

Existing FFMIS

Departmental Focus

Stovepipe System Architecture

Extensive “Dumb Terminals” and “Green Screens”

Inconsistent Chart of Accounts

Limited Integrated Performance Data

Limited Contract Management and Tracking

No CFO Drives Financial Management

No Single Source Drives FFMIS Policy

Excessive Ad Hoc Reporting

Extensive Manual Reconciliations

Four Data Centers

Limited e-commerce

Rigid Financial Policies Embedded in Statute

Focus on Expensive Preventive Controls

Future FFMIS

Statewide Enterprise Focus

Integrated System Structure

Enhanced Desktop Capabilities

Consistent and Integrated Chart of Accounts

Enhanced Integrated Performance Data

Enhanced Contract Management Support System

CFO Drives Financial Management

CFO and Governor Drive FFMIS

Standard Management and Financial Reporting

Automated Reconciliations

Consolidated Data Center Support Structure

Fully Integrated e-commerce

Flexible Financial Policies Set by Administrative Rule

Focus on Employee Efficiency with Cost-Effective Detective Controls



Objectives

The Study focused on providing answers to three questions critical to making the State’s vision for

FFMIS a reality:

! What should the State do to modernize its financial management systems?

! How much will it cost?

! What benefits will the State receive?

KPMG worked closely with the State to meet its objectives while ensuring the integrity and objectivity of

the analysis. The State’s Project Management Team and State’s Study Advisory Council met regularly

with KPMG to promote open, ongoing communications and Study management.

Approach

KPMG organized the Study into three major tasks:

! Business Process Reengineering (BPR)

! Information Technology (IT) Assessment and Evaluation

! Evaluation of Options

Business Processing Reengineering Task

The Business Process Reengineering task focused on assessing the benefits the State could achieve by

changing its business processes. The benefits were primarily with technology but some non-technology-

dependent opportunities were also identified. A review of every business process in State government

was not feasible within the time constraints of the Study. With the help of the State Study Team and

Study Advisory Council, KPMG selected 16 processes for analysis. These processes are listed in Exhibit

ES-3. KPMG completed high-level documentation of current activities and processes, developed

recommendations for improving these processes, and determined the impacts of the recommendations on

the five system options described below in the IT Assessment and Evaluation Task.



Exhibit ES-3Processes Selected for Analysis

Management Reporting Purchasing Commodities and Services

Financial Reporting Payment for Goods and Services

Accounting Reconciliation Budgeting

Accounting for Payments from Multiple Accounts Rate and Position Administration

Allocation of Common Costs Certified Forward

Flow of Federal Funds Cash Receipts and Cash Management

Payroll Accounts Receivable

Travel Reimbursement Asset Management

KPMG also worked with the State Study Team and Study Advisory Council to identify and select a

representative sample of State agencies to participate in high-level process reengineering. The five

agencies selected were:

! Department of Transportation

! University of Florida

! Department of Highway Safety and Motor Vehicles

! Department of Children and Families

! Department of Insurance, Treasury and State Fire Marshal

The results of this high-level reengineering were extrapolated to the 49 Governor, Cabinet, Legislative,

and Judicial agencies in the State of Florida. The opportunities that KPMG identified included both

technology-dependent improvements as well as improvements that the State can implement without new

technology. Our recommendations included “hard” savings (budgetary) resulting from reduced operating

costs and “soft” savings (increased efficiency) resulting from reduced staff efforts that make time

available for other higher value activities.

IT Assessment and Evaluation Task

For the IT Assessment and Evaluation Task, KPMG performed the following:

! Assessed the existing system used by the State of Florida

! Defined the five system options identified by the State for evaluation in the Business Case Study.The five options are shown in Exhibit ES-4

! Developed system requirements for existing and future technologies to use in analyzing the fivesystem options

! Evaluated the five system options



Exhibit ES–4Financial System Options

Option 1 As-Is Maintain the current legacy systems as-is with no major modifications or upgrades

Option 2 Enhanced Enhance current systems by adding new tools and functionality

Option 3 Custom Develop a new custom integrated information management system

Option 4 COTS Implement a commercial off-the-shelf Enterprise Resource Planning package

Option 5 Best of Breed Use some combination of the other four options

KPMG analyzed the strategic, operational, technical, and financial impact of each alternative. The

evaluation included the advantages and disadvantages associated with each system option.

Evaluation of Options Task

For the Evaluation of Options Task, KPMG prepared a Total Cost of Ownership (TCO) estimate and a

Return on Investment (ROI) analysis for a period of 15 years. The financial analysis included cost

savings identified in the BPR Task and investments required as a result of the IT Assessment and

Evaluation Task. The ROI consisted of quantitative operational improvements for the State. KPMG

analyzed various financial metrics including net present value (NPV), internal rate of return (IRR), and

payback period.

Findings—BPR Analysis and IT Assessment and Evaluation

KPMG’s BPR analysis and IT assessment and evaluation resulted in a number of findings and

recommendations for both the State’s financial management practices and for the operational support

from the respective IT staffs.

Business Process Reengineering Findings

Our analysis of the processes selected for review in the Business Case Study revealed many opportunities

for budgetary savings and increased efficiency. Some of these opportunities are a result of the State not

having taken full advantage of technology to improve its processes. Other opportunities are not

technology driven.

In total, KPMG made 46 separate recommendations, which address major weaknesses with current

processes. Among the goals are improving customer service, reducing costs, and reducing cycle times.

The recommendations cluster around several themes as follows:

! Develop an enterprisewide perspective on State government financial operations

! Expand the functionality of the financial management system



! Automate manual steps and reduce excess paper

! Provide better financial management information for more cost-effective decisions

! Increase the use of e-commerce

! Update and modernize policies and procedures

A sample of BPR recommendations from the Study is shown in Exhibit ES-5.

Exhibit ES-5Sample BPR Recommendations

Payroll (BPR–18) Move to a shared services concept by having severalagencies served by a single payroll unit $2,016,000

Purchasing (BPR–31) Enhance the central purchasing function at Stateagencies and DMS to focus on strategic sourcing

10,700,000

Cash Receipts andCash Management(BPR-39)

Terminate the certificate of deposit program aimed atFlorida banks and S&Ls and transfer funds to theexternally managed program

11,679,000

Cash Receipts andCash Management(BPR-40)

Reduce funds in the internal investment liquidity pooland transfer them to the externally managed funds

10,000,000

The estimated annual fiscal impact of all BPR recommendations is presented by option in Exhibit ES-6.

Exhibit ES-6Summary of Fiscal Impacts by Option

OptionsBudgetary

SavingsIncreasedEfficiency Total BPR savings

Option 1 $23,691,000 $1,707,000 $25,398,000

Option 2 60,219,000 3,159,000 63,378,000

Option 3 90,776,000 6,193,000 96,969,000

Option 4 90,776,000 6,193,000 96,969,000

Option 5 90,776,000 6,193,000 96,969,000



IT Assessment and Evaluation Findings

KPMG found that the current FFMIS subsystems will not support the vision that the State has for its

financial management systems. The overarching concerns about Florida’s existing subsystems are shown

in Exhibit ES–7.

Exhibit ES–7Findings on Existing FFMIS Subsystems

1 Florida has created stovepipe data and technical architectural models.

2 FFMIS subsystems do not provide adequate decision-support information and functionality, resulting innumerous shadow and feeder systems.

3 Significant staffing resources are dedicated to ensuring consistency among the five FFMIS subsystems inthe form of duplicate data entry, data redundancy, and data reconciliations.

4 FFMIS processing, application, and help desk support occurs in four distinct IT organizations.

5 The lack of a unified, standard Chart of Accounts makes aggregating information across agencies extremelydifficult without extensive manual effort.

6 FFMIS subsystems are difficult, time consuming, and expensive to modify.

7 Existing State personnel policies and funding processes inhibit the recruitment and retention of skilledemployees required to support FFMIS technology.

8 FFMIS makes limited use of e-commerce.

Surveys conducted during the Study indicated that most users do not believe FFMIS can support the

future business needs of the State of Florida. Users also expressed dissatisfaction with the current

functionality in FFMIS. Targeted improvement areas from the users’ perspective focused on:

! Integration

! System flexibility

! Ad hoc reporting capabilities

! Ease of use

! Training

! Help facilities



Findings—Evaluation of Options

KPMG’s evaluation of the five FFMIS options covered three key areas: ability to satisfy requirements,

risks, and financial considerations.

Requirements Assessment

KPMG considered the ability of each option to meet approximately 1,500 functional and technical

requirements, which were defined for FFMIS by KPMG and State personnel. Exhibit ES-8 summarizes

the results of our requirements assessment for each option. The maximum score available was five

points. Higher scores indicate that the option is better able to meet the State’s functional and technical

requirements.

Exhibit ES-8Summary of Requirements Assessment

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Total Functional Score 70% 1.5 2.3 3.5 2.9 3.4

Total Technical Score 30% 0.5 0.8 1.4 1.4 1.3

TOTAL SCORE 100% 2.0 3.1 4.9 4.3 4.7

As the scores indicate, a Custom solution will best meet the State’s functional and technical requirements

because it is possible with the right amount of resources and time to build exactly what the State needs.

The COTS and Best of Breed solutions can satisfy most of the State’s requirements while the As-Is and

Enhanced options fall short of meeting many of the State’s requirements.

Risk Assessment

KPMG considered the strategic, project, and continuation risk to the State for each of the options.

Exhibit ES-9 summarizes our assessment of each risk category. (Note: Lower scores indicate less risk.)



Exhibit ES-9Summary of Risk Assessment

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Total Strategic Risk/Weighted Average 100% 4.8 2.8 1.3 1.2 1.3

Total Project Risk/Weighted Average 100% 0.0 2.1 4.5 3.2 3.3

Total Continuation Risk/Weighted Average 100% 3.8 3.6 3.1 2.3 2.8

Total All Risk Categories/Weighted Average 2.9 2.8 3.0 2.2 2.5

The risk analysis indicates that a Custom solution exposes the State to the greatest degree of risk. The

COTS and Best of Breed options provide the least exposure to risk.

Financial Assessment

KPMG considered the BPR savings net of the risk-adjusted implementation and ongoing operational

costs over a 15-year period for each option. In addition, financial metrics such as NPV (based on a

discount rate of 6 percent), IRR, and payback period were considered. Exhibit ES-10 summarizes the

financial impact of each option.



Exhibit ES-10Summary of Financial Assessment(dollar amounts are in thousands)

Options As-Is Enhanced Custom COTSBest ofBreed

Implementation Costs $ 0 $(119,222) $(563,745) $(257,960) $(281,327)

Operations Costs $(396,328) (402,065) (216,392) (277,548) (316,317)

Technology-related BPR

Savings 0 478,471 798,797 956,113 956,113

Net Fiscal Impact (Technology

Savings Only) (396,328) (42,816) 18,660 420,605 358,469

NPV on Net Savings

(Technology Savings Only) (250,806) (96,638) (166,387) 133,770 92,965

Internal Rate of Return N/A (2%) (1%) 12% 10%

Years to Payback N/A N/A 15 Years 10 Years 11 Years

Nontechnology-Related

BPR Savings 467,922 467,922 467,922 467,922 467,922

Net Fiscal Impact

(All Recommendations) $71,594 $425,106 $486,582 $888,527 $826,391

Recommendation

After comparing the five system options to the State’s vision and functional and technical requirements,

and after assessing the risk and financial impacts, KPMG believes, as shown in Exhibit ES-11, that the

Best of Breed option is the optimum choice for the State’s financial management information system.

Exhibit ES-11Minimum Requirements Analysis Ratings

(dollar amounts are in thousands)

Functionality Financial

RawScore

WeightedScore

Raw Savings(Cost)

WeightedScore Total

Option A B A + B

As-Is 2.00 40 $(396,328) - 40

Enhanced 3.10 62 (42,816) 24 86

Custom 4.90 98 18,660 28 126

COTS 4.30 86 420,606 50 136

Best of Breed 4.70 94 358,469 46 140



The Best of Breed option KPMG recommends would:

! Use an ERP system to replace the State’s accounting and personnel systems

! Use an ERP system to partially replace the budgeting, cash management, and purchasingsubsystems

! Allow dual-tracks for the SUS and the remainder of State government

As documented in our analysis, ERP packages (at the time of evaluation) are generally weak in certain

key areas, such as supporting the legislative approval of budget issues, supporting a web-enabled vendor

bid management system, and complying with Florida’s unique cash management practices. Accordingly,

the portions of those subsystems not replaced with an ERP system would continue to be supported by

State-developed software that would interface with the ERP solution.

In addition, the student administration systems used by the State University System (SUS) are

sufficiently self-contained and have unique requirements that must be met by the SUS Financial

Management System. If the student administration system drove the selection of an ERP package, it

could lead to selecting an ERP vendor that may not be best for the rest of State government and vice

versa. Recognizing the important differences between general government and Florida’s higher education

system, the recommendation enables a dual track software selection and implementation strategy to

accommodate, but not require, separate software packages for the State University System and the

remainder of State government. If this approach is taken, the systems would need to interface to provide

statewide management information.

KPMG believes that the Best of Breed option is the optimum practical solution to meet the functionality

required by the State of Florida. With this option, the State would be able to blend the best practices of

the industry with that of the State wherever the off-the-shelf solution does not meet a requirement.

Although KPMG recommends enhancements to the ERP solution in some specific areas, we suggest that

the State exercise care when evaluating enhancements and consider the effect that those enhancements

have on future upgrades.

To reduce the project risk of this effort, KPMG recommends that a dedicated project management office

be established—one that is consistent with the State's vision, focuses on delivering a quality product, and

is sensitive to producing a timely solution. KPMG also recommends that the Executive Office of the

Governor take ownership of the project. Exhibit ES-12 illustrates a timeline for the implementation of the

integrated solution. We have overlaid a line on the chart to graphically represent the estimated savings

from the State’s implementation of recommendations prior to the full system implementation.



Exhibit ES-12Timeline for Solution Implementation

RFP Bid Requirements Definition

RFP Requirements Definition Vendor Selection

Requirements Definition

Integration RFP Preparation

Integration Vendor Selection

Integration Solution (Design, Build, and Test)

Implementation

Implementation of BPR Recommendations

1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05

7/1/00 7/1/01 7/1/02 7/1/03 7/1/04 7/1/05

FY01 FY02 FY03 FY04 FY05

Savings

—$45M

—$30M

—$15M

—0

It is important to have a detailed requirements definition for the State’s FFMIS before selecting the ERP

vendor. The requirements definition should focus on the detailed processes of all the State agencies and

the universities related to the accounting and human resource functions. After selecting the ERP package,

the State should refine the requirements at the data element level. The State will be able to use the

requirements definition phase to require that ERP vendors and integrators demonstrate their ability to

meet the State’s critical requirements. The requirements definition phase will help the State understand

the capabilities of the ERP packages and will help ERP integrators speed implementation. The

requirements definition phase will consist of three distinct tasks:

! State preparation of RFP for requirements definition

! State selection of vendor for requirements definition

! Vendor-led requirements definition

The requirements process, including the related procurement, is projected to be completed in 13 months.

The compiled list of requirements will then serve as input for the request for proposal for the

implementation of the new FFMIS.

Implementation will have the following overlapping subtasks:

! Develop the implementation RFP (up to 3 months)

! Select the ERP vendor and the integrator (up to 6 months)

! Design, build, and test the new solution (3 years)

! Implement the solution ( 2½ years)



The implementation process is projected to require approximately 4 years to complete. For simplicity, we

assumed that accounting and human resource modules of the chosen ERP vendor will be built once and

will be implemented in phases. With this approach, implementation for the initial phase of agencies will

begin in 3½ years. With proper planning, control, and approval, the State could begin implementing the

solution in selected agencies 6 to 9 months earlier than presented in our timeline. Thus, implementation

in the first agencies could be completed in less than 3 years.



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Business Case Study 1—Objectives and Approach

Final ReportPage 1-1 kpmg

1. Objectives and Approach1.1 Objectives

The State of Florida’s objectives in the Modernization of State Government Financial Management

Business Practices Study are:

To develop a business case study for enhancing or replacing the State’s current financial

management systems while simultaneously changing the State’s associated financial

management business practices.

The decisions that Florida must make based on this Study are both significant (in dollars and time to

implement) and complex (in the number of agencies and processes it impacts). Furthermore, these

decisions will receive extensive scrutiny by both internal and external stakeholders of the State. The

underlying analysis governing this Study must be widely viewed as independent and objective. In reality,

the future of the Florida Financial Management Information System (FFMIS) modernization rests on this

Study’s credibility.

KPMG worked closely with the State’s leaders to meet their objectives while ensuring the integrity and

objectivity of this analysis:

! The State and KPMG agreed up front on the Study’s approaches and methodologies

! The State’s Project Management Team and Advisory Council met regularly with the KPMGStudy Team to promote open, ongoing communications and study management

! The Study effort was organized to provide decision-useful results

1.2 Business Case Study Approach

To achieve the State’s objectives, KPMG conducted a Business Case Study to provide a recommendation

for reengineering selected State business processes in tandem with enhancing or replacing the State’s

current financial management systems. Our recommendations are based on a comprehensive assessment

of costs and benefits and include a strategy for rollout and funding, an estimate for the time to implement,

and direction on system ownership.

1—Objectives and Approach Business Case Study


The Study compares five options identified by the State as shown in Exhibit 1-1.

Exhibit 1-1Options

Option 1 As-Is Maintain the current systems as-is with no major modifications or upgrades





KPMG considered the strategic, operational, technical, and financial impacts of the five options and

prepared a 15-year total cost of ownership (TCO) estimate and a return on investment (ROI) analysis.

We organized the Study into seven tasks as shown in Exhibit 1-2.

Exhibit 1-2KPMG Approach

BusinessProcess

ReengineeringTask 3

IT Assessmentand

EvaluationTask 4

Evaluationof

OptionsTask 5

FinalizeBCS

MethodologyTask 2

InitiateStudy

Task 1

PrepareFinal

ReportTask 8

Finalize BCSand Prepare

RecommendationTask 7

DraftInterimReportTask 6

Our amended timeline for the Study is presented in Exhibit 1-3.



Exhibit 1-3Amended Timeline

1. Initiate Study

2. Finalize Business Case Study Methodology

3. Conduct BPR Assessment

4. Evaluate System Options

5. Conduct Business Case Study

6. Brief Steering Committee

7. Finalize BCS and Prepare Recommendations

8. Prepare Final Report

BIWEEKLY STATUS REPORTS

Kick Off Meeting August 2, 1999

Report on PreliminaryAnalysis and Results

October 15, 1999

Draft Final ReportJanuary 21, 2000

Final Report withRecommendationsFebruary 15, 2000

Up to 3 Briefingsas requested

Presentation to Senior State Officials

December 15, 1999

To evaluate the five options, we organized the Study into three major components grouped in the center

of Exhibit 1-2:

! Business Process Reengineering (BPR)

! Information Technology (IT) Assessment and Evaluation

! Evaluation of Options

After initiating the Study, KPMG met with the State management representatives to finalize the Study

methodology and assumptions. Our experience has shown that it is critical for KPMG and the State’s

Study Management Team to reach consensus on key issues that will influence the success of this project.

During the Finalize BCS Methodology Task, we reached consensus on the methodologies and approaches

for the BPR, IT Assessment and Evaluation, and Evaluation of Options tasks. This included determining

the processes to be modeled, specific agencies to be evaluated, and agreements on various financial and

operational criteria and assumptions. This task provided the basis for the activities to be performed in

Tasks 3, 4, and 5. We made numerous data and record requests on which to base our analysis. A list of the

documents and key information reviewed is included in Appendix E.



For the BPR Task, KPMG:

! Reviewed the State’s goals and underlying business strategies

! Developed a high-level process flow model of 15 selected business processes

! Identified opportunities for improvements in the current performance of selected businessfunctions, processes, overall business process integration, and the Chart of Accounts used by thefive FFMIS subsystems

! Quantified the current performance of selected business processes and compared them to thereengineering improvements

! Made recommendations for business process reengineering

! Determined the strategic impact and economic benefits of selected business processimprovements

! Coordinated the business process reengineering with the evaluation of system options

For the IT Assessment and Evaluation Task, KPMG evaluated the five options, in three steps:

! Assessed the existing FFMIS

! Developed system requirements including existing and future technologies for our analysis of thefive system options

! Defined the five options for which we prepared implementation cost estimates and operationalcost estimates

For the Evaluation of Options Task, KPMG prepared a TCO estimate and a ROI analysis for an average

5-year implementation period and an average 10-year operational period. The TCO estimate for each

option included the following cost factors:

! Required hardware (that is, production, testing, training, and user “sandbox”)

! Software (system software and utilities, core application software, and applicable third-partysoftware)

! Database

! Network and connectivity requirements

! Desktop

! Peripherals

! Interfaces

! Hardware and software maintenance

! State staff (that is, project management team, core project team, technical team, and users)



! Consultants (that is, process reengineering, common data conversion, system configuration, andimplementation)

! Training

! Operations support (that is, technical and help desk support)

! Overhead allocations

KPMG analyzed the TCO during the following stages, as applicable to each option:

! Planning—Costs to develop the To-Be vision and detailed requirements

! Evaluation—Costs incurred in the selection process for the application software, hardware, andconsultants, and during the contract negotiation process

! Implementation—Costs incurred for sizing and placement of technology infrastructure, data andprocess design, data cleansing, migration and reconciliation, integration with legacy and third-party applications, customizations, testing, development of new processes and relateddocumentation, and change management

! Operation—Costs to support the application software and hardware after they have beenimplemented and for supporting existing hardware and software during any transition period

! Upgrades—Cost to upgrade (that is, resizing infrastructure, customizations, testing new releases,and retraining)

The financial analysis included cost savings identified in the BPR Task and investments required from the

IT Assessment and Evaluation Task. ROI analysis consists of those benefits that support the State’s

strategy, vision, and direction such as:

! Reducing waste, fraud, and abuse in State government

! Supporting the ability to move to improved performance-based budgeting

! Improving the sharing of information between government agencies and between the governmentand the public

! Realizing e-commerce savings to the government and public

KPMG analyzed various tangible ROI metrics including net present value, internal rate of return, and

payback period. KPMG then prepared a summarized analysis of the strategic, operational, technical, and

financial impacts of each alternative. The evaluation included the advantages and disadvantages

associated with each system option. KPMG considered the functional and technical requirements;

strategic, project, and continuation risks; the costs of operations and implementation; and other BPR

savings for each option. We have recommended one option for the State of Florida to pursue, which is

presented in Section 7 of this report.



1.3 Project Organization

The project organization is depicted in Exhibit 1-4. The State Project Manager provided onsite project

management for the State. The State convened a State Advisory Council consisting of 11 members

representing financial management of State government.

Exhibit 1-4

Organization Chart

KPMG dedicated a partner onsite and full time to manage the project. KPMG also provided an advisory

council of three additional partners who have significant experience serving the IT needs of State

government. The KPMG Team was organized into three functional teams, each of which had a senior-

level Team Leader, supported by numerous staff with technical and functional experience. We have

included a list of State personnel who participated in the Study in Appendix C.

State of FloridaProject Manager

KPMGStudy Director

Deputy StudyDirector

Financial Team

StateAdvisoryCouncil

KPMGAdvisoryCouncil

BPR Team IT Team

KPMG Staff & State of Florida Staff



1.4 Communication

Both KPMG and the State’s Study Management Team recognized that effective lines of communication

are essential to the success of the Study. To ensure effective communications, an official Communications

Plan for the Study was developed. The purpose of this Plan was to summarize the process for creating

effective lines of communication both to and from the Study team. Ultimately, the goal was to enlist the

support and commitment necessary for the success of the Study, as well as the acceptance and adoption of

the Study’s recommendations. The Plan identified more than 500 stakeholders in the Study. The

stakeholders were informed of the Study’s purpose and have received regular updates on the Study’s

progress.

1.5 Report Organization

The Business Case Study final report is organized as follows:

! Section 1, Objectives and Approach, identifies the State of Florida’s objective in undertaking theModernization of State Government Financial Management Business Practices Study. ThisSection also outlines the approach that the State and KPMG adopted to achieve the objective

! Section 2, Current Environment, describes the existing management information system and itsfive subsystems

! Section 3, Business Process Reengineering, lists the 16 major financial processes analyzed anddescribes the current process and our recommendations for reengineering them

! Section 4, IT Assessment, identifies the elements analyzed to gain an understanding of and todocument the FFMIS subsystems

! Section 5, System Requirements, delineates the key technical and business requirements

! Section 6, Options Analysis, provides KPMG’s in-depth analysis of the five options, includinggeneral assumptions and criteria

! Section 7, Recommendation, presents KPMG’s evaluation of the five options. This Sectiondescribes a vision for the State’s technology infrastructure; compares the functionality, risk, andfinancial impact of each option; and presents its recommendation

The appendices contain the following information:

! Appendix A, Innovative Practices, details the results of research conducted on key processimprovement strategies successfully used by companies and government agencies

! Appendix B, Risk Multiplier, presents the risk-adjusted contingency rate used to account forperceived risk of additional project expense for each of the five options analyzed



! Appendix C, List of Participants, identifies the personnel and organizations that participated inthe Study

! Appendix D, Cost Detail, presents the BPR savings associated with each of the five options, aswell as the total costs of operation for each option

! Appendix E, Research Documents, lists the documentation used during the Study

! Appendix F, Preliminary Implementation Plan, provides a sample high-level project plan for therecommended option

! Appendix G, High Level Infrastructure Schematic, depicts the infrastructure for four of theoptions analyzed

Business Case Study 2—Current Environment

Final ReportPage 2-1kpmg

2. Current Environment2.1 Overview

In 1980, the Florida Legislature enacted the Florida Fiscal Accounting Management Information System

(FFAMIS) Act (Chapters 215.90-215.96, Florida Statutes). The Act’s purpose was to design and

implement a management information system through a unified approach with the following goals:

! Strengthening and standardizing management and accounting procedures

! Strengthening internal controls

! Enabling the preparation of objective, accurate, and timely fiscal reports

! Reporting on the stewardship of officials who are responsible for public funds or property

! Providing timely and accurate information for decision making

Since its enactment in 1980, the FFAMIS Act has been modified 12 times. In 1997, the name of the Act

(Chapter 215.93, Florida Statutes) changed to the Florida Financial Management Information System

(FFMIS) Act. Exhibit 2-1 shows the five functional subsystems of FFMIS.

Exhibit 2-1Five Functional Subsystems of FFMIS

System Function System Name System Owner

Accounting Florida Accounting InformationResource Subsystem

FLAIR Department of Banking and Finance

Human Resources Cooperative PersonnelEmployment Subsystem

COPES Department of ManagementServices

Purchasing Statewide PurchasingSubsystem

SPURS Department of ManagementServices

Budgeting Legislative AppropriationSystem—Planning andBudgeting Subsystem

LAS/PBS Executive Office of the Governor

Cash Management Cash Management Subsystem CMS Department of Insurance, Treasuryand State Fire Marshal

The subsystems of FFMIS underwent extensive modifications between their respective development,

pilot, and implementation dates. Exhibit 2-2 reflects those dates.

2—Current Environment Business Case Study

Final ReportPage 2-2

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Exhibit 2-2FFMIS Development, Pilot, and Implementation Dates

Subsystem

InitialDevelopmentDate

PilotImplementationDate

ImplementationDate

FLAIR July 1980 July 1982 July 1986

COPES July 1980 July 1981 July 1982

SPURS October 1985 May 1988 May 1988

LAS/PBS July 1982 July 1983 July 1983

CMS July 1982 July 1982 July 1982

The FFMIS subsystems have many users statewide. Exhibit 2-3 summarizes the approximate number of

current subsystem users.

Exhibit 2-3Approximate Number of FFMIS Subsystem Users

Subsystem Number of Users (approximate)

FLAIR 14,300

COPES 4,000

SPURS 6,400

LAS/PBS 486

CMS 30



2.2 FLAIR

FLAIR is a double-entry, computer-based general ledger accounting subsystem consisting of four

components:

! Departmental Accounting System—Maintains agency accounting records and is used at the endof each fiscal year to prepare financial statements in accordance with Generally AcceptedAccounting Principles

! Central Accounting System—Maintains cash basis records and is used by the Comptroller toensure that expenditures are made in accordance with the legislative appropriations

! Payroll Accounting—Processes the State’s payroll

! Information Warehouse—A reporting system that allows users to access the Central AccountingSystem information and limited Departmental Accounting System information from FLAIR

The Department of Banking and Finance is the functional owner of FLAIR. While all agencies and

universities use FLAIR for their primary accounting functions, numerous other specialized accounting

systems are used by State agencies in addition to FLAIR.

FLAIR has been expanded and enhanced many times during the past 17 years. The most recent

expansions were the implementation of the Purchasing Card (PCard) in July 1997 and Electronic Data

Interchange (EDI) of invoices in July 1998. During Fiscal Year 2000, the Department of Banking and

Finance will focus on short-term enhancements that emphasize electronic commerce.

The State has the following projects planned or currently underway for FLAIR:

! Vendor History on the Web—Vendors will be able to access their payment history directly fromthe web site thus reducing vendor interaction and encouraging electronic fund transfer (EFT)

! Electronic Invoicing Through the Internet—This application allows invoices to be input via theInternet and processed through the invoice tracking system. Ideally, this application will allowvendors to query the statuses of their invoices through the Internet

! Electronic Routing of Earnings Statements to Department of Banking and Finance Employees—This project provides the earning statements of employees on the Internet

! EFT to Miscellaneous Deduction Vendors—This application provides the capability to transfermiscellaneous payroll deductions to vendors electronically



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2.3 COPES

COPES is the statewide online personnel subsystem used by all State agencies (excluding the State

University System, Auditor General, Legislature, and the Board of Regents) to maintain human resource

records for approximately 140,000 employees. This subsystem includes functions for maintenance of

employee and position data, including funding sources and percentages and salary lapse; recruitment and

examination; time reporting; and collective bargaining. The Department of Management Services is the

functional owner of COPES.

COPESView provides a snapshot of COPES and is updated daily with downloads from COPES. Users

can create and run reports using tools such as Impromptu. COPESView can be accessed via the State’s

intranet.

During the past 10 years, significant modifications to COPES occurred when more than 40,000

employees of the Department of Children and Families and the Department of Health agencies were

added to COPES. During the past 3 years, enhancements to COPES have been on hold because the

Human Resources and Payroll project that was piloting a replacement to the current Human Resources

and Payroll subsystems.

The State has the following projects planned or currently underway for COPES:

! COPES DIRECT—A web site is under development to make COPES information available viathe State’s intranet to aid in paper reduction, training, and better communication to COPES users.Browser-based transactions and reports are also being developed. Most of these transactionsprovide functionality that does not exist in the mainframe environment

! Employee DIRECT—This web site links areas of interest to employees in one location. Theemployees’ personal and leave information will be available for them to review. Whereappropriate, employees will be provided the capability to update their personal information suchas telephone numbers and emergency contact information. Various statewide forms will beavailable electronically. A solution will also be developed to provide employees’ earningsstatements electronically

! COPES Security System—The COPES security system was developed with physical securityfeatures (that is, the actual workstation on which the user enters data must be known to thesecurity system and is validated when the user signs on). Today’s mobile workforce would bebetter served by changing the security system to one that requires user IDs and passwords forauthenticating a user



2.4 SPURS

SPURS is the automated commodity procurement (purchasing) subsystem for the State of Florida.

SPURS provides purchasing information for decision making by customers, management, and legislators,

and provides operational systems for effective and efficient purchasing operations by State agencies. The

subsystem is used by the Executive Branch agencies of State government for the creation of requisitions,

purchase orders, vendor bid lists and mailing labels, and a variety of other standard purchasing functions.

The Department of Management Services is the functional owner of SPURS.

SPURSView provides a “snapshot” copy of SPURS. Users perform queries and reporting from the

Internet and intranet.

The Vendor Bid System (VBS) allows an agency user to advertise its bids and requests for proposals on

the Internet and publish the documents on the Internet. VBS notifies registered vendors of the bids via

e-mail.

Over the last decade, a number of important modifications and enhancements were made to SPURS

including:

! System Security—A new security system was developed and implemented in the CommodityProcurement component of SPURS

! FLAIR/SPURS Financial Interface—SPURS interfaces online in real time with FLAIR forvendor updates, account code validation, and fund encumbrance additions, updates, and deletions.In addition, users can inquire on fund encumbrances and account balances

The State has the following projects planned or currently underway for SPURS:

! Electronic Commerce—This initiative includes a web-based electronic requisition component,EDI of purchase orders from the mainframe to approved trading partners, and VBS enhancements

! Other SPURS Mainframe Applications Development—Modifications will be made to theStatewide Vendor File to provide additional Certified Minority Vendor information

! Agency Implementations—Tentative plans call for the addition of two agencies during FiscalYear 2000: the Office of the Auditor General, and Office of Program, Policy Analysis, andGovernment Accountability



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2.5 LAS/PBS

LAS/PBS is the State’s automated budgeting and appropriation subsystem. This subsystem is used by all

branches of State government for developing, preparing, analyzing, and evaluating State agency budget

requests. The Executive Office of the Governor and the Office of Policy and Budgeting use LAS/PBS to

develop the Governor’s budget recommendations and to allocate and control the appropriations. The

legislative appropriations committees use the subsystem to create the appropriations bills, including the

proviso and other controlling language used to document the legislative intent and create a basis to enable

the agencies to manage their agencies consistent with such legislative intent. The budgeting and

appropriating process produces the General Appropriations Act and its supplements. The Executive

Office of the Governor is the functional owner of LAS/PBS.

During the mid- to late-1980s, modifications and enhancements were made to LAS/PBS including the

following:

! LAS merged with PBS to form the current LAS/PBS

! The Virtual Storage Access Method files were replaced with Software AG’s ADABAS databasemanagement system, and its fourth-generation language, Natural, became the primaryprogramming language

During the last decade, a number of important enhancements were made to LAS/PBS including the

following:

! The Systems Design and Development section enhanced LAS/PBS by developing auxiliarysystems in Lotus Notes and Visual Basic that increase functionality

! Heavily used modules in LAS/PBS have been rewritten to operate as much like a personalcomputer as possible. Pop-up windows and hierarchical help are provided. Both application-leveland field-level help have been added

! LAS/PBS is mission critical and therefore provides for Direct Access Storage Device mirroring,hot-site backup, 24x7 vendor and staff support, and disaster recovery

The State has the following projects planned or currently underway for LAS/PBS:

! Multitier client/server

! Relational database management systems

! Network-based computing

! Graphical user interfaces

! Local area networks, Internet/intranet, Groupware, and e-mail



2.6 CMS

Owned by the Department of Insurance, Treasury, and Fire Marshal, CMS is a collection of 13 systems.

These systems facilitate the Treasurer’s responsibilities for monitoring cash levels and activities in State

bank accounts, receipt and disbursements of funds, investment of available balances, performance of

related accounting functions, and cash management operations and consultations.

During the last decade, a number of important enhancements and modifications were made to CMS

including the following:

! The Treasurer purchased an IBM AS/400 mid-range computer

! A client/server-based front end was developed for the interactive portions of the applications

! The original COBOL programs were migrated to the AS/400 and they continued to be used forovernight processing

! The Treasurer updated its PC operating system to Windows 95

! Seventy percent of the Treasurer’s processing is now in an interactive mode, while 30 percent isbatch processing using COBOL

The State has the following projects planned or currently underway for CMS:

! During Fiscal Year 2000, the Treasurer will establish an interactive web site on an AS/400 server.The web site will include interactive capabilities for general and administrative functions relativeto activities of the Treasurer

! Automation of the receipt and verification of incoming Automated Clearing House (ACH)Payments will replace the use of telephone and facsimile with electronic means to notify agenciesof incoming ACH payments, automate FLAIR verification, and pass on other income, such asaddenda data that is received with payments

Other current initiatives include the development of electronic data exchange, enhancement of

communications and functionality, a return items application, and consolidation of revolving accounts

transactions and statements.



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Business Case Study 3—Business Process ReengineeringOverview


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3. Business Process Reengineering3.1 Overview

The BPR analysis of the State of Florida’s financial management processes identified several

recommendations for improvement. If implemented, these recommendations would increase the

availability of financial management information through more user-friendly processes, reduce the time

needed to carry out financial management processes, and increase efficiency. When the estimated fiscal

impacts of all the recommendations are taken together, the estimated annual savings totals $97 million.

This includes $91 million in anticipated budgetary reductions and $6 million in increased efficiencies.

The BPR analysis was undertaken in the context of assessing five options for addressing the State of

Florida’s need for an automated financial management system. The five options are shown in Exhibit 3-1.

Exhibit 3-1Options






Although some of the recommendations for reengineering the State’s financial management processes can

be implemented with the current automated system (Option 1), most of the recommendations require

either a significant upgrade of the current system or its replacement. Of the $91 million in annual

budgetary savings, only $24 million can be achieved if no change in the automated system is undertaken.

An additional $36 million in annual savings can be achieved with Option 2, but only with Options 3, 4,

and 5 can all $91 million in budgetary savings be achieved.

The remainder of this section includes a discussion of the background, assessment of current processes,

reengineering themes, and fiscal impact that resulted from the BPR analysis.

Background

The purpose of a financial management system is to automate an organization’s financial management

processes. Maximum benefit is derived from the automated system if the processes are efficient and if

they make use of the automated system’s fullest capabilities. To understand the customer service and



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fiscal impact of a decision to keep, upgrade, or replace the State of Florida’s financial management

system, we have undertaken a BPR analysis of selected financial management processes. The purpose of

this analysis is to identify better ways to carry out financial management processes and to document the

expected impacts on quality, service, and costs.

With nearly $50 billion in revenues and expenses, the State of Florida presents a tremendous financial

management challenge. The State manages a payroll for nearly 200,000 workers, receives payment for

licenses from millions of drivers, makes payments to more than 300,000 vendors, and invests billions in

assets. Many of the processes for carrying out these functions are several decades old while others are

newer but interface with older technology. Exhibit 3-2 identifies the 16 processes included in this

analysis.

Exhibit 3-2State of Florida’s Major Financial Management Processes

Management Reporting Purchasing Commodities and Services

Financial Reporting Payment for Goods and Services

Accounting Reconciliation Budgeting

Accounting for Payments from Multiple Accounts Rate and Position Administration

Allocation of Common Costs Certified Forward

Flow of Federal Funds Cash Receipts and Cash Management

Payroll Accounts Receivable

Travel Reimbursement Asset Management

The introduction of new technologies has created opportunities for streamlining and consolidating

processes, automating databases, and sharing information. We developed reengineering recommendations

for 16 major financial management processes of the Florida State government. Implementing them should

yield significant cost savings. The most dramatic changes are not reflected in the numbers but in the

nature of the changes and the impact they will have on customer service.

Assessment of Current Processes

The State of Florida’s financial management processes reflect many of the problems found in

organizations that have not taken full advantage of technology to improve customer service. In assessing

current processes, we identified the following issues:

! Performance is below acceptable standards. The State issues its comprehensive annual financialreport nearly 8 months after the end of the fiscal year. Forty-three other states complete thisprocess in 6 months or less



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! System capabilities do not meet customer needs. The clearest evidence is that agencies havepurchased or developed numerous supplemental systems to overcome limitations in systemfunctionality. An agency may have one or more of the following modules supplementing thestatewide accounting systems: grants management, accounts receivable, cash receipts, journaltransfer, project cost, position control, reconciliation, leave and attendance, payroll tracking, andcertified forward. In many cases, agencies download data from the Florida AccountingInformation Resource (FLAIR) subsystem to PC-based spreadsheets and databases to analyze andreport financial information

! Key steps in the process are not automated. Entry of travel vouchers and positive pay timekeeping, purchasing, and vendor payments are initiated using paper processes. The centralizeddata entry is redundant in the preparation of manual forms

! Selected policies place a tremendous burden on staffing resources with little added value. Assetmanagement, certified forward, financial reporting, and rate and position administration require alarge staff. The experiences of other states and large corporations show that the goals of theseprocesses can be achieved using more streamlined and efficient processes

! Key building blocks of the financial management system impede efficient operations. FLAIRincludes two ledger systems: Central Accounting System (Comptroller Records/Cash Basis) andDepartmental Accounting System (Agency Record/Accrual Basis). This fact by itself creates theneed for a reconciliation process. In addition, a significant amount of work—checking,reconciling, verifying, and ad hoc reporting—is caused by variations among agencies in the Chartof Accounts

The impact of these shortcomings in the current processes is manifested through an unacceptably high

cost for managing the State’s financial resources.

Reengineering Themes

The reengineered processes address major weaknesses with current processes. Among the goals are

improving customer service, reducing costs, and reducing cycle times. The recommendations cluster

around several themes. These themes and the reengineering recommendations associated with them are

summarized as follows:

! Develop an enterprisewide perspective on State government financial operations

– Establish a statewide single Chart of Accounts

– Consolidate central and department accounting into one enterprisewide accounting system

– Establish an enterprisewide policy for accounts receivable and a database capable ofenforcing a “clean hands” law

– Establish a semi-monthly payroll statewide



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– Consolidate payroll support functions into five shared service cluster units

! Expand the functionality of the financial management system

– Modify the system to enable disbursements against more than one account

– Automate the process of calculating and reporting indirect (common) costs

– Develop a grants management system and automate the process of matching federal fundsreceipts

! Automate manual steps and reduce excess paper

– Introduce electronic auditing of invoices and exception reporting for in-depth audits

– Fold most supplemental warrants into the regular payroll warrant and issue only one pay stub

– Decentralize data entry for employees entering time and travelers seeking reimbursement

– Automate the interface between the accounting system and the budget system

! Provide better financial management information for more cost-effective decisions

– Use better financial management information, shift up to $1 billion in assets from the internalprogram to the higher yielding external program

– Create a statewide financial information data warehouse for the collection and reporting offinancial management information

! Increase the use of e-commerce

– Decentralize purchasing and verification of receipt of goods and services to the lowestpossible level within service delivery units

– Decentralize and automate the payment process

– Require that all vendors doing business with the State have e-commerce capabilities (onlineinvoicing and payment) by 2002

– Establish online automated reconciliation with banks

– Require that all travel reimbursement be remitted through electronic funds transfer

! Update and modernize policies and procedures

– Raise the definition of a capital asset to $5,000 for tracking purposes and reduce thefrequency of physical inventory

– Make the acceptance of debit cards a statewide standard

– Terminate the certificate of deposit program aimed at Florida banking institutions

– Eliminate the detailed certified forward process—review obligations by exception rather thancomprehensively and estimate year-end obligations



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– Make salary rate a direct function of salary appropriations to simply calculation of ratethroughout the year

– Remove travel parameters from the Florida Statutes and place them in administrative rules

Except for the last set of recommendations under the theme “Update and modernize policies and

procedures,” most of the recommendations do not require legislative action beyond the authorization for

funds to replace or upgrade the Florida Financial Management Information System (FFMIS).

Fiscal Impact

Taken together, the fiscal impact of all the reengineering recommendations is significant. Fiscal impacts

are labeled in two ways—budgetary savings and increased efficiency. Budgetary savings reflect the

potential for reductions in full-time equivalent (FTE) positions and consequently reductions or redirection

of budgetary resources. Increased efficiency reflects a reduction in the labor necessary to carry out a

process, but that reduction is either too small or spread across so many staffs that FTE reductions are not

expected to result. Exhibit 3-3 presents the total fiscal impact of all the Business Case Study

recommendations. The fiscal impact of the recommendations has been presented separately for Option 1

and Option 2. The fiscal impact of the recommendations is the same for Option 3, 4 and 5 and is

presented once at the end of Exhibit 3-3.



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Exhibit 3-3Summary of Business Process Reengineering Savings by Process

Net Budgetary Savings Net Increased Efficiency

ProcessTechnologyDependent Other

TechnologyDependent Other Total Savings

Option 1: As-Is

Management Reporting $0 $0 $0 $0 $0

Financial Reporting 0 (100,000) 0 0 (100,000)

Reconciliation 0 0 0 0 0

Accounting Payments for Multiple Accounts 0 0 0 0 0

Allocation of Common Costs 0 0 0 0 0

Flow of Federal Funds 0 0 0 0 0

Payroll 0 0 0 0 0

Travel Reimbursement 0 3,482,000 0 0 3,482,000

Purchasing Commodities and Services 0 0 0 0 0

Payment for Goods and Services 0 0 0 0 0

Budgeting 0 0 0 0 0

Rate and Position Administration 0 0 0 0 0

Certified Forward 0 3,125,000 0 3,125,000

Cash Receipts and Cash Management 0 14,656,000 0 0 14,656,000

Accounts Receivable 0 0 0 193,000 193,000

Asset Management 0 2,528,000 0 1,514,000 4,042,000

Option 1: As-Is Total $0 $23,691,000 $0 $1,707,000 $25,398,000

Option 2: Enhanced


Financial Reporting 56,000 (100,000) 90,000 0 46,000

Reconciliation 0 0 145,000 0 145,000

Accounting Payments for Multiple Accounts 0 0 0 0 0

Allocation of Common Costs 0 0 0 0 0

Flow of Federal Funds 0 0 0 0 0

Payroll 6,038,000 0 0 0 6,038,000

Travel Reimbursement 0 3,482,000 0 0 3,482,000

Purchasing Commodities and Services 16,910,000 0 0 0 16,910,000

Payment for Goods and Services 1,500,000 0 0 0 1,500,000

Budgeting 0 0 1,217,000 0 1,217,000

Rate and Position Administration 0 0 0 0 0


Cash Receipts and Cash Management 10,000,000 14,656,000 0 0 24,656,000


Asset Management 0 2,528,000 0 1,514,000 4,042,000

Option 2: Enhanced Total $34,504,000 $23,691,000 $1,452,000 $1,707,000 $61,354,000



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Exhibit 3-3 (continued)Summary of Business Process Reengineering Savings by Process


ProcessTechnologyDependent Other

TechnologyDependent Other Total Savings

Option 3: Custom, Option 4: COTS, andOption 5: Best of Breed


Financial Reporting 56,000 (100,000) 90,000 0 46,000

Reconciliation 2,848,000 0 145,000 0 2,993,000

Accounting Payments for Multiple Accounts 0 0 2,783,000 0 2,783,000

Allocation of Common Costs 2,324,000 0 0 0 2,324,000

Flow of Federal Funds 303,000 0 0 0 303,000

Payroll 8,054,000 0 0 0 8,054,000

Travel Reimbursement 3,260,000 3,482,000 0 0 6,742,000

Purchasing Commodities and Services 22,335,000 0 0 0 22,335,000

Payment for Goods and Services 17,905,000 0 0 0 17,905,000

Budgeting 0 0 1,217,000 0 1,217,000

Rate and Position Administration 0 0 73,000 0 73,000


Cash Receipts and Cash Management 10,000,000 14,656,000 0 0 24,656,000


Asset Management 0 2,528,000 178,000 1,514,000 4,220,000

Option 3: Custom, Option 4: COTS, andOption 5: Best of Breed Total

$67,085,000 $23,691,000 $4,486,000 $1,707,000 $96,969,000

A summary by option of the fiscal impact of the BPR recommendations is shown in Exhibit 3-4.

Exhibit 3-4Summary of Fiscal Impacts by Option


OptionsTechnologyDependent Other

TechnologyDependent Other

TotalSavings

Option 1 – As Is $ 0 $ 23,691,000 $ 0 $ 1,707,000 $ 25,398,000

Option 2 – Enhance 34,504,000 23,691,000 1,452,000 1,707,000 61,354,000

Option 3 – Custom 67,085,000 23,691,000 4,486,000 1,707,000 96,969,000

Option 4 – COTS 67,085,000 23,691,000 4,486,000 1,707,000 96,969,000

Option 5 – Best of Breed 67,085,000 23,691,000 4,486,000 1,707,000 96,969,000



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Savings can be achieved through reengineering the State’s financial management processes. The largest

saving, however, is expected to result from implementing Options 3, 4, and 5. These options represent a

comprehensive change in the underlying automated system that supports financial management in the

State of Florida.

Business Case Study 3—Business Process ReengineeringMethodology

3.2 Methodology

This section presents the methodology used for designing reengineered financial management processes

for the State of Florida. The methodology consisted of three components:

! Process identification

! Process analysis

! Extrapolation

Process is defined as a series of steps or activities that enable an organization to meet a customer need.

These steps may cross organizational boundaries and usually involve the customer as well. To conduct the

process analysis, we assess the current process, which is sometimes called the As-Is process. Current

processes are usually defined from the organizational perspective and limited by organizational

boundaries. The result of the process analysis is the development of a reengineered process, which is also

known as the To-Be process. Reengineered processes are usually defined from the customer’s

perspective.

Processes begin with a customer request or need and end when that request or need is fulfilled. Customers

of Florida’s financial management processes include customers internal to State government as well as

external individuals and businesses.

Process Identification

Florida State government has numerous financial management processes. Some processes such as the

certified forward process require a small amount of time from a large number of people, while other

processes such as payroll and purchasing require a large amount of time from a centralized staff dedicated

to the process. For this analysis, we focused on the major processes that have a significant impact on costs

or decision making. Furthermore, the analysis focuses on processes that require the use of an automated

financial management system. The three major steps used in identifying the processes included the

following:

! Identify what customers need and request

! Identify the customers

! Identify the roll played in the process by FFMIS

For the first step, KPMG identified customer needs that are fulfilled by financial management processes.

Although customers want different kinds of financial and program performance information, the process

of obtaining that information is still the same from the customer’s point of view. The customer makes a


request; then, someone in the organization queries one or more databases, manipulates numbers, and

produces a report. Although the actual steps that the agency staff follow may differ according to the

agency or nature of the information request, all of these steps can be seen as one process. A summary of

customer-oriented financial management needs is provided in Exhibit 3-5.

Next, we identified the customers. The customers are the internal employees or organizational units or

external individuals or businesses that rely upon a financial management process to meet a particular

need. Most of the processes that we identified have multiple customers. Column 2 of Exhibit 3-5 provides

a listing of the customers by category of need.

Finally, we note the role that FFMIS plays in supporting the process. The level of support for financial

management processes can vary. Some processes such as those for reporting management information,

rely almost exclusively on FFMIS; others such as budget formulation include many steps that may not

interface with FFMIS or any of its subsystems.

Exhibit 3-5Summary of Customer Needs

Needs Fulfilled Through FFMIS Who Needs It?

To know how money is spent Citizens, Legislators, Governor, CabinetAgencies, Department Heads, Unit Managers,Grantors, Creditors

To know the status of their investments Citizens, Legislators, Governor, CabinetAgencies, Department Heads, Unit Managers,Grantors, Creditors

To obtain/make appropriations for the next year Legislators, Governor, Cabinet Agencies,Department Heads

To manage end of year spending Governor, Cabinet Agencies, Department Heads

To receive non-tax revenue and to make it available forexpenditure

Governor, Unit Managers, Cabinet Agencies,Department Heads

To monitor the deployment of human resources Governor, Unit Managers, Cabinet Agencies,Department Heads

To monitor and record purchases of commodities andservices

Legislature, Governor, Unit Managers, CabinetAgencies, Department Heads

To collect on overdue receivables Legislature, Governor, Cabinet Agencies,Department Heads, Unit Managers

To receive reimbursement, salary and benefits andrelated information

Employees

To pay an amount owed to a vendor Legislature, Governor, Cabinet Agencies,Department Heads, Unit Managers


Through the process described above, we identified the following processes for analysis:

! Management reporting: Reporting of a wide range of financial management information primarilyto State managers

! Financial reporting: Developing the annual Comprehensive Financial Management Report(CAFR)

! Accounting reconciliation: Reconciling central accounts with agency accounts

! Accounting for payments from multiple accounts: Recording disbursements that should be paidagainst more than one account

! Allocation of common costs: Calculating and reporting of indirect costs to federal grantingagencies

! Flow of federal funds: Managing federal grant funds

! Payroll: Recording employee time and paying salaries

! Travel reimbursement: Reimbursing employees for expenses covered by the travel policy

! Purchasing commodities and services: Procuring commodities from vendors

! Payment for goods and services: Paying vendors for commodities purchased

! Budgeting: Tracking budgetary decision making and monitoring compliance

! Rate and position administration: Monitoring personnel expenditures

! Certified forward: Managing end-of-year spending

! Cash receipts and cash management: Receiving funds and making them available

! Accounts receivable: Collecting on overdue receivables

! Asset management

Through the process identification, two processes were not included and two were combined. We did not

include the administration of training because of the low impact that a new financial management system

would have on it. We also eliminated recruitment and hiring because FFMIS plays a small part in that

process. Receiving and purchasing were combined into one process—purchasing.

The process analysis consisted of two parts: the analysis of the current process and the development of a

prototype reengineered process.


Current Process Analysis

Analysis of current processes included the following steps:

! Develop high-level process maps

! Identify technology required to carry out the process

! Gather process metrics

! Identify cost components

! Identify strengths and weaknesses

The high-level process maps illustrate the major steps in a process and identify the organizational entities

that participate in the process. These maps usually include the customer to ensure that the customer’s

relationship to the process is documented. The maps also indicate where technology plays a role in

facilitating the process.

Different process metrics or measures of process performance are used in the process analysis. Among the

process metrics used is cycle time—the time that lapses from the point that the customer need is identified

or a request is made to the time that the need or request is fulfilled. Another common metric is process

time—the actual time it takes to carry out the process excluding waiting time between steps. Other key

process metrics are accuracy or error rates and customer satisfaction.

Cost is an important component of any process analysis. The cost analysis focuses on costs at three

levels—customer costs, agency costs, and centralized costs. The customer costs are costs associated with

initiating a process, such as completing a travel reimbursement voucher or recording time worked. Based

on this definition not all processes have customer costs.

Agency and centralized costs refer to the labor cost required to carry out the process. In the purchasing

process, for example, agency costs reflect the salaries of staff dedicated to processing purchase orders at

the agency level. Centralized costs are labor costs as well, but refer to costs incurred by agencies that have

a statewide responsibility for a process. For example, the Office of Policy and Budget has statewide

responsibility related to the budget process, but its costs are in addition to what it costs agencies to carry

out the budget process.

After gathering relevant data on the process, we identified the strengths and weaknesses of the process.

The weaknesses, also known as findings, provide insight into what needs to change in the process to

improve its performance.


Reengineered Process

To develop the reengineered process, we performed the following:

! Identified innovative practices

! Developed specific recommendations

! Developed a conceptual model

! Conducted an implementation analysis

To assist in the identification of reengineered processes, we conducted research on the Internet, in

publications, and through interviews with other State governments to identify innovative practices used

for the financial management processes. The innovative practices that we identified are provided in

Appendix A and are organized by process.

After identifying the weaknesses during the process analysis, we developed a series of recommendations.

The recommendations form the basis for developing a conceptual model of the reengineered process.

Finally, we conducted an implementation analysis. For this portion of the methodology, we assessed the

fiscal impact of implementing the recommendations. Fiscal impacts are measured either by budgetary

savings—actual reductions in expenditures—or increased efficiency in which staff time is made available

and can be redirected to higher valued activities. The analysis includes an assessment of implementation

issues such as regulations, statutes, or significant resistance to change.

Extrapolation

The goal of the extrapolation process is to determine the quantitative effects of reengineering agency

financial management processes statewide. The following five agencies were selected for in-depth

analysis in order to extrapolate the potential reengineering savings across State government:

! Department of Transportation (DOT)

! Department of Children and Families (DCF)

! Department of Highway Safety and Motor Vehicles (DHSMV)

! Department of Insurance, Treasury and State Fire Marshal (DOI)

! University of Florida (UF)

Working with representatives from several State of Florida agencies, we selected these five agencies to

ensure that a breadth of financial management processes was included in the in-depth analysis. These five

agencies are representative of State government.


The representative processes within the five agencies were analyzed and modeled. These processes

provide the basis for the extrapolation to determine the impact across all State agencies. Generally, the

cost of carrying out a process statewide is based on the number of FTEs it takes to carry out the process in

the five agencies divided by the percentage of the entire Statewide workload that the five agencies

perform. This calculation yields an FTE number that applies to the entire State. For each of the processes,

the five study agencies are more or less representative of the rest of State government. We worked with

State representatives to adjust the basic extrapolation method to fit the particular process.

The savings estimate is based on the reduction in labor costs that can be achieved by changing from the

current process to the reengineered process statewide. Budgetary savings are identified in those cases

where actual reductions in FTEs can be achieved. Budgetary savings usually occur when a core of FTEs

devotes 100 percent of its time to a process. Examples include procurement, payroll, asset management,

and travel reimbursement. FTE savings are based on the average compensation for employees who carry

out the processes under consideration.

Many of the process improvements do not result in FTE reductions, but instead result in increased

efficiency. Increased efficiency generally reflects a small reduction in the time that a large number of

employees devote to a particular process. Examples include management reporting, rate and position

administration, and certify forward.

Summary

The methodology for carrying out the business process reengineering was tailored to assist in the

assessment of the State’s financial management information system. The methodology includes an

identification of the processes, analysis of the current processes, development of reengineered processes,

and extrapolation statewide of any resulting savings. The result of applying this methodology to each of

the State’s major financial management processes is detailed in the sections that follow.



kpmg

Business Case Study 3—Business Process ReengineeringManagement Reporting

3.3 Recommended Process Changes—Management Reporting

This section presents KPMG’s recommendations for reengineering the State’s processes for management

reporting—the processes by which agency managers request and obtain financial information. The

primary focus of this analysis is on management reports from FLAIR. Managers with financial

responsibility obtain management reports from all five subsystems in FFMIS. The five subsystems are

FLAIR, LAS/PBS, COPES, SPURS, and CMS.

Background

Managers and supervisors in State agencies require

certain financial and human resource information from

FLAIR to operate their units and departments

efficiently and effectively. Although managers

throughout the State have adjusted to the quality and

efficiency of the financial management reports that are

now available, when queried they express frustration

with the process. Managers note that huge reports of

little value are printed automatically and distributed

widely, while specialized reports that could meet

individual managers’ needs require a special request,

programming, and extra time to produce. As a result,

the State has developed ad hoc systems to develop and report financial information that meets the special

demands of the Legislature, the Governor, and agency managers. The systems can consist of a series of

telephone calls to several or possibly all State agencies to gather one or two pieces of financial

information. These ad hoc systems require an enormous effort, and that effort is neither tracked nor

managed. Some State agencies have implemented their

own systems applications to provide them with

management reporting capabilities not available with

FFMIS. A manager with the DCF expressed his

experience in preparing reports before and after

implementation of DCF’s own data warehouse.

FFMIS subsystems were originally developed

primarily as transaction processing systems. They

were not designed specifically for management

reporting. FLAIR Report Distribution System (RDS), The FLAIR Information Warehouse (IW),

SPURSView, and COPESView are recent applications developed in the 1990s to enable managers to

“Providing the end user with the appropriate

tools for easy access to the computer data has

always been a high priority at the University of

Florida. The current methods for accessing the

State’s databases are not satisfactory for the

majority of the employees who need this

information to perform their job. I strongly

recommend that any studies for the

reengineering of the State’s automated

systems include a comprehensive solution for

this problem.”

—Manager, University of Florida

“Every month, my staff used to transfer

figures off of a FLAIR report onto a

spreadsheet. We would then prepare charts

and graphs for presentations to our board.

This was a solid 2-day project every month for

one FTE. With a data warehouse, we can do it

in less than 15 minutes.”

—Manager, Department of Children and

Families

3—Business Process Reengineering Business Case StudyManagement Reporting

extract specific information from FFMIS. Despite these data warehouse efforts, the basic FFMIS

subsystems do not serve as effective decision support systems or executive information systems.

Because each agency has unique management reporting requirements, the approaches and resources used

throughout the State to collect and present management reports vary significantly.

Management reports based on the information in FLAIR are also developed and used by the Office of the

Governor and the State Legislature to:

! Assess overall State government financial performance or the financial performance of anindividual department and its organizational units on a periodic or ad hoc basis

! Identify and resolve operational deficiencies

! Respond to miscellaneous constituent or media inquiries

! Quantify issues under legislative review

! Support decision making

! Gauge the State’s progress in meeting financial goals and objectives

Some management reports are developed to support Performance-Based Budgeting requirements

mandated in Florida’s 1994 Government Performance and Accountability Act. Most other reports are

developed as a function of departmental policy. With the State’s requirement for unit-cost reporting,

managers will have to find ways to report cost per unit.

FLAIR provides some management reporting capabilities through its RDS and IW. RDS features nearly

150 standard accounting and payroll reports that an agency can request on a periodic or ad hoc basis.

Selected standard reports can be run and posted to an agency’s RDS library according to a schedule that

the agency requests. Additionally, agencies can write Natural programs to create their own customized

versions of these standard reports. These reports can also be run and posted to the agency’s RDS library

on a prescheduled basis.

The FLAIR IW provides agencies with another option for developing ad hoc management reports using

accounting data. Agencies can query the IW to develop ad hoc reports using accounting and payroll data

stored in central FLAIR. The FLAIR IW is limited primarily to FLAIR Central Accounting.

One concern is Purchase Card (PCard) expenditures. Information on PCard expenditures is apparently in

the FLAIR data warehouse, but obtaining information requires specialized programming. The information

is for all practical purposes not available to many agency managers.


Because the FLAIR RDS and IW provide limited reporting capabilities and can be difficult to use, most

agencies have developed additional resources to produce management reports. Supplemental systems and

applications used by the five study agencies, ranging from simple desktop spreadsheets and databases to

comprehensive data warehouses, are summarized in Exhibit 3-6.

Exhibit 3-6Supplemental Systems Used by Study Agencies in Management Reporting

Agency Supplemental System PurposeInterfaceswith

Department ofTransportation

Financial Management System,other internal systems, andmiscellaneous desktop PCapplications

Develop reports for monthlymanagement meetings, periodicinternal distributions, and Board ofTransportation meetings

FLAIR

Department of Children andFamilies

Information Delivery System Enable users to access records todevelop tailored ad hoc reports

FLAIR

Department of HighwaySafety and Motor Vehicles

Miscellaneous desktop PCapplications

Develop miscellaneousmanagement reports

FLAIR

Department of Insurance,Treasury and State FireMarshall

Miscellaneous desktop PCapplications

Develop miscellaneousmanagement reports

FLAIR

University of Florida SUS Automated FinancialStatements System andmiscellaneous desktop PCapplications

Develop miscellaneousdepartmental reports andmanagement reports for theUniversity of Florida Chancellor

FLAIR

State agencies have a new requirement for unit-cost reporting that FFMIS does not now support. To

address this requirement, agencies will have to develop additional supplemental systems or ad hoc

methodologies to develop and report unit costs. Neither the chart of accounts nor FLAIR is set up to track

and report unit costs.

Current Process

State agencies acquire management reports through the FLAIR RDS or IW, as needed, or by developing

reports on their own systems and PC desktop applications, using information downloaded from FLAIR

records.

Standard reports generated in RDS are run by FLAIR technical staff and posted to an agency’s online

RDS library the next day. Agency personnel, using Natural program routines, can develop custom reports

using FLAIR data—these reports are also posted to the agency’s online RDS library. Authorized agency

personnel can gain access to information from this site and download and/or print reports for internal

distribution. A limited number of agency personnel use the FLAIR IW to develop ad hoc reports. These


reports are similarly posted to an agency’s FLAIR online library, where they can be viewed, downloaded,

and/or printed for internal distribution.

Agencies that use their own supplemental systems to develop management reports do so by loading their

own agency data not available on FLAIR, or by downloading or re-keying information from FLAIR to

data warehouses, internal management systems, or PC desktop applications.

Current Process Performance

Management reporting in the State is a highly fragmented process. The FLAIR RDS and IW provide

useful data to a limited number of managers and technicians who know how to get into these systems and

extract the information they need. Exhibit 3-7 presents IW usage metrics for the five study agencies

during the first quarter of Fiscal Year 2000. These statistics show that IW usage appears to be light—

especially among smaller agencies such as DHSMV and DOI.

Exhibit 3-7Average Monthly Information Warehouse Usage

Fiscal Year 2000—Quarter 1

AgencyNumber ofQueries

Numberof Users

TotalAgencyManagementStaff

AgencyManagementStaff UsingIW

Department of Transportation 4,245 118 3,327 3.5%

Department of Children and Families 709 17 975 1.7%

Department of Highway Safety and Motor Vehicles 5 1 834 0.1%

Department of Insurance, Treasury and State FireMarshall

21 3 244 1.2%

University of Florida 18 2 ~4500 <0.1%

Source: State of Florida, Department of Banking and Finance

In many larger agencies, managers use supplemental information systems and data warehouses to obtain

the financial reports they need. Still, other managers rely upon desktop PC database programs to store and

retrieve financial management information. Exhibit 3-8 presents an estimated breakdown of management

reports produced in FLAIR, in agency information systems, and on desktop PC databases. This does not

include management reports from any of the other four subsystems in FFMIS. When actual workload data

was not readily available, KPMG developed composite estimates based on interviews with agency

managers in the five study agencies.

Assumptions used in estimating management reporting workload data are based on actual data and

KPMG interviews of managers in the five study agencies:


! The numbers of FLAIR RDS and IW users are current actual totals provided by the FloridaDepartment of Banking and Finance

! The number of IW queries shown is the actual total for October 1999

! The average agency orders 75 RDS reports per month and each user spends 30 minutes per monthretrieving these reports

! FLAIR IW users spend 30 minutes per query

! Ten percent of all State agencies and universities have significant internal information systems—a limited number of users in these organizations develop an average of 20 reports per month,requiring 2 hours to produce each report (includes data input time)

! Agency data warehouse queries were not included in this total

! Of the estimated 26,000 management and professional staff in Florida State government (includes16,000 State agency users and 10,000 users in the State University System), 25 percent havepersonal computers that are used to produce periodic management reports

! An average of three reports are run off each PC, requiring 2 hours to produce each report(includes data entry time)

In all cases, we based our estimates on conservative assumptions.

Exhibit 3-8Management Reporting Workload Estimates for Florida State Government by Information Source

ManagementInformation Source

Total Number ofUsers (Est.)

Total Number ofReports Produced

per Month

Total Annual HoursDeveloping and/orRetrieving Reports

FLAIR RDS 8,900 2,925 53,600

FLAIR IW 450 9,200 55,200

Agency Information Systems 100 2,000 4,000

PC databases 6,500 19,500 39,000

Total — 33,625 151,800

Source: KPMG interviews and State of Florida, Department of Banking and Finance

Although the estimated workload data in Exhibit 3-8 appears high, managers in the five study

organizations reported problems in obtaining reports quickly, easily, and tailored to their specific

information needs. The Florida Department of Children and Families has attempted to mitigate these

difficulties by developing its own data warehouse—the Information Delivery System (IDS). Recent

statistics indicate that IDS is currently logging nearly 70,000 queries per month, or approximately

840,000 queries per year. This annual count represents nearly twice the total statewide volume of reports

developed in FLAIR and on agency systems and PC databases (33,625 reports). Based on this


comparison, it appears that current management reporting resources are not sufficient to meet the needs of

the State’s 26,000 management and professional staff.

Current Process Cost

The cost of the current financial management reporting process from FLAIR is derived by analyzing three

cost components—customer costs, agency costs, and centralized costs. Customer costs generally reflect

the time an individual spends completing a form or entering data to initiate a process. Agency costs reflect

the labor costs of the agency personnel devoted to carrying out the process. Centralized costs reflect the

labor costs of personnel who are located in a statewide administrative support agency and who participate

in the process statewide

The cost analysis focuses on direct labor costs. Overhead and other indirect costs associated with the

process are excluded. The costs measured in the five study agencies are extrapolated to the rest of State

government based on workload factors that most affect the costs. The categories and the costs for the five

study agencies and for estimates of those categories and costs statewide are described below.

Customer Costs: The process does not include a customer cost as defined in this analysis.

Agency Costs: Agency costs consist of the time spent by agency personnel using the FLAIR RDS or IW

to retrieve desired management reports, or in downloading or key-entering information from FLAIR to

agency management systems, data warehouses or PC desktop applications. As shown in Exhibit 3-9, State

employees spend about 151,800 hours per year to developing and retrieving management reports.

Centralized Costs: Centralized costs consist of the time spent by FLAIR administrative staff maintaining

systems and developing and producing desired reports. Effectively, two FTEs from FLAIR assist agencies

in maintaining systems and in developing or running management reports.

The estimated current cost of reporting the State’s financial management information maintained in

FLAIR, summarized by information source, is presented in Exhibit 3-9. The costs were derived by

estimating the annual hours required to develop and retrieve various management reports. These hours

were then multiplied by an estimated average labor cost of an Accountant II ($28,406 divided by 1,850

hours per year).


Exhibit 3-9Costs for Reporting Financial Management Information by Source

Management Information Source

Estimated Hours forDeveloping and/orRetrieving Reports Total Cost

FLAIR RDS 53,600 $823,006

FLAIR IW 55,200 847,574

Agency Information Systems 4,000 61,418

PC databases 39,000 598,829

Total 151,800 $2,330,827

Source: KPMG interviews and State of Florida, Department of Banking and Finance

In total, the State annually expends an estimated $2.3 million in agency costs and $60,000 in centralized

costs to carry out the management reporting process.

Current Process Weaknesses

The overall managers of the State—the Legislature and the Governor—need enterprisewide information

to support them in making enterprisewide decisions. Some enterprisewide information resides in FFMIS,

but too often it does not. When such information is not readily available, the State is faced with two

choices—do without or undertake an ad hoc data gathering exercise that could involve literally hundreds

of analysts and accountants throughout State government. Several factors have contributed to the

difficulty in reporting enterprisewide financial management information:

! Policies and procedures for financial management vary among agencies. The State has noaccounting policies and procedures manual

! The Chart of Accounts is expansive, inconsistent, and outdated

! The State has not developed a set of common core financial management data that every agencyshould collect and report in a consistent manner

The decentralized approach to financial management is supported by dual ledger systems. FLAIR

includes a Central Accounting System and a separate Departmental Accounting System.

State agencies need simple, timely access to accounting and human resource data to assess operational

performance and support decision making. However, the means to secure this information is often costly

and time consuming. Problems identified with the State’s current management information processes

include the following issues:

! FLAIR RDS does not support ad hoc reporting. Information available in RDS is limited by theformat and content inherent in standard reports and any custom reports an agency may have


developed. Also, agencies without technical staff capable of writing Natural programs cannotdevelop desired RDS custom reports.

! The FLAIR IW is reportedly difficult to use. Access and query capabilities are limited. IWusage—measured as a percentage of an agency’s total management staff that routinely taps thesystem to retrieve data—is extremely low. It appears that critical management information in theIW, when requested, is funneled through a limited number of agency staff.

! The current Chart of Accounts lacks a coherent logical structure. As such, it is often animpediment to extracting statewide financial management information. Over time, codes havebeen added as needed, few codes have been deleted, and no attempt has been made to rationalizecodes that do exist.

! Because RDS and IW do not fully support management reporting needs, managers who needspecific archived information to evaluate an organization’s operational performance or to supportdecision making will typically exercise one of the following options:

– Ask other employees who have access and experience working with RDS and IW to retrieverequested information. This option involves RDS and IW system expenses and personnelcosts associated with requesting and distributing reports.

– Refer to historical data recorded on their own PC desktop applications or on other agencydatabases. In this option, the agency incurs systems and personnel costs associated withstoring data in more than one location:

! Cost of redundant data entry and storage

! Costs incurred when data stored in multiple locations is misplaced

! Cost of validating information found to be inconsistent

! Lacking useful management information:

– Managers may make inappropriate and potentially costly decisions

– Agencies may not be able to determine the degree to which strategies, action plans, and workmethods are successful in helping the organization to achieve its goals and objectives

In summary, inefficiencies in the State’s current statewide management reporting processes are seriously

restricting management and professional staff from quickly and easily obtaining reports tailored to their

unique information needs. The result is the huge dispersed and largely hidden cost of gathering financial

management information that does not fit neatly into the current Chart of Accounts or standard financial

management reports.



The weakness in the management reporting process can be addressed by first identifying the core

financial management information needed to manage the State as an enterprise, developing a statewide

information warehouse, and changing the Chart of Accounts to support those core information needs.

Recommendation BPR-1: Identify enterprisewide financial management informationneeds

The State should identify the core financial management information that it needs from every agency and

program throughout the government to manage the State as an enterprise. This challenge is the same

management and organizational challenge that conglomerates face in the private sector. Stockholders

expect the enterprise to be profitable but the businesses that make up the conglomerate often have

different ways of reporting financial information. Likewise, Florida’s stakeholders expect the State to be

fiscally sound.

With input from the legislative budget staffs, the Governor’s budget office, selected central administrative

support agencies, and agency representatives, the State should identify the core financial management

data needed to manage the State as an enterprise.

Fiscal Impact: This recommendation will require the use of existing resources to develop an

enterprisewide financial management data plan. The existence of enterprisewide financial information

should significantly affect critical legislative and executive branch decisions. Better information can yield

better financial decisions that will benefit the State and its stakeholders.

Recommendation BPR-2: Develop a flexible decision support system by providing Stateagencies with the ability to create their own custom management reports

To give State employees the ability to develop their own customized management reports quickly and

easily, the State should develop a data warehouse for storing and retrieving management information.

This data warehouse should have the following features:

! Is accessible via the Internet, to provide remote offices and mobile employees with the capabilityto view and download management information

! Provides interactive, user-friendly query tools

! Is updated with information from an integrated financial management system nightly

! Includes historical data

! Enables State agencies to enter selected other data to the system


The data warehouse should have detailed transaction operational information as well as derived

information. The State will need to make a concerted effort to identify the derived (value-added)

information to be included in the data warehouse. By developing this derived information, the State can

increase significantly the usefulness of the data warehouse.

Costs for the data warehouse could be offset by financing the implementation and system maintenance

expenses through an enterprise fund—charging each agency according to the data volume stored and for

each query posted.

For agencies that have already invested in their own data warehouse solutions, the State should develop a

simple means for downloading daily transactions from its integrated financial management system to the

agency’s data warehouse.

Fiscal Impact: The most significant impact from implementation of this recommendation is that State

managers will be in a better position to make financial management decisions that affect the State’s

bottom line. Managers will be able to focus more of their time on planning, decision making, and resource

allocation rather than on gathering and verifying information. The total number of FTE hours for those

currently involved in developing management reports would decrease. Managers would have access to

better information that should result in better decision making and lower overall cost of government

service.

Recommendation BPR-3: Streamline and reengineer the Chart of Accounts to reflectreporting requirements

The State is reviewing and reengineering its Chart of Accounts. The Chart of Accounts should allow

managers to track financial data consistent with legislated reporting requirements. The new Chart of

Accounts should support performance budgeting and unit costing specifically.

Fiscal Impact: Implementation of this recommendation is expected to eliminate a significant portion of

existing and future manual processes needed to develop and report program and unit cost information that

cannot be reported now through FLAIR. With better information, managers will be able to make more

effective program management decisions. The most significant effect will be improved government

services.

Reengineered Process—System Requirements

A statewide data warehouse for storing and retrieving accounting and human resource information should

be developed and have the following features:


! Is accessible via the Internet

! Provides interactive, user-friendly query tools

! Is updated with information from an integrated financial management system nightly

! Includes historical data

! Enables State agencies to enter selected other data to the system

Additionally, agencies should be able to download daily transactions from the integrated financial

management system to their existing proprietary data warehouses.

Options Analysis

The proposed reengineering solution for developing management reports based on information in

FLAIR—developing a statewide data warehouse—can be accomplished with all systems alternatives

except Option 1, maintaining the status quo. Option 2 will see partial savings in management reporting

because consolidation of a statewide decision support system will be limited by the lack of a uniform

Chart of Accounts. Options 3 through 5 include the capabilities for a financial data warehouse and easier

reporting capabilities necessary to support the financial management reporting process. Exhibit 3-10

provides the savings associated with each of the five alternatives.


Exhibit 3-10Summary of Annual Savings by Option

OptionBudgetarySavings

IncreasedEfficiency

Total BPRSavings

Recommendation BPR-1

Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 $0 $0 $0

Option 2 $0 $0 $0

Option 3 $0 $0 $0

Option 4 $0 $0 $0

Option 5 $0 $0 $0

Business Case Study 3—Business Process ReengineeringAccounting for Payments from Multiple Accounts

Business Case Study 3—Business Process ReengineeringFinancial Reporting

3.4 Recommended Process Changes—Financial Reporting

This section presents recommendations for reengineering the State of Florida’s financial reporting

process—the process for producing the Comprehensive Annual Financial Report (CAFR).

Background

The CAFR is a formal, audited presentation of the State’s financial and operating activities that is

prepared after each fiscal year-end. The CAFR is prepared in conformance with Generally Accepted

Accounting Principles prescribed by the Governmental Accounting Standards Board (GASB) and

includes combined balance sheets, operating statements, and cash flow statements for the Florida State

government. It also includes selected statistical and economic data. State agencies provide input to the

State Comptroller for preparation of the CAFR. Some State agencies also develop their own unique

financial reports, as needed, to secure bond funding, grants, and other revenue sources. The CAFR reports

on the financial health of the State and as such is important for the State’s overall bond rating.

The CAFR process is a set of procedures and activities performed by personnel in the State Comptroller’s

office, each State agency, and the Auditor General’s office to prepare financial statements and other

information to be included in Florida’s CAFR.

The CAFR and other agency-specific financial reports are used by a broad cross-section of customers,

including legislators and other elected officials, agency managers and directors, commercial lending

institutions, the general public, and policy groups to:

! Compare actual financial results with the legally adopted budget

! Assess financial conditions and the results of operations

! Assist in determining compliance with finance-related laws, rules, and regulations

! Assist in evaluating government efficiency and effectiveness

Creation of the CAFR requires participation of departmental accounting units statewide. When FLAIR’s

Departmental Accounting System was originally implemented, the State did not publish a CAFR. Each

State agency published its own financial statements. Consequently, FLAIR’s Departmental Accounting

System was not designed to consider the State as an enterprise. The Central Accounting System in FLAIR

is not structured to report all relevant agency-level detail at an enterprisewide level.

Chapter 16 of the Florida Statutes requires the State Comptroller to prepare audited statewide financial

reports annually. The CAFR is prepared in conformance with Generally Accepted Accounting Principles

as prescribed in pronouncements of the GASB. Florida voters passed a referendum effective January 2003

that combines the offices of the State Comptroller and the Treasurer into a Chief Financial Officer.


Current Process

The State Comptroller uses FLAIR ledger files and desktop applications to develop the CAFR. At the end

of each fiscal year, the State Comptroller’s Financial Reporting section downloads the FLAIR

Departmental Accounting System records to a Statewide Master File, a FLAIR module. It develops a

FoxPro database file to analyze, sort, and compare information provided by each agency. Before

producing a final report, the Auditor General’s comments and corrections are included.

When the CAFR is reviewed, proofed, and edited, approximately 500 copies are printed and distributed.

After the CAFR is presented to the Governor (typically by mid-February of the following fiscal year), the

State-wide Financial Reporting Section within the State Comptroller’s office prepares a PDF and HTML

file version to post on the State Comptroller’s Internet site.


The performance of the financial reporting process is usually measured by how quickly the CAFR is

issued after the close of the fiscal year. By that measure, Florida’s performance is poor. Forty-three of the

50 states issue their CAFRs within 6 months of the close of the fiscal year. For Fiscal Year 1998, Florida

issued its CAFR 8 months after the close of the fiscal year. For Fiscal Year 1999, Florida expects to issue

its CAFR within 7 or 8 months after June 30, 1999.

Current Process Costs

The cost of the financial reporting process is derived by analyzing three cost components—customer

costs, agency costs, and centralized costs. Customer costs generally reflect the time an individual spends

completing a form or entering data to initiate a process. Agency costs reflect the labor costs of agency

personnel devoted to carrying out the process. Centralized costs reflect the labor costs of personnel who

are located in a statewide administrative support agency and who participate in the process statewide.



government based on workload factors that most affect the costs. The categories and costs for the five

study agencies and statewide are described below.

Customer Costs: This process does not include a customer cost as defined in this analysis.

Agency Costs: Agency costs consist of personnel time and expense on the part of accounting offices in 49

agencies required to collect, analyze, and submit year-end financial data needed by the State Comptroller

to produce the CAFR. For the five study agencies, accounting offices spent 14,606 hours or 7.9 FTEs

developing the CAFR. The amount of time and effort that each agency expends preparing information


needed by the State Comptroller to prepare the CAFR varies. Agency level-of-effort estimates (FTE

hours) are summarized in Exhibit 3-11.

Exhibit 3-11Estimate of Personnel Hours to Prepare Florida’s CAFR

Agency Total FTE HoursTotal Estimated Number

of Effective FTEs

Department of Transportation 4,000 2.2

Department of Children and Families 2,460 1.3

Department of Highway Safety and MotorVehicles

316 0.2

Department of Insurance, Treasury andState Fire Marshal

200 0.1

University of Florida 7,630 4.1

Total 14,606 7.9

Source: KPMG interviews of various Florida State fiscal personnel

Generally, agencies with larger budgets, greater number of funds, and greater number of geographic

locations, etc., require more time and resources to support the State Comptroller’s preparation of the

CAFR. Following this assumption, Florida’s total estimated personnel costs for this process can be

approximated by factoring the labor costs assumed by the five study organizations in preparing the CAFR

by a ratio of the State’s total appropriations divided by the sum of the appropriations for the five study

agencies. This cost extrapolation is summarized in Exhibits 3-12 and 3-13.


Exhibit 3-12FTE Costs and Fiscal Year 1999 Appropriations for Study Agencies

Agency Number of FTEs Cost of FTEsFiscal Year 1999

Appropriations


2.16 $61,357 $5,592,308,779


1.33 37,780 3,553,149,918


0.17 4,829 334,648,029

Department of Insurance,Treasury and State FireMarshal

0.11 3,124 124,036,407

University of Florida/StateUniversity System

4.11 116,749 1,066,279,000

Total Study Agencies 7.88 $223,839 $10,670,422,133

Notes: (1) Assume $28,406 Salary + Fringe Benefits per FTE (average) and 1,854 hours per year(2) Excludes certify forward related costs

With total statewide appropriations for Fiscal Year 1999 of $49.5 billion, the ratio of statewide

appropriation to study agency appropriations is 4.6 to 1. The extrapolated cost of all State agency

personnel in processing the CAFR, therefore, would be approximately $1,040,000, and the total number

of actual and “effective” FTEs would be 36.6.

Exhibit 3-13Estimated Statewide CAFR Development Costs

Cost ComponentNo. of FTEs

(Actual and “Effective”) Personnel Costs

State Agencies 36.6 $1,040,000

State Comptroller 5.0 261,000

Auditor General 15.0 648,000

Total 56.6 $1,949,000

Centralized Costs: Centralized costs consist of personnel time and expense to solicit, collect, input,

analyze, audit, and present financial information required in the CAFR. The State Comptroller dedicates 5

FTEs that have an average salary plus benefits of $52,116 to this process while the Auditor General

dedicates 15 FTEs that have an average salary and benefits of $43,230.

Combining the cost of personnel in the Auditor General’s and State Comptroller’s offices (as shown

above), the total annual cost of preparing the CAFR is an estimated $1,949,000.



Florida historically requires 7 to 8 months to prepare its CAFR. By contrast, 43 states develop their

CAFRs in less than 6 months.

The Government Finance Officers Association (GFOA) presents a “Certificate of Achievement in

Excellence in Financial Reporting” to state and local governments that meet the association’s award

criteria. One of these criteria is a requirement that a government formally issue its CAFR within 6 months

from the end of its fiscal year. Florida is one of only seven states that did not receive this certificate in

1999. The Auditor General issues a qualified opinion on Florida’s CAFR due to the valuation of certain

State lands preventing it from receiving the certificate. A second reason it did not receive the certificate is

that the CAFR was not issued within 6 months.

Exhibit 3-14 presents a summary of CAFR preparation time and staffing levels for a selected number of

states.

Exhibit 3-14Comparison of CAFR Preparation Time and Staffing Levels for Selected States

State

Approximate TimeRequired to Prepare

CAFR (months)

Number of Full-Time StateComptroller Staff Dedicated to

Producing CAFR

California 6.0 7

Maryland 5.5 7

Michigan 4.0 15

New York 4.5 8

North Carolina 5.0 18

Texas 6.0 15

Florida 8.0 5

Source: KPMG Benchmarking Study, 1999 and phone inquiries

Significant causes of this delay in producing Florida’s CAFR are the certified forward and reconciliations

processes. In the certified forward process, agencies identify those payables and encumbrances recorded

in FLAIR in the current fiscal year that will be paid out of current appropriations in the subsequent fiscal

year. The Auditor General reviews these amounts as part of its annual audits. Reconciliation is necessary

to ensure that the Central Accounting System is consistent with the Departmental Accounting System.

The difficulty with keeping these two accounts synchronized is complicated by “due to” and “due from”

entries posted to a Departmental Accounting System in error or an incorrect journal transfer amount

posted to the Departmental Accounting System from one or more agencies.

In the reconciliations process, State agencies compare trial balances in the agency’s Departmental

Accounting System in FLAIR with the State Comptroller’s Central Accounting System to analyze,


identify, and resolve exceptions and make adjusting entries necessary to reconcile the agency’s accounts

to the Central Accounting System.

The process of developing the CAFR is further slowed by awkward systems, interfaces, and network

applications, resulting in paper-laden, labor-intensive work activities. Problems with the current process

include the following issues:

! Process is paper-intensive and involves frequent information and data exchanges betweendepartments and agencies via mail or courier:

– State Comptroller prints and distributes SWFS forms, instructions, and reports downloadedfrom its Statewide Master File

– Most (but not all) agencies print trial balances of their FLAIR records for internal distributionand analysis

– Agencies manually complete SWFS forms and mail them back to State Comptroller (a fewreturn forms on disk)

– Agencies manually complete post-closing adjustments and mail them to State Comptroller(more than 1,000 agency adjustments and nearly 2,000 Comptroller adjustments in FiscalYear 1998)

– State Comptroller develops a discrepancy report and distributes it to agencies for resolution

– Agencies resolve issues on the discrepancy report and mail it back to State Comptroller

! Automated processes are awkward:

– Agencies that elect to download their trial balances from FLAIR must write subroutines toprocess the transfer of records to agency databases

– Agency information must be loaded into the State Comptroller’s Statewide Master Fileovernight by FLAIR systems personnel

– SWFS data is key-entered to FoxPro database file for analysis

– State Comptroller must run a comparison report to confirm agreement between data in theStatewide Master File and FoxPro database

– Edited information in the Statewide Master File must be transferred to an MS Excel file toformat CAFR-combined financial statements

! After the first draft of the CAFR is reviewed by the Auditor General, revisions must be entered tothe Statewide Master File and the revised data transferred to MS Excel file again

! Maintaining separate ledgers for the Central Accounting System and Departmental AccountingSystem within FLAIR requires a great deal of time and expense to reconcile


In addition to the slowness of the process, the State lacks a standard set of accounting policies and

procedures. In many cases, agencies follow their own department-based policies and procedures, which

differ from other agencies’ policies and procedures. This can affect the coding of actions or purchases and

the timing of transactions. Inconsistency in accounting policies and procedures bears directly on the time

it takes to obtain accurate and consistent statewide financial information.

Another impending issue is the requirement to develop financial reports compliant with GASB Statement

34. The new financial reporting model prescribed in this GASB pronouncement must be used by the State

of Florida in developing its Fiscal Year 2002 CAFR. Fundamentally, it requires that Florida prepare new

governmentwide financial statements using accrual accounting for all activities. Long-term assets and

liabilities—including infrastructure assets and depreciation and expenses associated with maintaining

these assets—will need to be recorded. Also, all revenues and costs associated with providing government

services in a given year will need to be reported—not solely those received or paid in the current fiscal

year.


To address the weaknesses of the financial reporting process, the State should change its certified forward

process, establish a communications network that will enhance data exchange between the State

Comptroller and the agencies, and enhance system support to automate the rollup of statewide financial

data. In addition, the State should assess the impact of the new financial reporting requirements associated

with the GASB Statement 34.

Recommendation BPR-4: Estimate certified forward amounts to be reported in the CAFR

Significant delays in the CAFR development process are attributable to Florida’s practice of certifying

forward encumbrances from one fiscal year to the next. While Florida must report certified forward

amounts in its CAFR, it does not need to identify and audit each certified forward item to satisfy

Generally Accepted Accounting Principles financial reporting requirements. Instead, the State

Comptroller could develop reasonable, auditable estimates of its certified forward balances using a

program that:

! Identifies automatically all liabilities recorded in an agency’s accounts for the current fiscal year,but payable in the next

! Uses prior-year data to estimate the percentage of certified forward amounts that will be paid inthe 90-day period following the end of the fiscal year

! Applies these percentages to estimate the total certified forward amounts for this 90-day period


Certified forward estimates could be run in late August, when each agency has officially closed its books

for the fiscal year. The Auditor General could audit these estimates in September, decreasing the CAFR

development time by 30 days.

Fiscal Impact: By estimating certified forward balances to be reported in the CAFR, audit workload

would be reduced and the State could eliminate approximately one and a half FTE positions in the

Auditor General’s office—an annual saving of approximately $56,000. An estimated 15 FTEs from the

Auditor General’s office work on the statewide financial statement audit at any given time during an 8-

month period from June of one fiscal year to the end of January in the next fiscal year. Reducing this time

period by 1 month would effectively reduce the Auditor General’s workload by 12.5 percent—nearly two

FTEs. Additional savings relating to the certified forward process can be found in Recommendation

BPR-37.

Recommendation BPR-5: Establish communications network needed for the StateComptroller and State agencies to collect, compile, and exchange data for the CAFRelectronically

The State Comptroller should be able to retrieve all agency year-end fund balances and information

needed to prepare the CAFR from FLAIR or any other enterprise financial management system.

However, for the Financial Reporting Section to develop the CAFR, each agency would need to provide

information that the State Comptroller cannot readily obtain. This information relates to:

! Post-closing adjustments to cash ledgers for each fund

! Year-end payables and receivables (accrual amounts)

! Inventory values

! Balances for agency revolving and clearing funds

! Investments not included in one of the State Treasurer’s investment pools

! Value of compensated leave balances

! Long-term assets and liabilities

! Notes and disclosure information requested by the State Comptroller

To improve the accuracy and the speed by which this data is compiled and reviewed by each agency and

provided to the State Comptroller for incorporation into the CAFR, Florida should use the Internet to

facilitate the electronic exchange of financial information integral to this process. Information could be

exchanged by attaching files to e-mail or by posting data to specific, secure online libraries accessible to

the agency and the State Comptroller.


Fiscal Impact: By implementing this proposed change, the State would eliminate the time and related

expense associated with the redundant key-entering of data by staff at the agency level and in the State

Comptroller’s office. Considered together with the fiscal impact for recommendation BPR-6, we estimate

that the State could realize a 10 percent reduction in the time and expense it incurs preparing the CAFR

and other financial reports at a cost savings of approximately $90,000 per year.

Recommendation BPR-6: Automate the process of developing and formatting financialstatements for inclusion in the CAFR

The State Comptroller could efficiently and effectively develop and format the financial statements,

notes, and statistical data in its CAFR by acquiring a commercial software application such as

CAFRonMICRO, offered by the GFOA, or by acquiring or developing a comparable custom software

application. Ideally, this type of software solution would also:

! Provide the State Comptroller with the ability to produce interim financial statements

! Produce HTML or PDF file versions of the CAFR that can be easily posted to the StateComptroller’s Internet site

! Support State agencies that need to produce their own unique annual or interim financial reports

Fiscal Impact: By implementing this proposed change, the State would eliminate the time and related

expense associated with the manual entry and formatting of financial statements and statistics on desktop

productivity software—activities performed by staff in the State Comptroller’s office. Considered

together with the fiscal impact for recommendation BPR-5, the State could reduce the time it takes to

prepare the CAFR and other financial reports by 2 weeks—at a cost savings of approximately $90,000 per

year.

Recommendation BPR-7: Develop and enforce statewide accounting policies andprocedures

The State should convene a task force composed of Department Accounting System and Central

Accounting System staffs to develop a manual of accounting policies and procedures. These policies and

procedures should include a new Chart of Accounts with clear, consistent definitions of codes and

examples of how to use them. The manual should address issues of how and when to record transactions

and at what level of detail for statewide reporting purposes. The State Comptroller (or the Chief Financial

Officer beginning in January 2003) should be charged with overseeing the development of the policies

and procedures and ensuring compliance through training and audits. The process of developing these

standards has begun.

Fiscal Impact: This recommendation can be carried out primarily using internal resources. The State may

wish to use outside resources to compile and publish the policies and procedures manual, the cost of


which is estimated at $50,000. Training on the new policies and procedures is estimated to cost another

$50,000, assuming 100 key staff members from the 50 agencies are trained, with the members responsible

for training the accounting staffs in their agencies.

Recommendation BPR-8: Assess impact of new financial reporting requirements andincorporate into requirements for new financial management system solution

GASB Statement 34 requires that Florida re-evaluate the way it currently records and reports on its annual

financial operations. Changes from the current reporting model to the new model specified in this recent

GASB pronouncement include:

! Governmentwide reporting

! Focus on major funds and new focus added for government activities

! Changes in budgetary reporting

! Requirements for a narrative analysis to accompany basic financial statements

Key implementation challenges identified by GFOA include the requirement to address the following

issues and activities:

! Infrastructure reporting

! Depreciation accounting

! Conversion of data for governmental activities (for example, removing capital outlays and debtservice principal outlays from operating statements, reporting amortizations, and reporting certainexpenses and revenues not currently reported)

! Reporting cash flows from operating activities for proprietary funds

We understand that Florida is assessing its readiness to implement this new reporting model and is

defining necessary changes as requirements to be specified and included in its financial management

system. We have included the recommendation to raise awareness of the new reporting requirements.

Fiscal Impact: There would be no direct fiscal impact of this recommendation; however, failure to

implement by this date places Florida in potential jeopardy of not meeting SEC requirements for periodic

disclosure, thereby affecting its capacity to secure bond financing at favorable interest rates.


To implement recommendations proposed for reengineering the CAFR development process, the State

must implement the following systems requirements:


! Establish statewide intranet or Internet access capability, as required, to link all State agencies toprovide for timely, accurate, and cost-effective exchange of financial information betweenagencies and the State Comptroller’s office

! Create or acquire software that facilitates development of the CAFR and other agency orstatewide financial reporting requirements that:

– Interfaces or integrates with the new financial management system

– Provides interim and annual financial reporting capabilities for the State Comptroller’s officeand for individual State agencies

– Presents financial reports and notes compliant with requirements stated in GASBStatement 34

Options Analysis

Florida’s financial reporting processes are significantly affected by delays in the reconciliation process.

Recommendations that would improve this process could shorten the CAFR development cycle by as

much as 2 months. Costs associated with these process savings are included elsewhere in this report.

Recommendation BPR-4 requires that Florida develop a program that estimates certified forward balances

for a fiscal year automatically. This improvement strategy would reduce the Auditor General’s workload

by nearly 30 days, resulting in cost savings of approximately $56,000. Implementing recommendations

BPR-5 and BPR-6 (combined) requires the State to develop process and systems changes that would

reduce the CAFR development time frame by 2 weeks—reducing labor costs by approximately $90,000.

Recommendations BPR-4, BPR-5, and BPR-6 require that systems improvements be implemented. These

improvement strategies can be included in Options 2 through 5, but not in Option 1.

In addition, there is an initial cost of implementation of $100,000 for all five options in year 1 under

recommendation BPR-7. Exhibit 3-15 provides the savings associated with each of the five alternatives.



OptionBudgetary

SavingsIncreasedEfficiency

Total BPRSavings


Option 1 $0 $0 $0

Option 2 56,000 0 56,000

Option 3 56,000 0 56,000

Option 4 56,000 0 56,000

Option 5 56,000 0 56,000

Recommendations BPR-5 and BPR-6

Option 1 0 0 0

Option 2 0 90,000 90,000

Option 3 0 90,000 90,000

Option 4 0 90,000 90,000

Option 5 0 90,000 90,000

Recommendation BPR-7*

Option 1 (100,000) 0 (100,000)

Option 2 (100,000) 0 (100,000)

Option 3 (100,000) 0 (100,000)

Option 4 (100,000) 0 (100,000)

Option 5 (100,000) 0 (100,000)


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 ($100,000) $0 ($100,000)

Option 2 ($44,000) $90,000 $46,000

Option 3 ($44,000) $90,000 $46,000

Option 4 ($44,000) $90,000 $46,000

Option 5 ($44,000) $90,000 $46,000

* The amounts are included in year 1 only

Business Case Study 3—Business Process ReengineeringAccounting Reconciliation Process

3.5 Recommended Process Changes—Accounting Reconciliation

This section presents the recommendations for reengineering the State of Florida’s process for reconciling

the FLAIR Departmental Accounting System with the FLAIR Central Accounting System.

Background

Using the accounting reconciliation process, State agencies compare trial balances in the agency’s

Departmental Accounting System of FLAIR with the Central Accounting System. This process allows the

agencies to analyze, identify, and resolve exceptions and make adjusting entries necessary to reconcile the

Departmental Accounting System with the Central Accounting System. The principal customers in this

process are the State Comptroller and each State agency. Reconciliation processes occur throughout State

government whenever the same piece of information is maintained on two systems. This analysis focuses

on reconciliation between the Departmental Accounting System and Central Accounting System.

Generally, Chapter 216 of the Florida Statutes specifies accounting requirements for State agencies,

including reconciling actions necessary to develop a single, consistent set of financial records for the State

(currently the State Comptroller’s ledgers).

The FLAIR subsystem of FFMIS is used to record State accounting transactions. While the Departmental

Accounting System in FLAIR provides agency management with a budgetary check mechanism,

FLAIR’s Central Accounting System maintains a separate accounting system on a cash basis, for the

control of budget by line item of the appropriations act by the State Comptroller.

Some Florida State agencies have developed or acquired their own automated reconciliation programs.

These systems identify discrepancies between the State Comptroller’s ledgers and the agency’s FLAIR

records automatically. Most of these systems are programmed to interface with FLAIR to download

monthly trial balances through a variety of exchange mediums, commonly tape or disk transfer.

Supplemental systems and applications used by the five study agencies to automate the accounting

reconciliation process are summarized in Exhibit 3-16.


Exhibit 3-16Agency Supplemental Systems Used in the Reconcilation Process

AgencySupplementalSystem Purpose

InterfacesWith

Department of Transportation Automated CostReconciliation System

Identifies exceptions toComptroller’s ledgers

FLAIR

Department of Children and Families FLAIR/ComptrollerReconciliation System


FLAIR

Department of Insurance, Treasuryand State Fire Marshal

AutomatedReconciliation System

– –

Department of Highway Safety andMotor Vehicles

None – –

University of Florida AutomatedReconciliation System


FLAIR

Current Process

The accounting reconciliation process is a consequence of having two separate sets of financial records in

FLAIR—one official set maintained by the State Comptroller and another set kept by each State agency.

Most agencies reconcile these two accounts monthly—to avoid the undesirable task of reconciling 12

months of transactions at year-end.

The process of reviewing and reconciling outstanding items is similar in each State agency. Approaches

vary mainly in the volume of transactions to review each month and the methods used to identify

exceptions. Not surprisingly, agencies with the largest budgets have the most reconciliations to process.

Many agencies have acquired simple programs that compare agency FLAIR records with the State

Comptroller’s ledgers for each fund, noting items outstanding in either set of records. Both sets of records

are downloaded from FLAIR to the reconciliation program, commonly by tape or disk. Agencies without

access to automated reconciliation programs perform this process manually.

After outstanding items are identified, the agency must determine the source and cause of any exceptions.

Often, this involves communication with district, regional, or subsidiary offices. When the cause of the

exception is determined, the agency makes online adjustments to its FLAIR records, as required, to bring

its records into agreement with the State Comptroller’s ledgers. Alternatively, an agency may send a

reconciliation statement to the State Comptroller explaining exceptions that require an adjusting entry to

the Central Accounting System.



Exhibit 3-17 provides a summary of the average number of monthly cash and unexpended budget release

reconciling items for each study agency and the estimated number of FTE hours each agency spends in a

month performing necessary reconciling adjustments. In performing cash reconciliations, an agency

identifies and resolves differences between cash ledger entries recorded in the Central Accounting System

and Departmental Accounting System for a given time period. Similarly, an agency reconciles its

unexpended budget releases by identifying and resolving differences in Central and Departmental

accounts for funds that have been appropriated but have not yet been spent. Cash and unexpended budget

releases commonly represent most of an agency’s monthly reconciliation workload.

Exhibit 3-17Average Number of Monthly Reconciling Items for Study Agencies

AgencyNumber of CashReconciliations

Number of UnexpendedBudget ReleaseReconciliations

ApproximateNumber ofFTE hours

Department of Transportation 2,043 54 540

Department of Children and Families 5,594 282 3,400


350 Not available 120


118 2 72

University of Florida 2,928 24 410

Source: KPMG Interviews of accounting personnel at DOT, DCF, DHSMV, DOI, and University of Florida, 1999


The cost of the reconciliation process is derived by analyzing three cost components—customer costs,

agency costs, and centralized costs. Customer costs generally reflect the time an individual spends

completing a form or entering data to initiate a process. Agency costs reflect the labor costs of the agency

personnel who are devoted to carrying out the process. Centralized costs reflect the labor costs of

personnel who are located in a statewide administrative support agency and who participate in the process

statewide.







Agency Costs: Agency costs consist of district and central office accounting staff who identify and

resolve differences between the Departmental Accounting System and the Central Accounting System.

Exhibit 3-18 presents an estimate of personnel costs incurred by each of the five study agencies in

performing monthly reconciliation.

Exhibit 3-18Estimated Annual Cost of Reconciling Cash and Unexpended Budget Releases in Five Study Agencies

Agency

Number ofMonthly FTE

Hours

EffectiveNumber of

FTEsEstimated

Cost

Department of Transportation 540 3.5 $99,000

Department of Children and Families 3,400 22.0 625,000


120 0.8 22,000


72 0.5 13,000

University of Florida 410 2.6 75,000

Total 4,542 29.4 $834,000

Assumptions: (1) $28,406 Salary + Fringe Benefits per FTE (average); (2) 1,854 hours per yearSource: KPMG interviews of accounting personnel in DOT, DCF, DHSMV, DOI, and University of Florida

Exhibit 3-19 presents a summary of total estimated annual costs incurred by all agencies in performing

reconciliations.

Exhibit 3-19Estimate of Total Annual Statewide Labor Costs for Reconciling Cash and Unexpended Budget Releases

Cost Component

Total ProcessCosts—Study

AgenciesExtrapolation

FactorTotal Statewide

Costs

State Agencies $759,000 5.16 $3,916,000

State University System 75,000 2.10 158,000

Total $4,074,000

The extrapolation factors are based on 1998-1999 appropriations data. For State agencies, we divided the

total statewide appropriations (other than the State University System [SUS]) by the sum of

appropriations for DOT, DCF, DHSMV, and DOI and calculated the factor to be 5.16. For the SUS, we

divided the total appropriations for all SUS schools by the appropriations for University of Florida and

calculated the factor to be 2.10.


Centralized Costs: Centralized costs include time spent by the State Comptroller addressing

reconciliations issues that affect its own ledgers or resolving discrepancies in interfund/interagency

journal transfers. It is estimated that the State spends approximately $58,000 per year for the

reconciliation process.


costs to carry out the reconciliation process.


Most of the reconciling items that State agencies identify and adjust each month are caused by problems

in trying to maintain two sets of ledgers for the Central Accounting and Departmental Accounting

Systems.

Reconciling items are affected by several different factors, including:

! Errors made in posting disbursements or receipts to a specific organization, object, or ledger code

! Timing differences created when an agency records a disbursement (that is, the agency issues avoucher and records it in the Departmental Accounting System, but the State Comptroller doesnot record this same disbursement in the Central Accounting System until the warrant is issued)

! Disbursements corrections made to the Central Accounting System that the State Comptroller’soffice does not communicate to the appropriate State agency

Several Florida State agencies have acquired reconciliation programs that detect and identify

discrepancies between two ledgers automatically. Most agencies, however, still perform this activity

manually. After the reconciling item is identified—whether automatically or manually—the agency

determines the status of the exception by reviewing and comparing amounts posted to each ledger—

another manual process. When each exception is resolved, the agency or the State Comptroller makes

adjusting entries online.

Many agencies also need to reconcile cash balances every month for each revolving account and clearing

funds account they maintain in local banks. These account balances are not recorded in FLAIR and

consequently are not affected by most of the issues listed above. However, the high volume of monthly

activity in these accounts results in a supplemental reconciliation activity that most agencies perform

manually.


The only way to change the reconciliation process significantly is to end the practice of maintaining a

Central Accounting System separate from the Departmental Accounting System.


Recommendation BPR-9: Implement an automated financial management system thatmaintains a single set of accounts for each fund

Florida should implement an automated financial management system featuring a single set of ledgers for

each fund. Ledgers would be secure, shared, online files that are available only to the managing agency,

the State Comptroller, and the State Treasurer. Generally, the roles to be assumed by each of these entities

in maintaining the State’s financial records under a single-ledger system, would be as follows:

! Agency: The agency managing a particular fund would assume primary authority andresponsibility for posting transactions to its own ledgers. Journal transfers, Treasury receipts, andcorrections identified by the State Comptroller would be posted to the ledger only with themanaging agency’s online concurrence

! State Comptroller: The State Comptroller would audit selected ledger transactions, reviewingthose entries automatically identified by the system according to criteria it predefines. Exceptionswould be presented to the agency managing a fund, with correcting entries automatically postedto the fund’s ledgers only with the agency’s online concurrence

! State Treasurer: The State Treasurer would electronically notify an agency regarding receipts itproposes to credit to a particular fund. The revenue entry would automatically be posted to thefund’s ledgers only with the agency’s online concurrence

Fiscal Impact: By implementing a single-ledger system, Florida could eliminate 70 percent of the

reconciling items that it must resolve each month. The annual cost savings to three of the larger study

agencies alone (that is, DOT, DCF, and University of Florida) would be an estimated $560,000. Our

estimate was derived from eliminating 70 percent of the FTEs currently performing reconciliations and

using an estimated annual cost per FTE of $28,406 (average salary and benefits for an Accountant II).

The estimated FTEs used to extrapolate to Other State Agencies and Universities was derived by applying

extrapolation factors based on relative appropriations for nine of Florida’s largest agencies and nine other

State universities. The resulting total cost savings to Florida’s largest agencies, estimated to be

$2,739,000, is summarized in Exhibit 3-20 provided at the end of this section. The resulting total cost

savings to the remaining Florida agencies is estimated to be $109,000, bringing the statewide savings to

$2,848,000.

Recommendation BPR-10: Require online approval from both agencies before aninterfund or interagency journal transfer can be entered to the financial managementsystem

Many reconciling items result from journal transfers that are unilaterally posted to an agency’s ledgers

without the agency’s knowledge or consent. Considered together with recommendation BPR-9, the State

should develop an automated financial management system that requires concurrent online approval from


both agencies before an interfund or interagency journal transfer can be entered into either agency’s

ledgers.

Fiscal Impact: The cost savings associated with this recommendation are included in the discussion for

recommendation BPR-9.

Recommendation BPR-11: Implement a system that rejects entries made withunrecognizable organization, object, or ledger codes

To eliminate key-entry errors caused by operators posting transactions to the wrong organization, object,

or ledger code, Florida should implement a financial management system that automatically rejects

entries with unrecognizable codes or with codes not commonly used by the agency for a given fund. The

system should continue to feature warning messages and provide the capacity to override the rejection,

but require a supervisor to approve the override.

Fiscal Impact: This recommendation could eliminate another 5 percent of the State’s current

reconciliation workload, which we estimate to be approximately $145,000.

Recommendation BPR-12: Establish online banking and automated reconciliationservices with local banks holding an agency’s revolving fund or clearing funds accounts

Many State agencies maintain revolving fund or clearing fund accounts in local banks to facilitate petty

cash transactions and accept certain local deposits before transferring these revenues to the State

Treasurer. These funds are not recorded in FLAIR and therefore are not subject to the accounting

reconciliation process issues addressed in recommendations BPR-9 and BPR-10. However, accounting

personnel in each agency must reconcile these account balances to the bank’s records—a process that can

be very time consuming and costly.

To address this problem partially, agencies could establish online bank accounts for their revolving and

clearing funds, and use automated reconciliation services to maintain accurate balances for each account.

Using a bank’s automated reconciliation services, an agency grants the bank authority to review its online

account register daily. The bank identifies exceptions and informs the agency of discrepancies found. The

agency would still need to determine the cause of any errant entry and make an adjusting entry. However,

the agency would maintain more accurate account balances and save a significant amount of the time that

it spends reviewing monthly (paper) bank statements and reconciling exceptions—weeks and sometimes

months after an incorrect entry is posted.

Fiscal Impact: The cost to implement this recommendation is minimal—most commercial banks offer

online banking and automated reconciliation services either free of charge or for a small monthly fee

although a substantial minimum balance may be required. However, the resulting time and cost savings to


each agency could be considerable. Because this process issue does not directly affect Florida’s integrated

financial management system, KPMG did not identify workload measures and process costs that could be

used to extrapolate an estimate of cost savings.


To implement recommendations proposed for reengineering Florida’s accounting reconciliation

processes, the State must address the following systems requirements:

! Maintain a single set of ledgers for each fund within the integrated financial management system

! Control access to ledger files and restrict authority to make account entries:

– Grant primary authority for recording all entries to a fund solely to the agency responsible formanaging that fund

– Permit State Comptroller personnel to view fund balances and ledger entries but restrict themfrom recording or adjusting entries

! Require online approval for interfund and interagency journal transfers from each agency that thejournal transfer affects

! Prevent entries with unrecognizable organization, object, or ledger codes by automaticallyrejecting such entries and requiring secondary approval to override the rejections

Options Analysis

Estimated savings from recommendations to improve Florida’s accounting reconciliation process can be

achieved in all the systems options except Option 1 and Option 2. Although Option 2 includes

modifications to the current system, it would not eliminate the practice of maintaining a central ledger

along with agency ledgers. Option 2 does not add savings to recommendation BPR-9; however,

recommendation BPR-10, which shares savings with recommendation BPR-9, does include Option 2. The

savings depend on the implementation of the following systems improvements:

! Implement a single set of ledgers for each fund

! Require online approval from both agencies before an interfund or interagency journal transfercan be entered to the financial management system

! Automatically reject entries made with unrecognizable organization, object, or ledger codes

Options 3 through 5 can provide the functionality required for these applications.

Exhibit 3-20 provides the savings associated with each of the five alternatives.



OptionBudgetary


Total BPRSavings

Recommendation BPR-9 and BPR-10

Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 2,848,000 0 2,848,000

Option 4 2,848,000 0 2,848,000

Option 5 2,848,000 0 2,848,000


Option 1 0 0 0

Option 2 0 145,000 145,000

Option 3 0 145,000 145,000

Option 4 0 145,000 145,000

Option 5 0 145,000 145,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 $0 $0 $0

Option 2 $0 $145,000 $145,000

Option 3 $2,848,000 $145,000 $2,993,000

Option 4 $2,848,000 $145,000 $2,993,000

Option 5 $2,848,000 $145,000 $2,993,000


3.6 Recommended Process Changes—Accounting for Paymentsfrom Multiple Accounts

This section presents the recommendations for reengineering the State of Florida’s process for accounting

for payments from multiple accounts.

Background

Agencies make payments to employees and vendors regularly. The payroll and accounts payable

functions are present in some form in every State agency. Whenever a disbursement is made, an

expenditure amount equal to the disbursement amount must be charged against an expenditure account in

FLAIR. Normally, this is not a problem. However, when a disbursement is funded from more than one

expenditure account, a limitation in FLAIR requires that disbursements be expensed against only one

expenditure account. To ensure proper accounting, the State staff has to go back into FLAIR and, through

a series of journal transfers, allocate the expenditure amount to the proper expenditure accounts.

Specifically, the disbursement is made from one fund and an adjustment, Journal Transfer Voucher

Schedule, is prepared to effect the transfer of expenditures from the paying account to other supporting

accounts.

An alternative to executing a series of journal transfers is to issue more than one warrant to the vendor or

employee. The University of Florida does not perform back-end journal transfers to overcome the FLAIR

deficiency; instead, it issues multiple checks against a single invoice, thereby taking the alternative route

to solve the deficiency.

The issuance of a warrant in FLAIR is restricted by funds, category, and budget entity. If an agency

attempts to issue a warrant and it crosses either a funding source, category (for example, expense,

operating capital outlay, and other personal services), or budget entity, the agency cannot issue a single

warrant to the vendor. These restrictions cause the journal transfer process or the issuance of multiple

warrants for a single invoice. FLAIR currently has the capability to use a distribution matrix for PCard

and Electronic Data Interchange (EDI) payments, which eliminates the allocation problem for those

transactions.

State Statutes do not govern this process. It is a process created to address a deficiency in FLAIR.

Current Process

The smaller agencies that we studied rely on functionality within FLAIR to execute the fund journal

transfers, but large agencies with a high volume of federal grant activity have developed automated

systems to mitigate the manual workload. Of the agencies we reviewed, only one has a supplemental

system aimed specifically at automating this journal transfer process—DCF. The DCF system determines


the amounts to be distributed by fund and generates accounting entries to effect the transfer of

expenditures from the paying account to the supporting account. Data is transferred regularly from

FLAIR to the Cost Journal Transfer (CJT) system and subsequently to the Automated Journal Transfer

(AJT) system to accomplish the objective.

The method for allocating payments from multiple accounts varies from agency to agency. Exhibit 3-21

indicates the variation among the five study agencies.

Exhibit 3-21Methods for Accounting for Payments from Multiple Accounts

Agency Method

Department of Transportation Pays nearly all its expenditures out of the StateTransportation Fund; therefore, these adjustments arean insignificant part of its workload

Department of Children and Families Uses an AJT system


Manual

Department of Insurance, Treasury and StateFire Marshal

Manual

University of Florida Issues multiple checks, avoids making journal transfers

Because of the variance reported, the process is separated into the automated (represented by DCF) and

the manual effort accomplished by the smaller agencies.


Exhibit 3-22 provides annual workload and performance information by agency for the accounting for

payments process described above.


Exhibit 3-22Workload and Performance Metrics for Accounting for Payments from Multiple Accounts

Agency

Annual Workload(Hours) or System

MaintenanceTransaction

Activity FTEs

Department of Transportation Not applicable Not applicable Not applicable

Department of Children and Families $300,000 5,708,671 debits Automated system


696 hours* Unable todetermine

0.4


Insignificant amount Insignificantamount

Insignificantamount

University of Florida Not applicable Not applicable Not applicable

*Workload hours represent agency estimate for manual fund journal transfer activities for a given fiscal year

The only agency that was able to provide reliable workload transaction volume was DCF. The agency

uses a Financial Data Warehouse that is capable of providing transaction counts from FLAIR on a

multitude of agency activities. The agency reported that 5,708,671 debits were posted by the AJT system

in Fiscal Year 1999. The other agencies do not have systems in place to perform this process or were

unable to determine the transaction activity associated with the process.


The cost of the accounting for payments from multiple accounts is derived by analyzing three cost

components—customer costs, agency costs, and central costs. Customer costs generally reflect the time

an individual spends completing a form or entering data to initiate a process. Agency costs reflect the

labor costs of the agency personnel devoted to carrying out the process. Central costs reflect the labor

costs of personnel who are located in a statewide administrative support agency and who participate in the

process statewide.






Agency Costs: Agency costs for this process are incurred for all types of expenditures including payroll

expenditures. Exhibit 3-23A summarizes agency efforts to allocate payments from multiple accounts by

agency. Exhibit 3-23B summarizes agency-related efforts to make adjustments in FLAIR to update their

payroll Departmental Accounting System. The costs include FTEs and systems operation and

maintenance costs.


Exhibit 3-23AAgency Estimates for FTEs or System Maintenance Costs to Allocate Payments from Multiple Accounts

AgencyAgency

FTEsAgency SystemMaintenance $

Total Cost ofAllocation Process

Department of Transportation NotApplicable

– –

Department of Children and Families 0.0 $300,000 $300,000

Department of Highway Safety and Motor Vehicles 0.4 – 12,000

Department of Treasury, Insurance and State FireMarshal

0.0 – –

University of Florida NotApplicable

– –

Total 0.4 $300,000 $312,000

The agency FTEs represent the central staff required to make manual adjustments in FLAIR to allocate

payments from a single funding source to the appropriate authorized funding sources. We used statewide

budget figures to estimate the statewide cost savings associated with modifying this process. The process

required using the workload FTEs reported by DHSMV and the total Fiscal Year 1999 appropriations for

all State agencies. The DHSMV Fiscal Year 1999 total appropriations of $334,648,029 was divided by its

corresponding FTE to determine an appropriation dollars/FTE of $836,620,073. The appropriations for

each agency that does not have an AJT system was then divided by the appropriation dollars/FTE figure

to estimate the number of FTEs in an applicable agency associated with accounting for payments from

multiple accounts. We estimated that 55 statewide FTEs were associated with this process at an estimated

cost of $1,562,330. We have not extrapolated the cost of maintaining DCF’s fund journal transfer systems

because it is unique among State government agencies.

Exhibit 3-23BAgency Estimates for FTEs or System Maintenance Costs to Allocate Payments from Multiple Accounts

AgencyAgency

FTEsAgency SystemMaintenance $

Total Cost ofAllocation Process

Department of Transportation 2.7 – $77,000

Department of Children and Families 0.0 $116,220 116,220

Department of Highway Safety and Motor Vehicles 0.3 – 9,000

Department of Treasury, Insurance and State FireMarshal

0.1 – 3,000

University of Florida 8.0 – 227,000

Total 11.1 $116,220 $432,220

The agency FTEs represent the central and dispersed agency staffs required to process payroll File 0013

data and make adjustments in FLAIR to update their Departmental Accounting System. This includes


systems and accounting or budgeting personnel who process the tape, produce reports for various

departments, and manually enter transaction 51s (unencumbered expenditure transactions) in FLAIR to

allocate the Central FLAIR payroll data to the departmental records. We used statewide numbers of

employees to estimate the statewide cost savings associated with modifying the payroll journal transfer

process. The study agencies require 11.1 FTEs to carry out the payroll journal transfer process for 27

percent of the State’s employees. Assuming that the number of FTEs is commensurate with the number of

employees being paid, we estimate that the State as a whole devotes 43 FTEs or $1.2 million to the

process. We have not extrapolated the cost of maintaining DCF’s system because it is unique among State

government agencies. All costs associated with this process were agency costs. In total, the State annually

expends an estimated $2.8 million in agency labor costs to carry out the accounting for payments from

multiple accounts and to allocate Central FLAIR payroll data to the departmental records.

Centralized Costs: No centralized costs were collected or reported.


The accounting for payments from multiple accounts process has one significant weakness—FLAIR lacks

the capability to issue a warrant from multiple accounts. FLAIR does not accommodate multiple-fund

warrant issues, requiring the individual agencies to perform extensive journal transfers on the back-end of

an expenditure to ensure that the appropriated accounts are being expended for their intended use.

The problem is particularly acute in agencies such as the DCF that have large federal grant activity. If the

agency does not have disbursements in the appropriate fund categories when they do federal reporting, the

agency does not get reimbursed for its federal dollars. AJT systems move dollars to the accounts based on

the federal guidelines allowing them to maximize funds recoupment.


To address the weakness in the system that is causing additional journal transfer activity, the State needs

to change its system to accommodate the need to disburse from more than one fund.

Recommendation BPR-13: Develop the capability to automatically debit against morethan one account

The State’s accounting system should be able to charge payments against more than one account. If the

State’s Central Accounting System can disburse from more than one account, a significant amount of

manual data entry would be eliminated across State government.

Under the reengineered model, agency personnel enter their expenditure transactions for a particular

budget entity, internal budget indicator, expense, other cost accumulator, and category code combination.


A matrix built into FLAIR or a statewide AJT system determines whether the transaction meets certain

criteria for funds distribution and, if so, allocates the transaction to the supporting authorized funding

sources based on the matrix table percentages within the system. The State Comptroller issues the warrant

from multiple accounts, thereby providing a clearer process to determine if the agencies are expending

their budgets in a manner consistent with the appropriated intent.

Fiscal Impact: Implementation of the reengineering recommendation would eliminate this process and

the cost associated with it. Savings would total $2,783,000. Because this process rarely constitutes an

employee’s full-time responsibility, we anticipate that no positions could be eliminated with this

recommendation. The savings represent the value of resources made available to perform other duties.


The State’s financial system would need the capability to issue a warrant without being restricted by

funding source, category, or budget entity. These restrictions cause the journal transfer process or the

issuance of multiple warrants for a single invoice.

Options Analysis

The weakness identified in the process for paying from multiple accounts is essentially a system problem.

Consequently, only the options that include significant system upgrades can claim the BPR savings

associated with our recommendation. The first and second options do not include extensive modifications

to the existing system; therefore, the BPR savings are not attributable to this option. The remaining

system options accommodate the required functionality for this recommendation. The potential budgetary

savings resulting from implementation of the recommended process change is $0. The savings identified

in Exhibit 3-24 reflect an increase in efficiency of approximately $2,783,000.


OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 0 2,783,000 2,783,000

Option 4 0 2,783,000 2,783,000

Option 5 0 2,783,000 2,783,000

Business Case Study 3—Business Process ReengineeringAllocation of Common Costs

3.7 Recommended Process Changes—Allocation of Common Costs

This section presents the recommendations for reengineering the State of Florida’s process for allocating

common costs—the process by which agencies calculate indirect cost for the purpose of charging

overhead expenses to grants, contracts, and other agreements with the federal government.

Background

Indirect costs are the costs of an agency that are not directly attributable to a particular project or program

activity but are necessary to the general operation of the agency and conduct of the activity it performs.

States develop Indirect Cost Allocation Plans to estimate the indirect costs applicable to sponsored

activities performed under grants, contracts, and other agreements with the federal government.

In theory, such costs might be charged directly to the contract or grant; however, practical difficulties

prevent such an approach. These costs are usually grouped into common cost pools and distributed to

those agency activities that benefit from them. The cost allocation process provides the distribution of the

indirect costs of an agency to the direct service activities in proportion to the extent of their use of

administrative resources. The cost allocation process provides the agency with a means to determine its

indirect rates for federal grant and contract billing purposes, thereby maximizing the amount of funding

provided from nonstate entities. The process also provides accountability to the federal agency for

satisfying the allowable use of the grant funds.

The customers of this process are primarily the cognizant agencies. The term “cognizant agencies” refers

to the federal agencies that oversee the grants and have approval authority for the indirect cost plan

submissions.

State agencies benefit from the end result of the cost allocation process as do citizens. A well-structured

cost allocation plan can maximize nongeneral fund income for a State agency. The cost allocation process

is governed by various federal regulations depending on the cognizant federal agency and nature of the

State agency’s mission. The cognizant federal agencies for the five study agencies are as follows:

! DOT falls under Office of Management and Budget (OMB) Circular A-87, Cost Principles forState, Local and Indian Tribal Agreements, and the Code of Federal Regulations (CFR) Title 23(Highways)

! DCF works in accordance with OMB Circular A-87 and Subpart E of CFR, 45 CFR Part 95

! SUS is governed by OMB Circular A-21, Cost Principles for Educational Institutions

! DHSMV and DOI do not prepare Indirect Cost Allocation Plans because they perform minimalfederal grant and contract activity


Guidelines in the OMB circulars and federal rules require that agencies and institutions identify allocation

methodologies for all costs of the respective agency/institution and that they restrict or provide guidance

on unallowable costs. Because each cognizant agency has its own standards for and interpretations of

indirect costs, the methodology for classifying administrative costs varies among agencies. In addition,

the State does not have a common approach for charging administrative costs within a State agency.

Some agencies budget and are appropriated funding directly for administrative expenses; others charge

administrative costs to the State agency divisions and programs.

In general, agencies rely on the FLAIR system to provide the base financial data for the cost allocation

process; however, because the volume of grant activity and funding is so high, some agencies have

developed complex processes and supplemental systems to satisfy their cost and activity reporting

requirements. Exhibit 3-25 provides a listing by agency of the supplemental systems and their

corresponding purpose and system interfaces.

Exhibit 3-25Agency Supplemental Systems Used in the Allocation of Common Costs Process

Agency Supplemental System PurposeInterfacesWith


Project Cost ManagementSystem

Work Program System

Reciprocal Cost AllocationModel

COPES

Calculates indirect rates for agiven project

Provides project numbers used fordirect cost pools

Provides reciprocal cost model toapply indirect costs to direct costs

Provides personnel information foractivity reporting

FLAIR

FLAIR

None

None

Department of Childrenand Families

COPES

Grants Management System

Random Moment SamplingSystem(s)

Substance Abuse and MentalHealth

Adult Services

Family Safety andPreservation

Economic Self-Sufficiency

Adult Payments

Provides FTE data used forallocation bases

Determines which OCAs areallocated directly (remaining OCAsare potential indirects). Also usedfor billing purposes

Determines activity reporting andproduces reports that allocate costpercentages to budget entities

None

FLAIR

None


None* Not applicable Not applicable


Exhibit 3-25 (continued)

Agency Supplemental System PurposeInterfacesWith


None** Not applicable Not applicable

University of Florida Comprehensive RateInformation System

University of Florida DataWarehouse

University of Florida OnlineSpace Reporting System

Non-Academic EffortReporting System

Academic Activity ReportingSystem

Generates Indirect Cost ProposalRates

Provides a means of sorting andmanipulating FLAIR expendituredata

Space utilization reporting

Non-academic activity reporting

Academic activity reporting

FLAIR

FLAIR

None

None

None

*Department of Highway Safety and Motor Vehicles has one federal grant with the U.S. Department of Transportation for FatalAccident Reporting. It does not submit a cost allocation plan.

**Department of Insurance, Treasury and State Fire Marshal has minimal federal grant activity. Florida Wildfires (FEMA) does notapply administrative burdens, only spending authority.

Current Process

Agency cost allocation processes and the amount of activity vary considerably among the five agencies.

However, regardless of the cognizant federal agency, the methodology and subsequent rate development

used for billing indirect costs need to be auditable. Depending on the cognizant federal agency, the plans

and subsequent rates can be updated annually, over a period of years, or routinely. If the State agency

changes its methodology for common cost allocation, the plan is revised and submitted in full for

approval.

At the end of a given fiscal year, the agencies use FLAIR expenditure data and various supplemental

systems to determine their direct and indirect cost pools. Indirect cost pools include such items as

building and equipment, operations and maintenance, and general and administrative. Direct cost pools

include programs, projects, organizational research, and other sponsored grant activities. Depending on

the number of grants and other factors overseen by the agency, this can be a substantial effort.

Usually, after determining the initial direct and indirect cost pools, the agencies will determine their

modified direct costs by removing certain unallowable costs. They will determine the reasonableness of

the modified direct costs based on the guidelines of the OMB circulars and past experience. At this point,

the agency has determined its “clean” cost pools to use as a basis for applying indirect costs to the direct

costs in a reasonable manner.


Using various allocation bases extracted from various agency supplemental and statewide systems such as

COPES, the agencies apply their indirect costs to the direct costs in a reasonable manner consistent with

the beneficiary of that activity. Examples of allocation bases include:

! Full time equivalents

! Revenue expenditures

! Budget transactions

! Hours of service

After applying the indirect costs to the direct costs in a reasonable manner, the agencies are able to

determine the indirect cost rates to be applied to a budget entity.

After completing this portion of the process, the agencies finalize their Indirect Cost Allocation Plans

detailing their methodologies, indirect rate proposals, and supporting schedules. The plan is submitted to

the cognizant federal agency for negotiation and subsequent approval. Upon approval, the indirect rates

are applied to the direct costs associated with a grant or contract and billed out on the respective grant

reports for cost recoupment.


Exhibit 3-26 provides annual workload statistics by agency for each of the five study agencies. The

workload hours represent the total annual hours expended by the agency to perform its cost allocation

processes. The number of grants, other cost accumulators (accounting codes established to capture costs

of federally funded programs), and dollar amount of grants directly affect the workload of the study

agencies.

Exhibit 3-26Workload and Performance Metrics for Allocation of Common Costs

AgencyAnnual Workload

(in hours)Number of Grants or

OCAs

Department of Transportation 928 TBD

Department of Children and Families 65,232 Number Grants TBD

1220 Active OCAs

Department of Highway Safety and Motor Vehicles 40 1 Grant

Department of Insurance, Treasury and State FireMarshal

Negligible 3 Grants

University of Florida 38,158 4,000+ Restricted Grants

1,000+ Unrestricted Grants



The cost of the allocation of common costs process is derived by analyzing three cost components—

customer costs, agency costs, and centralized costs. Customer costs generally reflect the time an

individual spends completing a form or entering data to initiate a process. Agency costs reflect the labor

costs of the agency personnel devoted to carrying out the process. Centralized costs reflect the labor costs

of personnel who are located in a statewide administrative support agency and who participate in the

process statewide.






Agency Costs: As shown in Exhibit 3-27, the total number of FTEs devoted to this process totals 56.32.

The cost for these FTEs is $1.6 million annually. (The estimated average salary is based on an

Accountant II.)

Within the agencies, this process is carried out using central and dispersed staff. The agency central FTEs

represent the effort involved in overseeing the agency’s allocation of common costs processes and

reporting mechanisms. This includes the overseeing of district/departmental activity reporting functions,

compliance with cost accounting standards, rate development, determination of cost pools, and other

indirect plan development requirements. Dispersed agency FTEs represent district/departmental efforts

associated with the allocation of common costs processes. This includes overseeing district/departmental

activity reporting mechanisms and implementing usage and other requirements used in the allocation of

common costs process. In agencies that have a large amount of grant activity, hundreds of people at the

district/departmental level participate in this process.


Exhibit 3-27Agency FTEs and Associated Costs for Allocation of Common Costs

Agency

AgencyFTEs

Central

AgencyFTEs

DispersedTotalFTEs

Cost ofAllocation of

Common Costs

Department of Transportation 0.50 Not applicable 0.50 $14,000

Department of Children and Families 4.00 31.20 35.20 1,000,000


0.02 Not applicable 0.02 1,000


Negligible Not applicable Negligible Negligible

University of Florida 3.40 17.20 20.60 585,000

Total 7.92 48.40 56.32 $1,600,000

Statewide agency costs are derived based on grant activity throughout government. The study agencies

require 56.3 FTEs to carry out the cost allocation process for 29.6 percent of the federal grants that the

State receives. Assuming that the number of FTEs is commensurate with the size of the federal grant, we

estimate that the State as a whole devotes 190 FTEs or $5.4 million to the process.

Centralized Costs: The State bears no centralized costs for this process.

In total, the State annually expends an estimated $5.4 million in agency costs to carry out the allocation of

common costs process.


We identified the following key weaknesses in the current process:

! Information needed for cost allocation exists in separate systems. A significant level of staffresources is devoted to the exchange of automated data and reconciling differences amongvarious systems

! There is no State policy or associated methodology on cost allocation

One of the issues that surfaced when evaluating the five agencies’ cost allocation processes is the number

of systems that have been developed by the agencies to meet their unique grant reporting requirements.

DCF and the University of Florida in particular have developed multiple systems to meet the specific

requirements associated with their cost allocation processes. The University of Florida uses multiple

systems in its process; information is culled from various systems and input into other systems to

complete all facets associated with the University’s Facilities and Administrative Cost Plan. For example,

the Contracts and Grants Management department downloads State records from FLAIR and inputs the


data into the university’s financial data warehouse, allowing department personnel to manipulate and sort

the information with the degree of granularity and flexibility they require. DCF also has developed

systems to meet its unique requirements.

The State does not have a cost allocation policy or standard methodology that could be used by the

agencies as the basis for their unique requirements. Each agency has its own unique interpretation of cost

allocation. We even found instances where cost allocation was defined differently by different units

within the same agency. The absence of a cost allocation policy and a uniform methodology means that

some agencies may be inconsistent in classifying similar costs as direct and indirect. The individual

agency determines its cost allocation process and corresponding procedures on its own with no uniform

guidance from the State.


To address the weaknesses in the current allocation of common costs process, the State should establish

general policies and procedures regarding the allocation of common costs and augment the functionality

of FFMIS to support the calculation of indirect costs.

Recommendation BPR-14: Establish policies and general methodologies for allocation ofcommon costs

The State should establish a standard set of definitions and a methodology for calculating administrative

costs and allocating them to direct services. Among the definitions that should be included in the

methodology are administrative costs, common costs, direct costs, and indirect costs. The methodology

should use real examples from agencies to illustrate the application of these standard definitions.

The State Comptroller (or the Chief Financial Officer, beginning in January 2003) should work with the

State agencies that have received a substantial portion of their funding from grants (for example, Regents,

Labor, and Transportation) and with representatives of the cognizant agencies to determine acceptable

definitions and a methodology.

The State Comptroller (or the Chief Financial Officer beginning in January 2003) should perform audits

on the State agencies to monitor compliance with the State policies and methodologies for allocation of

common costs.

Fiscal Impact: This recommendation can be carried out using internal resources with no significant

impact on costs.


Recommendation BPR-15: Augment system functionality to support the calculation ofindirect costs

After developing a policy and common methodology, the State should then develop a cost allocation

system that can support the development of an Indirect Cost Allocation Plan and have the commonality to

support improved statewide cost reporting and associated recoupment of federal funds. An integrated

system would provide the functionality to:

! Accommodate the direct and indirect cost pool generation and adjustments and determineunallowable costs in line with the specific OMB circular requirements

! Generate statistical bases for allocation

! Perform the reciprocal or step-down allocation of common costs into the beneficiary direct costpools and rate development including supporting schedules

Using these capabilities should make resources available that can be applied to other work.

Fiscal Impact: Increased system functionality would yield significant time savings in the effort now

performed by dispersed FTEs. Currently, the dispersed FTEs are carrying out work that can be gathered

partially by an improved system. We estimate that up to 50 percent of the workload for dispersed FTEs

could be eliminated with the introduction of an improved financial management system. For the five

study agencies, the savings would total 24 FTEs or $0.7 million. Statewide, the savings are estimated at

$2,324,000.

The process takes into account the development of a State of Florida cost allocation system that interfaces

with FLAIR and the agency supplemental systems. Together, these systems would determine appropriate

statistical bases, indirect and direct cost pools, applicable unallowable costs, and the application of

indirect costs to the direct cost pool beneficiaries to support rate development.


To implement the reengineered process, the State needs to develop a cost allocation system for the

agencies that provide the base functionality to support agency generation of Indirect Cost Allocation

Plans. The system should be flexible to allow the agency to comply with its unique federal requirements

while simultaneously providing for common data elements to support more effective statewide reporting

of its costs. The system, at a minimum, should:

! Support relatively quick development of direct and indirect cost pool generation and adjustmentsand determine unallowable costs in line with the specific OMB circular requirements

! Generate statistical bases for allocation

! Interface with other agency systems


! Perform the reciprocal or step-down allocation of common costs into the beneficiary direct costpools and support rate development

! Develop supporting schedules

! Support generating grant reporting mechanisms for cost recoupment

! Provide a powerful query tool to develop agency-unique and statewide reports for cost allocation

Any system developed would have to interface with FLAIR.

Options Analysis

Exhibit 3-28 provides the savings associated for each of the five alternatives. The statewide savings of

$2,324,000 can be realized in Options 3 through 5. Because Option 1 is the status quo, it does not produce

any savings. Option 2 only meets two of the seven system requirements, while Options 3 through 5 meet

all of the necessary provisions. The development of a cost allocation system will provide the State with

benefits that include standardized cost reporting across agencies and statewide. It will reduce time and

effort throughout State government.


Exhibit 3-28

Summary of Annual Savings by Option

OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0


Option 1 0 0 0

Option 2 0 0 0

Option 3 2,324,000 0 2,324,000

Option 4 2,324,000 0 2,324,000

Option 5 2,324,000 0 2,324,000

Total

Option 1 $0 $0 $0

Option 2 $0 $0 $0

Option 3 $2,324,000 $0 $2,324,000

Option 4 $2,324,000 $0 $2,324,000

Option 5 $2,324,000 $0 $2,324,000

Business Case Study 3—Business Process ReengineeringFlow of Federal Funds

3.8 Recommended Process Changes—Flow of Federal Funds

This section presents the recommendations for reengineering the State of Florida’s flow of federal funds

process—the process by which the State draws on federal grant funds.

Background

Federal funds provide a significant proportion of total revenues for many Florida State agencies. Funds

are provided in various forms, including entitlements, grants, scholarships, and various program

allocations, which are awarded by a number of federal agencies.

In the flow of federal funds process, a State government agency files for a draw on a line of credit, or it

requests reimbursement for funds that the agency or its subgrantee organizations have already expended.

After the applicable federal authority approves a funding request, the U.S. Treasury deposits the funds in

a commercial “receipt” bank account maintained by the Florida State Treasurer.

The customers of this process include each requesting agency and the grant recipients to which many of

these revenues are suballocated and distributed, including:

! Local governments and government authorities

! Local charities and community organizations providing children and family services

! Other State agencies

The State Treasurer is responsible for receiving and depositing federal funds appropriated to State

agencies, in accordance with Article IV, Section 4(e) of the Florida Constitution. In addition,

Chapter 18.10 of the Florida Statutes assigns the State Treasurer the responsibility of maintaining these

funds in bank accounts and establishing investment operations to keep funds fully invested or deposited.

The purpose of this is to realize maximum earnings while providing for the cash requirements of the

State. Annually, in accordance with the federal requirement for a single audit of all federal funds, the

State must gather and report information on all federal funds that the State receives.

Larger agencies have developed detailed, internal policies to guide their employees through the flow of

federal funds processes for their respective organizations.

A Contracts and Grants subsystem in FLAIR offers State agencies a resource to record, monitor, and

manage data related to federal funds they receive and expend or suballocate to other agencies and local

government or community groups. However, this system reportedly cannot adequately record and monitor

detailed transactions for projects and activities with multiple funding sources. Consequently, agencies

with large, complex federal funding process requirements have developed their own internal management


systems to record, compile, and report project costs. These agency systems upload and download

financial information to and from FLAIR daily.

Other agencies download or re-key information from FLAIR to PC desktop applications, where they

format cost information required to process federal funding requests. Supplemental systems and

applications used by the five study agencies to automate parts of the flow of federal funds process are

summarized in Exhibit 3-29.

Exhibit 3-29Agency Supplemental Systems Used in the Flow of Federal Funds Process


InterfacesWith


Federal ProgramsManagement System

Interfaces with Florida DOT’sFinancial Management System toprocess requests for reimbursementof federal highway funds

FLAIR


GRANTS System Processes financial information fromFLAIR and other DCF inputs tofacilitate draw on federal lines ofcredit

FLAIR


None – –


None – –

University of Florida PC desktopapplications invarious departmentscampuswide

Track grant expenditures anddevelop reports and invoices

FLAIR

Source: KPMG interviews with staff in five study organizations

A receipt processing module in FLAIR provides a mechanism for the Treasurer to validate federal funds

posted to an agency’s trust funds. The State Comptroller and State agencies use this module to verify

receipt of federal funds and subsequently to update their respective FLAIR ledgers.

Current Process

As an agency expends fiscal resources on eligible federal-aid activities or projects, it tracks and records

its costs, applies indirect cost rates, and prepares a funding request report. Information provided in this

report is collected from the agency’s records in the FLAIR Contracts and Grants subsystem or is

processed through the agency’s supplemental systems. Agencies that receive their federal funds via a

letter-of-credit draw must forecast their anticipated cash needs by fund before they file a draw request.


After a funding report or invoice is developed, the agency processes a draw or reimbursement request

(typically daily, weekly, or monthly), which is sent to the applicable federal authority by wire, e-mail, fax,

or U.S. Postal Service. If the request is approved, federal funds are wired or sent by electronic fund

transfer (EFT) or by mail from the U.S. Treasury for deposit to a commercial receipt bank account

maintained by the State Treasurer. By October 1, 2002, all federal agencies will be required to use either

Automated Standard Application for Payments (ASAP) or Payment Management System (PMS) to

process State funding requests.

Daily statements from the State Treasurer’s receipt bank show which federal funds were deposited each

day. However, this transaction record does not always provide enough detail to indicate which Florida

State agency is the intended recipient of any particular deposit. The State Treasurer must match each

deposit manually with the State agency requesting the federal draw or reimbursement request and transfer

the appropriate deposit amount to the correct agency trust fund.

When the Treasurer has identified the proper fund, it posts a verification entry in the treasurer’s receipt

processing module in FLAIR, which triggers an update in the State Comptroller’s FLAIR accounts to

record receipt of the federal funds. The verification entry confirms the receipt of funds, which had been

anticipated by the State agency that entered the transaction in FLAIR.

The State Comptroller runs an annual “clearance pattern” study in accordance with its Cash Management

Improvement Act (CMIA) agreement with the U.S. Treasury’s Financial Management Service (FMS) to

estimate the aggregate time that the State holds cash before expending federal funds. Florida must

compensate the federal government for the interest it earns on federal funds (alternatively, the federal

government must pay Florida for delays in remitting federal-aid payments).


Output and outcome measures provide insight into how the flow of federal funds process is working in

Florida. Output measures reveal the volume of work associated with the flow of federal funds process.

The quantity of work an agency must assume is directly related to the number of different federal funds

the organization manages and the frequency with which it processes funding draw or reimbursement

requests. Exhibit 3-30 provides a summary of the total estimated number of letter-of-credit draws or

reimbursement requests filed by the five study agencies in Fiscal Year 1999.


Exhibit 3-30Estimated Number of Federal Fund Draw or Reimbursement Requests Filed by Five Study Agencies

AgencyFund or GrantType

TotalNumber ofPrograms,

Grants, etc.

FundingRequest

Frequency

Total Numberof Federal Fund

Transactions(Annually)

FTA, FAA, FRA andNHTSA Grants

42 * Monthly 504Department ofTransportation

FHWA TEA-21funds

1 Weekly 52

Entitlement,Program or BlockGrants

~ 90 Weekly 4,680Department of Children andFamilies

Program or BlockGrants

10 Monthly 120


FHWA Grants andFEMA Funds

3 Monthly 36


None – – –

IFAS Grants andFunds

523 Varies 2,288

Other ResearchGrants and Funds

N/A Varies 2,351

University of Florida

Student Loans andGrants

N/A Varies 184

* Represents nearly 500 different grant recipients for whom Florida DOT processes invoices for federal reimbursement

An appropriate outcome indicator for this process is the time required by agency personnel to prepare the

required financial information needed to support a funding draw or reimbursement request. For line-of-

credit draws, agencies must submit funding requests expeditiously to receive federal funds in time to pay

anticipated disbursements. If an agency delays requesting and receiving its federal fund draw or it

miscalculates its cash flow needs, it may have to pay late charges on invoices for federal-aid activities and

programs.

If the agency receives more funding than it needs to pay immediate liabilities for these activities and

programs, it must pay the federal government an amount commensurate with the time these funds were

banked and earning interest before they were spent. Therefore, it is critical that the agency understand its

current cash position and that it request and receive its federal fund draw quickly, so it can pay its

invoices on time. For most agencies, estimating periodic cash flow needs and developing the subsequent

letter-of-credit draw request takes 30 to 90 minutes per transaction.

Agencies entitled to federal fund reimbursement payments are motivated to file quickly to recover the

money already spent on federal-aid projects and activities. Ideally, an agency would file its funding


requests daily, as it incurred reimbursable costs. However, agencies are limited by specific filing

frequencies stated in federal funding rules and contracts—typically weekly, biweekly, or monthly.

To minimize impacts on its cash flow, an agency must quickly compile and prepare all current cost

information required to submit the reimbursement request—so that it receives the maximum amount of

payment for which it is eligible in any filing period. Agencies typically require 90 to 120 minutes to

process each federal funding reimbursement request.


The cost of the flow of federal funds process is derived by analyzing three cost components—customer










Agency Costs: State agencies incur some of the following additional costs:

! Administration of statewide programs (for example, Medicaid, TANF, and Food Stamps)

! Administration of grant “pass through” to other State agencies or to community groups and localgovernments and authorities

! Forecasting cash requirements

! Maintenance of complex grants and program management systems

Exhibit 3-31 presents a summary of the estimated State personnel costs associated with flow of federal

funds process for the five study agencies.


Exhibit 3-31Estimated Cost of Filing Federal Fund Draw or Reimbursement Requests for Five Study Agencies

Agency

Total EstimatedFTE Hours per

MonthEstimated Total

FTEsTotal Estimated

Cost

Department of Transportation 36 0.2 $6,000


120 0.8 23,000

Department of Highway Safetyand Motor Vehicles

8 0.1 3,000

Department of Insurance,Treasury and State Fire Marshal

N/A N/A N/A

University of Florida

! IFAS 775 5.0 142,000

! College of Engineering 620 4.0 114,000

! Other 1705 11.0 312,000

Total 3,264 21.1 $600,000

Assumptions: (1) $28,406 Salary + Fringe Benefits per FTE (Accountant II); (2) 1,854 hours per year = 155 hours/month;(3) FTE hours for DOT and DCF do not include time incurred by field personnel recording project or activity data to internalmanagement systems (e.g., FMS GRANTS)

The University of Florida employs Grants Administrators who are responsible for all aspects of grants

and funds management for designated programs or colleges. Responsibilities include preparing and

submitting grants applications, setting up and managing grants and contracts, and reporting and invoicing

for federal fund payment.

Based on the portion of all federal grant funds that go to the five study agencies, we have extrapolated the

process costs statewide. An extrapolation factor is applied to all universities based on the experience of

the University of Florida and a factor is applied to all other State agencies based on the experience of the

four non-university study agencies. KPMG’s estimate of the total labor costs associated with this process

is presented in Exhibit 3-32.

Exhibit 3-32Estimate of Total Statewide Labor Costs for Flow of Federal Funds Process

Cost Component

Total ProcessCosts—Study

AgenciesExtrapolation

Factor

TotalStatewide

Costs

State Agencies $32,000 3.2 $102,000

State University System 568,000 2.5 1,420,000

Total $1,522,000


The extrapolation factor for State agencies is 3.2. The factor was derived by dividing the total federal

revenues less State University System funds into the sum of federal revenues received by DOT and DCF.

The extrapolation factor for the SUS is 2.5. The factor was derived by dividing the total federal revenue

of the SUS into the federal revenue received by the University of Florida.

Centralized Costs: Centralized costs are those incurred by the State Treasurer in performing the following

activities:

! Matching federal revenues received with the State agency making the funding draw orreimbursement request

! Forecasting cash receipts, which include federal revenues

The State Treasurer staff spends an estimated 120 hours per month or about 0.8 FTEs on this process. The

estimated annual centralized labor cost associated with this process is $23,000, assuming an average FTE

and benefit cost of $28,406 per year. (The estimated average salary is based on an Accountant II.)


costs to carry out the flow of federal funds processes.


Several significant process and technical issues affect the flow of federal funds process in Florida. Many

of these issues result from a lack of functionality in FLAIR’s Contracts and Grants subsystem, causing

many agencies to track project data and costs on their own internal management systems or even on PC

desktop programs. When federal funding data is filed in many different systems and applications

throughout Florida, the State incurs costs related to:

! Redundant data entry to the Contracts and Grants subsystem and an agency’s supplementalsystems

! Data consistency and integrity

! Accessibility of data for statewide reporting and revenue forecasting needs

Problems identified with the Contracts and Grants subsystem include the inability to:

! Develop, approve, and submit grants applications electronically

! Set up grants and contracts in the system with adequate user-defined award information (forexample, terms and conditions, Catalog of Federal Domestic Assistance (CFDA) identification,compliance guidelines and restrictions, and awarding agency information)


! Manage cost and performance data for grants and contracts according to flexible, user-definedrequirements

! Support online submission of federal fund draw or reimbursement requests

! Allocate and record disbursements for projects with federal and nonfederal funding sources

Other process problems identified include the following:

! Matching receipts and expenditures: The State has difficulty in matching federal grant receiptswith the federal grant expenditures. In many cases federal grant funds are deposited into trustfunds that also receive deposits of State moneys and other grant funds. An estimated 10 percentof federal funds deposited in the State Treasurer’s receipt bank lack sufficient detail for theTreasurer to readily match receipts to the agency making the funding draw or reimbursementrequest. In these instances, staff in the State Treasurer’s office must manually research thedeposit—calling State and federal agencies, and sometimes the U.S. Treasury, to determine whichState agency is to receive the funds. In some instances, the funds are posted to the wrong agencyaccount—requiring staff members in the State Comptroller’s office and in several agencies tomake time-consuming corrections to their respective FLAIR ledgers

! Tracking grants across agencies: The State does not have a consistent definition for a grant, aproject, or a contract. Each State agency can define these terms as it chooses. There is currentlyno statewide assignment of numbers for grants, projects, and contracts. The assignment of thesenumbers is unique within each State agency but the numbers are not unique statewide. This factfurther contributes to the difficulty in tracking the flow of federal grant funds received by oneState agency and then subgranted to another State agency

! Forecasting: Florida cannot forecast its cash flow needs accurately and consequently earns excessinterest on federal funds requested by State agencies but not needed for immediate disbursement.According to its CMIA agreement, Florida must return all excess federal interest—an amounttotaling approximately $4,867,000 in Fiscal Year 1999

An important area of potential weakness in the process is the possibility that the State may be losing float

(that is, interest earnings) because of delays in drawing on federal funds. After investigating this issue, we

did not find this to be a significant problem. In some areas it may be possible to eliminate a day from the

process, but the payback is small ($15,000 in the case of the universities). Consequently, this is not

included as a significant weakness nor is it addressed in the recommended process changes.


To address the weaknesses in the flow of federal funds process, the State should develop a statewide

grants management system and automate the federal funds matching process.


Recommendation BPR-16: Develop a statewide grants management system that fullysupports the information management and reporting needs of Florida State agencies

Several Florida State agencies have developed their own management information systems to record and

report information needed to support federal-aid draws or reimbursement requests. Most other agencies

rely upon FLAIR’s Contracts and Grants subsystem, supplemented with miscellaneous PC desktop files,

to perform this function. To reduce personnel costs, maintain consistent and reliable federal project and

program data, and shorten the time required by State agencies to file federal-aid draw or reimbursement

requests, Florida should reengineer its Contracts and Grants subsystem. Proposed system requirements

and related process improvements include:

! Improved pre-award functions

– Enhanced capacity to prepare grant applications (including a library of prior grant applicationdocuments)

– Automated routing of grant applications for agency-level approval

– Electronic submission of grant applications to federal agencies

! Improved account set-up and award information features

– Adequate number of user-defined fields to summarize project award information (forexample, terms and conditions, CFDA identification, restrictions, awarding agency,compliance guidelines, contact persons, addresses, and telephone numbers)

– Budgetary controls with user-defined rules

! Improved grants and contracts management features

– Greater flexibility in defining types of project and program costs

– Greater flexibility in developing deliverables required to support funding draws orreimbursement requests

– Capability to allocate and record disbursements for projects with multiple funding sources

– Capability to submit federal fund draw or reimbursement requests online through ASAP orPMS

! Automated receipt-matching program (see recommendation BPR-17)

! Federal fund forecasting module

! Interface with existing grants and contract management systems maintained by agencies withunique federal-aid data management and reporting requirements (for example, DCF and DOT)

Fiscal Impact: This strategy would provide the greatest benefit to State universities and some small State

agencies that presently rely upon the FLAIR Contracts and Grants subsystem, supplemented with

miscellaneous PC desktop applications, to manage their respective federal funds processes. With access to


a well-designed grants management system, these universities and State agencies could reduce personnel

costs related to these processes. We estimate that Grant Specialists throughout the State government could

reduce their workloads by approximately 20 percent using an integrated system. This estimate is based on

agencies’ reporting of time devoted to data entry, reconciling, resolving errors, and other non-value-added

work. Estimated savings for agencies other than the SUS are estimated at $20,000. Exhibit 3-33 presents

actual University of Florida FTE data, extrapolated to all institutions in the SUS to estimate costs savings

from eliminating 20 percent of Grants Specialists positions. The number of Grants Specialists positions

for University of Florida is actual—FTE counts for other State universities were extrapolated on the basis

of federal funding received by each university.

Exhibit 3-33Estimate of Annual FTE Cost Savings from Improving Contracts and Grants Management Subsystem

State University

Federal FundingFiscal Year 1997

($million)

Actual or EstimatedNo. of Grants

Specialists FTEs20 Percent

of FTEs

EstimatedAnnual Cost

Savings

University of Florida $145.4 20 4 $114,000

Florida State University 64.5 9 2 57,000

Florida A&M University 30.6 4 1 28,000

University of South Florida 42.5 6 1 28,000

Florida Atlantic University 14.2 2 0 0

University of West Florida 8.8 1 0 0

University of Central Florida 28.6 4 1 28,000

Florida Int’l University 24.1 3 0 0

University of North Florida 5.1 1 0 0

Florida Gulf Coast University 1.5 1 0 0

Total $365.3 51 9 $255,000

Source: KPMG interviews and the SUS 1997-1998 Fact Book

Recommendation BPR-17: Automate the process of matching federal fund receipts withState agencies initiating a funding draw or reimbursement request

Currently, the State Treasurer manually traces and matches federal fund receipts to agencies initiating a

funding draw or reimbursement request. This process could be automated by implementing the following

systems requirements and related process improvements:

! State agencies record the following information in the grants management subsystem for eachfederal-aid draw or reimbursement request:

– Agency and fund (by name and by code)

– Draw or reimbursement amount

– Date of request and anticipated payment


– CFDA code

! Payment remittance data is attached via an electronic template to an agency’s ASAP or PMSsubmittal (or alternate electronic filing mechanism), and returned by federal agency with paymentto Treasurer’s receipt bank

! Payment remittance data is included on the agency’s reimbursement invoice documents forpayments processed via U.S. Postal Service

! State Treasurer’s receipt bank collects payment and remittance data, and provides daily electronicreports to the Treasurer, listing payment amount and matching remittance data

! Treasurer runs program in the grants management subsystem to:

– Process the bank’s electronic reports to match each payment with the agency originating afunding request, using remittance data (codes) to establish a confirmed link

– Automatically initiate transfer of payment to appropriate agency fund and record transactionin the State’s integrated financial management system

– Automatically update the status of federal funds in the Federal Funds Forecasting module

This automated receipt-matching program would provide the most benefit to the State in October 2002,

when all federal agencies are required to use either ASAP or PMS to process all State agency funding

requests.

Fiscal Impact: Implementing this recommendation would reduce time spent by personnel in the State

Treasurer’s office and in each agency manually tracing and matching funds to the State agency

originating the draw or reimbursement request. The Treasurer’s office may eliminate one FTE for a

saving of $28,406 annually. Potential savings to each State agency are not large enough to warrant the

elimination of any whole FTE position. This strategy would also improve cash flow for each State agency

by shortening the time required to transfer federal funds to the proper State fund. Because Florida’s

CMIA agreement with the U.S. Treasury requires the State to return all excess interest earned on invested

federal funds, this recommendation would not affect the net interest revenue earned by the State.


To implement recommendations proposed for reengineering Florida’s flow of federal funds processes, the

State must develop a grants management system with features and functionality needed by a broad cross-

section of users from most State agencies and universities. General requirements for this system include:

! Improved pre-award functions

– Enhanced capacity to prepare grant applications (including library of prior grant applicationdocuments)

– Automated routing of grant applications for agency-level approval


– Electronic submission of grant applications to federal agencies

! Improved account set-up and award information features

– Adequate number of user-defined fields to summarize project award information (forexample, terms and conditions, CFDA identification, restrictions, awarding agency,compliance guidelines, contact persons, addresses, and phone numbers)

– Budgetary controls with user-defined rules

! Improved grants and contracts management features

– Greater flexibility in defining types of project and program costs

– Greater flexibility in developing deliverables required to support funding draws orreimbursement requests

– Capability to allocate and record disbursements for projects with multiple funding sources

– Capability to submit federal fund draw or reimbursement requests online through ASAP orPMS

! Ability to interface with existing grants and contract management systems maintained byagencies with unique federal-aid data management and reporting requirements (for example, DCFand DOT)

Other recommended systems improvements include developing a program that automatically processes

federal funds deposited in the Treasurer’s receipt bank by:

! Processing electronic files containing bank deposit data and tracking template information(submitted with federal receipts) through the State’s integrated financial management system tomatch receipts with agency originating the fund draw or reimbursement request

! Automatically transferring federal receipts from bank to the appropriate agency’s trust fund(s)

! Automatically updating Departmental Accounts to record credit in trust fund

Options Analysis

Estimated savings from recommendations to improve the flow of federal funds process can be achieved in

three of the subsystems options—Options 3, 4, and 5. The savings depend on implementing an enhanced

grants management system and a program that can automate the Treasurer’s matching of federal fund

receipts to funding requests. Options 3 through 5 can provide the functionality for these applications

while Options 1 and 2 do not. Exhibit 3-34 provides the savings associated with each of the five

alternatives.



OptionBudgetary


Total BPRSavings

Recommendation BPR-16 Agencies

Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 20,000 0 20,000

Option 4 20,000 0 20,000

Option 5 20,000 0 20,000

Recommendation BPR-16 SUS

Option 1 0 0 0

Option 2 0 0 0

Option 3 255,000 0 255,000

Option 4 255,000 0 255,000

Option 5 255,000 0 255,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 28,000 0 28,000

Option 4 28,000 0 28,000

Option 5 28,000 0 28,000

Total

Option 1 $0 $0 $0

Option 2 $0 $0 $0

Option 3 $303,000 $0 $303,000

Option 4 $303,000 $0 $303,000

Option 5 $303,000 $0 $303,000

Business Case Study 3—Business Process ReengineeringPayroll

3.9 Recommended Process Changes—Payroll

This section presents the recommendations for reengineering the State of Florida’s payroll process.

Background

The State of Florida has approximately 200,000 employees, including both employees in established

positions and Other Personal Services (OPS) employees. Each employee receives a regular monthly or

biweekly paycheck. About 48 percent of the employees receive their paychecks monthly and the rest

receive them biweekly. Annually, Florida processes 5.5 million payments for its employees. Most of the

payments (75 percent) are electronic fund transfers; the rest are distributed to employees via interoffice

mail. All employees receive hard-copy pay stubs through interoffice mail.

All State employees submit a timesheet. Employees in established positions on an active pay status

submit timesheets primarily to record leave. Their timesheets are not required to generate their pay

checks, but are required of OPS employees. OPS employees represent 17 percent of State employees. The

leave and attendance personnel of the five study agencies enter from 177 timesheets up to 8,700

timesheets each pay period.

Florida’s payroll process is supported by automated systems that track employee time and leave, calculate

salary and benefits, and disburse payment. Employee payments are calculated based on the rules and

regulations of the personnel system in which they are included. Exhibit 3-35 shows the personnel systems

and the number of authorized positions that fall within each of them.

Exhibit 3-35Employees Compensated Under Each Personnel Group

Personnel GroupsTotal Number of

State Employees

Career Service System 120,855

Office of Legislative Services 1,211

Senior Management Service System 508

Selected Exempt Service 3,474

Faculty 12,592

University Support Personnel System 15,382

Administrative and Professional/Executive Services 4,350

Other Personal Services 11,823

Judicial Branch 9,756

Total 179,951

Source: State of Florida’s Annual Workforce Report, 1999


In addition to regular biweekly and monthly payroll, employees can receive additional payments referred

to as supplemental payments. Supplemental payments are processed on a biweekly schedule following a

regular payroll cycle. Supplemental payments include Criminal Justice Incentive Pay (CJIP), terminated

leave, overtime, on-call, uniform allowances, and other nonrecurring payments. These payments are made

through the payroll process, but are disbursed on warrants separate from salary warrants.

Exhibit 3-36 shows the estimated annual number of supplemental payments made to employees by type.

Exhibit 3-36Supplemental Payments by Type

Payment Type Number of Payments

Overtime 306,216

CJIP 157,692

On-Call 43,584

Uniform 2,880

Other 148,176

Total 658,548

Source: Fiscal year supplemental payment data provided by the Bureau of State Payrolls

The laws and regulations governing the payroll process include:

! Chapter 110, § 11.46(3), 215.93, 20.23(3)(I) 2 of the Florida Statutes

! Chapters 60K-60N, § 14-17.021 of the Florida Administrative Code

! Federal Fair Labor Standards Act

The discussion that follows generally represents the payroll process including both agencies that use

COPES and those agencies that do not use COPES (for example, the State University System and the

Legislative Branch). The payroll process starts in COPES and ends in FLAIR. COPES supports flexible

entry of payroll data and tracks information. Payroll data entered in COPES interfaces with FLAIR and

generates error reports per agency and per payroll. Reports and different types of payroll information are

stored in COPES and other personnel systems.

The FLAIR Payroll Accounting System generates payroll registers for the agencies based on a data

interface from COPES. The FLAIR Payroll Accounting System updates the FLAIR Central Accounting

System and generates a File 0013 (payroll register) to enable agencies to update the FLAIR Departmental

Accounting System. To ensure that the information from COPES is appropriately transferred into the

FLAIR Departmental Accounting System, agencies transfer the data on File 0013 to a tape. That tape is

used to update the FLAIR Departmental Accounting System with payroll data in COPES. Finally, journal


entries are prepared in the FLAIR Departmental Accounting System to allocate payroll costs to more than

one account code, and then the FLAIR Payroll Accounting System is updated.

Although the State relies on FLAIR and COPES to provide the bulk of financial management as well as

human resources (HR) and payroll information, many agencies use shadow or exception systems to assist

in managing and tracking HR and payroll. Exhibit 3-37 shows the supplemental systems used by the

study agencies.

Exhibit 3-37Agency Supplemental Systems Used in the Payroll Process

AgencySupplementalSystem Purpose Interfaces With

Department of Transportation Payroll PersonnelSystem

Track leave andattendance on a projectbasis and handleinquiries

COPES and FLAIR


PersonnelManagement DataSystem

Update departmentalFLAIR following apayroll run

COPES and FLAIR


Access database Input specialcompensation and othernonrecurring payments

None


None None None

University of Florida InformationAssociates

Payroll, personnel andbudget system

FLAIR


The process begins at the end of an employee’s pay period and ends with the issuance of a payroll

warrant. For the following discussion, warrants include both EFT payments and paper warrants. The

major components of the process include:

! Data Capture: Data regarding the actual time worked by an employee is entered into the system.For those employees under an exception reporting time process, the system automaticallycalculates and pays them all hours for the pay period, with exceptions for leave being enteredmanually. For those agencies with positive time reporting, COPES requires the hours workedfrom a timesheet to be entered for each person every pay period. Those actual hours worked arethen used as the underlying input for generating payroll

! Processing: For each pay cycle, COPES generates both change order and nonrecurring files basedon the payroll data entered by agencies. COPES then processes the files and creates an interfacefile, which is forwarded to FLAIR for payroll calculation and to update the financial system


! Issuance of Warrant: Payroll is calculated in FLAIR. Following this calculation, FLAIR generatespayroll warrants and payroll registers for each agency

At the end of the process, the Comptroller generates a warrant that is remitted to the employee through

EFT or on paper through interoffice mail.


Exhibits 3-38 and 3-39 provide annual workload data by agency for payroll warrants processed for Fiscal

Year 1999 and the total warrants issued by the five study agencies. Florida issued approximately

5.5 million warrants in Fiscal Year 1999, including both regular payroll warrants and supplemental

payroll warrants. Exhibit 3-38 also shows that 89.3 FTE payroll personnel are responsible for ensuring

that employees are compensated and pay actions are executed each period. Exhibit 3-39 shows that

88.5 FTE leave and attendance personnel are responsible for data entry on OPS employee timesheets.

Exhibit 3-38Payroll Annual Workload Statistics

AgencyAnnual Workload (Payroll

Warrants Processed)Payroll

FTEs

Department of Transportation 317,727 12.7

Department of Children and Families 793,103 47.5

Department of Highway Safety and Motor Vehicles 105,866 6.0


26,434 1.1

University of Florida 577,217 22.0

Total 1,820,347 89.3

Exhibit 3-39Time and Attendance Workload Statistics

Agency

Number ofOPS

Employees

AnnualWorkload

(TimesheetsProcessed)

AttendanceFTEs

Department of Transportation 453 10,376 16.0

Department of Children and Families 4,151 65,408 37.3

Department of Highway Safety and Motor Vehicles 370 2,081 2.1


177 4,602 1.2

University of Florida 8,700 11,700 31.9

Total 13,851 94,167 88.5


Source: Interviews with agencies and Fiscal Year 1999 payroll data provided by Bureau of State Personnel


The cost of the current payroll process is derived by analyzing three cost components—customer costs,

agency costs, and centralized costs. These costs are estimated in the agencies that were part of the study

and then extrapolated to the entire State government. Customer costs generally reflect the time an




process statewide.





Customer Costs: The customer for this process is the employee. Customer-related costs refer to the time

it takes the employee to report his or her time worked. For employees whose time is reported by

exception, the customer costs are minimal. Employees need only report exceptions to the normal work

week or month. For employees whose time is reported positively, the customer cost is the time it takes to

complete the timesheet. Each timesheet requires about 10 minutes to complete. Extrapolated to the entire

State government, the customer cost for this process based on an average of $23 per hour (average of all

State employees’ salaries and benefits), 178,000 employees, and 26 pay periods per year is $20.2 million.

Agency Costs: Agency costs include three parts—data entry, oversight of the creation of the payroll file,

and journal transfers to ensure proper accounting. The costs for data entry and oversight of the payroll file

are summarized in Exhibit 3-40.

Exhibit 3-40Summary of Labor Costs Associated with the Payroll Process

Agency Payroll FTE Costs

Department of Transportation 12.7 $361,000

Department of Children and Families 47.5 1,349,000

Department of Highway Safety and Motor Vehicles 6.0 170,000

Department of Insurance, Treasury and State Fire Marshal 1.1 31,000

University of Florida 22.0 625,000

Total 89.3 $2,536,000

Source: Interviews and data provided by agencies


Each agency has staff responsible for entering leave and attendance for OPS and positive pay employees.

As shown in Exhibit 3-39, for the study agencies, 88.5 FTEs are devoted to data entry for positive pay

and OPS employees. We extrapolated our study agencies to the entire State operations and estimated the

number of FTEs devoted to this function at 279.3 FTEs. We used an average annual FTE payroll

processing compensation of $28,406, including benefits. The total statewide cost for leave and attendance

FTEs is estimated at $7.9 million.

Agencies’ payroll personnel are responsible for determining that employees are accurately compensated

and pay actions are properly executed. In addition, errors resulting from leave and attendance records are

examined and resolved by payroll personnel. Furthermore, these personnel ensure that following a payroll

run, the FLAIR Departmental Accounting System is updated to reflect payroll amounts for the period.

Staff devoted to overseeing the creation of the payroll file, handling errors, and resolving issues totals

89.3 for the five study agencies. Extrapolated statewide based on the total number of State employees, we

estimate that 289.8 FTEs are devoted to this function, costing approximately $8.2 million.

Additional agency costs include the time required to update the FLAIR Departmental Accounting System.

Because FLAIR allows disbursements from only one account code, accounting personnel must execute a

series of journal transfers to allocate payroll warrants to more than one account code. The costs for this

portion of the process are addressed in Section 3.6 (Accounting for Payments from Multiple Accounts).

Centralized Costs: These are costs for the staff in the Comptroller’s office who are responsible for

printing warrants and the staff in the Bureau of State Payrolls who are responsible for processing payroll

centrally. Currently, there are 35 FTEs in the Bureau of State Payrolls, which equates to a cost of

$1,504,000.

In total, the State annually expends an estimated $20.2 million in customer costs, $16.1 million in agency

costs, and $1,504,000 in centralized costs to carry out the payroll process.


The payroll process for the State of Florida is inefficient. Inefficiencies arise from:

! Separate supplemental payments

! Inconsistent payrolls

! Redundant data entry

! Inefficient use of payroll personnel in small agencies

! Inadequate system support for dually employed personnel

! Inadequate interface between COPES and FLAIR


Separate Supplemental Payments

During Fiscal Year 1999, the State issued nearly 5.5 million payroll warrants. This includes both regular

payroll warrants and supplemental payroll warrants. Supplemental warrants account for approximately 12

percent (648,000) of the payroll warrants issued, because the State does not always include supplemental

payments in regular payroll warrants. A best practice of many states is to combine overtime payments and

other supplemental payments with regular warrants. The overtime amount is included in the warrant and

indicated separately on the pay stub. The State’s policy of issuing these payments separately results in the

creation of 648,000 additional warrants.

Inconsistent Payrolls

The State does not have a standard pay cycle. Employees are either on a monthly or biweekly pay cycle,

causing inconsistency of payroll cycles statewide. Generally, the agencies that use both pay cycles,

compensate OPS employees using a biweekly cycle. The practice of having each agency establish its own

pay cycles leads to a proliferation of payroll processes and inefficient use of payroll resources. Based on

data provided by 45 State agencies, we observed that large agencies are twice as efficient as small ones.

The average ratio for agencies larger than 3,500 employees is 989 employees per one payroll staff. For

agencies with fewer than 3,500 employees, the ratio is 464 employees to one payroll staff.

Redundant Data Entry

The use of manual time cards for positive pay and OPS employees results in redundant data entry. Leave

and attendance data is entered once manually by the employee and then again by data entry clerks. OPS

employees make up 23 percent of the employees compensated through the State’s payroll system. The

greater the frequency that the data is entered, the greater the probability for error. Data received from the

Bureau of State Payrolls indicates the reasons that contribute to the errors, such as incorrect Social

Security number, incorrect number of hours worked, and leave-without-pay hours not captured. The post-

payroll adjustments include activities such as warrant cancellation, salary refunds, EFT cancellation, and

other miscellaneous adjustments.

Inadequate System Support for Dually Employed Personnel

In addition, without modification the current system cannot ensure compliance with Fair Labor Standards

Act (FLSA) standards. The scope of work for our study assumes that Florida is a single employer and as

such all agencies operate under the same rules and regulations, using a uniform set of management

principles, while working toward the same goal of the State. Governed by Florida Statutes 110.109 and

110.207, the State has a regulatory obligation to follow the guidance and stipulations of the FLSA and the

Family Medical Leave Act (FMLA). The State has staff who are dually employed and are drawing


income conjointly from multiple agencies. The criteria for overtime dual employment and leave under the

FLSA applies uniformly to all employees.

Inadequate Interface Between COPES and FLAIR

Finally, the inadequate interface between COPES and FLAIR does not allow efficient data connectivity

between the two systems. Following a payroll cycle, agency personnel expend resources to ensure that

data between COPES and FLAIR are synchronized. Interface files such as File 0001 and File 0013 are

created to make certain that data from both systems match. This process is inefficient, because the

financial system is not updated as soon as the process is complete. Agency personnel enter data manually

from the interface files and create a tape to feed the data into the financial system.


To address the weaknesses in Florida’s payroll system, the State should:

! Move to a shared services concept by having several agencies served by a single payroll unit

! Incorporate supplemental warrants into regular payroll

! Establish a statewide semi-monthly payroll

! Automate positive pay data entry

! Enhance the integration of payroll and accounting functions

Recommendation BPR-18: Move to a shared services concept by having severalagencies served by a single payroll unit

The State should organize its payroll personnel (and possibly its personnel staffs) into five shared services

clusters that would each serve a number of agencies. Shared services units should be organized into the

following clusters:

! Education

! Human Services

! Criminal Justice and Corrections

! Natural Resources/Environment/Growth Management/Transportation

! General Government

The shared services approach takes advantage of the economies of scale that come with serving a large

number of employees. As indicated previously, payroll staffs at the larger agencies are nearly twice as

efficient as payroll personnel in the smaller agencies. By having fewer payroll offices—each handling


more employees—the State can move all payroll personnel to a 1 to 989 ratio of payroll staff to

employees, rather than a 1 to 464 ratio experienced by smaller agencies.

Exhibit 3-41 illustrates a technique the State may consider using to combine the State agencies. Each

group contains agencies that provide similar functions and can be supported by a single large agency

within that group. The bolded agencies in the table will serve as the HR/Payroll central processing units

for the agencies that belong in the same section.

Fiscal Impact: The estimated number of payroll staff statewide is 289.8. If the State adopts this

recommendation and assumes a ratio of 989 to 1 payroll staff, the total number of payroll personnel could

be reduced by about 71 positions for an annual estimated savings of $2,016,000. (The estimated average

salary is based on an Accountant II.)


Exhibit 3-41Allocation of Payroll Personnel Based on Shared Services Concept

AgenciesPayroll Warrants

Oct. 1999Current

Payroll FTEsShared Services

Payroll FTEs

Department of Corrections 26,667 56.0 43.6

Justice Administrative Commission 7,740 6.0

Department of Juvenile Justice 5,812 5.0

Department of Law Enforcement 1,705 2.4

Department of Legal Affairs/Attorney General 1,059 1.0

Parole Commission 183 1.5

Subtotal 43,166 71.9 43.6

Department of Education 1,069 2.3 72.0

Board of Regents 151 2.0

Universities 70,326 72.2

Subtotal 71,546 76.5 72.0

Department of Transportation 10,154 12.7 21.5

Agriculture/Consumer Services 4,338 2.0

Department of Community Affairs 544 2.5

Department of Environmental Protection 4,237 4.0

Florida Fish and Wildlife Commission 2,072 2.0

Subtotal 21,345 23.2 21.5

Department of Children and Families 26,347 47.5 43.0

Agency/Health Care Administration 1,972 3.8

Florida School for the Deaf and Blind 799 1.5

Department of Elder Affairs 402 2.4

Department of Health 13,459 13.9

Department of Veterans’ Affairs 382 1.2

Subtotal 43,361 70.3 43.0

Department of Management Services 1,554 2.0 28.7

Banking and Finance/Comptroller 897 1.0

Business and Professional Regulation 1,889 2.0

Division of Retirement 261 1.0

Ringling Museum 59 .75

Department of Citrus 148 1.0

Administrative Hearings 67 1.0

Executive Office of the Governor 326 6.0

Department of Highway Safety and Motor Vehicles 4,715 6.0

Office of the Auditor General 423 1.2

Department of Insurance, Treasury and State Fire Marshal 1,483 1.1

Department of Labor and Employment Security 5,761 5.0

Legislative Offices 1,417 2.3

Department of Lottery 637 1.2

Department of Military Affairs 255 1.0

Public Service Commission 402 2.5

Department of Revenue 5,324 5.0

Department of State 777 1.5

State Courts System 2,800 3.0

Subtotal 29,195 44.55 28.7

Total 208,613 286.45 208.8


Recommendation BPR-19: Fold supplemental warrants into regular payroll

By combining supplemental warrants (other than travel reimbursements) with regular payroll warrants,

the State would significantly reduce the total number of warrants issued. If a supplemental payment is due

to an employee after or before the payroll cycle, the warrant would be held until the next payroll cycle to

be issued along with the regular payroll.

The advantage of adopting this recommendation is the reduction in the number of warrants and the cost of

issuing warrants. Based on studies conducted by the Federal Department of the Treasury, organizations

can reduce costs by $0.28 per check if payroll checks are issued via EFT.

Fiscal Impact: In Fiscal Year 1999, the State processed approximately 658,000 supplemental payments.

Based on the State’s current rate of non-EFT payments to employees of 25 percent, calculations show that

this recommendation would result in eliminating 493,500 separate EFT payments and 164,500 separate

warrants. By combining supplemental warrants with regular payroll, the State would save approximately

$88,000 annually.

Recommendation BPR-20: Establish a semi-monthly payroll

Innovative practices for processing payroll show that many government agencies are moving toward a

consistent payroll cycle and calendar for all employees. The more consistent the payroll is statewide, the

more success the State will have with the shared services concept for payroll processing. A single

statewide payroll process is consistent with an enterprisewide perspective for managing State

government. The adoption of a single pay cycle for all State employees would assist the State in its efforts

to standardize human resources and payroll policies, procedures, and practices and to implement the

shared services concept. The standardization would also allow for cost reduction in processing payroll.

We recommend that the State adopt a semi-monthly pay cycle. A semi-monthly pay cycle allows

employees to be paid twice per month. This cycle results in 24 pay periods each year instead of 26 or 27

pay periods and generally provides an equal pay rate for employees each pay period. Although there

could be variation in the number of hours worked each pay period, the effect would be minimal compared

to that of a monthly cycle.

A semi-monthly payroll cycle standardizes employment practices among all State agencies. The State

would see a reduction in the amount of processing time required to calculate payroll. There would be no

tax calculation complexities when an employee switches from one agency to another mid-cycle. The State

should further consider the impact of cash flow to employees.

Fiscal Impact: Because the State now has monthly and biweekly pay periods, the number of payrolls and

warrants produced during the year would not change significantly with the change to a semi-monthly


payroll. Consequently, there are no net savings associated with the recommendation. However, depending

on payment timing, significant interest earnings would be lost by the State as a result of moving to a

semi-monthly payroll cycle. In addition, retaining multiple paycycles could significantly increase

implementation costs.

Recommendation BPR-21: Automate positive pay decentralized data entry statewide

HR/Payroll professionals recommended that companies integrate the entry of leave and attendance with

HR/Payroll systems and decentralize entry for nonexempt employees. This simplifies time reporting and

eliminates exempt reporting and exception reporting where possible. The automation and integration of

leave and attendance entry would enable approximately 70 percent of OPS and positive pay employees to

report time directly in the leave and attendance system.

Decentralization of leave and attendance entry would allow employees to enter their time directly into the

time keeping system and would reduce the number of data entry personnel required to enter leave and

attendance by 75 percent. Late timesheets would be processed in the next time period along with current

payroll.

Leave and attendance capture systems can be integrated with the payroll system and can be close to the

source with corrections made at the source. Leave and attendance processing improvements would also

contribute to the reduction in supplemental payroll processing, cost of typing, and logging of manual

checks and would allow for real-time maintenance of the payroll database. Late timesheets would be

processed in the next time period along with current pay. This allows for employee empowerment and

accountability.

Fiscal Impact: The five pilot agencies studied have a total of 89.3 FTEs dedicated to entering leave and

attendance. Extrapolating this number based on the number of positive pay and OPS employees working

for the State, we estimate that 279.3 FTEs perform this function statewide. With decentralization, the

effort required of these 279.3 FTEs would be reduced by an estimated 75 percent. Based on an estimated

279.3 data entry FTEs statewide, at a salary of $28,406 per FTE and 75 percent reduction, the calculation

shows that the State could realize potential annual savings of $5,950,000.

Recommendation BPR-22: Enhance the integration of payroll and accounting functions

A best practice for payroll processing is to integrate payroll information with HR and financial systems.

The State must determine how to distribute the overtime charges between agencies and internal account

codes, as well as how to determine the rate of overtime payment when multiple employees have multiple

rates of pay. The State must set guidelines for establishing a primary employer when an employee is

dually employed, with explanations on how to handle issues such as nonstandard work schedules or

unexpected work demands affecting overtime rates and charges to another agency.


An integrated HR/Payroll system would screen dual employment practices to ensure that the State is in

compliance with FLSA and FMLA standards. This would minimize the State’s exposure to dual

employment violations.

Over time, stipulations could be monitored to ensure that employment standards are not violated. An

integrated HR/Payroll system would enable the State to adhere to federal requirements as a single

employer. It would aid the State in screening employees who seek additional employment for FLSA

overtime qualifications by one system and one set of criteria. In addition, all employees would be treated

to the legal and ethical applications outlined in FLSA and FMLA overtime benefits, and employees

would be timely paid to ensure compliance with FLSA standards.

All State agencies would have a uniform system. An integrated HR/Payroll system would replace the

current system to ensure that Florida has a state-of-the-art HR/Payroll Management System. Agency

personnel could easily evaluate employees for FLSA and FMLA compliance and rely more on the

efficiency of the financial system through an integrated system.

Fiscal Impact: The fiscal impact from this recommendation would only ensure that the State stays in

compliance with FLSA, FMLA, and Internal Revenue Service regulations.


An integrated HR/Payroll system should have the following capabilities:

! Support biweekly, monthly, or semi-monthly pay cycles for more than 200,000 employees

– Pay employees on any cycle

– Provide a common pay master support

– Allow agencies the ability to cancel warrants online

– Track detailed and summary payroll history for each employee

! Send funding source information to accounting

– Update the accounting segments of the financial system

– Distribute labor costs according to project, account, or cost center

– Compute overtime premium and distribute the premium portion of the pay to separate generalledger accounts by cost center

! Capture and integrate time worked by all employees who must report time

– Allow time reporting from automated electronic collection system

– Provide time entry screens that select all employees eligible for a particular earning type for aspecific agency


– Display current leave accrual balances to the agency at the time of payroll certification/entry

– Produce agency payroll reports after time entry is complete to ensure an accurate pay run

! Accommodate salary/salary, salary/OPS, and OPS/OPS payments made from the same ordifferent agencies

– Provide an electronic approval process for dual employment and compensation betweenagencies

Options Analysis

Options 3, 4, and 5 will accommodate the State’s move to a single payroll unit. This single

recommendation contains savings of $2.0 million. An additional $88,000 in savings can be applied to

Options 2 through 5 by folding supplemental warrants into regular payroll. Following a cycle change and

standardization of pay cycle to semi-monthly, it is recommended that any process change require

implementation of all systems options. In addition, the adoption of the recommendation to automate

positive pay decentralized data entry statewide will necessitate the implementation of system Options 2,

3, 4, or 5. Finally, implementing a system that enhances the integration of payroll and accounting

functions, while having its benefits, requires an overhaul of the current system. To achieve this venture

and maintain systems integration, the State may consider 70 percent of system Option 2, and all of

Options 3, 4, or 5. Exhibit 3-42 provides the savings associated with each of the five alternatives.



OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 2,016,000 0 2,016,000

Option 4 2,016,000 0 2,016,000

Option 5 2,016,000 0 2,016,000


Option 1 0 0 0

Option 2 88,000 0 88,000

Option 3 88,000 0 88,000

Option 4 88,000 0 88,000

Option 5 88,000 0 88,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0


Option 1 0 0 0

Option 2 5,950,000 0 5,950,000

Option 3 5,950,000 0 5,950,000

Option 4 5,950,000 0 5,950,000

Option 5 5,950,000 0 5,950,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 $0 $0 $0

Option 2 $6,038,000 $0 $6,038,000

Option 3 $8,054,000 $0 $8,054,000

Option 4 $8,054,000 $0 $8,054,000

Option 5 $8,054,000 $0 $8,054,000

Business Case Study 3—Business Process ReengineeringTravel Reimbursement

3.10 Recommended Process Changes—Travel Reimbursement

This section presents the recommendations for reengineering the State of Florida’s travel reimbursement

process.

Background

A public officer, public employee, or authorized person uses the travel reimbursement process to obtain

reimbursement for authorized and allowable out-of-pocket expenses while on State business. Allowable

expenses include transportation, meals, lodging, and other costs incidental to traveling such as taxi fares,

parking fees, and tolls.

Governed by Chapter 112.061 of the Florida Statutes, travel status is classified as Class A, Class B, and

Class C:

! Class A travel is defined as continuous travel of 24 hours or more away from the traveler’sofficial headquarters. Travel time is based on a calendar day—from midnight to midnight

! Class B travel is defined as continuous travel of less than 24 hours that requires an overnightabsence from the traveler’s official headquarters. Travel time is calculated on the travel periodconsisting of 6-hour cycles beginning with departure time

! Class C travel is defined as travel for short or day trips where the traveler is not away fromofficial headquarters overnight. Class C meal expense allowances are a fringe benefit and areconsidered taxable income by the IRS, subject to federal income tax withholding and SocialSecurity taxes

The travel expenditures for Fiscal Year 1999 are estimated at $174.4 million for all 49 State entities

(agencies and universities). A travel expenditure report received from the Bureau of Auditing shows that

the 1999 budget allocations for travel for State agencies ranges from $1.1 million to $16.5 million per

year.

To obtain reimbursement, a State traveler must generally receive authorization or approval from an

authorizing agent before departing. The only exception to the authorization policy is Class C travel. Class

C travel may involve vicinity or map mileage; related parking and toll expense; and airfare, car rental,

meals, or travel for an emergency situation. Thus, pre-approval is unnecessary.

Guidelines for reimbursement are specified in the Statutes. A Class A or Class B traveler is usually

reimbursed $50 per day or actual expenses to the extent allowed. A Class C traveler is reimbursed for

applicable meal allowances plus actual expenses for items such as parking and tolls.


Agencies are afforded some flexibility in administering travel. We observed variations in the following

areas:

! Mileage requirements: Agencies have some variations in mileage parameters that a traveler has tomeet to be eligible for Class C meals reimbursement. The mileage parameters may range from 25to 80 miles. In some cases, city limits define the parameters

! Credit cards and PCards: Although the use of PCards is rare, some employees use PCards fortravel expense. Others are required to pay for expenses with individual credit cards.Reimbursement of PCard expenses are paid directly to the vendor by the bank, and the bank isreimbursed by the State Comptroller. The majority of Department of Banking and Financeemployees use PCards to incur travel expenses, whereas the use of PCards in other agencies isinfrequent

! Expense reimbursement forms: Different reimbursement forms are used by agencies. However,the Bureau of Auditing requires that forms capture basic information such as the name of thetraveler, date of travel, Social Security number, and authorization signatures

Travel expenditures, including travel advances, are entered and maintained in the FLAIR subsystem.

Agencies generate voucher schedules and transmit them to the State Comptroller’s office. FLAIR

produces and tracks warrants issued to reimburse travelers.

Current Process

The travel reimbursement process has three major components—completing, processing, and auditing the

requisition form. The traveler completes the form and central agency staff members process and audit the

form; the State Comptroller conducts an audit as well.

Before incurring travel expenses, the agency traveler generally submits an authorization form to the

authorizing agent. The agent reviews the form and authorizes travel. After the traveler incurs travel

expenses, he or she completes an expense reimbursement form manually and submits the completed form

to the authorizing agent. The agent reviews the reimbursement form and manually signs and authorizes

reimbursement for travel expenses.

The reimbursement form is forwarded to agency personnel who audit the form and the attached

supporting documentation. Agency personnel classify expenses on the form by object codes and enter

details of the expenses into the FLAIR system manually. In addition to this task, personnel process Class

C meals separately from other expenses through the payroll system. If errors are found during the auditing

function, the form is generally sent back to the traveler for correction. If no errors are found and expenses

are $1,000 or less, FLAIR generates an expense warrant or EFT (which is sent to agency personnel for

distribution to the employee) and a voucher schedule.


If travel expenses are over $1,000, agency personnel will forward the reimbursement form and supporting

documentation to the State Comptroller’s office for auditing and reimbursement. When the State

Comptroller has reviewed the travel expenses, an expense reimbursement warrant or EFT is issued to the

traveler.

The University of Florida uses an automated travel reimbursement system known as Travel Request and

Reimbursement Information Processing System (TRRIPS). TRRIPS automates the entering, routing, and

approval of travel authorizations and vouchers for reimbursement of travel expenses. The traveler enters a

Travel Approval Request into TRRIPS and forwards it for budget approval. Following budget approval,

funds are encumbered and forwarded to the Disbursement Office for approval. The Disbursement Office

approves travel electronically and assigns an encumbrance number to the traveler’s record. After travel is

completed, the traveler forwards receipts to agency personnel and enters expenses online. This entry

creates a travel voucher, which is electronically forwarded to the traveler for review and is subsequently

forwarded to the traveler’s authorizing agent for expense approval. The approval by the authorizing agent

is sent electronically to the Disbursement Office for reimbursement, and agency personnel mail original

receipts to the Disbursement Office. TRRIPS includes an automatic audit function to ensure compliance

with travel rules and regulations. The traveler is reimbursed approximately 3 days after travel is

completed.


Exhibit 3-43 provides Fiscal Year 1999 annual workload data by agency for the travel reimbursement

process.

Exhibit 3-43Workload and Performance Metrics for the Travel Reimbursement Process

AgencyAnnual Workload (TravelReimbursement Forms)

Average Cycle orTransaction Cost

(Days)

Department of Transportation 34,675 10

Department of Children and Families 111,475 15


6,500 10


9,364 15

University of Florida 55,357 10

Source: Interviews with agency personnel

The five study agencies generally reimburse travel expenses through their revolving fund accounts. This

process accelerates reimbursement to the traveler for expenses incurred while on travel status. The

average cycle time shown in the Exhibit 3-43 indicates the cycle time beginning with entry of a traveler’s


expense data by agency personnel and ending with expense reimbursement to the traveler from the State

Comptroller.


The cost of the travel reimbursement process is derived by analyzing three cost components—customer









Customer Costs: These are costs incurred by the traveler. Customer costs reflect the time spent by the

employee to complete the travel reimbursement form—currently about 20 minutes. The reductions in

these costs are beneficial but are not likely to lead to reduced staffing costs. Based on the total number of

travel reimbursement forms completed statewide (887,689), estimates are that State employees spend

292,000 hours per year completing travel reimbursement forms. Based on an average hourly rate of $23

(average of all employees’ salaries and benefits), estimates are that the customer cost is $6.8 million.

Agency Costs: Agency costs are represented in the staff time and effort associated with data entry and

auditing the travel reimbursement process. Exhibit 3-44 shows the number of FTEs that are 100 percent

dedicated to the travel reimbursement process. The total number of FTEs dedicated to the travel

reimbursement process for the five study agencies is 36.8. The total cost of these positions is $1.0 million.

(The estimated average salary is based on an Accountant II.) The staff members dedicated to processing

travel reimbursement devote 75 percent of their time to data entry and auditing of travel reimbursement

forms.

In Fiscal Year 1999, a total of 887,689 reimbursement forms were processed statewide. The total number

of reimbursement forms processed by the five study agencies was 217,371. Each FTE handles about

5,907 reimbursement forms per year. Based on this ratio, calculations indicate that the State has

approximately 150.3 FTEs who process expense reimbursement forms. This translates to $4.3 million

annually in agency labor costs devoted to the travel reimbursement process.


Exhibit 3-44Study Agency Resources Devoted to the Travel Reimbursement Process

AgencyNumberof FTEs

AverageSalary

andBenefits Cost

Department of Transportation 6.7 $28,406 $190,000

Department of Children and Families 17.0 28,406 483,000

Department of Highway Safety and Motor Vehicles 1.6 28,406 45,000


1.5 28,40643,000

University of Florida 10.0 28,406 284,000

Total 36.8 – $1,045,000

Centralized Costs: The Bureau of Auditing in the State Comptroller’s office incurs costs as well.

Included in these centralized costs is the staff that audits and processes expense reimbursement forms

over $1,000. There are 3.2 FTEs devoted to this process in the State Comptroller’s office, which equates

to a cost of $91,000 based on average salary and benefits of $28,406. (The estimated average salary is

based on an Accountant II.)


costs, and $91,000 in centralized costs to carry out the travel reimbursement process.


A weakness in the travel reimbursement process is the length of time it takes for a traveler to obtain

reimbursement. Although Florida’s practice (10 to 15 days) is well within statutory guidelines, it falls far

short of industry best practices. For businesses that issue reimbursement checks separate from salary

checks, the turn-around time for travel reimbursement is 2 to 3 days. The State earns interest the longer it

takes to issue a payment, but the traveler loses use of the money the longer the payment is delayed. The

delay in payment inconveniences the traveler and may cause employees to be reluctant to incur the up-

front cost associated with travel.

The cycle time for travel reimbursement is most affected by the following:

! Redundant activities: Agency personnel process Class C meals separately from other travelexpenses, and duplication of effort occurs when the traveler completes the reimbursement formsand agency personnel input expenses into FLAIR

! Excessive approval and auditing requirements: Statewide, 153.4 FTEs including 3.4 FTEs in theBureau of Auditing are involved in auditing and entering travel reimbursement forms for agency


travelers. To ensure compliance with Chapter 215.422 of the Florida Statutes, which allows 40days to process travel expenditures, agency personnel audit all reimbursement forms extensivelyand enter Class C travel separately. Except for Class C travel, travel must generally be pre-approved by an authorizing agent. The Bureau of Auditing performs random sampling ofreimbursement forms in the amount of $1,000 or less and audits all expense reimbursement formsover $1,000

! Manual processes: For many agencies, travel reimbursement is a manual process involving thetraveler, supervisor/authorizing agent, agency personnel, and Bureau of Auditing (StateComptroller). Much of the information required for the travel reimbursement form is not capturedin FLAIR or any other automated system. Consequently, the information cannot be reviewedthrough computer-aided audit techniques. The travel reimbursement form can only be auditedmanually

If an agency does not have revolving funds available to reimburse the traveler and the reimbursement due

is greater than $1,000, the cycle time can take up to 30 days.

Another impediment to an efficient travel reimbursement process is the separate processing of Class C

meals. An efficiently operating process should process all classes of travel together. Because Class C

reimbursements are processed separately, they contribute to the proliferation of warrants, dual processing

efforts, and unnecessary costs.

In Fiscal Year 1999, 171,141 warrants were issued for Class C travel. There are additional costs

associated with issuing Class C travel warrants including the following:

! Class C meal reimbursement is a fringe benefit to employees and is therefore considered taxableincome by the IRS. To withhold federal income and Social Security taxes, Class C meals areprocessed separately from other expenses through the payroll system. However, warrants issuedfor Class C meals are not included with the regular payroll

! FLAIR cannot withhold taxes or allocate funds for Class C meals to the correct funding source

The State of Florida has provided its employees with the Class C travel benefit for many decades and any

changes to the policy would have to consider the effect that this category of reimbursement has on State

employees.

Finally, Florida travel reimbursement rates do not reflect actual costs or cost variation by location. A per

diem rate of $50 for lodging and meals is specified in the Statutes. These rates have not kept up with

inflation. Currently, reimbursement does not vary based on where the costs are incurred. The mileage

reimbursement of $0.29 offered by the State has not changed in several years and does not meet the

federal reimbursement rate of $0.31 per mile. Federal per diem rates vary by city. Exhibit 3-45 indicates

the Federal per diem rates for major Florida cities.


Exhibit 3-45Federal Per Diem Rates for Comparison to $50 State Per Diem

Item Federal Per Diem Rates

Jacksonville Miami Fort Lauderdale

Lodging $65 (04/16–12/31) $75

(01/01–04/15) $89

(05/01–12/14) $65

(12/15–04/30) $89

Meals $34 $42 $42

Source: http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/perd00d.html


To address the major weaknesses in the travel reimbursement process, Florida needs to change its

reimbursement policies and implement a web-based travel reimbursement system.

Recommendation BPR-23: Require that all travel reimbursements be provided throughEFT

The State should require that all employees traveling on behalf of the State accept their reimbursements

through EFT. Currently, this option is available and widely used, but it is not mandatory. Information

about the reimbursement should be included with the employee’s regular pay stub information. The

current technology used by the State allows for a 2-day reimbursement using EFT; however, only

75 percent of agency travelers are reimbursed this way, leaving 221,922 separately issued warrants for

travel reimbursement.

In Fiscal Year 1999, of 887,689 reimbursement forms processed, 75 percent of Class A, B, and C travel

expense reimbursements were issued via EFT. A total of 171,141 were issued for the Class C travel

category alone. Expense reimbursement and payroll warrants are issued separately.

Fiscal Impact: Based on studies conducted by the Federal Department of the Treasury, organizations can

reduce costs by $.28 per item if payment is made by EFT rather than by separate warrants. By requiring

that all travel reimbursements are EFT and by putting all travel reimbursement information on the

employee’s pay stub, the State would eliminate 221,922 warrants and pay stubs. Total annual savings

would approximate $62,000.

Recommendation BPR-24: Allow for traveler to enter travel reimbursement informationon the network or remotely

The State should implement a web-based travel reimbursement system that allows remote data entry of

travel reimbursement information. This system would allow the traveler to directly enter expense

information.

http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/perd00d.html


A web-based reporting system reduces the paper process, relieves agency personnel of the responsibility

of entering and auditing reimbursement forms, and decentralizes data entry. Implementation of this

recommendation would eliminate the need for centralized data entry and auditing. Centralized data entry

and auditing make up approximately 75 percent of the workload of the 150.2 FTEs statewide devoted to

the travel reimbursement process.

Fiscal Impact: By implementing this system, the State would see a reduction of 112.6 FTE positions and

a reduction in personnel costs estimated at $3,198,000. (The estimated average salary is based on an

Accountant II.) A web-based system allows for remote access capability, online booking, and automated

transmission of authorization and reimbursement forms; it also reduces calculation errors.

Recommendation BPR-25: Create a corporate travel program

The major components of a corporate travel program include the following:

! Single credit card for all travel expenses

! A single travel agent

! Improved travel policies aimed at efficiency

The State should require that all travelers use a PCard to pay for travel expenses. This would relieve the

traveler of having to pay for travel expenses and wait for reimbursement. The bank is able to transmit

expenses charged with the corporate card or PCard electronically to the State Comptroller.

A further benefit of using a PCard for travel expenses is that it should allow the State to gather data that

can be used to negotiate better rates with vendors.

KPMG studies conducted of the five agencies showed that the use of PCards for travel expenses is rare.

Nearly 79 percent of all corporations use corporate credit cards for official travel.

Eighty-three percent of global corporations implement corporate travel policies, 46 percent of

corporations employ a corporate manager, and 73 percent of corporations have one designated travel

agency (American Express Global Travel & Expense Management Survey). FFMIS does not produce

information useful for negotiating rates with vendors. A statewide travel management program would

coordinate and oversee official travel by State employees to achieve fiscal accountability and significant

financial savings to the State.

Fiscal Impact: With more complete information on travel expenditures, it is estimated that the State

could reduce its travel expenditures by 2 percent or about $3,482,000 annually through negotiations with

providers.


Recommendation BPR-26: Remove travel parameters from Florida Statutes 112.061 andplace in administrative rules

The Department of Management Services (DMS) should be given responsibility for developing proposed

rules for travel reimbursements. We recommend that the DMS consider using the federal per diem and

mileage rates. This would reduce the administrative effort associated with setting the rates periodically, as

well as lowering the cost of lodging.

Guidelines in administrative rules can change more easily with changes in economic factors. Furthermore,

by piggybacking on federal rates, the State would not have to set per diem rates annually. Although the

mileage and meal rates are higher under federal per diem, lodging rates (not specified in the statute) are

likely to be lower than actual Florida experience.

Fiscal Impact: The estimated net savings for this recommendation is zero. If the state adopts this

recommendation, the mileage rate will increase from $0.29 to $0.31 (the federal rate), and the allowance

for meals will increase from $21 to $30. On the other hand, cost for lodging may go down because the

State now pays actual costs rather than a per diem based on location.


A self-service web expense reporting system provides employees with convenient access to information.

It also eases the workload for internal support staff and human resources personnel. The system at a

minimum should provide the following functionality:

! The system should capture and reimburse state-related travel expenses for State and non-stateemployees

! Agency personnel should have the ability to enter actual travel expenses to a pre-defined, onlinescreen and automatically calculate mileage between destinations. The system should also becapable of allocating cost component information automatically and of supporting online bookingof reservations (auto, airfare, etc.)

! The system should pay third parties directly and associate the payment to a specific employee. Inaddition, the system should reconcile travel advances to actual expenditures, audit travelinformation for compliance with State travel regulations, identify duplicate payments toemployees and nonemployees, encumber multiple funding sources, provide inquiry access toemployees’ travel history, maintain a travel profile on each traveler, and track advancesdistributed to employees for travel purposes


Options Analysis

Both of the recommendations requiring that all travel reimbursements be provided by EFT and allowing

for remote and desktop data entry of travel reimbursement information can be accomplished in Options 3,

4, and 5. The remaining recommendations can be implemented regardless of which option is chosen. The

savings by option are summarized in Exhibit 3-46.



OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 62,000 0 62,000

Option 4 62,000 0 62,000

Option 5 62,000 0 62,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 3,198,000 0 3,198,000

Option 4 3,198,000 0 3,198,000

Option 5 3,198,000 0 3,198,000


Option 1 3,482,000 0 3,482,000

Option 2 3,482,000 0 3,482,000

Option 3 3,482,000 0 3,482,000

Option 4 3,482,000 0 3,482,000

Option 5 3,482,000 0 3,482,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 $3,482,000 $0 $3,482,000

Option 2 $3,482,000 $0 $3,482,000

Option 3 $6,742,000 $0 $6,742,000

Option 4 $6,742,000 $0 $6,742,000

Option 5 $6,742,000 $0 $6,742,000

Business Case Study 3—Business Process ReengineeringPurchasing Commodities and Services

3.11 Recommended Process Changes—Purchasing Commoditiesand Services

This section presents the recommendations for reengineering the State of Florida’s purchasing process—

the process whereby the State procures commodities and services.

Background

Florida’s purchasing processes are used to obtain commodities and services requested by agencies to

carry out their responsibilities. Purchases are made through a traditional requisition process, which

generates a purchase order, or purchases are made by means of a State VISA Purchasing Card (PCard).

Annually, Florida State agencies purchase more than $1 billion worth of commodities and services. This

includes only those items purchased through a purchase order or on the PCard. For Fiscal Year 1999, the

State is expected to expend $80 million on goods and services using the PCard.

The State procures additional services through contracts that are not included entirely in the $1 billion.

Contractual services are procured primarily through contracts, although some State agencies convert

contracts to purchase orders to streamline processing. The primary customers of this process are State

agencies and their staffs that need to purchase goods or services from private vendors.

Agencies in the Florida State government do their own purchasing for the most part. The Division of

State Purchasing within the Department of Management Services negotiates and manages statewide

contracts and selected blanket purchases for agencies to use. The Division of State Purchasing has

approximately 63 staff members. Agencies are generally bound to purchase from these State contracts for

the commodities and services that fall within these contracts’ purview. For all other purchases, agencies

purchase on their own.

Chapter 287 of the Florida Statutes governs the purchasing process. Additional rules and regulations are

also found in the Florida Administrative Code (Rule 60A). The Judicial Branch and the SUS are exempt

from Chapter 287. These rules govern the method of procurement based on thresholds. Chapter 287

defines five categories of purchases:

! Category One: $15,000

! Category Two: $25,000

! Category Three: $50,000

! Category Four: $150,000

! Category Five: $250,000


The amount of a purchase determines its category. Each category has different guidelines for the method

of procurement. Category One purchases allow the most flexibility. Purchases over Category Two

generally require a sealed, competitive bid. Category Three purchases may require additional approvals

(budget, legal). Categories Four and Five define limits for purchases using State Negotiated Agreement

Price Schedules (SNAPS) agreements and other caps.

A portion of the purchasing process is automated, although the requisition component of the process for

most agencies is manual. Most State agencies rely on Florida’s SPURS to generate purchase orders and

encumber funds. When a purchase order is created in SPURS, the user has the option to encumber funds.

If funds are encumbered, then SPURS interfaces with FLAIR to create an encumbrance in the accounting

system. Some agencies interface directly with FLAIR to encumber funds, while others do not encumber

funds at all. The SUS does not use SPURS for any aspect of the purchase order process. The SUS has its

own purchasing subsystem that interfaces with FLAIR. A Consolidated Vendor File (CVF) within

SPURS is used to manage vendors. No vendor can receive payment from the State of Florida without

being on CVF.

Exhibit 3-47 shows the supplemental systems identified for the purchasing system during analysis of the

five study agencies.

Exhibit 3-47Supplemental Systems


InterfacesWith

Department of Transportation Access database Track requisitionsand assign POnumbers

–

Department of Children and Families Excel spreadsheet PO numberassignment

–


Excel spreadsheet PO numberassignment

–


Access database Track requisitions,assign PO number

–

University of Florida Topaz Entire requisition/purchasing function

FLAIR

Current Process

The current process for requesting goods and creating a purchase order (PO) has five major components.

Employees first identify a need and complete a paper requisition, which is forwarded to a centralized

purchasing unit in the agency. The purchasing unit keys in the requisition information to create a PO,

performs several checks, and then sends the PO to the vendor with copies going to receiving and


accounting. We should note that the purchasing units also often assist employees in finding the right

product at the right price from the right vendor. For simple purchases of commodities or services, the

employee may do all the purchasing research needed, but most often the employee needs help in

identifying the best product for the job and the correct vendor (for example, State contract and PRIDE) to

provide the product. Obtaining informal quotes for items under $25,000 and conducting formal sealed

competitive bids for items over $25,000 are important aspects of the purchasing units’ responsibilities.

PCard transactions follow a different set of procedures. PCard procedures vary widely by agency. The

proposed PCard procedure is standardized and is discussed in the recommendations.


Exhibit 3-48 provides annual workload statistics for Fiscal Year 1999 by agency for the purchasing

process described above. The annual workload for POs created does not include the number of times a

blanket PO was used. The number of PCard transactions refers to the transactions for which a PO was not

created. The purchasing unit does incur work when the PCard is used. PCard users are trained by the

purchasing unit, and many purchasing units are assigned the responsibility of PCard administration,

which requires follow-up and tracking activities.

Exhibit 3-48Workload Metrics for Purchasing Process

Agency

AnnualWorkload

(POs Created)

Annual Workload(PCard

Transactions)

Total Workload(POs andPCards)

Department of Transportation 9,760 60,896 70,656

Department of Children and Families 69,955 468 70,423


4,220 343 4,563


2,898 427 3,325

University of Florida 55,705 13,107 68,812

As indicated in Exhibit 3-48, use of the PCard varies widely among agencies. Workload factors and cycle

times are directly affected by the level of PCard usage. Thus, the impact of reengineering will vary

depending on the level of current PCard usage.

(Note: At the time of our analysis, all the Study agencies except for the Department of Transportation

were in the very early stages of PCard rollout. Just before the issuance of the final Study Report, a second

review of PCard usage was completed. Based on this review, it appears that PCard usage is rapidly

increasing. Only midway through Fiscal Year 2000, the PCard usage by the Study agencies other than the


Department of Transportation had increased anywhere from 200 percent [University of Florida] to more

than 1,000 percent [Department of Children and Families].)


The cost of the purchasing process is derived by analyzing three cost components—customer costs,









Customer Costs: Customer costs include the time spent completing a requisition and getting approvals.

On average, the customer spends an hour completing a requisition and getting approvals. The customer in

this example is an employee of a State agency who has duties and responsibilities not related to

purchasing goods or services. In the five study agencies, 142,538 POs were created, each of which

required a requisition. This translates to 76.9 FTEs of staff time annually devoted to the requisition and

approval process. Extrapolated statewide, the customer time spent on requisitions and approvals in Fiscal

Year 1999 is estimated to be the equivalent of 191 FTEs. Assuming an average salary and benefits of

$28,406, the annual costs of the purchasing process to the customer is approximately $5.4 million.

Agency Costs: Agency costs consist primarily of centralized staff usually located in an office of

purchasing dedicated to carrying out the purchasing process. Many agencies have pushed out their lower

level purchases to front-line management through use of the PCard. Staff functions include data entry into

SPURS/FLAIR, auditing for accuracy, and document management. The estimated time spent by function

is:

! Data entry: 20 percent

! Auditing for accuracy/preparing for input: 10 percent

! Document management: 20 percent

! Other (training, bid specifications): 50 percent

Exhibit 3-49 presents the number of FTEs dedicated to the purchasing process in the five agencies

studied.


Exhibit 3-49FTEs Devoted to Centralized Purchasing Function in the Five Study Agencies

AgencyAgency FTEs-

CentralAgency FTEs-

Dispersed Total

Department of Transportation 12 17 29

Department of Children and Families 8 64 72

Department of Highway Safety and Motor Vehicles 9 0 9


6 0 6

University of Florida 38 0 38

The FTEs identified in Exhibit 3-49 represent the employees who make up the purchasing unit in each

agency. These staff are dedicated to the central processing of POs. They do, however, have duties and

responsibilities beyond actual purchase order processing which include developing purchasing

specifications, assisting employees in the purchasing process, obtaining quotes, conducting sealed

competitive bids, negotiating, and training staff on purchasing guidelines. In addition, some purchasing

units are responsible for the administration of the PCard and the Minority Business Enterprise program.

The FTEs identified above also include individuals in a supervisory role.

The number of FTEs dedicated to the purchasing process statewide is estimated to be 615, including the

SUS. This estimate was derived by applying the PO/FTE ratio for the sample agencies excluding the

University of Florida (745) to the statewide number of POs processed in Fiscal Year 1999 (354,071) plus

the number of FTE in the SUS (140). The SUS is added separately because it does not use SPURS.

This estimate is within a fair range of the total number of positions identified as having purchasing-related

job titles in a COPES report run on October 10, 1999. The report identified 420 staff in State agencies not

including the SUS. Including the SUS and positions that have other job titles should bring the staff

number to 615. The staff identified includes only those agency-level staff who are dedicated to the

purchasing process. The customers who spend time preparing requisitions and getting approvals are not

included in Exhibit 3-49, because they are not dedicated to the purchasing process.

Assuming an average salary and benefits of $28,406, the annual cost of the purchasing process is

approximately $17.5 million.

Centralized Costs: Central costs consist of costs of operating a central function statewide. DMS operates

a central purchasing unit for all State agencies. This unit is responsible for negotiating and maintaining

State contracts, operating and maintaining the Vendor Bid System and other purchasing Internet

applications, operating and maintaining the purchasing system, and maintaining CVF and the commodity

file. There are 63 FTEs at DMS dedicated to these processes.



costs, and $2 million in centralized costs to carry out the purchasing process for goods and services.


We identified several weaknesses with the current process. Among the most significant are the following:

! PCard implementation includes inefficient steps

! CVF does not achieve its purpose

! Commodity codes are excessively detailed

Florida operates a rather typical government purchasing operation in that it generally relies on manual

completion of requisition forms and centralized data entry. As a result, the current purchasing process is

more costly than necessary. Customers prepare requisitions manually and get a hard copy document

approved. Upon completion, a requisition is forwarded to a central purchasing unit that duplicates much

of the work by re-keying information into SPURS to create a purchase order. The current process requires

an extended cycle time, increased risk of error, and a need for additional staff at the agency level.

Although the State has made progress in the use of technology for purchasing (for example, using the

Internet to make contracts and SNAPS agreements readily available), these problems result because the

process does not take full advantage of current technology to streamline purchasing processes.

Technology is available that can support a decentralized purchasing process that can dramatically reduce

the need for centralized agency staff in the purchasing process.

A second weakness in the current process is in the agencies’ implementation of the PCard. While

implementation of the PCard reduced some inefficiencies in the traditional procurement process, the

current PCard procedures are still inefficient. Procedures vary widely among agencies, some of which

have made little, if any, changes to the purchasing process as a result of using PCards. Moreover, the

post-audit process of PCard transactions, which is carried out by agency-level accounting staff, is

intensive, without adding benefit. A Department of Banking and Finance analysis of purchasing indicated

that the cost of processing and auditing a payment is roughly the same for a PCard purchase as it is for a

traditional purchase. Savings are realized on the front end of the PCard process but not the back end

because the back end of the processes are fairly similar.

CVF and the Commodity Code List create additional inefficiencies in the purchasing process. CVF is

wrought with duplication and inaccuracies. The reason for the inaccuracies in CVF include:

! A large number of users have permission to add new vendors

! Vendor numbers are appended with a sequence code that identifies a location

! Insufficient maintenance is performed


Currently in CV, one KPMG address is listed four times. The tax identification number is the same for all

four KPMG address listings, but the company name is different. CVF lacks the control mechanism to

ensure that only one name is associated with one tax identification number.

Agencies must have a vendor number from CVF before they can issue a payment. Because agencies are

under pressure to issue payments within a strict deadline, they are allowed to enter vendors into CVF

themselves. Consequently, few controls exist to ensure accuracy and to eliminate redundancy.

CVF uses the tax identification number. Attached to the number is a location code. Florida allows

vendors to designate more than one location for sending a payment. As a result, there can be more than

one record in the database for a vendor that has more than one location for receiving payments.

The commodity code listing is excessively detailed. More than 40,000 different commodities exist in the

list. There is no requirement for complete accuracy of the commodity code when creating a PO. Thus, the

data collected on commodity purchases is inaccurate.


To reengineer the purchasing process for commodities and services, the State must decentralize purchase

and payment authority, change the post-audit process for PCard purchases, enable e-commerce, enhance

the central purchasing function, and restructure the vendor file.

Recommendation BPR-27: Decentralize purchase and verification of receipt of goods andservices to the lowest possible level within service delivery units

Employees would have the ability to request, order, receive, and pay for goods from their desktops.

Reengineering the current centralized process to a decentralized process would require a procedural

change along with a technology solution. A web-enabled electronic procurement system with an

electronic mall concept would be implemented statewide. The culture and control of the current central

system must change to oversight and support in a decentralized system.

All purchases, whenever possible, would be performed using e-commerce. Purchases above specific

threshold amounts would require a pre-approval process prior to actual purchase. The pre-approval

process would be electronically routed for approval, and a virtual PO would be created at completion of

the approval process. The PCard could be used in emergencies as a back-up and for travel expenses.

A decentralized procurement system would reduce cycle times and reallocate scarce resources.

The following two examples illustrate the opportunities available with this recommendation.


Advanced Micro Devices

Advanced Micro Devices (AMD), a leading global supplier of integrated circuits for PCs and networks,

implemented a decentralized purchasing solution using an Internet-based catalog system. In the past,

AMD had followed a traditional purchasing approach: the requester completed a form and sent it to

purchasing; purchasing reviewed the requisition, added information, and generated a PO; a supplier was

selected and signed to a contract; and finally, the order was placed. This approach generated mountains of

paper work that needed to be processed and filed. Now authorized users access pre-qualified suppliers on

the intranet, which ties directly to suppliers. Orders and payments are handled over the Internet. AMD

reports decreased process costs and savings between $15 million and $37 million annually.

Cisco Systems

With an Internet-based, decentralized catalog solution, Cisco Systems offers its 9,000 U.S. employees

one-stop shopping for the items they need for daily operations. The system provides fast and cost-

effective access to computer and communications equipment, office supplies, and even a wide array of

consulting services. To place an order, the user launches an Internet browser and logs onto the corporate

purchasing site. He or she searches the illustrated electronic catalogs and makes a selection. From there,

the system routes the requisition for approvals based on a complex set of decision rules before

transmitting the request electronically to the appropriate supplier.

Fiscal Impact: Decentralization of purchases and verification of receipt of goods and services to the

lowest possible level within service delivery units would have a significant impact on agency central

purchasing staff needs. The need for centralized data entry and PO processing would be completely

eliminated. However, a central purchasing unit would still be necessary to develop specifications;

negotiate contracts; and provide customer service, training, and oversight. The impact would vary across

State agencies, however, and the degree of impact would vary based on each agency’s current level of

decentralization and automation. In the five agencies studied, the use of the PCard and other decentralized

purchasing mechanisms such as local POs varied significantly. For example, DOT created eight district

purchasing offices and used the PCard for more than 60,000 transactions in Fiscal Year 1999, while DCF

used it for fewer than 500 transactions. Therefore, the impact of decentralization and e-commerce would

be less significant on agencies such as DOT than it will be for agencies such as DCF.

From extensive interviews and analysis, we estimate that the time savings on purchasing units from e-

commerce would range from 20 to 50 percent. One-third of the centralized purchasing workload

statewide could be eliminated when the technology solution recommended is implemented. In total, this

recommendation would yield approximate savings in staff workload reductions equivalent to 191 FTEs.

Assuming an average salary and benefits of $28,406, the annual savings would total $5,425,000. In

addition, savings would be generated from the reduction of paper, printing, and postage expenses incurred

in the present process.


Recommendation BPR-28: Replace the current exhaustive post-audit activity in thePCard process with a sampling methodology

The State should implement a sampling methodology for auditing PCard transactions. This audit process

should be carried out at the agency level as well as centrally at the State Comptroller’s office. A sampling

methodology, coupled with a transaction profiling system, would provide adequate internal controls with

fewer resources than the current system. The Office of the Comptroller should research the development

of intelligent queries to identify high-risk transactions by object codes, transaction amount, and

appropriation categories. As more advanced monitoring tools are developed, agencies will be more

willing to use data-on-demand as an adequate internal control.

In addition, the State should standardize use of the PCard by setting consistent parameters and criteria for

use. The maximum cost of a PCard transaction should be raised to at least $1,000 across all State

agencies. If the State implements e-commerce for its purchasing process, the State should use the PCard

as a principal payment method for online transactions, travel management, and small purchases under the

$1,000 threshold. However, any restriction on the use of the PCard must be balanced with the

understanding that the State has a free purchasing card program because of its volume potential of $750

million annually. Should any future policies limit card volume, the State could incur costs to maintain a

program.

Fiscal Impact: The savings generated through use of the PCard are part of the savings estimated from the

use of e-commerce. No additional savings are calculated here.

Recommendation BPR-29: Require that most vendors doing business with the State havee-commerce capabilities (online invoicing and payment) prior to full systemimplementation

The State should require that all vendors that do a significant amount of business with the State have e-

commerce capabilities. Based on a consultation with agencies and central purchasing, KPMG suggests

that the State define “a significant amount of business with the State” as the total annual payments to a

vendor in excess of a set amount. Based on our preliminary review of this issue, KPMG suggests that a

set amount between $5,000 and $10,000 would be appropriate. Before doing business with the State, all

vendors that meet the threshold level would be required to register as e-vendors. The registration process

would ensure that all vendors have a mechanism (most likely the Internet) for transmitting invoices

electronically and receiving payment electronically. It is expected that by the time the system is fully

implemented, nearly all businesses engaged in business-to-business commerce (by definition, this

includes all vendors doing business with the State) will be engaged in e-commerce. By making this

requirement, the State would not be forcing businesses to do business on the Internet—the market is

already making that requirement.


Fiscal Impact: The fiscal impact of this recommendation is included in the fiscal impact for

recommendation BPR-27, decentralizing and automating the purchasing process.

Recommendation BPR-30: Purge the vendor file, augment central staff, and reorient thevendor file around a random number key

The State should create a CVF with one record per vendor organized by a vendor number but allowing for

as many addresses as desired by the vendor. The first step in implementing a new vendor file is to purge

the existing vendor file of duplicates and incorrect information. The second step is to strengthen the

central online mechanism for updating and maintaining the file. The State would need to augment its

SPURS help desk to maintain the database. The central staff would be responsible for approving most

changes to the vendor file—specifically, changes to the address.

The State should change the structure of the vendor file to be keyed on a random number rather than tax

ID, and it should allow for as many addresses to be tied to that vendor number as the firm wishes.

Agencies should be able to query the system for existing vendors, add vendors if none exist, and obtain a

provisional vendor number. This vendor number would be a multiple-digit number randomly generated

by the computer. The central staff should be of sufficient size to guarantee a 24-hour turn-around for

approving all changes to the vendor file.

Fiscal Impact: Implementation of this recommendation would increase the service delivery requirements

and consequently the workload of the SPURS help desk. The State should add three additional FTEs to

assist in maintaining the vendor file. This would cost about $90,000 per year. In addition, the State should

obtain temporary help to purge the vendor file. We estimate that a one-time investment of approximately

$500,000 would be needed to purge the file. This estimate is based on a temporary staff cost of $15 per

hour, 300,000 vendors, and 8 to 9 verifications per person per hour.

Recommendation BPR-31: Enhance the central purchasing function at DMS and Stateagencies to focus on strategic sourcing

The savings calculated so far represent only transactional savings from reengineering. It is likely that

significant savings from strategic sourcing would also be garnered. That is, with better information and

less expensive order costs, the State would be able to negotiate lower prices with vendors. An e-

commerce solution will reduce the costs to vendors for filling orders because of online electronic transfer

of information and payment. As a result, the State should be able to reduce current contract prices by a

small margin to account for the cost savings to the vendor. In addition, an e-commerce solution will

expand the opportunities for contract negotiation with more “intelligence” related to what goods and

services the State acquires, from whom the acquire them, and at what volume. The State should be able to


increase the amount of purchases made through discounted contracts by developing more contracts and

allowing easier access to the information by State agencies.

Fiscal Impact: The fiscal impact of strategic sourcing is divided into two categories: savings from current

contracts via reduced order costs and savings from growth in the use of State contracts.

The savings from current contracts via reduced order costs is assumed to be 1 percent of current contract

expenditures. This assumption is conservative because of the uncertainty in quantifying these savings.

Some vendors will reduce prices by a margin greater than 1 percent while others may not be willing to

reduce prices at all because of their own inability to accommodate e-commerce. The exponential growth

in e-commerce today suggests that the overwhelming majority of vendors will realize and pass on savings

from business to business electronic commerce by the time the State is prepared to engage in e-

commerce. In Fiscal Year 1999, DMS reported State contract expenditures of $630 million. These

expenditures do not include many agency-level contracts that also have the potential for savings from e-

commerce. On the other hand, the $630 million includes purchases made by public entities other than the

State (counties, school districts, etc.). These two factors cannot be determined precisely and have an

inverse impact on savings. The impact of these factors will essentially offset each other. Therefore, it is

estimated that the State can save 1 percent of $630 million from reduced order costs passed on from the

vendor as a result of e-commerce. This represents an annual savings of $6.3 million.

The second area of savings from e-commerce is the growth in State and agency term contract

expenditures. E-commerce allows the State to focus on negotiating more, better contracts and expand

access for the use of these contracts by State agencies. In addition, agencies themselves will be able to

expand their own unique contract needs. It is estimated that the State and agency term contract

expenditures can grow by 25 percent through the introduction of e-commerce and strategic sourcing. This

represents a growth of $157.5 million in State and agency term contract expenditures. DMS reports that

through vendor certification it saves approximately 23 percent on its current State contracts. Marginal

savings from expanded growth of State and agency terms contracting expenditures is assumed to be only

10 percent because of diminishing marginal returns. That is, the easier savings have already been realized

and future growth will focus on more difficult savings items. The gross savings are estimated to be $15.7

million a year.

These savings cannot be realized without a redirection of resources. To attain the projected growth in

State and agency term contract utilization, the State will need to re-direct traditional purchasing staff to

become purchasing agents who analyze data and negotiate contracts. The physical location of these agents

is uncertain. DMS is the logical location for some of these agents, but State agencies will need their own

agents to negotiate agency-specific contracts and act as liaison to DMS. It is estimated that a force of 100

purchasing agents will be necessary to realize strategic sourcing savings. These agents will be in

professional positions requiring higher salaries than purchasing technicians. It is estimated that the annual

salary and benefits of each purchasing agent will average $50,000. This yields a $5 million marginal cost


offset to the $15.7 savings from expanded State and agency term contracting. The net savings are

estimated to be $10.7 annually.

The total savings from strategic sourcing, current contracts, and State and agency term contract growth is

estimated to be $17 million annually.


A reengineered purchasing process will require enhancements to the current information technology

architecture. The following elements are necessary to fulfill the recommendations in this section:

! Electronic Online Catalog

! Electronic Shopping Cart

! Product Information and Configuration

! Price Negotiation

! Order Verification, Tracking, and Proof ofDelivery

! Requisition and Order Management

! Vendor Registration and Management

! Customer Relationship Management

! Agency Bid Posting, Proposal Vault, andAward Management

! Comprehensive Data Warehousing,Reporting, and Analysis Features

! Electronic Bill Payment and Settlement

! Customer Registration

! Customer Authentication

! Provisions for Local Government Accessto State Contracts with Appropriate BillingProcedures

! Electronic Storage of Documents

Options Analysis

The savings in recommendations BPR-27 and BPR-29 depend on the functionality of a web-enabled e-

commerce solution and are included in Options 3 through 5, but are not included in Options 1 and 2. The

savings in recommendation BPR-31 include the enhancement of the central purchasing function at DMS

to focus on strategic sourcing, which is included in Options 2, 3, 4, and 5. Because the implementation of

recommendation BPR-30 would increase the service delivery requirements and consequently the

workload of the SPURS help desk, a cost of $590,000 for additional FTEs and training is applied to

Options 3, 4, and 5. A comparison of the five options is shown in Exhibit 3-50, followed by a discussion

of each of the five system options and their effect on the proposed reengineering solution.

In addition, there is an initial cost of implementation of $500,000 for all Options 2 through 5 in year 1

under recommendation BPR-30.


The recommendation to improve the current system’s functional and technical capabilities would be

affected by the system option chosen. Here is how each of the options affects the reengineering

recommendation:

! Option 1: Because the status quo assumes no changes, the State would not have to develop thefunctionality necessary to implement e-commerce; thus no savings would result

! Option 2: Making modifications to the existing system would generate cost savings fromreengineered process. Our analysis shows that $17 million could be saved by adding e-commercecapabilities to the existing system

! Option 3: The custom solution would be built to ensure implementation of the reengineeredprocesses. It is assumed that all BPR recommendations could be adopted under Option 3; thus allBPR savings would be realized

! Option 4: The next versions of the Enterprise Resource Planning (ERP) systems will be web-enabled and e-commerce ready. Assuming this is the case, all of the estimated savings can berealized through implementation of Option 4

! Option 5: The best solution would likely have one of the ERP systems as its base, which means itwould have the e-commerce capabilities of Option 4. This option also would enable the State torealize the estimated cost savings from the reengineering of the purchasing process

This analysis concludes that an estimated $22 million can be saved through a reengineering of the

purchasing process. The cost savings would be derived primarily from the elimination of centralized

positions that now are dedicated to manual processing steps in the process. These savings can only be

realized through the introduction of a technology solution that includes the system requirements identified

in this section.



OptionBudgetary


Total BPRSavings

Recommendation BPR-27 and BPR-29

Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 5,425,000 0 5,425,000

Option 4 5,425,000 0 5,425,000

Option 5 5,425,000 0 5,425,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0


Option 1 0 0 0

Option 2 0 0 0

Option 3 (590,000) 0 (590,000)

Option 4 (590,000) 0 (590,000)

Option 5 (590,000) 0 (590,000)

Recommendation BPR-31, reduced order costs

Option 1 0 0 0

Option 2 6,300,000 0 6,300,000

Option 3 6,300,000 0 6,300,000

Option 4 6,300,000 0 6,300,000

Option 5 6,300,000 0 6,300,000

Recommendation BPR-31, growth in State contracts

Option 1 0 0 0

Option 2 10,700,000 0 10,700,000

Option 3 10,700,000 0 10,700,000

Option 4 10,700,000 0 10,700,000

Option 5 10,700,000 0 10,700,000

Total

Option 1 $0 $0 $0

Option 2 $16,910,000 $0 $16,910,000

Option 3 $22,335,000 $0 $22,335,000

Option 4 $22,335,000 $0 $22,335,000

Option 5 $22,335,000 $0 $22,335,000

* Includes cost of $500,000 in year 1 only


3.12 Recommended Process Changes—Payment for Goods andServices

This section presents recommendations for reengineering the State of Florida’s payment process—the

process by which the State pays its vendors.

Background

This process is used to pay vendors for the delivery of goods and services that agencies request to perform

their operations. The primary customers of this process are the vendors that want to receive accurate and

timely payments. Most vendors must submit paper invoices to agencies to receive payments. However, in

the case of a PCard transaction, the vendor receives payment from the bank upon posting the transaction,

and the bank requests reimbursement from the State agency. In addition, a few large vendors that receive

recurring payments, such as Florida Power and Light, have the capability to submit invoices

electronically.

Payment processes are governed primarily by Chapter 215 of the Florida Statutes. Among other things,

the Statutes limit the length of time that may transpire between invoice and payment. After 40 days, the

vendor is entitled to receive interest payment. Chapter 287 of the Florida Statutes and the Florida

Administrative Code 60A are supplements to further detail State policy and requirements. In addition, the

Department of Banking and Finance produces a voucher handbook, which outlines the procedures

agencies are to use to process vouchers.

State agencies rely on FLAIR to process payments for goods and services. Generating payments in

FLAIR is a manual, paper-intensive process. Data entry clerks input transactions manually and provide

supporting documentation for audits with paper copies. Warrant distribution via the U.S. Postal Service is

the primary form of vendor payment. Even in the case of EFT, vendors are mailed a paper remittance with

minimal information.

FLAIR does not have the functionality necessary to meet all of an agency’s accounts payable needs.

Many agencies make recurring payments to vendors. FLAIR has a module for handling recurring

payments, but most agencies do not use it because it lacks certain critical capabilities. Recurring

payments, which should be handled automatically in the system, are handled like all other payments at

most agencies.

Exhibit 3-51 identifies the supplemental systems for the payment process for the five agencies studied.

These systems are used either to process invoices more efficiently or to expedite the cost allocation

process.


Exhibit 3-51Agency Supplemental Systems Used in the Payment Process


InterfacesWith

Department of Transportation CITS, EED Invoice tracking,approval and auditing,automate constructionestimates to submit forpayment

FLAIR


FoxPro database Track invoices and POstatus

FLAIR


Spreadsheetapplication

Cost allocation andmanagement reporting

None


Spreadsheetapplication


None

University of Florida Spreadsheetapplication


None

Current Process

The current payment process is manual, and paper and labor intensive. The process starts with the receipt

of an invoice, receiving report, contract, or purchase order. These documents are filed awaiting the receipt

of the remaining source document to be matched. When all documents are received, they are manually

matched to determine accuracy and legitimacy. Then, the transaction is entered into FLAIR for payment

processing. At this point, a voucher schedule is printed by FLAIR that identifies the transactions entered

that day. If a transaction has been flagged for audit (all invoices greater than $1,000 plus a random sample

of all others), then photocopies of all source documents are made and forwarded to the Comptroller for

audit. Upon clearance of the audit, the Comptroller prints a warrant. The warrant is delivered to the

respective State agency, then mailed to the vendor by the agency. In the case of an EFT, a remittance

advice is printed in place of a warrant, attached to the invoice, and processed identically thereafter.


Exhibit 3-52 provides annual workload and performance information by agency for each of the

subprocesses described. The annual workload is represented by warrants and EFT payments issued. These

figures represent the number of payments distributed. The actual number of invoices processed is greater

than the number of warrants issued because invoices to the same vendor on the same day are generally

combined into one warrant. Warrants and EFTs processed are presented in Exhibit 3-52 because it is a

more reliable figure to collect across all State agencies. In addition, it is assumed that the average number

of invoices per warrant is essentially the same across agencies. Thus, warrants and EFTs issued are a

valid representation of relative workload.


The average cycle time varies widely because of the audit function and method of payment. The cycle

time starts when all source documents have been received and ends when the vendor receives payment.

The current process can take several days before the transactions are entered into FLAIR and several

more days to prepare a voucher. Comptroller approval may require from 3 to 14 days after which the

warrant is printed and mailed. If an invoice is not audited by the State Comptroller and payment is made

by EFT, the process can take less than a week.

Exhibit 3-52Workload and Performance Metrics for Accounts Payable Process

Agency

Annual Workload(Warrants and EFTs

Issued)Average Cycle or

Time (As-Is)

Department of Transportation 86,980 6 to 30 days

Department of Children and Families 355,775 6 to 30 days


29,555 6 to 30 days


7,516 6 to 30 days

University of Florida 177,742 6 to 30 days


The cost of the payment process is derived by analyzing three cost components—customer costs, agency

costs, and centralized costs. Customer costs generally reflect the time an individual spends completing a

form or entering data to initiate a process. Agency costs reflect the labor costs of the agency personnel

devoted to carrying out the process. Centralized costs reflect the labor costs of personnel who are located

in a statewide administrative support agency and who participate in the process statewide.






Agency Costs: These costs include costs for staff members dedicated to carrying out the payment process.

The functions of these positions include filing documents, matching source document, performing data

entry, auditing for accuracy, photocopying documents, and distributing warrants/remittances. Staff

members carry out these steps for goods and services, professional services, and recurring payments.

Exhibit 3-53 identifies the staff costs for the five agencies sampled.


Exhibit 3-53Agency Labor Costs Associated with the Accounts Payable Process

AgencyAgency FTEs

CentralAgency FTEs

Dispersed Total FTEs

Department of Transportation 21.9 40.1 62.0

Department of Children and Families 8.5 156.5 165.0


27.5 0.0 27.5


6.5 0.0 6.5

University of Florida 30.0 0.0 30.0

Based on the FTEs identified in the sample and the corresponding workload accomplished by the sample

agencies, estimates are that 1,097 FTEs statewide are dedicated to the payment process. This estimate is

derived by extrapolating the warrants issued per FTE for the sample (2,268) to the total warrants issued

statewide in Fiscal Year 1999 (2,478,968). The total agency labor costs for carrying out the payment

process is estimated at $31.1 million.

Agency costs also include the cost of paper to carry out the process and the cost of mailing warrants and

remittances to vendors. It is estimated that 20 million pieces of paper are generated through the

purchasing and payment process annually. Estimating $0.04 per sheet for paper and printing costs, this

yields a paper and printing expense of $800,000 per year. In addition, $650,000 in postage expenses is

incurred for mailing of 2.5 million warrants/remittances.

Centralized Costs: These costs include Comptroller’s (Department of Banking and Finance) audit of

transactions. The audit process consists primarily of ensuring completeness of supporting documentation

and accuracy of payment. The Bureau of Auditing has 44 FTEs statewide dedicated to auditing vendor

invoices. Assuming an average salary and benefits of $28,406, the annual costs of the audit process is

approximately $1.2 million.

In total, the State annually expends an estimated $32.4 million in agency costs and $1.2 million in

centralized costs to carry out the payment processes.


The current payment process is time consuming and expensive. It is estimated that more than 1,000 FTEs

are dedicated to the payment process across all State agencies. The current process consumes

approximately 20 million pieces of paper a year and relies primarily on the U.S. Postal Service for the

delivery of payment and/or remittance advice. Vendor payment can occur within 1 week of invoice, but

usually extends to 1 month. The excessive time and expense are the result of poorly engineered processes.


The current payment process is essentially manual and paper intensive. Documents are matched

manually, invoices are keyed manually into FLAIR for generation of warrants, transactions are audited

manually by the Comptroller, and warrants are mailed using the U.S. Postal Service. Even for recurring

payments, which could be handled using a more streamlined process, the basic steps are the same. The

current state of the art allows for electronic invoicing, automated document matching, auditing, vendor

payment, and remittance information. Each of these processes can be performed online at reduced

expense to the customer, agency, and central audit unit.

EFT for vendor payment has grown to 15 percent of total transactions, but the process for generating the

payment, making the payment, and informing the vendor has remain unchanged. Although vendors

receive payment through EFT, a paper remittance advice containing minimal information is matched with

a copy of the invoice and both are mailed to the vendor. The remittance information is generally

inadequate for the vendor, causing vendors to call agencies to inquire about the details of an EFT

payment. The introduction of EFT payments has reduced the payment cycle time but has done little to

reduce process costs. Other governmental entities have developed sophisticated vendor tracking and

remittance systems that provide detailed information to vendors online. An automated tracking and

remittance application will reduce the expense of vendor payment and increase customer satisfaction.

Central auditing of invoices is inefficient. DBF requires all invoices over $1,000 and a random sample of

invoices under $1,000 to be audited by the central agency. This current audit process is extremely paper

intensive and lacks clear benefits. Transactions selected for audit require agency staff to photocopy all

supporting documentation and forward it to DBF. DBF audits the completeness of the supporting

documentation and the accuracy of the payment amount. This audit process is essentially the same

process undertaken by each agency before the central audit. DBF has 44 FTEs dedicated to this process.

Electronic audit systems can be developed to validate the accuracy of information and validity of a

transaction. An exception reporting system can be developed to identify transactions, through profiling,

that are suspicious. The transactions identified are audited in further detail by an auditor.


The expansion of e-commerce opens up significant possibilities for the State. With e-commerce, the State

can decentralize key components of the payment process and reduce the time it takes to audit transactions.

The recommendations included in this report are designed to leverage the Internet and the growing

capabilities across all industries to carry out business electronically.

Recommendation BPR-32: Decentralize and automate the payment process

The State should replace the manual central processing of paper documents with an automated system.

This will require a procedural change and a technology solution. The reengineered process would allow

for invoice processing from employee desktops. Not every employee should be given the responsibility of


authorizing or making payments, but the function may be decentralized to a single person within an

organizational unit. This would eliminate the need for central processing of invoices. A central function

of transaction review and audit would still exist; however, the State needs to fundamentally change its

focus away from a 100 percent audit coverage. This process would become an electronic verification

process, which would significantly reduce the need for invoice processing staff. This system would

reduce cycle time and free staff by eliminating paper processing, document storage, copying, and mail

processing. Implementation of this recommendation is constrained by technological requirements and

cultural change. This recommendation would dramatically change the current process and create the need

for reorganization and training. In addition, it will require access to the financial management information

system from employee desktops. Finally, this recommendation introduces an unquantifiable risk that

employees may expend funds inappropriately. Effective budget monitoring can help control this risk.

Fiscal Impact: Implementation of this recommendation would eliminate half of the work now being

performed by agency accounts payable staff. This work would be decentralized to program personnel and

streamlined through the use of web-enabled systems. As a result, agencies would no longer need at a

minimum 50 percent of the positions dedicated to invoice processing. This translates into approximately

$15,581,000 in annual savings from FTE reductions. We estimate that 10,000 employees would need to

learn the payment and approval functions on the new system. Comptroller staff may also need training for

auditing this new payment process. An additional $1 million in training costs during the first year would

be required.

Recommendation BPR-33: Mandate EFT payments for all vendors and develop a web-based remittance information system

The current process of printing warrants and remittances should be replaced with EFT payments to all

vendors combined with a web-based remittance information system. Implementation of this

recommendation would require policy and procedural changes along with a technological solution. The

State would have to change current policy to mandate EFT payments to all vendors. The procedure for

vendor payment would change from printing and mailing a warrant or remittance to an EFT without

mailing any supporting documentation. A web-based application must be developed to allow vendor

access to remittance information online. Implementation of this recommendation would eliminate paper

and postage expenses and increase customer satisfaction. Vendor access to remittance information would

drastically reduce customer calls to agencies regarding invoice payment issues. Implementation of the

recommendation is constrained by the need to mandate EFT payments and the need for a technological

solution.

Fiscal Impact: Implementation of this recommendation would eliminate all paper and postage expenses

currently incurred for vendor payment. This translates into approximately $1.5 million in annual savings.


Recommendation BPR-34: Introduce electronic auditing of invoices and exceptionreporting for in-depth audits

The State should replace the manual central auditing of paper documents with an automated system. This

will require a procedural change and a technological solution. The reengineered process would allow for

invoice auditing electronically. This will eliminate the need for copying source documents, forwarding

them to the Comptroller, and manual auditing transactions. A central audit function would still exist. This

process would become an electronic verification process, with an exception reporting mechanism that

identifies suspicious transactions for in-depth follow-up by an auditor. This system would provide

electronic profiling of transactions for targeted investigation, reduce paper handling, and eliminate

manual processing staff. Implementation of this recommendation would require the development of an

electronic auditing and profiling application.

Fiscal Impact: Implementation of this recommendation would eliminate the need for most field staff

dedicated to auditing invoice payments and eliminate 25 percent of the positions in the central processing

unit. This translates into approximately $824,000 in annual savings.


Changes in policies and procedures are required to implement the reengineered process, but by

themselves they are not sufficient. Changes in the system that supports the purchasing and payment

processes must occur before the State can implement an e-commerce solution. The following are the key

system requirements for the proposed reengineered process:

! Electronic receipt of invoices and receiving reports

! Recurring payment capabilities

! Automated document matching

! Automatic posting to ledgers

! Automatic EFT for payment

! Online vendor access to remittance information, and thus no mail

! Online access to source documents for auditing

! Waste, fraud, and abuse profile system to identify suspicious transactions

! Electronic storage of documents

! User-friendly reporting capabilities

! Additional data fields for vendor invoice number


These high-level system requirements will allow the introduction of the conceptual model described in

this section. These system enhancements are required to obtain the entire fiscal impact estimated.

Options Analysis

Based on the definition of the five options, the State can achieve the estimated saving from reengineering

in Options 3 through 5. The savings depend on the implementation of a web-enabled e-commerce

solution. Options 3 through 5 include the necessary functionality for e-commerce while Options 1 and 2

do not. However, Option 2 does permit savings associated with mandated EFT payments for all vendors,

in addition to the development of a web-based remittance information system. Because the basic e-

commerce functionality is part of Options 3 through 5, there are no additional implementation costs

associated with reengineering the payment process. A comparison of the five options is shown in

Exhibit 3-54.



OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option2 0 0 0

Option3 15,581,000 0 15,581,000

Option4 15,581,000 0 15,581,000

Option5 15,581,000 0 15,581,000

RecommendationBPR-33

Option1 0 0 0

Option2 1,500,000 0 1,500,000

Option3 1,500,000 0 1,500,000

Option4 1,500,000 0 1,500,000

Option5 1,500,000 0 1,500,000

RecommendationBPR-34

Option1 0 0 0

Option2 0 0 0

Option3 824,000 0 824,000

Option4 824,000 0 824,000

Option5 824,000 0 824,000

Total

Option1 $0 $0 $0

Option2 $1,500,000 $0 $1,500,000

Option3 $17,905,000 $0 $17,905,000

Option4 $17,905,000 $0 $17,905,000

Option5 $17,905,000 $0 $17,905,000

*Savings are net of $1,000,000 of costs in year 1 only

Business Case Study 3—Business Process ReengineeringBudgeting

3.13 Recommended Process Changes—Budgeting

This section presents KPMG’s recommendations for reengineering the State’s processes for developing

and executing the annual budget.

Background

The purpose of the budgeting process is for State leadership to allocate scarce resources to meet the

business objectives of the State. A successful budgeting process should have the following elements:

! Customer and stakeholder participation

! Development of priorities and required resources

! Execution of budget decisions

The budget development process involves many customers and stakeholders. In developing the State’s

budget, input is solicited from State agencies, statewide elected officials, and the Governor. The

legislature weighs this input and input from constituents, organizations, and the public before making the

final appropriations decision. The input is critical for developing the strategic objectives of the State and

determining the resources required to accomplish these objectives.

The State relies primarily on LAS/PBS for budget development and execution. However, because of

limitations in the existing system, several supplemental systems have been developed to support the

budget process. Exhibit 3-55 provides a list of the supplemental systems used by some of the agencies

involved in the budget process.


Exhibit 3-55Supplemental Systems


InterfacesWith

Department of Transportation Spreadsheet

Word processing

Develop budget issues

Allocation of appropriations

Prepare reports

LAS/PBS


Spreadsheet

Word processing



Prepare reports

LAS/PBS


Spreadsheet

Word processing



Prepare reports

LAS/PBS


Spreadsheet

Word processing



Prepare reports

LAS/PBS

University of Florida Spreadsheet

Word processing



Prepare reports

LAS/PBS

Office of Planning and Budget Spreadsheet

Word processing


Prepare reports

LAS/PBS

Senate Budget Office Spreadsheet

Word processing

Amtrak

Conduct analyses

Prepare reports

Amendment tracking

LAS/PBS

House Budget Office Spreadsheet

Word processing

Amtrak

Conduct analyses

Prepare reports

Amendment tracking

LAS/PBS

Current Process

The budget process has the following two major components:

! Budget development—Consists of identifying and prioritizing the needs of the State anddetermining the amount of resources required to meet the needs of the State

! Budget execution—Consists of carrying out the decisions from the budget development process

Budgeting is a resource-intensive and time-consuming process. The process of identifying, prioritizing,

and determining the level of resources needed to address priority issues requires input and analyses from

across State government and from management to front-line workers.


As previously stated, it is important to get input from agency management and staff who will be

responsible for carrying out the objectives set forth in the budget. It is also important to get guidance and

input from the Executive Branch, which is ultimately responsible for managing the operations of the

State. Lastly, it is important to get input from the elected officials in the House and Senate who represent

the interests of the citizens and businesses in the State.

Getting agreement from these groups on the State’s priority issues and required resources takes

considerable time to complete. Development of budget issues begins in May and is completed when the

General Appropriations Act is passed the following April.

Budget Development

Agencies develop their budgets at a level of detail necessary for State leaders to make decisions. Budget

issues are developed at the program component level, which is used by the Office of Policy and Budget

(OPB), the Senate Budget Office, and the House Budget Office to review and refine. After the budget

issues are finalized at the program component level, they are summarized at the budget entity,

appropriation category, and fund level where they are approved or rejected by the Senate and House. The

approved budget issues at the budget entity level are what compose the Appropriations Act.

The budget process begins when OPB, in conjunction with the House and Senate, issues budget

instructions to the agencies. Agencies prepare their budgets and forward them to OPB and the Legislature

simultaneously. OPB develops issues based on new legislation, the Governor’s priorities, and last year’s

budget and prepares the continuation budget. Information is collected from different systems during this

process, including:

! FLAIR—Expenditure data

! COPES—Salary and benefit data

! LAS/PBS—Current-year appropriations

The agencies develop their budget issues on PCs using software such as word processing and

spreadsheets. When the budget issues are completed, the financial information is input and the narrative is

downloaded into LAS/PBS. The OPB, Senate Budget Office, and House Budget Office also use

spreadsheets to analyze and manipulate budget data and re-input results and changes into LAS/PBS.

Budget Execution

After the Appropriations Act is passed, the budget is used primarily as a management tool. The budget is

monitored and modified throughout the year to ensure that the objectives set forth during the budget

development process and any new initiatives are successfully carried out. The agencies receive the


approved appropriations at the budget-entity, appropriation category, and fund level and then reallocate

the funding to the lower levels of the organization.

The account information from the Appropriations Act is downloaded into the budget ledger in LAS/PBS.

The budget ledger is the system OPB uses to execute the budget. The appropriation information is also

sent to the agencies where it is input into spreadsheets and allocated to business units. The allocations are

done at different levels of detail, depending on the needs of the agency. The agencies have the flexibility

to allocate the funds to the organizational and program components with a budget entity. They must not,

however, allocate money across line items (for example, personal services funds cannot be allocated to

equipment). When the allocations are complete, they are input into the Departmental Accounting System,

which is used as the budget execution system for the agencies.

Through the budget execution process, agencies are managing expenditures to stay within the

appropriated line items for all expenditures except personnel expenditures. For personnel expenditures,

agencies are required to manage within the appropriated amount and within the total salary rate for each

budget entity. Salary rate is an amount calculated based on the annual salary rate for filled and vacant

authorized positions. Rate calculation and management is a complicated issue that is addressed as a

separate process in Section 3.14.

Agencies must submit budget amendments to move funds across line items or request more budget. The

budget amendment process is similar to the budget development process. Agencies develop budget

amendment issues with guidance from OPB. Issues are submitted to OPB and reviewed and updated if

necessary. The issues are sent to the House and Senate Budget offices, which notify OPB only for

exceptions. Approved budget amendments need to be updated in all of the budget systems, including

LAS/PBS, Central Accounting System, Departmental Accounting System, and in some cases COPES.

Performance-Based Program Budgeting

In recent years, a number of State agencies have begun incorporating the elements of program budgeting

into the traditional budgeting process. The program budgeting component is submitted as a manual

schedule with the annual budget. The current budgeting systems do not support performance-based

program budgeting (PB2). The schedule primarily includes a number of performance measures designed

to measure the performance of specific programs organized in four categories—input, output, outcome,

and efficiency.

The State is in the process of rolling out PB2 to most major agencies. Although instructions have been

created to assist agencies in developing program-based budgets, the primary emphasis during budget

development is on the traditional budget.



Several factors drive the workload and performance of the budget process. The primary workload factor

during budget development is the number of budget issues that need to be developed, and the primary

workload factor during budget execution is the number of budget amendments. In general, the budget

issues and budget amendments begin in the agencies and are forwarded to OPB for further review and

analysis.

Exhibit 3-56 provides the annual workload statistics for the five study agencies.

Exhibit 3-56Budget Process Workload Statistics

Agency Budget Issues Budget Amendments

Department of Transportation 164 42

Department of Children and Families 188 158

Department of Highway Safety and Motor Vehicles 79 28


100 34

University of Florida * *

*Tracked at the Board of Regents level

The workload statistics shown in Exhibit 3-56 are affected by several other factors, including:

! Number of budget entities

! Number of appropriation categories

! Number of funds

! Number of budget programs

! New legislation

! Budget schedules

The Executive and Legislative branches determine the number of budget entities and budget programs,

based on their desired level of control.


The cost of the current process is derived by analyzing three cost components—customer costs, agency

costs, and centralized costs. Customer costs generally reflect the time an individual spends completing a

form or entering data to initiate a process. Agency costs reflect the labor costs of the agency personnel

devoted to carrying out the process. Centralized costs reflect the labor costs of personnel who are located


in a statewide administrative support agency and who participate in the process statewide. These costs are

extrapolated to the rest of State government based on the factors that drive the costs. The cost of

preparing Florida’s budget is incurred by each agency, OPB, and the House and Senate Budget offices.

These cost components are summarized in the following paragraphs:


Agency Costs: Agency costs are defined specifically as those costs incurred by the centralized budget

staffs. For the five study agencies, we identified the central budget staff and the portion of their time

devoted to the budget formulation and budget execution processes. Our interviews with budget staff in the

five study agencies indicate that the centralized budget offices in the study agencies devote 20 percent of

their time to budget formulation and 30 percent to budget execution annually. Exhibit 3-57 shows the

centralized budget staff at the study agencies.

Exhibit 3-57Budget Office Staffing Levels and Process Labor Costs

Agency

CentralBudget

Office Staff

FTEs Devotedto Formulationand Execution

SalaryCosts*

ProcessCosts

(Agency)



29 14.5 58,643 850,324


6 3.0 58,643 175,929

Department of Insurance,Treasury and State Fire Marshal

4 2.0 58,643 117,286

University of Florida 2 1.0 58,643 58,643

Total 48 24.0 – $1,407,433

*Based on the average salary cost plus benefits for State positions designated as budget related

Determining the total number of budget staff in all State agencies requires estimation, and the following

methodolgy was used. The 48 centralized budget staff identified in the study agencies are responsible for

21.6 percent of Fiscal Year 1999 statewide appropriations. Extrapolating the 48 staff to the rest of State

government based on total appropriations yields an estimated 222 central agency budget staff statewide.

Assuming that they spend half their time on budget formulation and execution, the total statewide labor

cost for these processes, based on an average salary and benefits of $58,643, is estimated at 111 FTEs or

$6.5 million.

In addition, costs are incurred by managers who prepare documentation to support budget issues and

attend meetings to discuss resource allocation alternatives. We estimate that State managers with budget

entity responsibility spend at least 5 percent of their time interacting with the budget process to advance


their programmatic priorities. There are 221 budget entities statewide, requiring an estimated 20,500

manager hours. Therefore, the estimated manager cost is $650,000.

Total agency costs for the budget process development and execution is estimated to be $7.2 million.

Centralized Costs: Centralized costs consist of the Governor’s office (OPB), and the House and Senate

Budget offices’ staff time devoted to budget preparation and execution. The budget offices also have

technology staff members who support information system needs. OPB, for example, has 48 technology

staff members who support IT operations for LAS/PBS (these costs are not included here but are in the

cost for operating FFMIS). Based on an average salary and benefits of $58,643, the centralized budget

staff accounts for 100 FTEs or $5.9 million in additional labor costs. Most of the legislative budget staff

are devoted to budget formulation. OPB and technology staff efforts are divided between formulation and

execution.

In total, the State annually expends an estimated $7.2 million in agency costs and $5.9 in centralized costs

to carry out the budget formulation and execution processes.


A budget process should allocate resources consistent with needs. It should do so efficiently and during as

short a time period as possible. Our experience with budget processes in other states indicates that neither

the length of Florida’s budget process nor the resources it consumes is out of line with common practice.

The State’s main issue is that it must use several systems that are not well integrated to formulate and

execute the budget. The State’s primary budgeting system, LAS/PBS, does not meet all of the

requirements for a budgeting system. Furthermore, the system does not support one of the key analytical

processes of budget analysis—the development of “what if” scenarios.

Based on interviews and analyses, LAS/PBS was identified as a weakness of the current budget process.

It does not provide the necessary functionality in the following areas:

! Analytical—Analyses are performed in spreadsheets and re-input into system

! Reporting and inquiry—Ad hoc reporting or changes to reports are difficult

! Interfaces—Flow of data is not automatic

! Ease of use—System is not easy to use or understand

! Performance-based program budgeting—Performance measures and program budgets are trackedmanually


The lack of analytical and reporting capabilities creates the need for a budget analyst to enter information

from LAS/PBS to spreadsheets manually and to analyze budget information and develop reports. This

situation is complicated by users’ perceptions that LAS/PBS is a difficult system to learn and use.

LAS/PBS’s limitations are caused by its system architecture and baseline functionality. The system’s

programming language and database are neither as flexible nor as easy to use as newer generation

technologies are. These factors make it difficult to make changes or enhancements to the system and

provide minimal reporting and inquiry capabilities.

Interfaces between LAS/PBS and other systems are difficult because the system does not have an open

architecture. To update or create new interfaces takes considerable effort. In addition, the budgeting Chart

of Accounts is different from the systems with which it interfaces, creating additional complications.

The weaknesses in the system described cause analysts to perform non-value-added activities, such as

inputting information into spreadsheets, and requires a significant IT staff to support the number of

systems that support the budgeting process. In general, when organizations use multiple systems that are

not integrated, it becomes necessary to ensure that data is consistent among systems. The central budget

offices and agencies have this problem. When the Appropriation Act is passed, the information is input

into the LAS/PBS ledger, which is used by OPB for budget execution. This information must also be

input into the State’s Central Accounting System in the State Comptroller’s office.

At the same time, the agencies allocate and input the same appropriation information into the

Departmental Accounting System, which is the system used to execute the budget. Appropriations related

to personal services must be updated in COPES. When changes need to be made to the budget (for

example, a budget amendment), the information must be changed in each of the systems. OPB and agency

staff must reconcile the systems periodically to ensure that the systems have the same information.

Modern budgeting systems have greater capabilities and capacities to meet the needs of today’s budget

analysts. Today’s systems can provide the ability to capture information at a low level of detail, conduct

forecasting and trend analyses, and develop different types of budgets (for example, zero-based and

modified zero-based). Integrated systems with open architectures make transmitting and sharing

information much easier.

Integrated budgeting and accounting systems do not have this problem. Budget changes are automatically

reflected in each system, therefore eliminating the need to reconcile the systems periodically.


To reengineer the current budgeting process, the State must leverage technology to improve system

capabilities and eliminate the need to perform manual or non-value-added tasks.


Recommendation BPR-35: Expand the functionality of the automated system to integratebudgeting with other financial management processes

By purchasing or developing an integrated financial management system, the State can address the

deficiencies described throughout this section. An integrated budgeting system with modern functionality

and architecture would enable OPB and agency management to use the same system to develop and

execute the budget.

An integrated system would benefit the State by eliminating reconciliation efforts and providing enhanced

capabilities that eliminate the need to use other applications. The use of improved databases and reporting

tools would increase the reporting capabilities of budget analysts and eliminate non-value-added tasks,

such as entering information into spreadsheets.

Fiscal Impact: No reduction in the number of budget analysts from implementation of this reengineering

recommendation is expected. However, time savings from the elimination of non-value-added tasks are

expected. These savings, which are indicated in Exhibit 3-58, are deemed “soft” savings because they do

not reflect elimination of positions, but instead reflect increased efficiency. Analysts would have

improved reporting and analytical capabilities and would have more time to spend on higher value tasks.

Exhibit 3-58 presents the estimated time and cost savings of the recommendation.

Our interviews with budget staff in the study agencies indicated that each analyst spends an average of 2

hours per week entering data manually to and from spreadsheets for analysis and reporting purposes. The

State could save an estimated 38,480 hours per year if such downloading and uploading were obviated by

a new system. Assuming an average salary and benefits of $58,643, this would result in approximately

$1.2 million in resources reallocated to higher value tasks.


Exhibit 3-58Estimated Soft Cost Savings

AgencyBudget

Staff

ManualInput

HoursAverageSalary* Costs

Department of Transportation 7 728 $58,643 $23,000

Department of Children and Families 29 3,016 58,643 95,000


6 624 58,643 20,000


4 416 58,643 13,000

University of Florida 2 208 58,643 7,000

Office of Planning and Budget 69 7,176 58,643 227,000

Senate 13 1,352 58,643 43,000

House 18 1,872 58,643 59,000

Remaining Agencies 222 23,088 58,643 730,000

Total – 38,480 – $1,217,143

*Based on the average salary cost plus benefits for State positions designated as budget related


The changes resulting from reengineering the budget process are not apparent in the flow of information

between organizational units. The major changes to the process are how information is generated and

passed from system to system.

A major requirement for the system that supports the budget process is to provide budget analysts with

the ability to conduct analyses while in the system and to produce necessary reports. The system should

provide agencies with the ability to develop a budget at the necessary level of detail. A new system

should be able to transmit data from other key source systems such as the human resources and

accounting systems.

The system should also provide the ability to develop and track program budgets to support the State’s

performance-based program budgeting initiative.

Options Analysis

The recommendation to improve the current system’s functional and technical capabilities would be

affected by the system option chosen. Option 1 contains no savings as the status quo, by definition,

cannot support the integration and enhanced functionality called for in the recommendation. The

remaining options, however, lead to BPR savings in the form of increased efficiency.


The fiscal impact of the options on the projected BPR savings is summarized in Exhibit 3-59.


OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 1,217,000 1,217,000

Option 3 0 1,217,000 1,217,000

Option 4 0 1,217,000 1,217,000

Option 5 0 1,217,000 1,217,000

Business Case Study 3—Business Process ReengineeringRate and Position Administration

3.14 Recommended Process Changes—Rate and PositionAdministration

This section presents recommendations for reengineering the State of Florida’s rate and position

administration process.

Background

Most state legislatures have developed mechanisms for controlling personnel expenditures that

supplement normal appropriations limitations. Such controls are designed to prevent an agency from

hiring excess personnel in the middle of one year and expecting the legislature to fund those personnel for

the next full year. In many cases the full-year cost of personnel who are hired midway through the

previous year may cause an agency’s personnel costs to exceed its annual expected budget level.

For example, suppose an agency has an annual appropriation for personnel salaries of $50,000, which is

meant to hire one manager. If no controls are in place, a well-meaning agency head could wait until the

sixth month of the fiscal year, hire two $50,000 managers, and still stay within the $50,000 annual

appropriation. (Each manager would receive his or her full salary for half a year—$25,000 each.) At the

start of the next fiscal year, the legislature is told that the agency cannot do without the two managers and

requests an increase in appropriation for salaries from $50,000 to $100,000 to avoid terminating staff.

State legislatures have enacted various measures to restrict hiring staff when hiring that staff forces

budget increases in subsequent years. For the State of Florida, this is done through rate and position

administration.

In Florida, State agencies’ salary expenditures—except for the SUS—are controlled by annual salary rate,

the annual budget for salaries, and the number of positions. SUS salary expenditures are controlled by

annual salary rate and salary and benefits appropriation. Governed by Chapter 216.181 of the Florida

Statutes, the annual salary rate is calculated based on the actual salary rate in effect on June 30 and the

number of authorized positions and salary policy specified in the General Appropriations Act. In

calculating salary rate, vacant positions are calculated at the minimum of class plus additives, and filled

positions are calculated based on an employee’s base rate of pay plus additives. Additives generally

include such items as shift differentials, hazardous duty pay, and temporary special duty. In addition,

biweekly pay rate is annualized based on 26.1 weeks per year while monthly pay rate is calculated based

on 12 months.

An agency may exceed its approved rate for all budget entities by no more than 5 percent, provided that

by June 30 of every fiscal year each budget entity is within the approved rate. The annual salary rate is

controlled at the position level within the budget entity, and rates cannot be transferred among budget

entities unless positions are transferred as well. Hence, position, but position additions and reductions

impact the approved rate.


The State relies on FLAIR, COPES, and LAS/PBS to provide the bulk of budget information related to

rate; however, there are exceptions. Some agencies rely on supplemental systems for the calculation of

rate. Exhibit 3-60 shows the supplemental systems used by the five study agencies.

Exhibit 3-60Agency Supplemental Systems Used in the Rate and Position Administration Process


InterfacesWith


Focus Desktop,Lotus

Report generation on projectbasis

COPES


Excel Analytical tool for calculationof rate

None


Focus Desktop,Lotus

Produce information, reportsmanagement, and ratecalculation

None


Impromptu,Access

For data retrieval fromCOPES and reportsgeneration

COPES

University of Florida Supers Provide biweekly reports toBoard of Regents

None

Current Process

The current process has two major components—establishing a rate amount for the year and managing

personnel expenditures against the rate throughout the year.

The process starts at the end of one fiscal year, with agencies reconciling their personnel budgets with the

data in LAS/PBS and ensuring that they are within their appropriated and approved budgets. OPB and the

agencies’ budget analysts use COPES to determine positions for the next year. Finally, OPB distributes

personnel pay packages to the agencies for the next fiscal year.

During the year, agencies may review daily reports generated by COPES to determine whether personnel

expenditures are within the calculated or approved rate amount and to make any adjustments to the rate

amount based on separations and accessions. Also, COPES does not provide the ability to issue pending

actions allowing the overall rate balances to show approved rate, actual rate, and actual rate with pending

action.


The cost of the rate and position administrating process is derived by analyzing three cost components—

customer costs, agency costs, and centralized costs. Customer costs generally reflect the time an





process statewide.




study agencies and for estimates of those categories and costs statewide are described in the following

paragraphs.


Agency Costs: The agency cost is reflected in the effort undertaken by the budget office staff and

managers who receive monthly reports on rate usage and by the information technology staff who convert

COPES data into LAS/PBS. In the five agencies reviewed, staff hours devoted to converting COPES into

LAS/PBS total 516. This is based on 29 hours per month for 12 months and year-end efforts totaling 168

hours. Based on the average salary and benefits of $58,643 for budget professionals statewide, the total

estimated annual cost is $16,000.

Examination of the five study agencies suggests that it takes 516 hours to manage 26 percent of the

State’s non-university positions. Extrapolated statewide, the hours required for the rate and position

administration process is 1,985 hours or about $64,000.

For the purpose of the extrapolation, universities are considered separately. Universities manage to an

overall salary rate but are exempt from the position control requirements. Consequently, they expend

fewer resources managing salary rate and position. The University of Florida has approximately 33

percent of all the university positions statewide. Based on the estimated 16 hours that the University of

Florida spends on rate and position administration, calculations indicate that all the universities spend

about 54 hours annually.

Exhibit 3-61 shows the agency cost components of the position control process.


Exhibit 3-61Labor Costs Associated with Position and Rate Administration

Agency

MonthlyMaintenance

(Hours)

End of YearProcess(Hours)

StaffInvolved

Department of Transportation 2 40 7

Department of Children and Families(Central office)

23 113 15


1 4 6


2 7 2

University of Florida* 1 4 2

Total 29 168 32

* State universities are held to annual salary appropriations and rate but not to a number of positions

Centralized Costs: The centralized costs are represented by the time the OPB analysts expend

downloading currently authorized position data from COPES into LAS/PBS and comparing currently

authorized position data and approved salary rate at the end of the fiscal year. With 40 FTEs dedicated

centrally to rate and position control, the time required for this function is estimated at 300 hours

annually, which translates to about $9,000 annually.

In total, the State annually expends an estimated $64,000 in agency costs and $9,000 in centralized costs

to carry out the rate and position administration.


The State’s process for managing personnel expenditures and positions is overly complicated, time

consuming, and limits agencies’ flexibility to manage their operations. With rate control, agencies have to

manage personnel expenditures against two numbers—salary appropriations and rate. The calculation of

rate is complicated, and the approved rate changes throughout the year while the appropriation amount

generally does not. (Appropriation amount can change with a budget amendment, cost-of-living

adjustment, or other legislative action.)

As a result of using rate to manage positions and personnel expenditures, nearly 15 percent of the State’s

$50 billion budget is not managed through the accounting system (FLAIR).

Although the State recognizes the importance of controlling the continuing cost of authorized positions,

agencies’ personnel expenditures are managed primarily through COPES. FLAIR, COPES, and LAS/PBS

are not sufficiently interfaced to allow efficient management of budget for personnel expenditures. The


insufficient interface between the systems causes several agencies to use supplemental systems and

reporting software to obtain reports and manage their personnel expenditures relative to the salary rate.

The current systems are not designed to support the management of personnel expenditures through rate.

The management of rate requires that three systems interface—FLAIR, COPES, and LAS/PBS. This end-

of-year process is inefficient because systems are inconsistent across agencies. The three systems are used

separately in the budgeting process, and each year, much effort in late May through June is required to

synchronize them on June 30. This problem also causes concern to the agencies when calculating rate and

dollars to be given for annual salary increases.


To address the weaknesses in the current process, the State should simplify rate and automate it in the

financial system.

Recommendation BPR-36: Simplify salary rate calculation and automate within thefinancial accounting system

To simplify the concept of rate, the State should control salary expenditures by setting allowable rate at

100 percent of the budgeted salary amount at the start of the year. The total projected salary for the

remainder of the year would need to be less than the rate. The allowable salary rate would decline during

the course of the fiscal year on a straight line from 100 percent on July 1 to 0 percent on June 30. The

accounting systems would track the amount of allowable rate to projected rate at any time during the year.

Upon a request to add a person to the payroll, the system would calculate three things:

! Portion of remaining salary rate to be expended based on current workforce strength within thebudget entity

! Amount of salary rate needed to add the person to the payroll for the remainder of the year

! Difference between the salary rate needed to add the person and the salary rate available

If the last calculation shows a positive difference between what is available and what is needed, then the

accounting system would allow the person to be placed on the payroll at the salary level requested.

Otherwise, the request would be rejected.

The following example illustrates the new proposed method for calculating and managing rate:

An agency with 10 positions submits a budget request to fund all 10 positions for the upcomingfiscal year. The agency requests $320,000 for salary and benefits. Through the course of budgetnegotiations, the House budget staff realizes that two of the positions are vacant and could not


possibly be filled until 3 months into the fiscal year. The Executive Branch and LegislativeBranch agree that the positions should be funded because they are slated to carry out worthwhileendeavors, but realized that funding is need for only 9 months for two of the positions. Theremaining eight positions are already filled and it is assumed that they will continue to be filledthrough the course of the fiscal year.

To meet the salary and budget needs for this agency, the House should fund eight positions attheir current rate (assuming no cost-of-living increases, step increases, or promotions) and twopositions for 9 months. Furthermore, the budget staff members realize that this agency has a highattrition rate historically. Based on their experience with this agency, they reduce the salary andbenefits request by another 5 percent across the board. When this negotiation is competed, whichshould be based on the best estimate of actual needs at the time, the result eventually becomes thesalary and benefits appropriation for the agency. As a result, the agency’s salary and benefitneeds are, for example, $300,000 rather than $320,000. The $300,000 also becomes the basis forcalculating the rate.

On the first day of the fiscal year, rate equals $300,000. On the last day, it equals $0. The rate atthe 6-month mark of the fiscal year would equal $150,000. If the agency delays filling theposition, it will have rate that could be expended for other authorized purposes within theappropriation.

The recommendation eliminates the concept of rate as it is used by Florida and may eliminate the need to

control the Executive Branch by position. This measure of control would give the Legislature more

assurance that personnel expenditures would not exceed budgetary appropriations and would not place

demands on a future budget, while at the same time giving agency heads more flexibility.

Fiscal Impact: Implementation of this recommendation would eliminate the time now expended on rate

and position administration. Total savings are estimated at $73,000 annually. The State may experience a

reduction in hours expended by the customers of this process, agency staff, and centralized staff to

manage and calculate rate. Adopting the proposed recommendation would reduce the monthly and end-

of-year workload on agencies and centralized staff.


To implement the reengineering recommendations, the State requires a financial management system that

must be able to calculate the salary rate remaining at any given time based on a straight-line reduction of

rate over the course of the fiscal year. This would require an integrated personnel and financial system.

When staff is to be added to the payroll, the system must calculate salary rate remaining to ensure

compliance with budget limitations.


Options Analysis

KPMG’s recommendation to simplify salary rate calculation and automate within the financial system

will require implementation of systems Options 3, 4, or 5. Although there will be some additional costs

involved with adopting any of the systems options, the State would benefit exceedingly with a change that

makes it easier for department managers to manage rate. Simplifying rate and automation would ease the

monthly workload on agency personnel and reduce the complexities of calculating rate. Agency personnel

responsible for calculating and managing rate would need training on the integrated system functionality.

The potential budgetary reduction resulting from implementation of recommended process changes is $0.

The savings identified in Exhibit 3-62 reflect an increase in efficiency valued at $73,000.


OptionBudgetary


Total BPRSavings


Option 1 $0 $0 $0

Option 2 0 0 0

Option 3 0 73,000 73,000

Option 4 0 73,000 73,000

Option 5 0 73,000 73,000

Business Case Study 3—Business Process ReengineeringCertified Forward

3.15 Recommended Process Changes—Certified Forward

This section presents recommendations for reengineering the State of Florida’s certified forward

process—the process by which undisbursed balances are certified for expenditure during the subsequent

fiscal year.

Background

The certified forward process is governed by Chapter 216.301, Florida Statutes: Appropriations;

Undisbursed Balances. This Chapter requires the head of each agency and the judicial and legislative

branches to certify to the Executive Office of the Governor on or before August 1 of the fiscal year

undisbursed amounts that have outstanding obligations at the end of the prior fiscal year. The Statutes

require the agencies to report in detail obligated but undisbursed appropriations to the Executive Office of

the Governor. The detail must include the obligees to whom the balances are obligated and the amounts of

the obligations. The Statutes further state that if such certification is not made and an obligation is proven

to be legal and binding, then the obligation will be paid and charged to the agency’s current-year

appropriations.

The SUS falls under purview of Chapter 240.272, Florida Statutes: Carry Forward of Unexpended Funds,

which requires the Executive Office of the Governor to certify forward all unexpended funds appropriated

or provided for the SUS on July 1. Unexpended balances in the current-year operating budget, including

unexpended student fee revenues, are carried forward by the Board of Regents for use by the university to

which the funds were allocated. Of the unexpended funds certified forward, any unencumbered amounts

may be transferred to university carry forward accounts on September 1 of each year. In addition, any

certified forward funds remaining undisbursed on December 31 are transferred to university carry forward

accounts. There are limitations on the amount of funding that universities can carry forward. Specifically,

only 5 percent of the aggregate budget can be carried forward by an institution.

The certified forward process has been in existence for more than 30 years. When it started, its original

purpose was to provide flexibility by reverting unneeded funds to the general revenue fund. When the

certified forward process was established, the State did not have a rainy day fund nor other funds to

address unforeseen needs. In its infancy, the process was completely manual, only estimates were

developed, and it required only 2 weeks to complete. Since then, the process has become more automated,

the State has established a rainy day fund, the obligations are provided in specific detail, and the process

takes about 2 months to complete.

Although the process is largely a budgetary exercise, it has implications for the State’s financial reporting

process. Information on the status of obligations and payables at the end of a fiscal year supplies

important input for the State’s CAFR. Payables are reported as a part of the annual report. Consequently,

the two processes (certified forward and the annual financial report) are linked.


In general, the agencies rely on FLAIR and LAS/PBS to support the bulk of the certified forward

processing requirements, management reporting, and appropriation changes, but there are exceptions.

Exhibit 3-63 identifies the agency systems used to support the completion of the certified forward process

and their corresponding purposes and system interfaces.

Exhibit 3-63Agency Supplemental Systems Used in the Certified Forward Process


InterfacesWith


DOT FMS Research, verification, and cross-walks

FLAIR (tape)


Northwood DataCenter (CertifiedForward)

Allocates approved certified forwardamounts into Departmental FLAIR(District Accounting Records)

FLAIR (tape)


EXCEL Contract and Utility Payment TrackingSystems

No interfaces


EXCEL Management reporting tool to monitorobligations throughout the fiscal year

No interfaces

University of Florida TOPAZ

Payroll PersonnelSystem

Financial DataWarehouse

Reconciling FLAIR transactions withpurchasing requisitions

Supports certifying forward theuniversity’s payroll requirements

Provides a check on a multitude offinancial transactions

FLAIR

FLAIR

FLAIR

Current Process

The current process includes five major components:

! OPB and Comptroller initiating activities

! Agency certification activities

! Agency fixed capital outlay (FCO) unique requirements

! Agency submittal and OPB review activities

! University of Florida activities

Exhibit 3-64 depicts the timeline associated with the current certified forward process.


Exhibit 3-64Certified Forward Current Timeline

ID Task Name

1 OPB Promulgates Memo to Agencies

2 Agencies increase monitoring Type As, Bs, and Cs

3 Agencies validate individual records for certify forward

4 Agencies submit DCFR01 and DCFR03 Reports

5 OPB Review and Adjustment of Certified Forward

6 OPB Publishes Approved Certified Forward

7 Agencies process approved certified forward items

8 Reversions

9 Reversions

��

��

��

��

��

��

��

6/18��

8/2��

8/23��

8/23

��

��

May Jun Jul Aug Sep Oct Nov DecMay June July August September October November December

OPB and Comptroller Initiating Activities: During the first week of July, OPB provides a tentative

certified forward release compiled from the Comptroller’s unexpended release balance to roll forward for

operating categories. The amounts obtained from the Comptroller are aggregated by operating category

and not broken down to the level of detail implied in the Statutes. For fixed capital outlay appropriations,

the unexpended release balances as of June 30 are tentatively certified forward (including unreleased

approved budget and any amount held in reserve). Agencies are able to pay prior year vouchers from

tentative certified forward release until final certified forward approval by Executive Office of the

Governor. The Comptroller does not process vouchers that exceed the unexpended release balance for any

certified forward appropriation category.

Specific direction on certified forward is provided by the OPB before the end of the fiscal year, usually in

mid-June. A memorandum from the OPB describes the requirements to the agencies and provides specific

directions regarding the submission of agency FLAIR DCFR01 (operations appropriations) and FLAIR

DCFR03 (fixed capital outlays) reports. The reports are due no later than August 1, and OPB publishes

the final approved certified forward appropriations on or before September 1.

Agency Certification Activities: Agency Central Accounting offices provide direction to their

districts/departments regarding the recording, update, and certification of accounts payable (Type A),

encumbrances (Type B), and accounts receivable (Type C) transactions for operating accounts and for

fixed capital outlay. Because this process is performed annually, agencies typically provide their

districts/departments direction in May or early June. More specific direction is forwarded upon receipt of

the OPB memorandum. Accounts receivables are generally not certified forward by the agencies unless

an agency has incurred obligations that are more than its unexpended release balance in anticipation of

receiving a reimbursement and subsequently depositing this amount in the fund from which it was

expended.

Agency District/Departmental Accounting offices initiate the process of recording certified forward all A,

B, and C items, when applicable, in FLAIR—A items to the accounts payable subsidiary, B items to the

encumbrance subsidiary, and C items to the accounts payable subsidiary. Encumbrances, accounts

payable, and accounts receivable items to be certified forward are marked for certification forward in the


CF field in FLAIR in one of three ways: on original input, updated in the appropriate subsidiary ledger, or

updated through Request for Certifications. Agencies also have the option of having all their records

automatically marked as certified forward on June 30 to avoid designating the records individually.

Regardless of the means of designating the individual records as certified forward, the agency

District/Departmental Accounting offices still need to perform research on outstanding contracts,

invoices, and purchase orders to determine whether they are a valid and legal obligation of the agency

from the prior year to comply with Statute 216.301.

While the agency District/Departmental Accounting offices are researching and recording items as

certified forward, agency Central Accounting offices run various discrepancy reports to determine the

accuracy of the District/Departmental entries. Examples of these reports include FLAIR Certification

Forward Subsidiaries Errors and FLAIR progress reports designating certified forward status by Internal

Budget Indicator (IBI), category, and fund source. The Central Accounting System notifies the

District/Departmental offices of any errors and requests that they make corrections or adjustments as

necessary.

In addition to overseeing the development of the certified forward reports, Central Accounting offices are

monitoring budgeted funds to ensure that no negative balances are showing up. Central Accounting

transfers funds from other sources to mitigate negative balances showing up on the certified forward

reports.

Agency Fixed Capital Outlay Unique Requirements: Because of the long-term nature of capital projects,

appropriations have unique requirements for the certified forward process relative to the operating

appropriations. The FCO certified forward process requires the agencies to indicate within the FLAIR

DCFR03 reports specific project status information about the following:

! Architectural program has been approved

! Architect/engineer is under contract

! Construction contract is approved

! Equipment purchases have been completed

! Force account approval has been granted

Codes of Y=Yes, N=No, and 0=Not Applicable are entered by the agencies in the appropriate field to

capture the required information.

Agencies are also required to detail agency obligations or commitments for fixed capital outlay. This is

accomplished through FLAIR with the agency reporting amounts in six fields used in the DCFR03 report

to break out funding as follows:


! Conducting a study provided by the appropriation

! Performing the architectural/engineering design work

! Purchasing land required to complete the project

! Performing the construction work including a contingency for unforeseen circumstances

! Purchasing equipment or furnishings required to complete the project

! Any amounts held in reserve for post-occupancy corrective work or other unforeseen allowancesnot covered by the construction contingency

The total of these amounts serves as justification for the FCO certified forward amount requested.

For agencies that perform extensive multiyear capital projects, there is a considerable amount of effort in

providing this information, and agencies have had to develop automated capabilities to relieve some of

the manual workload. For example, because of the extremely large volume associated with FCO and work

program appropriations within the Department of Transportation, DOT uses a scripting program to

designate the detail required for the appropriation category amounts.

Agency Submittal and OPB Review Activities: Upon completion of the certified forward detailed effort,

FLAIR Certification Forward Request reports are run for each operating appropriation category

(DCFR01) and for Fixed Capital Outlay (DCFR03). The agency head signs the report and submits the

report to the Auditor General. The Fixed Capital Outlay reports are submitted to the Department of

Management Services. In addition, agencies are also required to submit their reports electronically to the

Comptroller’s office through the FLAIR RDS. Accordingly, agencies notify the FLAIR help desk of their

intention to submit the reports, and the FLAIR help desk assists the agencies in transferring the

computerized FLAIR Certification Forward Request Data to LAS/PBS.

OPB uses LAS/PBS to compare departmental disbursement data to State account balances. Agencies are

notified of required adjustments in their certified forward reports. Because FLAIR certified forward

capabilities are unavailable until OPB has completed its review, agency personnel need to come to OPB’s

office to make the adjustments in LAS/PBS and make the corresponding adjustments in FLAIR.

Alternatively, OPB agency points of contact also make adjustments and then notify their agency

counterparts of the changes. After completing the review and adjustments of the certified forward data,

OPB approves the agency certified forward amounts on or before September 1.

Upon approval, OPB sends a tape to State Accounts (FLAIR Central Accounting System) designating

available appropriation balances by fund and IBI 00. Reversions return to the applicable funding source as

unappropriated dollars. FLAIR Central Accounting System posts the approved certified forward amounts

to State accounts, and agencies are allowed to continue processing their prior year obligations through

December 31. At this point, any unexpended operating certified forward amounts revert to the applicable

funding source.


University of Florida Activities: As stated previously, the SUS falls under purview of Chapter 240.272 of

the Florida Statutes regarding the carry forward of unexpended funds. As such, the process for the

University of Florida and the other State universities varies considerably from that described above for

other State agencies.

On June 30, the unexpended release balances in those funds subject to certified forward are brought

forward by the State Comptroller and posted by category in the new fiscal year as “certified forward

release.” In August, the Board of Regents requests the universities to complete a worksheet identifying

the total amounts, by category and fund source, of encumbrances and expenditures certified forward and

calculate the balance of unexpended release not certified forward. After verifying that the unexpended

noncertified forward balances reported on the work sheet do not exceed 5 percent of the total operating

budget of the university as required by the Statute, the Board of Regents staff submits a request to the

State Comptroller to transfer the unexpended noncertified forward balances from the certified forward

release to the carry forward category. The amounts are carried forward on September 1 of a given fiscal

year, and any certified forward funds remaining undisbursed on December 31 are also transferred to the

university carry forward account.


Exhibit 3-65 provides agency annual workload hours and associated FTEs for completing the certified

forward process. The number of operating and FCO items requested by the agencies for certified forward

in Fiscal Year 1999 is also provided to demonstrate a corresponding workload output volume.

Exhibit 3-65Workload and Performance Metrics for the Certified Forward Process

Agency

AnnualWorkload

(Hours)*

Number of Operating andFCO Items Requested for

Certified Forward FTEs

Department of Transportation 4,684 26,061 2.5

Department of Children and Families 52,419 46,014 28.3

Department of Highway Safety and Motor Vehicles 3,176 3,476 1.7


358 1,923 0.2

University of Florida 11,416 20,151 6.2

*Workload hours represent agency estimates for both operating and fixed capital outlay certified forward efforts

It should be noted that, to some extent, the item workload volume reported in Exhibit 3-65 is not wholly

indicative of the level of effort that agencies go through in the certified forward process. The number of

items certified in the table represent the number of items requested by the agencies and not the number of

items that are researched or evaluated for validity by the agencies. For example, the Department of


Children and Families pre-certified 240,431 operating items on June 30. The research, reconciliation, and

analysis required for a large agency to certify forward is extensive.


The cost of the certified forward process is derived by analyzing three cost components—customer costs,









paragraphs.


Agency Costs: Exhibit 3-66 shows the agency certified forward workload effort by Central Agency FTEs

and District/Departmental FTEs and gives the total costs of certified forward for the five participating

agencies.

Exhibit 3-66Agency Costs for Certified Forward

Agency

AgencyFTEs—Central

AgencyFTEs—

DispersedTotalFTEs

Cost ofCertifiedForward

Department of Transportation 0.3 2.2 2.5 $71,000

Department of Children and Families 0.3 27.9 28.2 801,000

Department of Highway Safety and Motor Vehicles 1.7 Not Applicable 1.7 48,000


0.2 Not Applicable 0.2 6,000

University of Florida 6.0 0.1 6.1 173,000

Total 8.5 30.2 38.7 $1,099,000

The Central Agency FTEs represent the effort involved in overseeing the agency’s certified forward

process and reporting mechanisms. This is not a full-time responsibility for any one person during an

entire year. Instead, it is the full-time responsibility of one person or a small group of people over a 2-


month period. This includes oversight of District/Departmental accounting activities, running and

analyzing exception and error reports, and in some cases adjusting negative account funding balances.

Agency dispersed FTEs represent District/Departmental efforts associated with the certified forward

process. The dispersed FTEs spend only a fraction of their time on the process; however, there are a large

number of employees involved at one level or another. This includes the researching of vouchers and

contracts to determine whether an accounts payable or encumbrance is a valid obligation of the agency

associated with the prior fiscal year. In the large agencies and the University of Florida, hundreds of

people at the District/Departmental level participate in this process.

To arrive at an accurate reporting estimate, agency Districts/Departments are required to report on their

certified forward workload focusing on only those activities that are associated with certified forward and

not end-of-year closing. For example, DCF reported on five districts of various sizes. Workload hours

were captured for each of the five districts and central headquarters accounting in relative detail. From the

five districts, working with the DCF certified forward expert, the information was extrapolated to the

remaining district offices by designating districts of similar size and transaction volume and then

extrapolating the FTEs and associated workload dollars accordingly using the five reporting districts as

the basis.

To calculate the statewide agency labor cost savings associated with modifying the certified forward

process, it was necessary to determine a transaction item/FTE for a small and large agency. This was

accomplished using an average of the two small and large agencies in terms of FTEs and items certified.

For the large agencies, this amounted to adding the FTEs and transaction items for DOT and DCF and

dividing them by 2. Then, the total number of average transaction items (36,037) of the two agencies was

divided by the average FTE (15.4) to achieve a ratio of transaction items per FTE of 2,342. A similar

calculation was accomplished for the two small agencies, DHSMV and DOI, to achieve a ratio of

transaction items per FTE of 2,842. For the University of Florida, a ratio of transaction items per FTE of

3,277 was calculated.

For the extrapolation, the number of transaction items certified forward was used as the basis and divided

by the appropriate transaction item/FTE to determine the number of FTEs associated with completing an

agency’s certified forward process. Those State agencies that certified in excess of 20,000 items used the

large transaction item/FTE factor. Those agencies that certified fewer than 20,000 items used the small

agency transaction item/FTE factor. For the SUS, all universities used the University of Florida

transaction item/FTE factor because their certified forward process is different from the other agencies

evaluated. Dividing the number of items by the appropriate transaction item/FTE factor provided the

number of estimated FTEs in an agency associated with certified forward. This FTE amount was

multiplied by the average State salary for an Accountant II with benefits of $28,406 to determine the

agency-specific cost of certified forward. All agency certified forward costs were summed to determine a

total statewide cost of $4.2 million.


Centralized Costs: Costs are incurred centrally by OPB during its review of the agency certified forward

requests. Based on discussions with OPB staff, we estimate that they spend 375 hours on this process,

which equates to 0.2 FTEs for an estimated cost of $11,000. This cost estimate is based on the average

salary and benefits for the staff in the centralized budget offices—$58,643.


costs to carry out the certified forward process.


The State’s current process for certified forward is inefficient and costly. The detailed listing of individual

items for certification forward consumes valuable labor resources. During the certified forward

extrapolation, we determined that the State uses approximately 146 FTEs to complete this process for the

State. In Fiscal Year 1999, State agencies requested 379,309 operating and FCO items as certified

forward.

This process is so labor intensive because of the following:

! The State’s interpretation of the law requires that agencies certify all outstanding items at adetailed level requiring each agency to research each outstanding encumbrance and payable todetermine if it is a valid obligation of the State

! FLAIR Departmental Accounting System, FLAIR Central Accounting System, and LAS/PBS arenot integrated systems, which requires reconciliation to determine available budget balances andadjustments to ensure that no one overspends

The certified forward process consumes resources far in excess of the benefits it provides. The detailed

itemizing of an encumbrance or payable is accomplished regardless of the transaction size. It is

understandable that the State and its agencies would want to investigate and determine any large,

outstanding obligations from the previous year; however, the certification process is accomplished

whether the item is a $1 million contract or a $40 voucher. In addition, agency representatives indicate

that approximately 70 to 80 percent of those items researched for certification are paid out within the first

2 months of the new fiscal year with the overwhelming majority of certified items being processed before

the end of the calendar year—by some agency estimates as much as 95 percent.

It is also interesting to note the degree to which an agency’s requested amounts are actually approved as

certified forward. Exhibit 3-67 provides agency total operating and FCO certified forward dollars

requested and approved in the Fiscal Year 1999.


Exhibit 3-67Agency Requested and Approved Certified Forward Dollars

Fiscal Year 1999

AgencyAmount Requested

for Certified ForwardAmount Approved

for Certified Forward

Department of Transportation* $3,598,663,982 $3,597,245,401

Department of Children and Families 296,829,162 297,816,848

Department of Highway Safety and Motor Vehicles 26,291,041 26,291,041


5,056,487 5,056,487

University of Florida $148,811,150 $148,487,359

*DOT amounts represent the total of operating, FCO, and Work Program categories

For Fiscal Year 1999, 99 percent of the certified forward items were approved. For operating categories,

which drive the overwhelming majority of the workload, $2,553,209,274 was approved. This amount

represents 6 percent of the entire annual State operating appropriations.

Differences between the amount requested and the amount approved in Exhibit 3-67 are due to

adjustments made during the OPB review process. Certain items may not be approved or additional items

may be approved during the OPB review. As stated earlier in the report, OPB analyst and agency

representatives coordinate these adjustments to ensure LAS/PBS and FLAIR are reconciled. It is

worthwhile to note, however, that the overwhelming majority of those items requested are approved as

certified forward. In fact, in some cases, the exact amount requested by an agency (for example,

DHSMV) was actually approved by OPB. With the large appropriations involved in the review process,

the lack of deviation between the review and approved amounts calls into question the benefits of the

State performing a detailed review.

The effect of the process is to drain the State of valuable labor resources. Eliminating or revising the

certified forward process can save the State millions of dollars annually or increase the productivity of its

workforce by freeing valuable resources to accomplish more productive tasks.

Furthermore, certified forward also undermines agencies’ compliance with Florida Statutes, Chapter

215.422: Prompt Payments Law, during July. Agencies reported that during July they cannot meet the

threshold requirements for prompt payments to their vendors. This is attributable to the amount of time

the agencies spend certifying forward during July.


To address the weaknesses in the certified forward process, the State would need to make wholesale

changes in the way it handles year-end undisbursed balances.


Recommendation BPR-37: Eliminate the detailed certified forward process for operationsappropriations

This can be accomplished by carrying forward automatically the prior year obligations on June 30 and

allowing agencies to process these obligations through September 30. All funds not expended by

September 30 would revert to the applicable fund source and be available for appropriation in the current

fiscal year. An exception process would have to be developed between OPB and agencies for certain

items that need to be carried forward beyond the September 30 reversion date. It is recommended that this

process last approximately 2 weeks beginning on or about September 15. Those obligation items that will

truly impact an agency’s current year funding if they are not allowed to be carried forward beyond that

date, should be itemized at the detail level. Those items that are not carried beyond September 30 would

be paid by the agency out of the subsequent year’s funding. All operating items not disbursed within 6

months of the end of the fiscal year would need to be funded from the subsequent year’s appropriation

and any unexpended moneys would revert to the applicable fund sources at that time.

Florida Statutes, Chapter 216.301: Appropriations; Undisbursed Balances, would have to be modified to

move the date for certification from August 1 to October 1. OPB would also need to develop a different

policy for this process to accommodate the change.

Fiscal Impact: The fiscal impact of changing the certified forward process is considerable. State agencies

currently spend extensive amounts of time researching contracts and vouchers at the end of the fiscal year

to comply with certified forward. Changing this requirement would free State resources or allow the

agencies to cut costs because the elimination of certified forward allows workloads in the agency central

and district/departmental accounting offices to be redistributed. Agencies estimated that 70 to 80 percent

of certified items are expended or eliminated during the first 2 months of the new fiscal year. We estimate

that eliminating the detailed certified forward process would reduce the work associated with the process

by 75 percent and thereby the labor costs as well. The value of the labor hours saved would total an

estimated $3,125,000.


The process change recommended for certified forward does not require changes to FLAIR or agency-

specific systems.

Options Analysis

The proposed process change does not depend on any of the system options under consideration.

Therefore, for each of the alternatives, KPMG estimates that a conservative cost savings of $3.2 million

can be achieved for the State of Florida by altering the certified forward process. The results are

summarized in Exhibit 3-68.



OptionBudgetary


Total BPRSavings


Option 1 $3,125,000 $0 $3,125,000

Option 2 3,125,000 0 3,125,000

Option 3 3,125,000 0 3,125,000

Option 4 3,125,000 0 3,125,000

Option 5 3,125,000 0 3,125,000

Business Case Study 3—Business Process ReengineeringCash Receipts and Cash Management

3.16 Recommended Process Changes—Cash Receipts and CashManagement

This section presents recommendations for reengineering the State of Florida’s cash receipts and cash

management process and improving the return on investment in the certificate of deposit program and

internal investment liquidity pool.

Background

The cash receipts and cash management process involves the collection of fees, fines, and other revenues

and the deposit of these monies into the State’s concentration account. State agencies receive payments

for numerous reasons including the sale of goods and services. Receipt sources for examples of sale or

service items for the five study agencies are presented in Exhibit 3-69.

Exhibit 3-69Revenue Sources by Agency

Agency Receipt Source

Department of Transportation Tolls, interagency fuel sales, permits, fines, saleof maps

Department of Children and Families Certificates, licenses, fees


Address change fees, data listings, publicrecords, tax collector offices, DMV offices, driverlicense offices, truckers permits and fees


Fees assessed, taxes (license, general revenue,and trust fund), penalties

University of Florida Tuition, fines, campus department sales

The cash receipt and cash management processes are governed by Chapters 215.31, 215.322, 116.01, and

18.10 of the Florida Statutes.

FFMIS and FLAIR, in particular, lack cash receipt functionality. To obtain information on receipts by

month or category, agencies require the assistance of a programmer to retrieve the information from

FLAIR. It is difficult to extract or manipulate data from FLAIR to generate daily, weekly, monthly, or

annual cash receipts reports. Consequently, agencies have purchased or developed supplemental systems

to produce management information reports on cash receipts. The costs of these systems range from

millions of dollars to less than $100.

Exhibit 3-70 illustrates several of the supplemental systems being used, their purpose, and the subsystems

with which they interface.


Exhibit 3-70Agency Supplemental Systems Used in the Cash Receipts Process

AgencySupplementalSystem Purpose Interfaces With


Cashiers System Records revenue and deposits,generates management reports

FLAIR


Cash ReceiptsDatabase

Tracks individual checks andrefunds, searches and generatesmanagement reports

FLAIR

Department of HighwaySafety and MotorVehicles

ATB Records deposits anddisbursements, generatesmanagement reports

–


RVS and RECSystem - AS400

Processes daily deposits made byState agencies, verifies receipts,and creates daily/monthly reports;reconciles account transactionswith FLAIR system; processescharge backs and debit memos

FLAIR

University of Florida Cashier ReceiptSystem

Records and receipts paymentsand deposits, generatesmanagement reports, updatesstudent records.

FLAIR

After the cash is received, it is managed through various accounts in DOI. Cash is invested in three ways

primarily: the internal portfolio, bridge portfolio, and external portfolio. The internal portfolio is the most

liquid and yields the lowest return. The external portfolio yields the highest return and is for longer term

investments. The bridge portfolio is somewhere in between the external and internal portfolios in return

and liquidity.

The internal portfolio has three parts: a certificate of deposit program, an internal investment liquidity

pool, and a liquidity pool. Both of these parts are managed “internally” by DOI. As of November 24,

1999, the State’s certificate of deposit program held total time deposits of $2.085 billion. These

instruments are generally held to maturity and are not used to meet short-term liquidity needs. The overall

CD rate for Fiscal Year 1999 was 5.45 percent. The break down of investments is shown in Exhibit 3-71.

Exhibit 3-71Time Deposits in State’s Certificate of Deposit Program

Type CSP (2 Year) Renewal (1 Year) Total

Bank CDs 1.183 0.376 1.559

Savings and Loan CDs 0.434 0.092 0.526

Total 1.617 0.468 2.085


In addition, the State maintains an internal investment liquidity pool of $2.297 billion. These funds are

invested in short-term instruments to ensure that the State has ample liquidity to address immediate needs.

The overall rate for these funds was about 5.28 percent for Fiscal Year 1999.

Current Process

Cash receipt transaction workload factors included the annual number of bank deposits, journal transfers

(JTs), EFTs/WIREs, and credit card transactions.

The process cycle begins when the agency receives payment for goods or services rendered. Most

agencies code and deposit such receipts daily into the State’s concentration account at NationsBank.

However, there are exceptions. One example is field offices and districts located in rural areas that do not

have access to a NationsBank branch. Chapter 116.01 of the Florida Statutes and administrative rule 4C-1

allow these offices and districts the opportunity to deposit receipts in a convenient local bank and then

transfer such funds to the concentration account no later than 7 working days from the close of the week

in which the agency received the funds. This allows some offices to make deposits weekly rather than

daily.

After depositing the receipts, a FLAIR entry must be made to correspond with the deposit. The physical

location of the entry varies among agencies. Entries are made at either the central/headquarters cashier

office or at the field/district offices. Most agencies make receipt entries into individual supplemental

systems first and then make a FLAIR entry. The FLAIR entry is the last step of the process an agency

takes. However, the funds are not available until the State Treasurer verifies the deposit.

Each morning, the State Treasurer attempts to match bank deposits to FLAIR entries. When a match is

made, the FLAIR entry is verified. The availability of funds for agency use is the last step in the cycle

process.


The current average cycle time for making receipts available for expenditure ranges from 24 hours to 15

days. Timely and error-free deposits can be available to an agency as quickly as 24 hours or can take as

long as 15 days, as shown in Exhibit 3-72. If a deposit cannot be verified, the Treasurer will continue the

automatic verification process for 3 days. On the fourth day, the Treasurer’s office will call the agency

and notify it that a deposit was received but no corresponding FLAIR entry was made. The average cycle

time for most transactions is approximately 4 days.


Exhibit 3-72Workload and Performance Metrics for Cash Receipts

Agency Annual WorkloadAverage Cycle Time(Current)*

Department of Transportation ! 1,829 Deposits(110,310 Items)

! 4,462 JTs

! 362 WIREs

! 1,068 Credit Cards

1 to 2 Days

Department of Children and Families ! 17,527 Deposits

! 2,594 JTs

2 to 15 Days


! 1,563 Deposits(406,288 Items)

! 499 WIREs

1 to 15 Days


! 106,467

! Transactions Verified

1 to 4 Days

University of Florida ! 251 Deposits(230,056 Items)

! 5,069 Credit CardTrans.

! 2,570 Debit CardTrans.

3 to 4 Days

* Average cycle times vary according to workload factor (cost driver). Time presented is an average of workloadfactors (cost drivers)


The cost of the cash receipts and cash management process is derived by analyzing three cost

components: customer costs, agency costs, and centralized costs. Customer costs generally reflect the

time an individual spends completing a form or entering data to initiate a process. Agency costs reflect the

labor costs of the agency personnel devoted to carrying out the process. Centralized costs reflect the labor


process statewide.




study agencies and for estimates of those categories and costs are described in the following paragraphs.



Agency Costs: Agency costs are those costs incurred at the agency level. Agency costs include staff with

primary responsibility for carrying out the receiving, coding, verifying, depositing, and entering functions

of the process. This is the number of FTEs dedicated to the cash receipts process. To estimate the labor

cost associated with this process, we used the average salary and benefits for an Accountant II position—

$28,406.

The total number of FTEs dedicated to the cash receipts process at the five study agencies is 48 at the

central/headquarters level and 95 at the field/district level as indicated in Exhibit 3-73. Other costs include

technical support for the individual supplemental systems, data entry, and mailroom personnel associated

with the cash receipts process and network costs.

Exhibit 3-73Cost of Dedicated FTEs to Process

Agency Number of FTE Salary and Benefits Cost


Department of Children and Families 34.0 28,406 966,000


90.5 28,406 2,571,000


0.0 28,406 0

University of Florida 8.0 28,406 227,000

Total 138.0 – $3,920,000

We estimated the average ratio of transactions per FTE at DOT, DCF, and the UF at 752 to 1. This

estimate includes all transactions recorded and tracked by the DOT, DCF, and UF divided by the total

number of FTEs devoted to this process. We excluded the Department of Highway Safety and Motor

Vehicles and DOI from the calculation because of their unique functions. DHSMV processes a high

number of small dollar amount transactions all over the State, which requires that it have a significant

cash receipts staff. DOI has statewide responsibility for handling financial transactions. Using this ratio,

we estimate that there are 232.1 FTEs (including the 90.5 at DHSMV) devoted to cash receipts for this

process. The total cost is $6.6 million.

Centralized Costs: Centralized costs associated with the cash receipts process are those costs incurred by

the State Treasurer when verifying bank deposits, FLAIR entries, and bank adjustments and when

identifying WIREs and ACHs. The Department of Insurance, Treasury and State Fire Marshal has five

FTEs devoted to this process. At the average salary and benefits for an Accountant II of $28,406 per year,

the central labor costs associated with this process are approximately $142,000.



costs to carry out the cash receipts and cash management processes.


The following five major weaknesses associated with the State’s process for handling cash receipts are:

! Interagency receipts transfers: Interagency cash transfers are slow and inefficient. JTs tend to be amajor source of frustration and extra work to those responsible for verifying such transactions. Itis extremely difficult to verify and track JTs if they do not include complete and accurateinformation. The average time an employee in the Cash Receipts Department spends verifyingand reconciling JTs is approximately 5 hours a week or 20 hours a month

! Transaction type: A high proportion of transactions for the five study agencies are cash andchecks rather than electronic. Currently, 25 percent of the value of receipts is electronic and 75percent of it is checks or cash. This is an important statistic because, as mentioned earlier, the costto the customer (the agency) is the time that it takes for the funds to become available for use bythe agency. The State should modify the mix so that the percentage of check and cash receiptsdecreases significantly and the percentage of electronic receipts increases

! System support: FLAIR provides inadequate support for the cash receipts function. The State’sfinancial management system does not support cash receipt or cash management functionswithout the use of agency-specific supplemental systems. Operating such supplemental systemssometimes requires duplicative data entry. Agencies first enter receipts, deposits, and collectionsin their supplemental system and then either repeat the process manually and enter data in FLAIRor upload data from the supplemental system. This practice also requires network connectionaccess

! Investment policy: State law requires that the Treasurer offer to purchase certificates of depositfrom Florida-based banks and savings and loans (S&Ls). At 5.45 percent during FiscalYear 1999, these banks and S&Ls had a lower rate of return than the State’s external program,which was about 6.28 percent for Fiscal Year 1999

! Cash flow forecasting: The financial management system does not provide adequate informationfor cash flow forecasting purposes. Consequently, the State keeps more than $2.2 billion in liquidassets despite studies recommending that a lower amount be held

Without the use of agency-specific supplemental systems, it is difficult to sort, extract, and/or manipulate

data to generate needed management and performance reports. In general, FLAIR is not user friendly and

does not contribute to either cash receipt or cash management functions.



A high-level narrative summary of the reengineered process—which can include a series of individual

process changes—is presented. We also review steps in the reengineered process and discuss the human

(that is, impacts on individuals, work units, and external stakeholders) and technology resources involved.

Recommendation BPR-38: Make the acceptance of debit cards a statewide standard, withuse of credit cards a secondary option

The State can reduce the number of check transactions by enabling agencies (and by encouraging

customers) to accept credit or debit cards and other electronic payments for goods and services. This

should be accomplished in several ways:

! Require agencies to provide goods and services online wherever possible. Customers will be ableto accomplish a majority of their needs online, from any location, and pay electronically for suchgoods and services through a secure web site

! Require all agencies to make it convenient for walk-in customers who chose to pay electronically

! Reduce the threshold to $5,000 for businesses that transmit their sales taxes paymentselectronically. This threshold could be reduced over time

! Prohibit checks as a form of payment for selected transactions. For example, Georgia does notaccept checks for drivers’ licenses

Implementation of these recommendations would require that every agency be set up with the appropriate

equipment to process electronic payments and have terminals with Internet access available to walk-in

clients. Debit card payments can be either online (requiring a personal identification number) or offline

(not requiring a personal identification number). Online payments are more secure and result in faster

funds transfer, while offline payments are quicker (there is no wait for online approval) but can take 2

days before funds are transferred. The State should review both options to determine which is more

appropriate.

Electronic payment acceptance will significantly affect the receipt mix by increasing the percentage of

electronic receipts. According to the State Treasury, receipts during Fiscal Year 1999 totaled more than

$48.5 billion. Of that amount, $12 billion was in checks and some cash (checks account for more than 95

percent of the $12 billion). A significant portion of these receipts are taxes collected by the Department of

Revenue.

Increased electronic receipts will change the cash receipts process significantly, making electronic

receipts available within 24 hours or, in some instances, instantaneously. When a sale is made through the

Internet, the data associated with such a sale should be automatically entered into the accounting system,

thus eliminating many or all the steps currently taken to record receipts.


Fiscal Impact: Electronic payments will ultimately result in increased collection of funds, availability of

funds sooner, and a significant reduction in account receivables. A New York-based market analysis

company, E Marketer, predicts that business-to-business e-commerce will increase 1,575 percent during

the next 3 years and consumer-to-business e-commerce will increase from 100 to 500 percent according

to the commodity during the same period.

Based on the current rate of growth of e-commerce and its expected future growth and on the

implementation of the measures suggested in this recommendation, the State could reasonably expect to

convert 50 percent of its check receipts to cash or electronic receipts during the next 3 years. By changing

the mix of payments to the government from checks to cash and EFT/debit card transactions, the State

would decrease its float on $6 billion by an average of 3 days: 1 day for the check to clear and 2 days for

the agency to process it. This would yield increased interest earnings, based on a 5 percent return, of

about $2,473,000.

This recommendation anticipates savings from interest earnings; however, we do not expect any savings

in processing costs. The cost to process a debit transaction is not free, but is no more than (and usually

less than) the cost for processing a check. Because we do not have estimates of what it costs for the State

to process a debit card transaction versus a check, we have not calculated any savings associated with

streamlined processing through the use of debit cards. However, there would be some modest savings in

processing costs.

Recommendation BPR-39: Terminate the certificate of deposit program aimed at Floridabanks and S&Ls and transfer funds to the externally managed program

The State should end its program of giving preference to Florida institutions in the certificate of deposit

program. This would require a change to Chapter 18.10 of the Florida Statutes.

Fiscal Impact: For the last 7 fiscal years, the State lost an average of approximately $11,679,000 in CDs

with Florida institutions rather than investing these funds in the State’s externally managed program. If

the State had invested in the externally managed funds, it would have made a total of $81,750,000 more

in investment earnings or approximately $11,679,000 per year. We cannot forecast that this differential

will continue, but it is an estimate of the fiscal impact.

Recommendation BPR-40: Reduce funds in the internal investment liquidity pool andtransfer them to the externally managed funds

With better projections on cashflows through an improved financial management system and the faster

collection and clearing of receipts, the State should move an additional $1 billion to the bridge and/or

external program. This change does not require legislation.


Fiscal Impact: Long term, moving $1 billion from the internal to the external program could realize an

additional 100 basis points of annual return or $10 million per year for the State Treasury.

Recommendation BPR-41: Eliminate the transfer of State Trust Funds’ monies betweeninvested status and cash status with the State Treasurer

Agencies are currently required to routinely transfer State trust funds’ monies held by the State Treasurer

from invested status to cash status to meet ongoing obligations and from cash status to invested status to

have interest earned on State trust funds’ monies accrue to the benefit of the respective trust fund. Interest

earned on State trust funds’ monies held in cash status accrue to the General Revenue Fund.

The State Treasurer does not make actual investment decisions based on the agencies’ classifications of

funds. Thus, the primary purpose of the classifications is to designate the recipient of interest earnings.

Based on our analysis at the five study agencies, we estimate that the statewide cost of these routine

transfers is $504,000.

Fiscal Impact: The State should eliminate the requirement for agencies to designate the status of State

trust funds’ monies as either “invested” or “cash.” Interest should accrue to the State trust funds based on

actual balances held by the State Treasurer. The impact of lost interest earnings by the General Revenue

Fund can be offset by increasing the General Revenue Service charge to State trust funds. The State will

realize labor savings in the amount of $504,000 by eliminating these routine transfers.


The following system requirements are necessary for implementing the reengineering recommendations:

! Online acceptance of electronic payments for goods and services provided

! A fully integrated, web-based accounting and reporting system

! An updated accounting system to include enhanced functionality for managing receipts andeliminate the need for agency-specific supplemental systems. A fully integrated, web-basedaccounting and reporting system would eliminate the need for supplemental systems and wouldend inefficient duplicative data entry

! A fully integrated, web-based accounting and reporting system that would eliminate networkapplications and reduce network costs, decrease time and effort of technical staff currentlysupporting supplemental systems, facilitate decentralized data entry, decrease errors in data entry,enhance tracking, and produce accurate and timely reports

! An integrated accounting and reporting system that would reconcile credits and debitsautomatically between the financial accounts of two or more agencies, thereby facilitating journal


transfers for services provided or received. This would eliminate the need to spend approximately5 inefficient hours tracking and verifying JTs

Options Analysis

Based on the definition of the five options, we estimate that savings of $2.5 million from increased use of

debit cards and other electronic payments can be achieved in all the options. The savings depend on the

implementation of a web-enabled e-commerce solution. The $11.7 million in savings from elimination of

the certification of deposit program can also be achieved regardless of the option. The recommendation to

move $1 billion from the internal program to the external program can be implemented under Options 2

through 5. The savings depend on enhanced financial management information as well as reengineered

processes. The estimated savings of $504,000 achieved by eliminating the transfer of State trust funds’

monies between invested status and cash status with the State Treasurer can be realized in all options.

A summary of the cost impacts is shown in Exhibit 3-74.



OptionBudgetary


Total BPRSavings


Option 1 $2,473,000 $0 $2,473,000

Option 2 2,473,000 0 2,473,000

Option 3 2,473,000 0 2,473,000

Option 4 2,473,000 0 2,473,000

Option 5 2,473,000 0 2,473,000


Option 1 11,679,000 0 11,679,000

Option 2 11,679,000 0 11,679,000

Option 3 11,679,000 0 11,679,000

Option 4 11,679,000 0 11,679,000

Option 5 11,679,000 0 11,679,000


Option 1 0 0 0

Option 2 10,000,000 0 10,000,000

Option 3 10,000,000 0 10,000,000

Option 4 10,000,000 0 10,000,000

Option 5 10,000,000 0 10,000,000


Option 1 504,000 0 504,000

Option 2 504,000 0 504,000

Option 3 504,000 0 504,000

Option 4 504,000 0 504,000

Option 5 504,000 0 504,000

Total

Option 1 $14,656,000 $0 $14,656,000

Option 2 $24,656,000 $0 $24,656,000

Option 3 $24,656,000 $0 $24,656,000

Option 4 $24,656,000 $0 $24,656,000

Option 5 $24,656,000 $0 $24,656,000

Business Case Study 3—Business Process ReengineeringAccounts Receivable

3.17 Recommended Process Changes—Accounts Receivable

This section presents recommendations for reengineering the State of Florida’s accounts receivable

process.

Background

This process is used to manage and collect money owed for goods or services provided by State agencies

and State universities. Accounts receivable are classified as amounts due that have not been recouped

within 30 days of receipt of goods or services. Generally, Article 7, Section 10, of the State Constitution

prohibits the State from extending credit, except under certain conditions. Accounts receivable often

occur, however, when customers receive goods or services and pay for them with checks or credit cards

that are not cleared by the payee financial institution. Examples of receivables for the five study agencies

are presented in Exhibit 3-75.

Exhibit 3-75Accounts Receivable (Revenue) Sources by Agency

Agency Source of Revenue Owed

Department of Transportation Tolls, permits, fines

Department of Children and Families Overpayment of benefits, fees


Administrative fines, examiner reimbursements

Department of Highway Safety and Motor Vehicles Data listings and crash accounts, drivers licenses

University of Florida Tuition, fines, campus department sales

Florida’s 1998 CAFR reported Primary Government accounts receivable at $4,122,161,000 (does not

include Component Units) and Allowance for Uncollectibles at $2,745,821,000. A substantial portion of

this accounts receivable number is made up of unemployment compensation taxes, retirement

contribution receivables, and child support payments. For the purposes of this analysis, we have

eliminated unemployment compensation taxes, retirement contribution receivables, and child support

payments to arrive at an accounts receivable total for Fiscal Year 1998 of $805 million. Retirement

contributions and unemployment compensation taxes represent primarily a delay in payment rather than

insufficient funds. Child support enforcement payments are unique and complicated because they involve

courts, child welfare agencies, and two parents.

Primarily, administrative rules and internal policies and procedures govern the accounts receivable

process. The State, however, must adhere to Generally Accepted Accounting Principles (GAAP). Write-

offs of uncollectibles are governed by Chapter 17.04 of the Florida Statutes.


FLAIR does not have an accounts receivable module. Consequently, accounts receivable information is

entered and maintained in agency-specific supplemental systems. FLAIR use is limited and in most cases

is not used at all. Currently, FLAIR is set up to record amounts owed up to 30 days but is not capable of

tracking and maintaining collection efforts or generating invoices and aging reports.

It is difficult to extract pertinent data from FLAIR and manipulate that data to generate daily, weekly,

monthly, or annual reports. Frustration by users of reports and those generating such reports lead

individual agencies to purchase or build supplemental systems to meet their needs, at costs ranging from

millions of dollars to less than $100 for purchasing off-the-shelf software.

Exhibit 3-76 indicates several of the supplemental systems being used, their purpose, and how they

interface with FLAIR.

Exhibit 3-76Agency Supplemental Systems to Facilitate Accounts Receivable Process


InterfacesWith


Accounts ReceivableInvoice System

! Customeraccountsreceivable data

! Invoices

! Security depositdata

! FLAIR entries

FLAIR


! FeeMaintenance System

! BenefitRecoverySystem

! Audit trail

! A/R journal pertransaction

! Claims owed

! Quarterly federalreports

! Managementreports

None


Quickbooks ! Accountsreceivableinvoices

! Aging reports

! Payments

None


– – –

University of Florida Student ReceivableSystem

! Studentreceivables

! Managementreports

None


Current Process

When accounts receivable are established, the information on the receivable is entered into the agency’s

accounts receivable supplemental system. Initial invoices are generated and mailed within 30 days. Initial

aging reports generated at the 45-day mark indicate which accounts are still outstanding. The timing of

aging reports and invoices varies among agencies. An analysis of the aging report initiates the generation

and mailing of follow-up invoices to facilitate collections. In general, this process is repeated every 30

days. Florida Administrative Code 3A.21.003 requires that accounts receivable more than 6 months old

be turned over to the Department of Banking and Finance.

Banking and Finance takes one of two actions when it receives an account from an agency. In most cases,

the Department uses a vendor under contract to perform collection activities. If and when an account is

determined to be uncollectible, Banking and Finance authorizes the agency to write off the account.


The workload factors of accounts receivable transactions consist of the number of receivable transactions

for Fiscal Year 1999. The variation in agency procedures dictates the current average cycle time

associated with the collection process. Cycle times range from 30 days to 3 years as depicted in

Exhibit 3-77. The process cycle ends upon receipt of a receivable or the write-off of a receivable.

Exhibit 3-77Workload and Performance Metrics for Accounts Receivable

Agency

Annual Workload(Individual Accounts

Receivable)

Average Cycle orTransaction Cost

(As-Is)

Department of Transportation 39,360 45 to 75 days

Department of Children and Families (including all districts) Cannot determine Do not write off

Department of Highway Safety and Motor Vehicles 20,495 30 to 90 days

Department of Insurance, Treasury and State Fire Marshal Cannot determine Do not track

University of Florida 357,793 30 days to 3 years


The cost of the accounts receivable process is derived by analyzing three cost components: customer






Customer Costs: This process does not include a customer cost as defined in our analysis.

Agency Costs: Agency costs reflect the number of FTEs dedicated to the accounts receivable process.

These staff members are responsible for tracking, managing, collecting, and reporting on accounts

receivable. The total number of FTEs dedicated to the accounts receivable process at the five study

agencies is 45, as shown in Exhibit 3-78. Based on the current average salary and benefits of $28,406 for

an Accountant II in the Florida State government, calculations show the total labor cost for the accounts

receivable process in the five study agencies is $1.3 million.

According to the State Comptroller’s listing of accounts receivable by agency for Fiscal Year 1998, the

study agencies accounted for $532.9 million. This amount represents 66.1 percent of the $805.8 million in

Fiscal Year 1999 accounts receivable included in this analysis. Using the ratio of staff to accounts

receivable in the five study agencies, we estimate that 68 FTEs are devoted to the accounts receivable

function statewide. This translates to a total statewide labor cost for this process of approximately

$1,800,000. Additional costs that are directly related to the process include fees and commissions paid to

private collection agencies.

Exhibit 3-78Cost of Dedicated FTEs to Process

Agency # FTE Salary & Benefits Cost

Department of Transportation 4 $28,406 $114,000

Department of Children and Families 19 28,406 539,000

Department of Highway Safety and Motor Vehicles 4 28,406 114,000

Department of Insurance, Treasury and State Fire Marshal 0 28,406 0

University of Florida 18 28,406 511,000

Total 45 $1,278,000

Centralized Costs: Centralized costs associated with the accounts receivable process include the one FTE

in the Department of Banking and Finance associated with write-offs and managing collection agencies.

Other centralized costs include those costs incurred 1 day a year to get accounts receivable information

into the CAFR.

In total, the State expends an estimated $1.9 million in agency costs and $51,000 in centralized costs to

carry out accounts receivable processes.



The major weaknesses of the State’s accounts receivable function include the following:

! A person or a vendor can owe one State agency and receive services from another

! The accounting system does not have the functionality to support the accounts receivable function

! Agencies’ approaches to accounts receivable vary widely

An individual or entity that owes one State agency can easily obtain goods or services from most other

State agencies. Exceptions exist in child support enforcement and State taxes; but without a centralized

database, these exceptions are difficult to enforce. Because the accounts receivable information is

maintained for the most part at the agency level, agencies can and do refuse service to an entity that owes

it money. When an entity owes one State agency and seeks services from another, the second agency is

unlikely to know that the entity has an outstanding debt with the first agency.

FFMIS and FLAIR in particular do not support collection management and reporting functions and must

be supplemented with agency-specific systems. Without the use of agency-specific supplemental systems,

it is extremely difficult to sort, extract, and manipulate data to generate needed management and

performance reports.

The private collection agency under contract to perform collections for the Department of Banking and

Finance is not the State’s exclusive vendor. Numerous contracts exist with private collection agencies.

The fee or commission structure for services provided is quite inconsistent. Fees and commissions

charged directly to an agency range from 10 to 30 percent. The vendor under contract to the Department

of Banking and Finance charges the fee to the debtor, rather than the State or agency, which enables the

State or agency to collect 100 percent of the overdue amount.


To address the weaknesses with the current process, the State of Florida should establish a statewide

policy for accounts receivable, implement a “clean hands” law, and make debit cards a standard for

payment throughout the State. These recommendations are discussed in more detail in the following

paragraphs.

Recommendation BPR-42: Establish an enterprisewide policy for accounts receivable

The State should centralize responsibility of all accounts receivable (excluding benefit recovery, fee

maintenance, unemployment compensation taxes, retirement contribution receivables, and child support

enforcement) with the Department of Banking and Finance. An agency should send no more than one

notice to a delinquent debtor before assigning the account to Banking and Finance (typically after 60


days). The Department should then contract with a select number of vendors to maintain collections

statewide. The contracts should be similar to the one currently in effect, charging the debtor for the

service rather than the State.

Exceptions to this 60 day policy are inevitable (for example, student debts at the SUS) and should be

granted to agencies accordingly. Banking and Finance will be responsible for granting such exceptions.

Fiscal Impact: An enterprisewide policy would eliminate the use of numerous collection agencies at the

agency level. The cost of managing the collection agencies would decrease through centralization. FTEs

dedicated to collections at the study agencies expend approximately 10 percent of their time tracking

receivables 60 days or more past due. Through centralization, agencies would devote fewer resources to

the collection function. Of the 45 FTEs in the study agencies who are dedicated to the collection

functions, we estimate that agencies will need 10 percent fewer FTEs when collection functions are

centralized. This is a reduction of 4.5 FTEs for the study agencies and 6.8 FTEs statewide for a savings of

approximately $193,000 annually.

Recommendation BPR-43: Implement a clean hands law giving the State authority todeny certain services (statewide) until the requestor’s hands are clean

To implement this recommendation, the State must first capture statewide accounts receivable

information on a centralized database. The Department of Banking and Finance would manage the

centralized data warehouse of entities that owe the State. Certain goods and services would be denied

requestors if they owe the State. The data warehouse would be accessible by all agencies to review the

status of a vendor or an individual. Some services, particularly those related to social services, would be

exempted under the clean hands policy.

Fiscal Impact: Allowance for uncollectibles in 1998 increased $118 million. We believe that

implementation of this act will have a significant fiscal impact by decreasing the level of uncollectibles

each year. No good benchmarks are available for measuring the effect of this recommendation and we did

not estimate any related savings.

Reengineered Process: System Requirements

Implementation of the reengineered process would require some changes in the State’s financial

management system. Key system requirements necessary to support these recommendations include:

! A statewide accessible, centralized data warehouse of individuals and entities that owe money tothe State

! Online acceptance of electronic payments for goods and services provided


! Integration of debit card receipt with the State’s accounting system

! Accounts receivable function integrated with the statewide financial management system

Setting-up and maintaining the data warehouse will require an initial investment but can yield significant

results.

Options Analysis

Based on the definition of the five options, we estimate that the total savings of $0.2 million from

reengineering can be achieved in all the options. Exhibit 3-79 shows the savings associated with the

accounts receivable process.


Exhibit 3-79Summary of Savings by Option

OptionBudgetary


Total BPRSavings


Option 1 $0 $193,000 $193,000

Option 2 0 193,000 193,000

Option 3 0 193,000 193,000

Option 4 0 193,000 193,000

Option 5 0 193,000 193,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 0 0

Option 4 0 0 0

Option 5 0 0 0

Total

Option 1 $0 $193,000 $193,000

Option 2 $0 $193,000 $193,000

Option 3 $0 $193,000 $193,000

Option 4 $0 $193,000 $193,000

Option 5 $0 $193,000 $193,000

Business Case Study 3—Business Process ReengineeringAsset Management

3.18 Recommended Process Changes—Asset Management

This section presents recommendations for reengineering the State of Florida’s asset management

process.

Background

Government organizations have traditionally identified and tracked fixed assets for two primary reasons.

The first is to provide information on capitalized assets for financial reporting purposes and the second is

to track the amount of missing, lost, or stolen assets. To accomplish these objectives, governments

typically set a fixed asset or capitalization threshold to identify the assets that should be tracked for

financial reporting and control purposes.

The State of Florida’s asset management process is governed by Florida Statutes, Chapter 273 and

Chapter 10.300 of the Rules of the Auditor General. The State currently defines an asset as an item with a

unit cost greater than $1,000 and a useful life more than 1 year. Before July 1, 1999, the asset threshold

was $500.

Currently, State agencies use the property subsystem in FLAIR to process and track assets. The property

subsystem is integrated with other accounting subsystems, allowing some accounting information to be

passed between the accounting and property subsystems. Some agencies use other systems or tools to

assist in managing or processing assets. Each of the study agencies used some form of bar-code software

to assist in the annual inventory process. Other agencies, such as the University of Florida, have external

databases to assist in reporting.

Current Process

The asset management process begins when an agency acquires a fixed asset. Assets are generally

acquired through the procurement process, but in some cases assets are received through donations or

grant programs. Assets acquired through the procurement process start with an individual preparing a

requisition. The purchase requisitions are generally processed in the agency’s purchasing office. The

supporting documentation generated in the procurement process is forwarded to a property unit where it

waits in a pending status.

After the asset is received, the agency begins the process of paying the vendor. Before the vendor is paid,

the necessary information is input into the FLAIR Departmental Accounting System to record the

accounting transaction and produce a warrant. The FLAIR Departmental Accounting System generates an

electronic pending file that is sent to the property subsystem. The hard copy documentation is also

forwarded to the property unit for further processing. The property unit inputs the nonaccounting


information into the electronic pending file created by the accounting transaction. The acquisition process

is completed when the property record is created in the property master file.

Throughout the life of an asset, several activities are performed to manage and control the asset. Property

records must be updated throughout the life of the asset to reflect changes to the following:

! Location

! Property custodian

! Lost, missing, or stolen


The following is a description of the major activities in the asset management process:

! Acquisition—The process that occurs when an agency establishes ownership of an asset;examples of methods of acquisition include purchases and donations

! Transfers/changes—The process of transferring ownership of an asset within an agency orchanging a field on a property record (for example, condition)

! Inventory—The process of physically counting all assets (currently, required annually)

! Dispositions—The process of disposing or retiring an asset

Exhibit 3-80 provides annual workload information by agency for each of the four subprocesses

described.


Exhibit 3-80Workload and Performance Metrics for Asset Management

Agency Assets Acquisitions Transfers Dispositions

Department of Transportation 56,000 11,005 9,575 4,676

Department of Children and Families 82,000 3,852 0 2,834

Department of Highway Safety and Motor Vehicles 58,000 5,525 5,165 7,227


7,500 1,369 800 628

University of Florida 122,000 16,801 2,970 9,028

Total 325,500 38,552 18,510 24,393

Source: KPMG Interviews of asset management and accounting personnel at DOT, DCF, DHSMV, DOI, and UF, 1999


The cost of the current asset management process is derived by analyzing three cost components—

customer costs, agency costs, and centralized costs. These costs are estimated in the agencies that were

part of the study and then extrapolated to entire State government. Customer costs generally reflect the

time an individual spends completing a form or entering data to initiate a process. Agency costs reflect the

labor costs of the agency personnel devoted to carrying out the process. Centralized costs reflect the labor


process statewide.





paragraphs.

Customer Costs: Customer costs consist of the time it takes a person requesting or transferring property

to complete the necessary paperwork. A property custodian, who is the individual primarily responsible

for the asset, most often completes the necessary paperwork. Paperwork is needed for all transactions (for

example, acquisition, transfers, and dispositions).

The customer costs of the five study agencies are estimated to be $208,000, assuming it takes 10 minutes

to complete the necessary paperwork. Exhibit 3-81 indicates the customer costs for each study agency.

Through extrapolation, it is estimated that there are 39.48 FTEs statewide.


Exhibit 3-81Customer Costs

Agency Acquisitions Transfers Dispositions Total Hours Cost*

Department of Transportation 11,005 9,575 4,676 25,256 4,209 $64,000


3,852 0 2,834 6,686 1,114 17,000


5,525 5,165 7,227 17,917 2,986 46,000


1,369 800 628 2,797 466 7,000

University of Florida 16,801 2,970 9,028 28,799 4,800 74,000

Total 38,552 18,510 24,393 81,455 13,576 $208,000

Source: KPMG interviews of asset management and accounting personnel at DOT, DCF, DHSMV, DOI, and UF, 1999

*Cost assumes average annual salary and benefits of an Accountant II of $28,406

Agency Costs: Agency costs consist of dedicated property staff who handle the asset management

transactions and other staff used for inventory purposes. A dedicated property staff member is defined as

a person who spends at least 75 percent of his or her time on property-related duties. As illustrated in

Exhibit 3-82, the estimated asset management costs for the five study agencies are $1.7 million.

Exhibit 3-82Asset Management Costs for Five Study Agencies

AgencyProperty

StaffInventory

Staff Cost*

Department of Transportation 3 3 $ 170,000

Department of Children and Families 28 4 908,000

Department of Highway Safety and Motor Vehicles 3 3 170,000

Department of Insurance, Treasury and State Fire Marshal 2 0 57,000

University of Florida 7 7 398,000

Total 43 17 $1,703,000

Source: KPMG interviews of asset management and accounting personnel at DOT, DCF, DHSMV, DOI, and UF, 1999


The number of inventory staff is based on the assumption that one staff member counts 17,429 assets per

year.

Asset management costs for the remaining State agencies are estimated at $2.8 million based on the

following assumptions:

! Agencies average two dedicated property staff members. Total estimated staff of 88 (44 agenciestimes two staff members) at a cost of $2.5 million


! There are 870,000 assets in the remaining agencies. Total estimated staff of 50 FTEs required

Asset management costs for all State agencies are illustrated in Exhibit 3-83.

Exhibit 3-83Statewide Asset Management Costs

DedicatedProperty Staff

InventoryStaff Cost*

Study Agencies 43 17 $1,704,000

Remaining Agencies 88 50 3,920,000

Total 131 67 $5,624,000

Source: KPMG interviews of asset management and accounting personnel at DOT, DCF, DHSMV,DOI, and University of Florida, 1999


Centralized Costs: We identified no significant centralized costs for this process.


The major weakness in the State’s asset management process is that agencies track more assets than

necessary to meet their business and financial objectives. For financial reporting purposes, the current

asset threshold level includes a large number of assets that do not affect the State’s financial condition

substantially. Based on the five study agencies reviewed, conclusions are that 80 percent of the assets

tracked account for less than 20 percent of the value of all fixed assets.

The practice of capitalizing assets as a method for controlling assets also needs to be reviewed. Although

it is the government’s responsibility to maintain a level of control over assets to minimize the amount of

loss, theft, or misuse, the costs and benefits of including these assets within the capitalization threshold

should be compared. As shown in Exhibit 3-83, the total cost to manage the State’s assets is estimated at

$5.8 million annually.

The outcome of maintaining inventory records leads to a better understanding of the number of missing or

stolen items; however, the practice of tracking and counting assets does little to prevent mishandling of

assets. Tracking and counting assets is a reactive method for managing assets because it only deals with

assets after they become missing or stolen. The historical method of tracking assets is a detective control

that only identifies what is missing and not why it is missing or where it is. Organizations are developing

more preventive controls and proactive methods for controlling assets such as establishing and

maintaining adequate control procedures at the appropriate levels of each agency. Other methods such as

using radio frequencies to track computers are designed to minimize asset loss or theft before it occurs.


Another weakness of the asset management process is that asset management transactions (for example,

acquisitions, transfers, and disposals) are paper driven and manual. All asset transactions are initiated by

completing a paper form requesting a specific action. To complete a transaction, personnel must prepare

and review the appropriate form and input it into the appropriate system to create or update property

records.

Paper-driven processes such as these are more resource intensive and slower than processes that have

eliminated the need for paper. Paper-driven processes are used by the State for two primary reasons:

! Insufficient information systems

! Need for paper documentation for approval and audit purposes

Modern property systems enable organizations to distribute work by providing easy access to systems

throughout the organization. These systems allow information to be captured at the source of the

transaction, therefore eliminating the need for additional manual tasks. The systems automate the

approval process by providing the ability to develop online approval paths based on asset type or cost.

Other controls include improved security through the use of user class and user IDs. These controls can

restrict user access to specified data or transactions types. These capabilities eliminate the need for review

and approval of paper documents.

Using new technologies, such as web-based applications, provides a cost-effective method to give a large

number of people access to applications regardless of their location.

Another weakness of the asset management process is that the agencies use excessive resources to

conduct the annual inventory. State Statutes mandate that all assets be physically counted every year.

Physically counting every asset every year requires significant time and resources. The State spends an

estimated $2 million in personnel costs to conduct the annual inventory of all assets. The output from

these efforts is an understanding of the number of lost, stolen, or missing items.

Management can get the same understanding of the extent of lost, stolen, or missing items from a sample

of inventoried items. Using a rotating inventory schedule will ensure that all assets are physically counted

at least once, but not necessarily every year.

The agencies currently use a perpetual inventory system that constantly updates additions, deletions, and

changes to assets. Effective use of perpetual inventory systems can reduce the need for an annual physical

count of all assets.

Another weakness in the asset management area is the lack of warranty tracking. Of the five study

agencies, only one used the current system to track warranty information. The remaining agencies either


tracked warranty information manually or not at all. No consistent policies and procedures mandated the

tracking of warranty information.

Tracking warranties on assets is an important part of effective asset management. Warranties can reduce

the cost of maintenance and provide information on required maintenance schedules.


To reengineer the asset management process, the State would have to make a dramatic change to the

definition of an asset, change the way it conducts inventory, and enhance the integration of the property

management system with the procurement and accounting systems.

Recommendation BPR-44: Raise the capitalization threshold to the $5,000 limitrecommended by GFOA

By raising the capitalization threshold to $5,000, the State can eliminate approximately 80 percent of the

assets that need to be tracked, while still capturing over 80 percent of the State’s asset value for financial

reporting purposes. Exhibit 3-84 shows the number of assets that would be tracked for the five study

agencies at the $1,000 and $5,000 capitalization thresholds.

The State should rely on other means to address the need to protect and control desirable assets such as

computers. Strict policies and procedures should be developed and enforced. Other methods such as

tracking computers through local area networks or using computers that can be tracked by radio

frequency are more proactive and effective methods for controlling and protecting these assets.

Increasing the capitalization threshold would reduce the current processing and inventory workload of the

agencies significantly, while meeting the requirements for financial reporting purposes. Implementing this

recommendation would require a change in the Florida Statutes, which currently mandate a capitalization

threshold level of $1,000. The recommendation does not require raising the operating capital outlay

(OCO) limit to $5,000.


Exhibit 3-84Impact of Changes to Capitalization Threshold

Assets at $1,000 Assets at $5,000

Agency Number $ Value Number $ ValueNumber %

of Total$ Value

% of Total


40,412 $689,251,067 12,316 $631,228,529 30 92


49,183 458,052,025 6,268 378,355,220 13 83


21,328 158,944,320 4,857 129,009,316 23 82


5,043 26,154,294 883 17,818,229 18 68

University of Florida 82,115 403,152,066 15,405 261,566,967 19 65

Fiscal Impact: Increasing the capitalization threshold to $5,000 would save the State an estimated

$2,528,000 annually. The savings are based on the following assumptions.

The reduced number of assets that would have to be processed, tracked, and inventoried, and the

implementation of a new system would allow the State to completely decentralize asset management

operations, thus significantly reducing the need for centralized property staff. It is assumed that only one

central property staff member would be needed to coordinate agencywide efforts and reporting

requirements.

Exhibit 3-85 shows the estimated savings for the five study agencies and the extrapolated savings for the

remaining State agencies. Assuming a minimum of two central property staff members in the remaining

agencies, there would be an estimated reduction of 44 staff members.

Exhibit 3-85Estimated Savings Statewide

Number of Staff Reduced Cost Savings*

Pilot Agencies 45 $ 1,278,000

Remaining Agencies 44 1,250,000

Total 89 $ 2,528,000


The State would also recognize additional soft savings due to a reduction in the number of assets that

would have to be counted in the annual inventory process. Assuming that 80 percent of assets would no


longer need to be inventoried, the cost of inventory could be reduced by 80 percent, or an estimated

savings of $1,009,000 annually.

Recommendation BPR-45: Adopt a rotating inventory schedule

The schedule should be set to count each asset once every 2 years. Counting assets every 2 years would

provide the same benefits of the current process, but would reduce the workload by 50 percent.

To implement this recommendation, the State must change the existing legislation that mandates agencies

to conduct a physical inventory of all assets every year. By using a rotating physical inventory, the

agencies could reduce the number of assets that must be counted each year and therefore reduce the

number of resources used to conduct inventory.

Fiscal Impact: By counting each asset an average of every other year, the agencies could reduce the

number of assets that need to be counted by approximately 50 percent. A 50 percent reduction in assets

could reduce the number of staff time required by 50 percent, resulting in estimated savings of $505,000.

Recommendation BPR-46: Improve the integration of procurement, accounting, andasset management systems

Improved integration would allow much information to be captured during the purchasing and accounting

events, thereby eliminating the need for paper forms and central data input of nonaccounting information.

Fiscal Impact: Capturing the necessary accounting and nonaccounting information during the purchasing

process would save resources by reducing the need to capture the information centrally. For the five study

agencies, the estimated savings from this recommendation are $178,000. The savings are based on the

assumption that it currently takes 5 minutes to process a new asset or transfer an asset to another property

custodian.

The reengineered asset management process leverages improved technology and focuses on the minimum

amount of workload necessary to accomplish the required business objectives. The decreased workload

and web-based property management system would enable the agencies to achieve significant savings by

reducing the amount dedicated property staff required. Because of the increase in the capitalization

threshold, the existing staff in the agencies would be able to absorb the additional workload of processing

and tracking their own assets.


This section outlines the system requirements that need to be present in a new financial management

system to realize the cost savings. A new system must be accessible to agency staff in remote locations or


facilities and have a sufficient level of integration with the procurement and accounting systems. The

integration with the purchasing and accounting systems is key to eliminating paper from the process and

related data entry activities. A common method for providing cost-effective access to many users is to

develop a web-enabled system.

Options Analysis

Two of the reengineering recommendations discussed previously are independent of the system options:

! Raising capitalization threshold to $5,000

! Conducting inventory on a rotating basis

These recommendations require changes to current statutes. Any savings from these recommendations

will be realized regardless of the system option.

The recommendation to improve the current system’s integration with the accounting and purchasing

systems would be affected by the system option chosen. The recommendation and related savings can be

achieved with system Options 3, 4, and 5.

The savings and estimated additional implementation costs are given in Exhibit 3-86.



OptionBudgetary


Total BPRSavings


Option 1 $2,528,000 $1,009,000 $3,537,000

Option 2 2,528,000 1,009,000 3,537,000

Option 3 2,528,000 1,009,000 3,537,000

Option 4 2,528,000 1,009,000 3,537,000

Option 5 2,528,000 1,009,000 3,537,000


Option 1 0 505,000 505,000

Option 2 0 505,000 505,000

Option 3 0 505,000 505,000

Option 4 0 505,000 505,000

Option 5 0 505,000 505,000


Option 1 0 0 0

Option 2 0 0 0

Option 3 0 178,000 178,000

Option 4 0 178,000 178,000

Option 5 0 178,000 178,000

Total

Option 1 $2,528,000 $1,514,000 $4,042,000

Option 2 $2,528,000 $1,514,000 $4,042,000

Option 3 $2,528,000 $1,692,000 $4,220,000

Option 4 $2,528,000 $1,692,000 $4,220,000

Option 5 $2,528,000 $1,692,000 $4,220,000

Business Case Study 4—IT Assessment


kpmg

4. IT Assessment4.1 Introduction

The IT Assessment required KPMG to understand and document current FFMIS subsystems. The

assessment included analyzing the costs, performance, systems, data, infrastructure, key management

processes, plans, and supporting IT organizations. KPMG also conducted a survey of FFMIS users to

assess their satisfaction with the current systems.

The methodology used in the assessment phase included interviews, application inventory forms,

management practices workshops, functional quality (FQ) questionnaires, a technical quality (TQ) tool,

document reviews, site surveys, and the capturing of FFMIS IT costs. We have summarized the results of

the assessment activities in this section. The tools used are described below.

Interviews: Interviews were conducted with:

! FFMIS IT leaders and functional owners to identify and gather information about customers, keyfunctions, reporting, interfaces, limitations, issues, and key initiatives

! IT leaders of each FFMIS subsystem to identify and gather information about their technologyinfrastructure, IT organization, IT processes, strategic plan, and strengths and areas of opportunity

! IT leaders of the study agencies to identify and gather information about their technologyinfrastructure, IT organization, network and desktop environment, FFMIS subsystem usage,FFMIS support, shadow systems, FFMIS interfaces, and FFMIS costs

Application Inventory Forms: An inventory form was completed for each FFMIS subsystem and selected

exception systems. The exception systems primarily focused on the human resource and payroll systems

used at the State University System, the Legislature, and the Office of the Auditor General. The main

categories of the form included number of users, number of interfaces, date of implementation,

programming language, database system, hardware platform, network topology, and user interface

information.

Management Practices Workshops: KPMG conducted two management practice workshops with each of

the FFMIS subsystem owners. One workshop focused on the processes used by the application

development and maintenance groups. Key processes included project management, change management,

documentation, process measurement, system design and development, methods, and tools. The other

workshop focused on infrastructure support processes such as configuration management, capacity

management, change management, problem management, backup and recovery, information security,

training, and help desk support.

4—IT Assessment Business Case Study


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Functional Quality Questionnaires: FQ questionnaires were sent to approximately 400 key and active

users of the FFMIS subsystems covering each agency or entity. More than 300 were returned and

provided significant insight on the strengths and weaknesses of the systems. The questionnaires also

allowed for the respondent to specify potential areas of improvement and assess how well the system

meets current and future needs. The improvement suggestions have not been reviewed for validity,

complexity, or importance.

Technical Quality Tool: The TQ tool was used at workshops with each FFMIS IT organization’s

application development and maintenance leaders. The tool allows KPMG to assess the soundness and

quality of the application. The specific categories included accuracy, compliance to standards, ease of

update, problem analysis, security, performance, testing, and reliability.

Document Reviews: During the initial phase of the study, a Project Initiation Document Request form

was sent to each of the functional owners of the five FFMIS subsystems requesting information about the

primary functions supported by each subsystem, specific requirements/specifications documentation,

primary data entities sorted, end-user reporting requirements and reports, hardware, operating systems,

data architecture and network schematics, programming languages, database file formats, and planned

and ongoing application initiatives. This data was reviewed and relied upon as a primary reference by the

Business Process Reengineering and Information Technology BCS teams. Additional information was

obtained from publicly available online State documentation, standard industry research channels such as

GartnerGroup, Giga, and Forrester, and from KPMG.

Site Surveys: Site surveys were conducted at each data center used for FFMIS processing. The surveys

helped gather information about the State’s ability to provide a secure and hardened physical environment

that meets the demands of the FFMIS subsystems.

Capture Costs: An analysis form was created to capture detailed costs incurred for processing and

supporting the FFMIS subsystems. The cost categories include hardware, software, network, desktop, and

staffing.



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4.2 IT Assessment Findings

The following are the IT findings that were derived from observations made during the data gathering

process. Some findings may not be directly related to FFMIS subsystems but are relevant in the context of

an enterprisewide approach to information technology. KPMG’s findings are presented in four categories:

! FFMIS subsystems

! Information technology processes

! Information technology infrastructure

! Information technology organization

A review of the FFMIS subsystems showed that the functionality of these subsystems can be improved.

Detailed scores of both the functional and the technical qualities of these subsystems were gathered in

workshops with State personnel. The scores have been compiled and summarized in Exhibit 4-1 to

indicate the subsystems’ overall fitness from the users’ perspective.

The detailed scoring for each subsystem is presented in Section 4.8.

Exhibit 4-1Opportunities for Improvement

1

2

3

4

5

1 2 3 4 5

Technical Quality

Fu

nc

tio

na

l Qu

alit

y

Improvement Target Area

Technical Reengineering Healthy

Replacement Functional Enhancement

COPESView

SPURSView

Vendor Bid System

LAS/PBS

SPURS

COPES

CMSFLAIR DA

FLAIR IWFLAIR CA

FLAIR PR



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Although there are significant opportunities for improvement, the FFMIS subsystems do what they were

designed to do quite well, which is to process large amounts of financial data and transactions. Despite

inhibitors such as recruitment and retention of skilled IT staff and use of older technology, the FFMIS

subsystems are stable and provide consistent performance to their users. In addition, support staffs have

introduced new technology such as client/server and web applications to provide improved reporting and

functionality. IT organizations have been gradually moving away from older network and desktop

technology. The FFMIS subsystems’ data centers are physically secure and environmentally hardened

(raised floor, fire protection, and electric backup); some have advanced disaster avoidance methods.



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4.3 Option Descriptions

The State’s scope of work for the BCS described five options to evaluate:

! Maintain the existing system as-is

! Enhance the existing system

! Build a new custom integrated system

! Implement a COTS ERP solution

! Implement a best of breed solution

KPMG worked with the State to define a detailed description of each of these options. KPMG began the

process by creating a draft description of each option. The draft was reviewed with the Study Advisory

Council members and their comments solicited. The definitions also were reviewed with the IT leaders of

the FFMIS subsystems and the Governor’s Chief Information Officer (CIO). Feedback from all sessions

was incorporated to create the following options descriptions.

Option 1: Maintain the current systems as-is with no major modifications orupgrades

This option assumes little or no modification to existing systems and assumes that enhancements to

business functions and practices will not occur. It implies that IT owners and functional owners will

conduct business as usual. The level of effort to enter data, reconcile systems, and process paper will not

change. The characteristics of this option follow:

! Maintenance of the current legacy systems as-is with no major modifications

! Continued use of current systems by the three branches of State government including the StateUniversity System

! Limited number of minor modifications that will not affect functionality of legacy processesunless required by mandates

! Maintenance of system functionality

! Minimal additional budget requirements except those required for growth upgrades

! Limited number of IT support organization changes

! Limited amount of additional user training

! Limited internal resources required to design, code, manage, and implement



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Option 2: Enhance current systems by adding new tools and functionality

This option assumes that significant modifications to existing systems will be made. It also assumes that

enhancements to business functions and practices will occur. The level of effort to enter data, reconcile

systems, and process paper will decrease based on the degree of change made. It is likely that this option

will include changes to the Chart of Accounts and agency interfaces, Florida Statutes and administrative

policies and require a significant effort. The characteristics of this option follow:

! People

– Significant internal and external resources to design, code, manage and implement

– Training for user and IT staff

– IT support staff changes (retool, reduction, additions)

! Process

– BPR functional changes that require modifications to legacy systems

– Use of a standardized system development methodology

– Changes to Florida Statutes and administrative policies

! Technology

– Continued use of current systems by the three branches of State government including theState University System

– Significant reprogramming and new programs to add functionality

– Standardization of data elements

– Changes to agency interfaces

– Front-end modifications (for example, GUI and WEB)

– Middleware modifications (for example, BEA, Open Link, and XIPC)

– Back-end modifications (for example, data warehouse, report writers, and query/extract tools)

– Hardware, software, and desktop expenditures

– Data conversion and cleansing effort

Option 3: Develop a new custom integrated information management system

This option assumes a major effort to redesign, test, and implement new and customized systems to

replace existing FFMIS subsystems. This option will use significant resources from both the State of

Florida and external sources. The new system will be fully integrated with changes to the existing system

architecture. This option assumes that significant enhancements to business functions and practices will

occur. The level of effort to enter data, reconcile systems, and process paper will improve significantly.



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This option will include changes to the Chart of Accounts and agency interfaces and will require

substantial effort to complete. The characteristics of this option follow:

! People


– Significant training for user and IT staffs

– Changing ownership/location of IT resources (infrastructure and personnel)

! Process

– Changes to the current Chart of Accounts


– Functional changes to implement BPR recommendations


! Technology

– Replacement of FLAIR, COPES, SPURS, LAS/PBS, and CMS

– Integrated subsystems


– Changes to the current hardware and software technical architecture



– Back-end modifications (for example, data warehouse, report writers, and query/extract tools)

Option 4: Implement a commercial off-the-shelf (COTS) package

This option assumes a major effort to design, test, and implement a new ERP package to replace existing

FFMIS subsystems using significant resources from both the State of Florida and external sources to

accomplish. A high-level comparison of PeopleSoft, SAP, and Oracle to system requirements will take

place. However, this will not include the selection of a vendor package. The ERP system will be fully

integrated with changes to the existing system architecture and IT support resources. It assumes the use of

basic capabilities of the ERP system without significant modifications. It also assumes that significant

enhancements to business functions and practices will occur. The level of effort to enter data, reconcile

systems and process paper will improve significantly. This option will include changes to the Chart of

Accounts and agency interfaces and will require significant effort to perform. The characteristics of this

option follow:



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! People



– Changing ownership/location of IT resources (infrastructure and personnel)

! Process


– Use of a standardized system integration, implementation, and change methodology



! Technology

– Replacement of FLAIR, COPES, SPURS, LAS/PBS, and CMS

– Integrated subsystems



– Significant network changes/expenditures

– Significant hardware, software, and desktop expenditures



– Use of basic ERP capabilities without significant modifications

– Comparison of PeopleSoft, Oracle, and SAP to systems requirements

– Use of KPMG resources for ERP comparison and costing exercise

Option 5: Use a “best of breed” approach (that is, a combination of the otheroptions)

This option assumes that some combination of Options1 through 4 may be used in this alternative. The

assumption is that the various FFMIS components may require different solutions. It is possible that

multiple ERP packages combined with As-Is, major modifications, or rewrite of a subsystem may occur.

This option will require a major effort to design, test, and implement possible replacements of existing

FFMIS subsystems. The effort will use significant resources from both the State of Florida and external

sources. A high level comparison of PeopleSoft, Oracle, and SAP to system requirements will also be

conducted. It is probable that the solution will be fully integrated with changes to the existing system

architecture and IT support resources. It assumes the use of basic capabilities of the ERP system without

significant modifications. It also assumes that significant enhancements to business functions and



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practices will occur. The level of effort to enter data, reconcile systems, and process paper will be reduced

significantly. This option will likely include changes to the Chart of Accounts and agency interfaces and

will require significant effort to perform. Potential characteristics of this option follow:

! People

– Significant internal and external resources to design, code, manage, and implement


– Changing ownership/location of IT resources (infrastructures and personnel)

– Significant IT support staff changes (retool, reduction, and additions)

! Process



– BPR functional changes may require modifications to legacy systems

– Will require changes to Florida Statutes and administrative policies

! Technology

– Comparison of PeopleSoft, Oracle, and SAP to systems requirements


– Significant hardware, software, and desktop expenditures




– Use of basic ERP capabilities without significant modifications

– Replacement of parts or all of FLAIR, COPES, SPURS, LAS/PBS, and CMS systems

– Implementation of integrated subsystems




– Back-end modifications (for example, D.W., report writers, and query/extract tools)

– Significant network changes/expenditures

– Use of Options 1 through 4 for various subsystems

– Replacement of some agency shadow systems

– Use of KPMG resources for ERP comparison and costing exercise



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4.4 FFMIS Subsystems

Finding IT–1. FFMIS subsystems experience a high level of up time andperformance

According to the TQ questionnaires (completed by interviewing IT owners), reliable operations of the

systems are a strength of the FFMIS subsystems. The FQ questionnaires (completed by FFMIS subsystem

users) show that all FFMIS subsystems were rated good or excellent for reliability and availability.

Finding IT–2. FFMIS subsystems are not integrated

The surveys and interviews conducted indicate that FFMIS subsystems were developed to address

specific requirements within a business function, with little consideration for data re-use across the State.

This creates a lack of consistency in how information is captured, stored, and accessed. In addition,

FFMIS subsystems do not share data easily and require specially written programs or manual processes to

exchange information. Documentation shows that FLAIR supports 267 interfaces.

Finding IT–3. FFMIS subsystems do not provide adequate decision supportinformation

Surveys show that management reporting of statewide financial information is inadequate. Users are

unable to access all information required, resulting in an inability to use the information as an important

management tool. Substantial quantities of information that would be useful in making management

decisions are often difficult to obtain because:

! Information is not consistently stored in a manner that is easily understood by the user

! FFMIS subsystems lack strong ad hoc reporting capabilities

! FFMIS subsystems lack user-friendly query capabilities

! Critical management information is stored in several different places and is not integrated

Finding IT–4. FFMIS subsystems lack strong ad hoc reporting capabilities

Surveys indicate that FFMIS subsystems do not provide easy access to the data so that the data can be

turned into information useful in making decisions. Users are frustrated because of their inability to

generate simple reports as needed because:

! Documentation or online help is lacking

! In some cases, the tools used for ad hoc reporting do not exist



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! The tools used for ad hoc reporting were built for experienced users and are cumbersome (forexample, COPESView and SPURSView were specifically designed to meet the needs of ad hocreporting, but are often difficult to run)

! Users are unable to access the data because of unnecessary security restrictions

! Data needed for ad hoc reports resides on several unique subsystems and requires agency-specific(shadow) systems to download information and generate reports

Finding IT–5. FFMIS subsystems have limited online viewing and printingcapabilities

Surveys indicate that FFMIS subsystems do not provide the ability to view and print data on the screen

easily. Often information is available, but users are unable to obtain all needed information at the first

look-up screen. Users are unable to print information on the screen and must run lengthy queries to obtain

that information. User concerns include the following:

! Documentation or online help is lacking

! View-only capability is not available in systems such as SPURSView (reviewing order status)

! Some components are not user friendly

! Selective printing capabilities are inadequate

! Reports take a long time to be printed and delivered

Finding IT–6. Not all State entities use FFMIS subsystems and have developedshadow and feeder systems to support business functions not provided byFFMIS subsystems

The surveys indicate that some State entities and agencies do not have the information or systems

functionality needed to support their processes in the FFMIS subsystems. As a result, some State entities

and agencies continue to develop alternative methods to perform the functionality or obtain the

information needed. Our review indicates that at least 300 shadow or feeder systems interface with

FFMIS subsystems. Shadow systems are systems used to perform a process outside the five key

subsystems. The development of shadow systems has resulted in the following:

! Increased information system investment

! Costly, complex, and time-consuming changes to FFMIS subsystems

! Duplicate data entry and maintenance of data

! Inconsistent data on different systems



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! Inconsistent reporting results or output

! Loss of productivity

Strategic planning documents state that there are an “extensive number of agency-unique applications that

interface with the FFMIS functional owner information subsystems. These interfaces provide a means for

State agencies to upload and download data from the FFMIS functional owner information subsystems.

The vast majority of these agency-unique applications interface with the State accounting system

(FLAIR).”

Implications of shadow systems are:

! Movement away from enterprise data

! Increased silo operations

! Increased requirements for agencies to assist in interpreting data

Finding IT–7. The current FFMIS design does not lend itself to timely access ofcurrent data

FLAIR was designed to update information one day behind real time. All subsystems within FFMIS share

information with the FLAIR system. Some subsystems have automated interfaces, while others such as

COPES require their own systems to feed human resource and payroll information to FLAIR. Because of

this, State agencies often obtain vital information too late.

Three specific “data warehouse” systems—COPESView, SPURSView, and the FLAIR Information

Warehouse—are web- and UNIX-based systems that provide additional reporting capability. Each system

receives a snapshot copy of COPES, SPURS, and FLAIR data nightly. Surveys show that users are

concerned about the time it takes to perform downloads. Users also thought that because of the delay in

information exchange, some data was not updated daily or did not match on each system, which makes

currency or frequency of updates an issue.

Finding IT–8. FFMIS subsystems often require manual and duplicate input ofinformation

Each of the FFMIS subsystems maintains its own database. Each database is updated by data transactions

that are keyed in by users or updated by batch loads. Some data transactions need to be input into more

than one subsystem. Because each database is independently updated, these data transactions may not be

recorded at all, the data transactions could be input incorrectly, or the data transactions could be updated

with different dates and times. The inconsistent data contributes to user confusion and frustration.



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Finding IT–9. Legacy FFMIS subsystems are not user friendly and are difficult forusers to navigate through

Users across the board stated in the surveys that ease of use and usability were issues. Legacy FFMIS

subsystems are based upon architectural concepts from the 1970s and 1980s. User navigation is labor

intensive, and information is very difficult to retrieve rapidly and effectively. Users often have to navigate

through several input screens to record a single transaction. Difficulties in using software ultimately

increase both the time and training costs required for users to learn a system and use the software. This

contributes to a loss of productivity and user frustration.

Technology architectures today use a common set of standards that define accessibility and navigation

throughout the system. These standards use a common set of menus, bars, help screens, and file transfer

methods that allow the user to navigate through the system independent of the application.

Finding IT–10. FFMIS subsystems have inconsistent data entry edit and validationmethods

Because each FFMIS subsystem database is unique, the methods by which data is captured and validated

for errors are different. SPURS users reported that the system does not perform data editing or validation

at time of input. Instead, errors are not found until batch processing. This causes delays in production of

purchase orders. Similar concerns were voiced by the users of the FLAIR Departmental Accounting

System. FLAIR Payroll users identified the need for better editing of data for duplicate payments.

Finding IT–11. FFMIS subsystems have had limited enhancement or modificationsduring the last 2 years

In interviews with the IT application support groups of the FFMIS subsystems, group members report that

most have performed limited maintenance or enhancements to the legacy FFMIS subsystems during the

last few years. The main inhibitors for changes have been the Y2K project and uncertainty about the

future of FFMIS subsystems. It is important to note that new functionality and improved access to data

have been made through FFMIS subsystems such as COPESView, SPURSView, and FLAIR Information

Warehouse. These systems have been developed using newer and more open technologies such as Visual

Basic, Oracle, and other web-based applications.

Finding IT–12. Changes to FFMIS legacy systems are often time consuming andcumbersome

After determining the age of the FFMIS subsystems, it is clear that many of the systems have exceeded

the industry norm for age. Most analysts agree that the useful life of an application is between 7 and 10

years. Except for CMS, the core legacy FFMIS subsystems are between 11 and 29 years old. Most FFMIS



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subsystems use older technology, which provides a challenge in finding people skilled in these areas. In

general, as systems age, modifications are performed inconsistently, especially if development standards

are not in place. Over time, these systems become difficult to maintain as staff leaves and documentation

has not been updated with modifications. The systems become fragile, inflexible, and difficult and costly

to modify to meet changing business requirements. A current change being considered in FFMIS—to add

a two-digit field in the Chart of Accounts—will affect numerous interfaces and is projected to cost more

than $900,000 to complete.

Exhibit 4-2 depicts the age of the key FFMIS subsystems and their major subsystems.

Exhibit 4-2Age of Key FFMIS Subsystems and Their Major Subsystems

2000

1995

1990

1985

1980

1975

1970

1965

FLAIR Payroll

Accounting

LAS/PBS

FLAIR Departmental Accounting

COPES

FLAIR Central Accounting

SPURS

CMSCOPESView

FLAIR Information

WarehouseSPURSView

SPURSVBS

YE

AR



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Finding IT–13. FFMIS end-users’ window of operation does not meet the needs ofall users

During interviews at the agencies and in responses on the FQ questionnaire, it was noted that some end-

users of FFMIS work outside the normal hours of 8 a.m. to 5 p.m., Monday through Friday. However,

most FFMIS subsystems of operation and support are available only during the standard 8 a.m. to 5 p.m.

Eastern Standard Time period. This is further complicated by Florida geographically spanning two time

zones. Most requests for longer hours of accessibility to both the systems and help desk operations were

from COPESView, SPURSView, and FLAIR users. Because no batch processing is performed during the

weekend, users need to wait until Monday to get results of any transactions entered after 5 p.m. on Friday.

This restricts an agency’s ability to service its clients. FLAIR Information Warehouse users reported that

the system was not available on critical days such as year-end.

Finding IT–14. FFMIS does not use a common Chart of Accounts

Another indication that substantiates the lack of integration among FFMIS subsystems is in the Chart of

Accounts. The Chart of Accounts is the backbone of any financial management system and will serve as

the basic building block to any enhancement or replacement of FFMIS. If the Chart of Accounts is not

properly managed, the State will be unable to provide information effectively to its citizens, its

elected officials, or its senior management. Surveys, interviews, and analysis by KPMG personnel

indicate the following:

! The State of Florida does not have a single person or entity with ultimate control over the Chartof Accounts, including controlling code design, controlling and managing code interpretation,code use, and managing code changes

! The current Chart of Accounts has codes containing more than 350 characters. The FFMIS Chartof Accounts for COPES, SPURS, FLAIR’s Central Accounting System, LAS/PBS, and CMSuses codes with more than 100 characters. The FFMIS Chart of Accounts for FLAIR’sDepartmental Accounting System has additional codes with additional characters totaling morethan 250. Because of improper code structure and despite the large number of codes available foragencies to use in the Departmental Accounting System, agencies have been forced to usespecific codes for purposes other than originally intended to accommodate their financialreporting needs

! The State has undergone many important changes during the past 20 years that have affectedFFMIS and the Chart of Accounts, including constitutional revisions; the creation, abolition andreorganization of departments; adoption of Performance Based Budgeting; and statutoryrequirements for agencies to provide unit cost information. The Chart of Accounts was notdesigned and has not been modified to accommodate these changes

! During the past 20 years, the State and business in general have adopted new business practicesthat have changed the character of expenditures, including the increased use of overnight mail; air



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travel; new technologies such as personal computers, pagers, and cellular phones; and contractingservices. The State needs to anticipate information requests and proactively make changes to itsChart of Accounts. Failure to anticipate these changes (with or without a new system) will makeit very time consuming and costly to react to information requests by citizens, elected officials,and senior management to manage and monitor the financial operations of the State

It is important to note that regardless of any action taken or not taken related to enhancing or replacing

FFMIS, the State must consider changing the way it manages its Chart of Accounts.



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4.5 Information Technology Processes

Finding IT–15. FFMIS support organizations do not have formal performancemeasurement and management processes

Several of the IT organizations (Infrastructure and Application Development and Maintenance) do not

formally measure IT performance or perform regular reporting. Surveys to measure user satisfaction with

services and to manage user expectations and perceptions are not conducted regularly. Although some

service-level agreements (SLA) exist, regular and consistent management and definition of SLAs with

customers to ensure that agreed-upon service is provided are not performed. No consistent effort is made

across the five subsystems to ensure that work is competitive in cost and quality.

Finding IT–16. FFMIS training and online help facilities are not meeting end-users’needs

Results of the FQ surveys indicate that the FFMIS user community is extremely concerned about the lack

of hands-on training in the proper use of all FFMIS subsystems. The lack of proper training forces the

end-user to call help desks frequently with “how-to” questions. Help desk response is not always friendly

or helpful, prompting the user to bypass the help desk and ask for peer support from other users at the

agency. Peer support is a nonproductive process for providing knowledge and help to FFMIS users.

FFMIS subsystems lack up-to-date and useful online help facilities and online user manuals. Adequate

help facilities would alleviate many of the how-to questions by providing answers directly to users.

Finding IT–17. FFMIS subsystems have multiple security controls and policies

Survey results indicate that some FFMIS end-users are frustrated by the multiple logons and passwords

required for all systems and applications used to perform their daily duties. This becomes especially

annoying when passwords expire at different times (some 30 days, others 90 days). This can lead to users

writing their passwords for the different systems on notes and leaving them on their workstations, voiding

the underlying security policy.

The agencies, however, are working to comply with the law as stated in the Information Resource

Security Policy adopted May 1998:

Agencies shall prescribe sufficient controls to ensure that access to network services and host

services and subsystems is restricted to authorized users and uses only. These controls shall

selectively limit services based upon: user identification and authentication (for example,

password), or designation of other users, including the public where authorized, as a class (for



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example, public access through dial-up or public switched networks), for the duration of a

session.

Under a statewide Information Financial Management System, a more streamlined security methodology

can be devised.

Finding IT–18. Project prioritization at the IT organizations supporting FFMISsubsystems does not ensure that high priority end-user needs are being met

Discussions with IT leaders revealed that many IT organizations pursue their own understanding of

FFMIS priorities and those dictated by the functional owners of the system rather than priorities based on

agency business leaders’ needs. In many cases, there are no IT steering committees with agency

representation to set IT direction. Often, no formal initiation and prioritization processes are in place to

ensure that an IT organization is working on high-value projects. Implementing the best practices of

prioritization imposes discipline while avoiding bureaucracy. Critical components of an effective process

are both on-going and post-completion reviews of projects to determine whether their objectives are being

met. An effective scoring model should be simple to apply with a few standard key criteria such as the

following:

! Financial value added

! Current financial cost

! Implementation costs

! Strategic fit

! Time to realize benefits

! Implementation risks

! Cost/benefit

! Intangible benefits

! Impact of lost opportunities

Finding IT–19. Not all FFMIS subsystems have backup and disaster recoverycapabilities for the mainframe components of the system

The Comptroller’s IT organization has a mainframe recovery plan and a formal “hot-site” agreement to

use IBM equipment in upstate New York in the case of a disaster for FLAIR, LAS/PBS, and other

systems. The plan has been tested four times with satisfactory results according to responsible State

officials. In addition, LAS/PBS has an agreement and plan to use the Office of Legislative Technology

Systems data in case of a disaster. The Comptroller’s IT organization is working on a plan for the



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recovery of business units. DMS and DOI do not have formal disaster recovery plans, strategies, or

agreements for recovery of the COPESView, SPURSView, and CMS.



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4.6 Information Technology Infrastructure

Finding IT–20. Florida lacks a statewide data architecture model

Interviews conducted indicate that some agency departments do not have all of the information or systems

to fully support their FFMIS business processes. Management reporting of enterprise data is ineffective.

Respondents had no clear vision about how to provide the State government with the information it needs

to develop a resource management plan. No statewide plan has been adopted to develop an integrated and

shared use of information and systems.

The Agency Data Administration Policy adopted in May 1998 was a start. It declared:

State agencies find it difficult to identify overlapping data, which should be shared with other

agencies. No mechanisms have been developed to identify and to foster the use of best practices

in data definition and data sharing. The responsibilities of data owners and data custodians have

not been clearly and consistently defined or assigned. Consequently, most of the existing data is

accessible and usable only to those individuals given access through a dedicated computer

application.

It appears that little has been done to enforce the policy as it pertains to FFMIS or other systems.

Finding IT–21. Florida lacks a statewide technical architecture model

Interview responses indicated a consensus that the State’s oversight structure and procedures for

information technology contribute to the perception that technology use as it pertains to FFMIS

subsystems is not optimized. Although a process is in place to provide centralized planning and oversight,

the individual agencies have considerable latitude over technology direction and decisions. This has

resulted in “stovepipe” systems that appear to have been developed without fully considering consistency,

interoperability, and the overall needs of the State.

Individual agency strategic plans, while all having the same underlying theme of “work smarter and more

efficiently,” do not add up to a comprehensive and cohesive State vision as seen by its constituents.

The Strategic Governance Committee was established with the following mission: “Provide statewide

policy, direction and leadership to maximize the State of Florida’s information assets, share and leverage

resources, and effectively manage investments.” However, it is not apparent that the committee has the

power or authority to carry out the directive.



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Finding IT–22. Existing FFMIS platforms are not interoperable in a seamlessmanner

Our assessment shows that many key systems are old but still provide most of the needed functionality.

The majority of the systems surveyed were more than 12 years old, were written in second-generation

languages (for example, COBOL), use older databases, and are not tightly integrated with other related

systems. Most applications have been developed to address specific requirements within a business

function, with little consideration for data re-use across the enterprise. The database management systems

in use include ADABAS, DB2, DB2/400, Oracle, and Unisys DMS. Unfortunately, these systems do not

share data easily and require the staff to have different skills to support them. Data modeling tools and

techniques have not been widely used to define business information needs.

The present process of data exchange is that one system with a specially written program extracts data

from its files, formats it, then writes the file to disk. The file is then either sent by file transfer protocol

(FTP) or, in more than half the cases, a tape is created and hand delivered to the receiving system.

Likewise, on the receiving system, a special program has been written to read the file format and update

the files on its system. Any changes in file formats, requested data, or data availability requires

modifications on both ends of this process. There have been instances where data was changed but the

receiving agency was not properly informed, resulting in processing delays and unscheduled time to

resolve issues.



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4.7 Information Technology Organization

Finding IT–23. FFMIS processing and application support occurs in four separateIT organizations

The five legacy FFMIS subsystems are processed on four different platforms in three distinct data centers.

CMS is on an AS/400 at the Treasury Department in the Larson Building, and LAS/PBS and FLAIR run

on an IBM ES9000 series 9672-R76 at the Comptroller’s Data Center in the Fletcher Building. SPURS

runs on an IBM S390 Multiprise 2003-1C5, and COPES runs on a Unisys Clearpath IX5602 D2; both are

at the DMS data center in the Carlton Building. The SPURS and COPES applications are maintained by

DMS, CMS is supported by the Department of Insurance, Treasury and State Fire Marshal, FLAIR is

supported by the Comptroller’s office, and LAS/PBS is supported by the Executive Office of the

Governor. While this in itself is not an issue, the lack of coordinated activities, duplicate and redundant

hardware, system software, networks, processes, and administration can be inhibitors as the State moves

forward. In addition, the IT organizations have pursued different directions regarding development and

maintenance of the FFMIS subsystems.

Finding IT–24. Existing State personnel policies and funding processes inhibit therecruitment and retention of skilled employees required to perform FFMIStechnology support

The complexity and sophistication of IT require specialized skills and expertise for employees at all

levels. The State’s existing personnel practices do not support attracting and retaining the best talent to

support this critical area.

A common concern in FFMIS technology staffs is the difficulty in attracting and retaining technical

employees. IT leaders interviewed all voiced the opinion that the State salary scales are below the private

market for skilled IT professionals. This prevents the State from competing with employers for recent

college graduates and for experienced IT professionals. The classification system compounds the problem

by limiting the grade and salary levels of top IT personnel. This prevents career growth in line with the

private sector and causes employees to move from one agency to another to increase salary and obtain

promotions.

FFMIS support organizations currently have shortages in a number of key skill areas. An example of this

is the need for experienced COBOL and Natural Language programmers to support legacy FFMIS

subsystems.



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Finding IT–25. Multiple help desks exist for FFMIS support that do not providesufficient and effective service

Interviews and surveys show that multiple help desks support FFMIS application end-users. These help

desks are neither interconnected nor use the same problem management software. Connectivity issues

may be redirected by the help desk receiving the call to the agency’s help desk because no network

management software is tied to the problem management software that would inform the help desk agent

of a network problem. Most application problems are dispatched to a programmer. The user, through

experience, may call the programmer directly, by-passing the help desk(s) altogether. Programmers for

the most part do not have access to the trouble ticket software; therefore, the call is not recorded. If

problems and solutions are not recorded, no knowledge base can be developed that would assist the help

desk agent in solving problems without having to dispatch the call.



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4.8 Detailed Functional Quality and Technical Quality Assessment

1

2

3

4

5

1 2 3 4 5

Technical Quality

Fu

nct

ion

al Q

ual

ity

Improvement Target Area

Technical Reengineering Healthy

Replacement Functional Enhancement

COPESView

SPURSView

Vendor Bid System

LAS/PBS

SPURS

COPES

CMSFLAIR DA

FLAIR IWFLAIR CA

FLAIR PR

Functional and TechnicalQuality Summary Results

Functional and TechnicalQuality Summary Results

• Opportunities exist for functionalenhancement in seven applications

• Areas of potential improvementinmost cases focused on flexibility,ad-hoc reporting capabilities, easeof use, and training

• Technical scores indicate the abilityto interface and integrate systemsis difficult

• Major functional deficiencies are inusability, flexibility, and helpfacilities

• One application could be replaced



kpmg

Ability of FFMIS Subsystems to Meet Overall Present and Future Business Needs

The last two questions in the FQ Survey asked end users ofthe FFMIS subsystems how the applications meet their presentand future overall business needs. They rated the overallapplication from 1 to 5 as follows:

1 = New Application Required2 = Major Enhancement Needed3 = Significant Modifications Required4 = Minor Modifications Required5 = Completely Acceptable As Is

The following chart shows the responses of these twoquestions by average response per application.

Application Portfolio Analysis - FQ

��

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Based on results of questionwhether FFMIS subsystemsare meeting current andfuture needs of users:

Application Portfolio Analysis - FQ

Meet Present and Future Business Needs

��

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Overall FQ Assessment

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

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5.0

FL

AIR

CA

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AIR

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AIR

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Meets Current Business Needs Meets Future Business Needs

Acceptable As Is

Minor Modifications Required

Significant Modifications Required

Major Enhancement Needed

New Application Required

• Most applications willnot meet the futurebusiness needs of theState of Florida

• Most applications arenot meeting all of thecurrent businessrequirements

• Significant modificationsneed to be made to atleast six applications



kpmg

* Improvement comments provided by COPESView users survey

• Reporting is complex and difficult• Performance issue that exists is the time

it takes to do COPESView loads

• It was felt that improvements or changesto meet agency needs are not done in atimely manner

• Another performance issue withCOPESView is attributed to lengthyqueries

• Concerns regarding security to ensureconfidentiality regarding personnel insensitive positions (i.e., law enforcement)

• Concerns regarding lack ofdocumentation on the system and datafields

• Some data is not updated daily whichmakes currency or frequency of updatesof data an issue

• Frequent training on Impromptu isrequired as is improved technical supportrelated to questions and issues

• Training on COPESView is not performedand help facilities require improvement

• Some data fields in COPES are notavailable in COPESView

Improvements Needed*:

1

2

3

4

5

Provided

Required

Functional QualityCOPESView

Functional QualityCOPESView

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Technical Quality–COPESView

Application Portfolio Analysis - TQ

* NOT APPLICABLE TO THIS SYSTEM* NOT APPLICABLE TO THIS SYSTEM



kpmg

* Improvement comments provided by SPURSView users survey

• All agencies use except for theUniversities

• There were several requests foradditional search capabilities

• There were several requests to allowfor downloading to MS products

• Many users requested view onlycapability as it applies to reviewingorder status

• If a change order is made to SPURS,it doesn't get reflected to SPURSView

• There were several comments aboutdata in SPURS and SPURSView notmatching (i.e., vendor)

• Many users requested thatSPURSView gets updated more often

• Data in SPURS and SPURSViewnot matching


1

2

3

4

5

Functional QualitySPURSView

Functional QualitySPURSView

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Technical Quality–SPURSView




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* Improvement comments provided by SPURS users survey

• Not considered flexible or user friendly, felttraining is almost non-existent as is help screens

• Several agencies not using the requisitioncomponent due to it being not user friendly andcumbersome and paper intensive

• View only capability as it applies to reviewingorder status

• Longer hours of operation for the system and thehelp desk, current downtime is excessive

• Does not have a flexible reporting system, usersdesire one compatible with MS products

• Program changes are difficult and timeconsuming to make

• There were several comments about SPURSdeleting a purchase order record if there was anerror which required total re-entry as opposed tocorrection

• Immediate updates as opposed to the 24 hourdelay currently experienced

• No audit trail• If an error is made in entering data, the user

must back out and start over• Year-end reports must be requested to DMS

instead of by end user• SPURS does not capture information about

purchases made with the PCard• SPURS has its own chart of accounts• Lack of control and duplicate data in the Vendor

file

Improvements Needed*:Functional QualitySPURS

Functional QualitySPURS

Provided

Required

��

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Good

Fair

Unacceptable

��

Technical Quality–SPURS

��

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Good

Fair

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kpmg

* Improvement comments provided by LAS/PBS users survey

• Narrative input needs to mirror word processingsoftware - user friendly capabilities

• Minimize number of different input screens the usermust access in order to enter position and budgetdetail data

• Simplified Schedule I input process by user viewingthe status of revenue and/or non-operatingexpenditure totals while still in the data input screen

• On-line access to real-time accounting and personneldata, including organization charts

• Column access (not update) to amended LBR data atall times from agency workstations. Changes madein SP environment not available to agencies in the APenvironment, even ability to run current reports

• Rounding issues between COPES and LAS/PBS

• Security so tight information needed to allocate rateor budget must be obtained from OPB and thenrouted to agency

• Reporting cumbersome

• Most work done in spreadsheets prior to entering thesystem - Analytical tools weak, need modeling tools

• Zero Base Budgeting could require a new system

• Always reconciliation issues

• Track Legislative actions by issue

• Too many codes - not descriptive - Report 3A has nomeaning

• Download capabilities not provided to all agencies

• An issue that requests positions and/or salaryamounts can not be entered and viewed at same time

• LAS/PBS budgets at program component levelwhereas FLAIR budgets at org. code level - shouldbe consistent

Improvements Needed*:Functional QualityLAS/PBS

Functional QualityLAS/PBS

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* Improvement comments provided by Vendor Bid users survey

• All agencies use except for theUniversities

• There were several requests to purgeincorrect vendor data

• It was felt that the process to order labelsrequired improvement

• It was requested to use drop down lists(i.e., selecting class, group, posting,search)

• It was requested to use spellcheck

• Users cannot place the entire bid or RFPin system


Functional QualityVendor Bid System

Functional QualityVendor Bid System

Provided

Required

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Fair

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Technical Quality–Vendor Bid System



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* Improvement comments provided by COPES users survey

• The current use of COPES has exceeded the originalscope - cannot process Criminal Justice Incentive pay,deferred compensation, flexible spending account, etc.

• Not an executive Management system• Many agencies had or have developed shadow and

feeder systems to provide functionality not available inCopes or automatic interfaces with FLAIR. Otheragencies have created systems to deal with lack ofreports to meet their needs

• Not considered flexible or user friendly, no flexiblereporting system, one compatible with MS products

• Manual entry of data creates room for error• Lack of funding has limited COPES changes/

enhancements, changes are difficult• Many agencies and FLAIR itself utilize different codes

and definitions of data elements (i.e., EEO, Sex codes)The only error processing performed is during batchprocess, not during data entry

• Many processes require re-entering data, users musttraverse multiple input screens to enter one transaction

• There were several requests to have more than oneyear’s history online

• Better selective printing facilities• Can not handle all Payroll functions such as call-back

time, excluded overtime pay, defferred compensation outof leave payments, overtime after the employee has leftthe agency and severance pay, criminal justice incentivepay, leave payments that have tax deferrals, multiplecost accounting capability, grant funding, and postpayroll process

• Should be available at 7:00 AM• Better training• Combine employee deductions to one screen - have to

access FLAIR to determine if there are levys, childsupport, deferred compensation, etc.

Improvements Needed*:Functional QualityCOPES

Functional QualityCOPES

Provided

Required

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Excellent

Good

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Unacceptable

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Technical Quality–COPES




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* Improvement comments provided by CMS users survey

• More help with training

• Time of printing reports

• Excessive "Run Time" errors that kickyou out of the system, causing you to logback in and start job over

• Cannot update records in ConsolidatedRevolving Account System - sequencingissues

• Some kind of archive mechanism needsto be established for cleared bankrecords

• Communication is poor between the usergroup and Tech Support


Functional QualityCMS

Functional QualityCMS

Provided

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Technical Quality–CMS



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* Improvement comments provided by FLAIR CA users survey

• Data is redundant to data in DepartmentalAccounting

• System is batch processing, normally one daybehind real time

• History file for Journal Transfers should beenhanced to have the functionality of the VendorHistory File

• System to be updated on-line or "real time",including enabling agencies to delete and/ormodify payments in pending status

• System should know if a SWD# is a voucher orJT, similar pitfalls should be eliminated

• Make payments from multiple sources, someagencies have many funding sources andredistribution of cost is a major workload

• User friendly input and browse screens, includingthe ability to find data using various fields andability to get all needed information at the firstlook up screen

• All codes used in Departmental should beavailable in Central

• Easily invest funds, either automated or byaccounting transaction

• Journal transfers between agencies should go toa pending area/status until approved by thereceiving agency

• GUI interface including the ability to have morethan one screen up at a time

• Additional accounting functionality, i.e., studentaccounting functions, accounts receivable,financial aid disbursements, financial aid awards,cashiering, etc.

Improvements Needed*:Functional QualityFLAIR CA

Functional QualityFLAIR CA

Provided

Required

��

Excellent

Good

Fair

Unacceptable

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• Some Agencies have expressed that littlereliance can be placed on this system due touser unfriendly tools. It is difficult tocorrectly use the multiple key indexes andfurther supported by a request for traveldata by the BPR team.

• Easier to use tools are needed, it takes atechnical programming type person todesign an ad hoc report

• The current data store has only CentralAccounts data, other components of datashould be available

• System has been reported to be slow andawkward

• Some agencies report that the system is notavailable on some key days, like year end

• Tables, fields and data dictionaries shouldbe relatively constant and communicatedwhen changes are necessary

• Fields used in Departmental Accounting andAgency Unique codes to be included on thetransactions

• Security requires yet another password andit expires in 30 days, much too soon for asystem utilized as infrequently as awarehouse

• Need GUI interface

Improvements Needed*:Functional QualityFLAIR IW

Functional QualityFLAIR IW

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Required

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Good

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* Improvement comments provided by FLAIR DA users survey

• Transactions between Agencies to update bothagencies records

• Better edits at the time of entry

• Ability to easily interface with Agency Specific shadowsystems

• User friendly input and browse screens, including theability to find data using various fields and ability to getall needed information at the first look up screen

• Reconciliations between systems is a big workload

• More levels in Organization code

• Real time updates, eliminate two day delay in batchprocessing

• User friendly ad hoc reporting and GUI interface

• More paperless technology, i.e., electronic invoicing

• Vendor history information

• Systems should be more integrated i.e., Vendor inSPURS=Departmental, CMS projections migrate tomicro projections in Agency fund, COPES/Payroll datashould create Departmental Accounting transactions,Central and Departmental should have same cashbalances

• System should be more flexible to permit change inpolicy/law/reporting requirements

• Able to make payments from multiple funds on onewarrant or an automated allocation process

• Unit Cost support/functionality

• Provision for a true management tool to performcomparisons of current year budget to actualexpenditures; perform cost accounting; allow forecastinginto future years; provide calculation of depreciation

• Ability to aggregate financial information from multiplefunding entities

• Accept input from bar code readers and scanners

• Ability to track and report on contract and grant activity

• Transactions between Agencies to update bothagencies records

• Better edits at the time of entry

• Ability to easily interface with Agency Specific shadowsystems

• User friendly input and browse screens, including theability to find data using various fields and ability to getall needed information at the first look up screen

• Reconciliations between systems is a big workload

• More levels in Organization code

• Real time updates, eliminate two day delay in batchprocessing

• User friendly ad hoc reporting and GUI interface

• More paperless technology, i.e., electronic invoicing

• Vendor history information

• Systems should be more integrated i.e., Vendor inSPURS=Departmental, CMS projections migrate tomicro projections in Agency fund, COPES/Payroll datashould create Departmental Accounting transactions,Central and Departmental should have same cashbalances

• System should be more flexible to permit change inpolicy/law/reporting requirements

• Able to make payments from multiple funds on onewarrant or an automated allocation process

• Unit Cost support/functionality

• Provision for a true management tool to performcomparisons of current year budget to actualexpenditures; perform cost accounting; allow forecastinginto future years; provide calculation of depreciation

• Ability to aggregate financial information from multiplefunding entities

• Accept input from bar code readers and scanners

• Ability to track and report on contract and grant activity

Improvements Needed*:Functional QualityFLAIR DA

Functional QualityFLAIR DA

Provided

Required

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Good

Fair

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* Improvement comments provided by FLAIR PR users survey

• Agencies to have access to payroll history with queryabilities. Data should be available for a longer period oftime.

• User friendly input and browse screens, including theability to find data using various fields and ability to get allneeded information at the first look up screen and ad hocreporting

• Integration with COPES and other FLAIR systems so thatall systems have complete and consistent information

• All additives to be included on regular paycheck• Real-time time and leave processing• Electronic signatures for personnel actions and

management approvals to eliminate paper pushing• Timely updates of Departmental Records• Central location to access payroll/personnel system

support. Currently DMS and/or BOSP.• Better and faster way to correct erroneous

insurance/benefit deductions• Transactions to be time delimited so that proper rates and

limits are applied• Ability to get an emergency wage payment timely• Automate all payment types• Enhance edits for duplicate payments• Automate the calculations for partial payments and

overtime• Flexibility to meet specific needs of agency• Ability to request perquisites by class• More timely reports after payroll processing to detect

errors prior to wt. dt.• Benefit information to go with employee when employee

transfers• Payroll System to address IRS reporting requirements• Need for system to quickly respond to changes required

by law or policy• Ability to make real-time updates for w-4 or adjustments

etc.

Improvements Needed*:Functional QualityFLAIR PR

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Provided

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Technical Quality–FLAIR (All Components)

Part of the Functional Quality Survey was to ask the end users of the FFMISsubsystems how the applications meet their present and future business needs.They rated the overall application from 1 to 5 as follows:

1 = New Application Required2 = Major Enhancement Needed3 = Significant Modifications Required4 = Minor Modifications Required5 = Completely Acceptable As Is

The following charts show the result of this important attribute of the subsystems byaverage response by application, then by the percentage of respondents in each ofthe five categories by application. The consensus is that most of the subsystems donot meet the State of Florida’s current or future needs.

Overall Functional Quality AssessmentOverall Functional Quality Assessment



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Overall FQ Assessment

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

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• Almost all applications will notmeet the future businessneeds of the State of Florida

• Most applications are barelymeeting current businessrequirements

• Significant modifications needto be made to at least sixapplications

• Modifications will affect thoseapplications that need onlyminor modifications

Overall Functional Quality AssessmentOverall Functional Quality Assessment

Acceptable As Is

Minor Modifications Required

Significant Modifications Required

Major Enhancement Required

New Application Required

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FLAIR Central Accounting

0%

20%

40%

60%

80%

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Meets Present Business Meets Future Business

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FLAIR Payroll

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80%

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FLAIR Information Warehouse

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80%

100%

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Overall Functional Quality Assessment ChartsOverall Functional Quality Assessment Charts


Meets Present Business Meets Future Business Meets Present Business Meets Future Business



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COPES

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80%

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1 2 3 4 5

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SPURS

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LAS/PBS

0%

20%

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CMS

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Vendor Bid System

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* Information obtained through interviews & questionnaires * Information obtained through interviews & questionnaires

• Core legacy systems usehierarchical and inverted listdatabases

• Client/Server and webapplications use relationaldatabases

• One database can notautomatically update anotherdatabase with the sametransaction

• Hierarchical DBs are difficultfor reporting

• Applications that usehierarchical DBs are costlyand time consuming tochange

Multiple databases for FFMIS subsystems lead to difficulty in exchanging data


SYSTEM OracleUnisys DMS

AdabasC

IBM Universal DB2

CMS XSPURS XSPURSView XVendor Bid XCOPES XCOPESView XFLAIR XFLAIR IW XLAS/PBS X

Databases*

* Information obtained in Y2k Agency File Interface Directory 9/1999

• FFMIS subsystems account for652 out of 1,451 interfaces theState of Florida uses to sharedata

• The high number of interfacesindicate that agencies’ functionalneeds are not fully provided byFFMIS

• Interfaces are costly to maintain

• Changes to interfaces canadversely affect an agency

• Any change to the core FFMISsystem could result inproblems/changes to interface(s)

• Of all the State of Florida’s dataprocessing systems, FFMISaccounts for 44.9 percent of allinterfaces

Interfaces were built because the FFMIS subsystems do not support all of the functionality required by agencies

Interfaces were built because the FFMIS subsystems do not support all of the functionality required by agencies

Total FFMIS Interfaces

118

242

16

84

55

122

12

3

Copes

FLAIR

SPURS

CA

DA

PR

LAS/PBS

CMS



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* Information obtained through interviews and questionnaires

SYSTEM OracleUnisys DMS

AdabasC

IBM Universal DB2

CMS XSPURS XSPURSView XVendor Bid XCOPES XCOPESView XFLAIR XFLAIR IW XLAS/PBS X

Databases*

Application Portfolio Analysis - Databases

• Current databases do notautomatically update anotherdatabase with the same transaction

• Database architecture makesapplication changes costly and timeconsuming

• Most core legacy systems usehierarchical and inverted listdatabases (Adabas C and DMS)

• Client/Server and web applicationsuse relational databases (Oracle,DB2, and IBM Universal)

• Hierarchical databases offer fewerquery and reporting tools

Application Portfolio Analysis - Implementation Date

The chart below summarizes the original implementation dates of the major FFMIS subsystems.

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Original Date of Implementation

1965

1970

1975

1980

1985

1990

1995

2000

FL

AIR

CA

FL

AIR

DA

FL

AIR

PR

FL

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PE

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CO

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SP

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SP

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Subsystem Name

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FLAIR CA - Central Accounting

FLAIR DA - Departmental

Accounting

FLAIR PR - Payroll Accounting

FLAIR IW - Information

Warehouse

SPURSVBS -Vendor Bid System

FLAIR CA - Central Accounting

FLAIR DA - Departmental

Accounting

FLAIR PR - Payroll Accounting

FLAIR IW - Information

Warehouse

SPURSVBS -Vendor Bid System



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Business Case Study 5—System Requirements

Final Report Page 5-1 kpmg

5. System Requirements5.1 Methodology

The System Requirements Phase allowed KPMG to gain consensus on system requirements as they

pertain to the current or proposed Florida Financial Management Information System (FFMIS)

subsystems. The System Requirements Phase included understanding and documenting the State’s key

technical and business requirements. KPMG used existing State material, industry best practices, results

of the IT Assessment and Business Process Reengineering (BPR) components, and KPMG technical

leaders’ experiences to build a draft of system requirements. Key State personnel reviewed the draft of

system requirements. KPMG conducted workshops to finalize the requirements.

KPMG developed a set of high-level system requirements to form a basis for measuring the functionality

of the five system options in our evaluation. The requirements are not intended to be a full set of

functionality requirements that should be present in the final solution.

The IT Team developed an initial draft of the As-Is system requirements using various methods. KPMG’s

methodology to develop the requirements is illustrated in Exhibit 5-1.

Exhibit 5-1Requirements Development

KPMG’s approach involved first analyzing each subsystem by reviewing system documentation and

deriving requirements from that review. We compared each derived requirement to a set of requirements

developed from other states, and from KPMG’s experience in identifying best-in-class requirement

standards. This comparison helped to evaluate the relevance and substance of each requirement derived

from the documentation. Expert users and leaders from a cross-section of State agencies reviewed the

Best-in-ClassDocumentation

KPMGExperience

ExistingSystem

Documentation

SystemFunctional

Requirements

BusinessProcess

Reengineering

StateExpert User/Leaders

EvaluateOptions andAlternatives

5—System Requirements Business Case Study


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preliminary requirements. The requirements were updated based on data from BPR activities. The

resulting system functional requirements were used as one mechanism to evaluate the five options.

KPMG’s analysis was limited to five key subsystems and the significant exception systems. Exhibit 5-2

summarizes these subsystems.

Exhibit 5-2FFMIS Subsystems

System Function System Name System Owner

Accounting Florida Accounting InformationResource (FLAIR) Subsystem

Department of Banking and Finance

Human Resources Cooperative PersonnelEmployment Subsystem (COPES)


Purchasing Statewide Purchasing Subsystem(SPURS)


Budgeting Legislative Appropriation System—Planning and Budgeting Subsystem(LAS/PBS)

Executive Office of the Governor

Cash Management Cash Management Subsystem(CMS)


After reviewing documentation collected, the IT Team developed summary definitions of the desired

requirements for each subsystem. These definitions came directly from current system documentation and

information gathered during discussions with users of the five subsystems. The definitions were then

translated to derived requirements based on the functionality being addressed. The derived requirements

were compared to KPMG’s best-in-class requirement standards for financial management systems to

develop the final system requirements list. Exhibit 5-3 shows the steps used to develop the overall

requirements. A description of each step used in the methodology is provided in the following paragraphs.



Exhibit 5-3KPMG’s Methodology

STEP 1Review ExistingDocumentation

STEP 5Perform Requirements

Union

STEP 4Derive Requirements from

System Documentation

STEP 2Identify and Document

System Processesand Procedures

STEP 6Refine Requirements

IT TEAM

ExternalKPMG

STEP 3Review Best-in-Class

Requirements

BPR TEAM

STEP 7Develop FinalRequirements

State Users /Leaders

Step 1—Review Existing Documentation

KPMG’s process began with Step 1 as illustrated in Exhibit 5-3. The KPMG Team collected the

following documentation to assist in developing requirements for the financial management systems:

! System documentation, user manuals, and procedure manuals for FLAIR, COPES, SPURS,LAS/PBS, and CMS

! Department of Management Services (DMS) Human Resources/Payroll Request for Proposal(DMS 97/98-001)

! Public Services Financial Management Systems Request for Proposal documents from Indiana,Kentucky, Michigan, and North Carolina to be used for further review

Step 2—Identify and Document System Processes and Procedures

In Step 2, KPMG reviewed the documentation collected in Step 1 and developed a summary of the

procedures and interfaces involved in system operation. Along with the summaries, system process flows

(context diagrams) were developed to represent KPMG’s understanding of the flow of information within

each subsystem.



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Step 3—Review Best-in-Class Requirements

KPMG reviewed the RFP documents collected from various states for relevance, similarity, and level of

detail. We noted requirements that had relevance to the processes being performed by the FFMIS

subsystems and that were selected for further analysis. A hybrid of these requirements was selected to be

used as the best-in-class baseline.

Step 4—Derive Requirements from System Documentation

During Step 4, we developed a list of requirements using the deliverables prepared in Step 2. We

developed these requirements based on existing functionality in FLAIR, COPES, SPURS, LAS/PBS, and

CMS using:

! Procedure lists

! Process diagrams

! Context diagrams

! Survey instruments

The requirements extraction was performed by staff familiar with the operation of the system and

validated by staff experienced in system analysis and documentation of system functional and technical

requirements.

Step 5—Perform Requirements Union

In Step 5, we compared the derived financial management systems requirements to KPMG’s best-in-class

requirements obtained in Step 3. Requirements that were unique to Florida were coded as FL

requirements. Requirements that were identified both in State documentation and also in best-in-class

documentation were also coded as FL requirements. In addition, those best-in-class requirements that

were applicable were noted as BP requirements. Each type of requirement was then incorporated in the

System Requirements Document.

Step 6—Refine Requirements

In Step 6, feedback from the following sources was incorporated into KPMG’s System Requirements

Document:



! 1999 Florida Statues—These statutes were reviewed to update requirements for the five keysubsystems

! BPR Team Findings—These findings identified areas where there might be new requirements orrecommendations for improvement. Shadow systems were also identified. Shadow systems aresystems used to perform a process outside the five key subsystems

! IT Team Deliverables:

– IT Assessment—Functional Quality Questionnaire: This questionnaire was sent to more than300 agency users and solicited feedback on the functionality of the five key subsystems.Included in the questionnaire were questions on new requirements and recommendations forimprovement

– IT Assessment—Technical Quality Questionnaire: This questionnaire was completed withapplication development leaders and solicited feedback on the technical soundness andquality of the five FFMIS subsystems

– IT Assessment—Application Inventory: The IT Team performed an inventory of theapplications and systems being used to perform financial management systems’ businessprocesses and placed the inventory in an Access database for further analysis

! External KPMG Resources:

– KPMG Industry Leaders—Key SAP, Oracle, and PeopleSoft industry leaders were eitherbrought on site or consulted to obtain feedback on the validity, breadth, and independence ofKPMG’s requirements

– KPMG Public Services Industry Practice Leaders—Partner-level financial system practiceleaders were consulted to validate and refine the list of requirements

Data from all sources was compiled and stored in requirement templates that were distributed to

functional and technical representatives for final feedback and input.

Step 7—Develop Final Requirements

In Step 7, the IT Team distributed the draft requirements, through the State’s Project Manager, to

appropriate representative users for review, comment, and validation. These users were asked to classify

the draft system requirements as:

! (H)igh—Capabilities that the current systems provide

! (M)edium—Capabilities that do not currently exist but are desirable

! (L)ow—Capabilities that have limited value



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KPMG then conducted a series of workshops to validate the requirements for each subsystem. The

workshops were held with a group of the functional experts from State agencies. These workshops were

used to validate the content of the requirements list.

5.2 Requirements List

The result of the System Requirements Phase is the following list of approximately 1,500 high-level

requirements. This list was used in the evaluation phase to evaluate the IT options.


Type Meth Ref # Source Functional Requirements Description RankingPUR Core Requirements

2 2 1.1 FL Ability to provide on-line entry and updates of:2 2 1.1.1 Vendors2 2 1.1.2 Requisitions2 2 1.1.3 Bids2 2 1.1.4 Purchase orders2 2 1.1.5 Contracts2 2 1.1.6 Receiving reports2 2 1.1.7 Change orders/addenda2 2 1.1.8 Cancellations2 2 1.1.9 Planning1 3 1.2 FL Ability for the system to have default information based on user ID with

override capability:1 3 1.2.1 Bill to/Ship to information1 3 1.2.2 Accounting information1 3 1.2.3 Contact person and phone number with drill down capability for email

address and mailing address.1 4 1.3 BP Ability to, without drill down, view on-screen item descriptions, names, etc.

rather than codes on any document type.2 3 1.4 BPR Ability to access a user friendly commodity code system. (e.g. Indexing and

Drop down menu)2 3 1.5 FL Ability to issue changes on-line and cancel against the following posted

documents with appropriate security:2 3 1.5.1 Requisitions2 3 1.5.2 Purchase Orders 2 3 1.5.3 Contracts2 3 1.5.4 Bids (bid addenda)2 3 1.5.4 Receiving reports2 3 1.6 FL Ability to change any aspect of the document including but not limited to:

2 3 1.6.1 Account codes2 3 1.6.2 Header (including terms and conditions)2 3 1.6.3 Detail (commodity, quantity, unit cost, unit of measure and

specifications)2 3 1.6.4 Subcontractor information with appropriate edits2 4 1.7 FL Ability to automatically assign a unique source document number, in series,

(e.g. by agency) for the following:2 4 1.7.1 Requisitions2 4 1.7.2 PO’s2 4 1.7.3 Contracts 2 4 1.7.4 Change orders2 4 1.7.5 Amendments2 4 1.7.6 Receiving2 4 1.7.7 Blanket purchase order2 4 1.7.8 Bid requests1 4 1.7.9 Inventory Control1 4 1.7.10 Fixed Assets1 4 1.8 BP Ability to set up specific approval paths at the commodity level.2 3 1.9 BPR Ability to reverse the original impact of a canceled document (e.g. pre-

encumbrance and encumbrance).2 4 1.10 FL Ability to inquire and report against vendor and product history files using

user defined criteria e.g. date, commodity, user group, etc.

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2 4 1.11 FL Ability to support system or user generated requisition and purchase order numbers.

2 3 1.12 BPR Ability to support user defined on-line vendor registration (e.g. through the Web), including interactive assistance to guide vendors through the process.

2 5 1.13 BP Ability to support links for agencies to electronically submit vendor complaints to the buyers, and vice versa.

2 5 1.14 BP Ability for the buyer to enter on-line the resolution of the agency complaint.

2 5 1.15 BP Ability for the system to track the timely response of the buyer/agency to resolve the complaint.

2 5 1.16 BP Ability for complaints and resolutions to link to the vendor history file.1 5 1.17 BP Ability to maintain integrated pre-qualification records, including DBE

registration, engineering associations, staff experience, equipment, etc.

2 5 1.18 BPR Ability for vendors to look up their invoices on-line e.g. on the Web.2 2 1.19 FL Ability to store up to 999 vendor addresses with suffixes per vendor.2 4 1.20 FL Ability to maintain vendor records that, at a minimum, encompass the

following:2 4 1.20.1 All information contained in the vendor registration2 4 1.20.2 EFT information2 4 1.20.3 Performance history (delivery dates, etc.)2 4 1.20.4 Unique vendor number2 4 1.20.5 Contracts associated with the vendor2 4 1.20.6 Other user defined fields2 4 1.20.7 Vendor on-hold (not allowing payment or receipt of bids).2 4 1.20.8 1099 reportable2 4 1.20.9 Federal ID type2 4 1.20.10 Back-up withholding2 4 1.20.11 Products/services offered2 4 1.20.12 Product performance2 5 1.21 BP Ability to maintain an on-line database of each vendor’s performance,

communications, quality, user defined comments, etc.2 5 1.22 BP Ability to maintain and track product performance.2 4 1.23 FL Ability to have user defined criteria for vendor file management e.g. purging

vendors with no activity within a certain time frame, with system generated notification (through EDI, e-mail, computer generated fax, etc.) to the affected vendors.

2 5 1.24 BP Ability to flag vendors (with user defined criteria) to manage them based on their previous record or current situation e.g. not sending bid documents to vendors who owe state taxes, etc.

1 5 1.25 BP Ability to support user defined links to external databases (e.g. the Federal Tax Identification system) to support vendor management activities, e.g. diverting payments if vendor has not paid their federal taxes.

1 4 1.26 FL Ability to have a minimum four places after the decimal for all prices.2 3 1.27 FL Ability to either encumber or pre-encumber funds at any stage in the

process.2 3 1.28 FL Ability to enter account distributions at multiple approval levels.2 4 1.29 BP Ability for system to generate reminder notices to vendors for shipments

due based on user defined thresholds.

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2 5 1.30 FL Ability for user definition of fields that must be completed for procurement activities to proceed. In addition, this definition must be flexible i.e. different requirements for different commodities, fund types, etc.

1 5 1.32 FL Ability to automatically create PO’s from user defined sources e.g. for preferred vendors.

1 4 1.33 FL Ability to display, at a minimum, the previous three prices for a specific commodity.

2 5 1.34 BP Ability for the system to indicate whether the commodity is an inventoried item or available from an in-house supplier.

2 5 1.35 BP Ability to order from in-house suppliers.2 5 1.36 FL Ability for the end user and receiving staff to receive on-line shipping

notifications and order acknowledgments from vendors.1 4 1.37 BPR Ability for purchasing and inventory modules to share a common receiving

function and commodity file.2 5 1.38 FL Ability to support (including vendor updating) online catalogs that can be

used to automatically order:2 5 1.38.1 By fax2 5 1.38.2 By EDI2 5 1.38.3 Via the Web1 3 1.39 BP Ability for ordered items to update commodity usage and history tables.

1 4 1.41 BP Ability to set price and quantity tolerances by line item or purchase orders for over-runs and under-runs.

1 4 1.42 FL Ability for the system to automatically create and track orders for items that have graduated pricing e.g. the first 25 items are $0.25 , 26-50 items are $.20, etc.

2 4 1.43 BP Ability to have multiple ship to locations on purchase orders.2 4 1.44 BP Ability to have multiple remit to locations on purchase orders.2 3 1.45 FL Ability to enter requisitions of any length in one master document, with on-

line updating of all other affected documents.2 3 1.46 FL Ability to award multiple contracts from one requisition.2 3 1.47 FL Ability to perform the following requisition functions on-line:2 3 1.47.1 User-friendly inquiry without having to know the requisition number

2 3 1.47.2 Add2 3 1.47.3 Change2 3 1.47.4 Cancel2 3 1.47.5 Delete2 4 1.48 FL Ability to retrieve or lookup line-item information from history or master files

and include on the requisition any combination of the following:2 4 1.48.1 Commodity code/inventory item number2 4 1.48.2 Description2 4 1.48.3 Unit of measure2 4 1.48.4 Recommended vendor2 4 1.48.5 Buyer2 4 1.48.6 Previous vendor2 4 1.48.7 Previous price2 4 1.48.8 Account information2 4 1.48.9 Ship to/Bill to/Remit to1 5 1.49 BPR Ability to maintain an on-line specifications library.

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2 5 1.50 BPR Ability to support an on-line specification library interface into the Internet.

1 5 1.51 BPR Ability for the system to notify affected users of changes to underlying specifications in the library if these changes would affect any open documents that a specific user is working with.

1 5 1.52 BP Ability to calculate line item cost estimates, using historical or other user defined information.

2 3 1.53 FL Ability to display the total estimated dollar amount of the requisition.1 4 1.54 FL Ability for user to define multiple order request types, including but not

limited to:1 4 1.54.1 Inventory items1 4 1.54.2 Non-inventory & fixed asset items1 4 1.54.3 Services1 4 1.54.4 Blanket release for commodities1 4 1.54.5 Blanket order contract1 4 1.54.6 Blanket release for services1 4 1.54.7 Direct purchase orders (no requisition created)1 4 1.54.8 In-house providers e.g. Correctional Industries2 4 1.55 FL Ability for multiple requisitions to be combined into one bid.2 4 1.56 FL Ability for a single requisition to be split over any combination of:2 4 1.56.1 Purchase orders2 4 1.56.2 Bid documents2 4 1.56.3 Contracts2 4 1.56.4 Blanket Purchase Orders2 4 1.56.5 Vendors2 4 1.56.5 Buyers2 2 1.57 FL Ability to produce a list of potential vendors (e.g. during bid preparations)

from the vendor registration file or other sources, and to be able to customize the resulting list as required.

2 3 1.58 FL Ability to maintain a terms and conditions table for contracts.2 4 1.59 BPR Ability to store and retrieve contract templates.1 5 1.60 BP Ability to make multiple awards per line item for blanket contracts, and for

the system to capture this information in its history.2 5 1.61 BPR Ability for the system to automatically generate contract renewal notices

which are triggered by the expiration date field.2 5 1.62 BPR Ability to forward contract renewal notices (e.g. on screen, by EDI, computer-

generated fax, mail, etc.) to vendors and agencies.2 5 1.63 BPR Ability to track milestones, payment milestones, retainage and milestone

performance within a contract e.g. personal service contracts, and contracts with deliverables.

1 5 1.64 BPR Ability to track cost-plus contracts for services.2 3 1.65 FL Ability to have multiple account distributions associated with one contract.

1 5 1.66 BPR Ability to support revenue-producing contracts.1 5 1.67 FL Ability for system to perform a global price adjustment to a price contract

either through a user defined change (e.g. global increase of 5% to all prices) or by using vendor supplied data (e.g. new price list in ASCII flat file format).

2 4 1.68 FL Ability to maintain and retrieve historical information on construction contracts.

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2 3 1.69 FL Ability to create and maintain templates of documents e.g. terms and conditions, instructions to vendors, etc.

2 4 1.70 FL Ability for a single bid to be split over any combination of:2 4 1.70.1 Purchase orders2 4 1.70.2 Bid documents2 4 1.70.3 Contracts2 4 1.70.4 Blanket Purchase Orders2 4 1.70.4 Vendors2 4 1.70.5 Buyers2 3 1.71 FL Ability to allow vendor listings to be sorted by user defined categories.2 4 1.72 FL Ability to support the following types of bids:2 4 1.72.1 Formal bids/RFP’s - advertised sealed bids2 4 1.72.2 Informal bids2 4 1.72.3 Informal request for quotes2 5 1.73 FL Ability for a vendor to specify a particular brand in a bid that cross-

references to an agency-defined acceptable brands list.2 5 1.74 BPR Ability to automatically edit the contents of the contract and/or PO against

built-in procurement guideline and rules. (e.g. Is a quote, bid, RFP, and/or IT approval required)

2 5 1.75 BPR Ability to locate and extract sample contract and/or PO language from a Knowledge Database.

2 4 1.76 BPR Ability to support posting the formal bid, addendum, results and award to the Web.

2 3 1.77 BPR Ability to send the bid to potential bidders via EDI, email, fax, regular mail, etc.

2 5 1.78 BPR Ability to receive responses to bids electronically (in a user-defined format), in a secured environment and upload data to a bid tabulation screen.

2 5 1.79 BPR Ability to electronically time and date stamp the electronic bid1 5 1.80 BPR Ability to automatically limit “receipt” responses from registered vendors

only2 5 1.81 BPR Ability to enter and track non-electronic bid responses.2 5 1.82 BPR Ability to attach test results and other documents to the electronic bid

record.2 5 1.83 BP Ability to easily electronically tabulate bids in the following manner:2 5 1.83.1 Direct feed from electronic responses2 5 1.83.2 Grouping line items or multiple or single line items2 5 1.83.3 Modify bid tabulations by adding lines as required e.g. shipping

charges2 5 1.83.4 Accept formulas as a part of the bid (per line or group of lines)2 5 1.83.5 Accept weighted tabulation criteria as part of the bid (per line or group

of lines)2 5 1.83.6 Take into consideration discounts in an unlimited manner (per line or

group of lines)2 5 1.83.7 Take into consideration trade-ins, replacements and salvage (per line

item or group of line items)2 5 1.83.8 Allowance for revenue generating contracts2 4 1.84 BP Ability for trade-ins to be reflected on purchase orders upon award without

requiring extensive adjustments to the original document.2 4 1.85 FL Ability to award a single line item to multiple vendors.

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2 5 1.86 BPR Ability to support electronic public viewing of bid results after the tabulation is official.

2 5 1.87 BPR Ability for system to automatically schedule bid opening dates with override capability.

2 5 1.88 BPR Ability for bid transactions to be tracked from cradle to grave.1 5 1.89 BPR Ability to provide an overridable warning message to the buyer for any

contract award which is not to the low bidder.1 5 1.90 BPR Ability to define criteria where completion of an award explanation field are

mandatory.2 4 1.91 FL Ability to automatically create a purchase order, from information on the bid

or requisition.2 3 1.92 FL Ability for purchase order to specify multiple delivery dates.2 4 1.93 FL Ability to create on-line blanket purchase orders.2 5 1.94 FL Ability for release transactions to be issued against a blanket purchase

order.2 5 1.95 FL Ability to enter account distributions on blanket order releases which will be

used to encumber funds.2 5 1.96 FL Ability to prevent a blanket release transaction from posting if it will cause

the blanket purchase order remaining amount to go negative, with override capabilities.

2 4 1.97 BPR Ability to pre-load blanket and regular PO’s for upcoming fiscal year and “encumber and release on or after July 1.

2 4 1.98 BPR Ability to encumber current year funds for a multi-year PO and update encumbrance at start of each fiscal year.

2 5 1.99 BPR Ability to compare receipts and invoices (quantities, receipt date and prices) with the purchase order line items originally ordered and report discrepancies.

2 4 1.100 BP Ability to support updates of open purchase order status and balances based on receipts into inventory.

1 5 1.101 BP Ability to support updates of inventory on hand and on order when items are received into inventory.

1 5 1.102 BP Ability to authorize designated receivers by department.1 5 1.103 BP Ability to optionally perform blind receiving, including at a minimum:1 5 1.103.1 Quantity blocked out but product description, number and unit of

measure showing1 5 1.103.2 Prompts to indicate to receiver that product count is over or under

ordered amount1 5 1.103.3 System forces recounts and also allows process to continue once

recount indicates correct amount1 5 1.103.4 In case of discrepancy, system generates on-line notification for

buyer or end-user that would be able to either hold payment or allow partial payment. System would automatically modify all related documentation accordingly

1 5 1.103.5 An easy drill down to a more detailed description of the item2 4 1.104 BP Ability for multiple receiving transactions from multiple locations to

reference the same PO.2 4 1.105 FL Ability to provide for the following transactions:2 4 1.105.1 Partial receipts2 4 1.105.2 Inspections2 4 1.105.3 Material disposition (stocked, rejected, returned and disposed)2 4 1.105.4 Return goods

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2 4 1.105.5 Trade-ins (a line item rather than deducting from the actual cost)

2 5 1.106 BPR Ability to track compliance with other shipping instructions (e.g. documentation, packing specifications, etc.) and to modify the vendor performance records accordingly.

2 5 1.107 BPR Ability to process a return goods authorization (either electronic or hard copy depending on vendor capabilities) for materials to be returned (i.e. rejected goods).

1 5 1.108 BPR Ability to track and enter a reason for rejection for each receiver.2 4 1.109 FL Ability to provide for purchase order receipt in total for selected vendors or

commodities so that line item entries are not required.2 4 1.110 BP Ability to enter hazardous materials codes based on user-defined

standards.1 5 1.111 BPR Ability for receiving, not payment, to update inventory.2 5 1.112 BP Ability to process two-way matches - PO and receipt; services rendered and

invoice; Receiving report and invoice.2 5 1.113 BP Ability to process three-way matches - PO, receipt and invoice.2 5 1.114 BP Ability to process four-way matches - PO, receipt, inspection report and

invoice.2 5 1.115 BP Ability to integrate purchasing and payment processes.2 3 1.116 FL Ability to process partial receipts or over shipments.2 5 1.117 BPR Ability to support procurement card interface for consumption dollars.2 4 1.118 BP Ability of system to handle the assignment of payments to an alternate

vendor.2 5 1.119 BPR Ability to provide on-line access to relevant information, product histories,

documentation and financial information to support analysis activities.

1 5 1.120 BPR Ability to track results of audits on-line and be able to analyze the resulting costs and benefits.

2 3 1.121 FL Ability to access, track, and maintain vendor information by FEID, SSN, or "other" unique identifier.

2 3 1.122 FL Ability to access and display fund encumbrance by account code.2 3 1.123 FL Ability to verify current balances for: Fund Cash, Fund releases,

Organization Cash, Organization allotments, Grant Fund Cash, Contract Fund Cash, Grant Allotments, and Contract Allotments before issuing a PO.

2 3 1.124 FL Ability to check Available Balance for agencies that want encumbrance, disbursement, payable and/or general accounting transactions checked for positive balances prior to accepting transaction.

2 3 1.125 FL System shall validate that all PO funds have been allocated to a single or multiple accounts during addition, modification, or deletion of PO information.

2 2 1.126 FL Ability to copy existing PO information into a new or modified PO.2 3 1.127 FL Ability to designate if subsequent requests can or cannot be added to PO.

2 2 1.128 FL Ability to establish and maintain lists for: Buyers, Ship To, Invoice To, Tax Status, Freight Terms, Commodity Number, Unit of Measure, Unit, Vendor, Vendor Status.

2 2 1.129 FL System shall validate data entry information that is maintained in system lists.

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2 1 1.130 FL Ability to enter discount percentage to be taken on PO.2 2 1.131 FL Ability to enter term conditions for %, net days, and/or date of month if

vendor offers prompt payment discount.2 5 1.132 BPR Ability to track the utilization of discounts.2 3 1.133 BPR Ability to specify and track a need date.1 2 1.134 BPR Ability to specify and track a "promised by" date.2 1 1.135 FL Ability to specify if purchased items contain recycled content.1 2 1.136 FL Ability to specify a line item "for internal use only." When specified, the line

item description will not print on PO.2 4 1.137 BP Ability to distribute PO across multiple account codes by percent, quantity,

or dollar amount.2 4 1.138 BPR Ability to flag items within a PO that must update the Property File after

receipt of goods. 2 Interface / Integration Requirements

2 3 2.1 FL Purchasing transactions including requisitions, purchase orders and contracts will validate against system wide reference tables for all accounting codes

1 5 2.2 FL Requisition transactions will create real time accounting entries that debit appropriate pre-encumbrance accounts and credit reserve for pre-encumbrance accounts

2 4 2.3 FL Purchase order and contract transactions will create real time accounting entries that debit appropriate encumbrance accounts and credit reserve for encumbrance accounts

2 2 2.4 FL Purchasing and Accounts Payable will share a common vendor file (see accounts payable requirements for additional details)

2 4 2.5 FL Purchasing and Accounts Payable will share a common set of inquiries which span the entire purchasing/payables cycle including requisitions, purchase orders, receivers, vendor invoices, match status, payment vouchers, and disbursements. Users should be able to infer all of major parts of the document chain based on knowing only one document number (e.g. ability to look up payment voucher based on PO number). See accounts payable requirements for additional details.

2 4 2.6 FL Purchasing and Accounts Payable should have a common set of vendor related inquiries. Included should be a summary inquiry showing pending orders, YTD orders, pending payables, unmatched receivers, and unmatched vendor invoices

2 5 2.12 FL Accounts payable and purchasing modules share a common 2, 3, and 4 way match facility that generates vouchers automatically from successful matches. (See accounts payable requirements for details)

1 5 2.13 FL Provides comprehensive intra-governmental purchasing, payment/settlement, approval processing that spans payables and purchasing modules.

2 4 2.14 FL Purchase order and contract transactions automatically update grant and project budgets with encumbrance information when grant or project codes are entered.

2 4 2.15 FL Requisition, purchase order, and contract accounting entries are automatically posted to grant and project inception to date files

2 3 2.17 FL Purchase orders and contracts create a hard reservation of funds against appropriation and management budgets

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Type Meth Ref # Source Functional Requirements Description Ranking 2 Interface / Integration Requirements

2 3 2.18 FL Provides a purchase requisition transaction that includes multiple accounting and commodity lines.

1 3 2.19 FL Provide a departmental purchase order that accommodates multiple accounting lines and commodity lines. This document would be limited to orders for one department and would typically be used without a requisition.

1 4 2.20 BP Provide a centralized purchase order that can cover orders for multiple departments. This purchase order should require a requisition to precede it. It should have multiple accounting lines and commodity lines.

1 5 2.22 FL Provide an ability to enter and post an intra-governmental purchase order

2 4 2.23 BP Ability to process all transactions by any of the following methods:2 4 2.23.1 Online with real-time posting2 4 2.23.2 Online data entry, editing, and correction with off-line posting2 4 2.23.3 Off-line data feeds with off-line editing and posting followed by online

correction and posting (where required)

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Business Case Study 6—Options AnalysisBest of Breed Option

6. OPTIONS ANALYSIS6.1 Introduction

The primary objective of the Evaluation Phase was to evaluate the requirements, risk, and financial

impact associated with each of the five options shown in Exhibit 6-1.

Exhibit 6-1Options






The functionality provided by each option was evaluated using the business and technical requirements

that were gathered over the course of the Business Case Study. Next, we identified and analyzed three

general categories of risk. The risk categories considered were project risk, continuation risk, and

strategic risk. Finally, we estimated project and maintenance costs for each option, and quantified the

fiscal impact on the State for each option over a 15-year period.

We present our evaluation in this section by first listing the general assumptions upon which we based our

analysis. Then we describe the criteria used for evaluating requirements, risks, and financial impact, and

conclude by providing an in-depth analysis of each option based on the evaluation criteria.

Business Case Study 6—Options AnalysisAssumptions

6.2 Assumptions

We operated under the following general assumptions:

! This review represents a “snapshot in time” as to the configurations and functionality of theFlorida Financial Management Information System (FFMIS) subsystems. All projections arebased on the time that the data was gathered, compiled, and verified. We assumed that theconfiguration and functionality of FFMIS subsystems continued to change during the course ofthis review

! All State entities in the three branches of State government, including the State UniversitySystem, will adopt the recommended option

! All costs are represented using the rate schedules and pricing structures in effect at the time of thereview. Similarly, hardware costs represent the cost today and do not take into account pricingfluctuations due to market conditions, discounts, new technology, and future software releases

! There was no detailed review and inclusion of the agency shadow or feeder systems, other than toreview FFMIS interfaces. The identification of such agency systems was outside the scope of thisproject. These shadow systems could affect the projected implementation schedule of the selectedoption

! The State will have a fully implemented IP-based network, replacing the existing SNA networks,within the next 2 years

! The State is willing to change hardware, operating systems, related networks, and desktopplatforms

! All State personal computers will continue to run commonly used, industry-supported desktopoperating systems

! The State is willing to consider major fiscal policy, legislative, and regulatory changes to improveefficiency and effectiveness

Business Case Study 6—Options AnalysisEvaluation Criteria

6.3 Evaluation Criteria

The specific criteria for evaluating the requirements, risk, and financial impact are outlined in the

following paragraphs.

Requirements Analysis

The functionality provided by each option was evaluated using the business and technical requirements

that were gathered over the course of the Business Case Study. Approximately 1,500 specific

requirements were gathered during the Business Case Study and are included in Section 5. The techniques

used to gather these requirements are also described in Section 5.

The requirements measured for this analysis fall into two major categories: functional requirements and

technical requirements. The relative weight awarded to these two high-level categories are 70 percent and

30 percent, respectively.

To ensure objectivity and the appropriate degree of product and system knowledge, several distinct

groups performed the evaluations. The core Business Case Study team reviewed them to identify and

resolve major inconsistencies and omissions in the rankings provided. The following external groups

performed the requirement evaluation/ranking:

! Functional and technical State personnel, identified as specialists in each of the five FFMISsubsystems, performed the rankings for the As-Is option and Enhanced option solutions. Theseevaluation results were refined by KPMG technical and functional specialists who compared thecurrent processes and environment to the best practices and potential improvements availablewith current technology solutions

! KPMG core team and external resources specializing in each of the three commercial off-the-shelf (COTS) package solutions being considered participated in the evaluation of the COTSoption. This rating process required input from functional and technical specialists in each of thethree COTS solutions under consideration (SAP, Oracle, and PeopleSoft). The rankings allowedus to prepare a composite score for a generic COTS solution for comparison to the other fouroptions. While the high-level requirements allowed us to identify some strengths and weaknessesof each of the COTS solutions, a detailed requirement analysis is necessary to determine the bestpackage fit

! KPMG personnel experienced in custom system design and development, in collaboration withthe KPMG COTS package specialists, were key to the evaluation of the solution presented in theCustom option and the Best of Breed option. The source of information used to evaluate theseoptions included the rankings of the existing systems, the relative fit of each of the COTSsolutions, and the wide range of middleware and network tools available for integration, web-enabling, and reporting

6—Options Analysis Business Case StudyBest of Breed Option

Functional Requirements

The functional requirements ranking consists of two high-level scores: information processing and

business operating requirements.

The information processing category, which represents 50 percent of the functional requirements score,

measures how well the option satisfies the State’s requirements. This rating was calculated from an

analysis of the approximately 1,500 requirements of the five FFMIS subsystems, which were compiled in

the System Requirements Phase.

The requirements are grouped into roughly the same five functional areas as the subsystems of the State’s

FFMIS:

! Financial Accounting: Includes all account processes (General Ledger, Accounts Receivables,and Accounts Payables) and is closely patterned on the processing currently performed by theFlorida Accounting Information Resource (FLAIR) Subsystem

! Human Resources/Payroll: Modeled after the requirements of Cooperative PersonnelEmployment Subsystem (COPES) and the payroll-processing portion of FLAIR, and includestraining, recruitment, time, and labor

! Purchasing: Encompasses all of the requirements indicated for the Statewide PurchasingSubsystem (SPURS)

! Budgeting: Represents the State’s budgeting requirements, and is modeled after the LegislativeAppropriation System/Planning and Budgeting Subsystem (LAS/PBS)

! Cash Management and Investment: Derived from the existing Cash Management Subsystem(CMS) processing system requirements

The compiled list of business operating requirements consists of high-level requirements that represent

the breadth and the scope of the complete FFMIS. They do not, however, address other elements

significant to the effectiveness and usability of the system. To highlight the visionary and strategic

direction of the State for FFMIS, and to measure each option’s adaptability to that direction, we have

added the following measurement criteria with a weight of 20 percent toward the total functional

requirements score.

! Integration: The integration score measures how well the option meets the State’s vision of anintegrated FFMIS. The integration of the financial system components is key to getting accurateand real-time planning and performance measurement reports. The usage of a uniform Chart ofAccounts and uniform business codes is required to achieve this goal. The uniformity of datastructures, the degree of data redundancy, and the number of shadow systems and intersysteminterfaces indicate the overall level of integration


! Flexible Reporting: This score measures how well the option meets the reporting requirements ofthe State. The reports should be flexible for summarization and drill down, and provide accurate,timely information that should be easy to obtain and analyze. This score represents the ability toextract current, consistent data from the system, in an unspecified variety of combinations andformats, to provide a comprehensive decision support system

! Service Level: The accessibility, availability, and responsiveness of the system for updates andreporting are key measures of the service level of the system. Due in part to the pace of change intechnology, service-level expectations of constituents, legislators, and employees are increasing.In particular, we have placed considerable emphasis on web-based forms and reporting in scoringthe accessibility of the system

! Human Resource Utilization: This score measures the degree to which the system supportsemployee productivity. It is believed that e-commerce and web-enabled employee self-servicecomponents add considerably to the productivity potential of the system

! Strategic Direction: The State’s strategic vision is to integrate financial information at the Statelevel. This category measures the degree to which the solution supports the strategic direction ofthe State (for example, management and citizen access to financial information, perceivedfinancial stability, and reduction of manual processes and shadow systems)

Technical Requirements

The technical requirements component of the analysis focuses on the capabilities and flexibility of the

technical architecture associated with each option. This component is given an overall weight of 30

percent and consists of two categories: sustainability and industry direction.

The sustainability category measures the flexibility and adaptability of the proposed architecture and

represents 20 percent of the overall requirement score. Sustainability is measured based on the following

components:

! Scalability: Describes how easily the architecture can be upgraded to support the State’santicipated growth in number of transactions, concurrent users, and changing technology

! System Availability: Describes the amount of system up-time expected or likely available to theend-user, based on the system architecture of each option

! Ease-of-Use: Measures the user friendliness of the environment. This largely depends on the helpand training available. The quality of the graphical user interface (GUI), as well as browser usedfor the front end, is important for this category

! Security: Assesses the system’s security features. Security of the environment is an importantissue. However, security should not be intrusive. Authentication should only be required once persession. Authorization facilities/layers should recognize the user’s profile throughout the entiresession


! Backup and Recovery: Assesses the ability to maintain consistent, recoverable images of thedatabase in a timely manner

! Architectural Integration: Addresses ease with which hardware and software componentsintegrate with each other

The industry direction category weighs the architecture of the proposed options against the current

industry standards and technology forecasts, and represents the remaining 10 percent of the technical

requirements score. The factors considered in the analysis of the industry direction include the following:

! Client/Server Environment: The degree to which FFMIS uses client/server technology

! Interoperability: Ease with which FFMIS interacts with various other application software andCOTS software belonging to the State agencies

! Uniform Data Models: The consistency of the data dictionary across multifunctional systems. Aconsistent data definition is important for an effective data exchange and to analyze theconsolidated reports

! Web, Workflow, and Middleware: Efficient and effective use of tools and techniques for webenablement, workflow, and middleware capabilities to connect systems seamlessly

! Open Systems: Degree to which application programming interfaces are published and generallyavailable, and the ease of interfacing with other systems

! Development and Test Tools: Quality, sophistication, ease-of-use, and effectiveness ofdevelopment and test tools

Risk Analysis

Risk accompanies any major change to an organization, especially technology change. We define risk in

this analysis as the “possibility of loss.” Three distinct categories of risk are assessed in this analysis:

! Strategic Risk: Relates to the risk of not meeting the State’s strategic information technologygoals, and applies uniformly to all the options presented in this analysis

! Project Risk: Relates directly to Options 2 through 5. We will define the risk elements, or riskfactors, associated with large-scale IT projects for each of the options

! Continuation Risk: Applies to all the options presented, and relates to the risks associated withongoing operations of the State’s financial system (1) after project completion or (2) if theexisting system is used as-is, whichever is applicable

The people, processes, and technology in each of the three risk categories are discussed in the following

paragraphs.


Strategic risk factors include management, employee, and citizen access to data; perceived financial

stability as it relates to the State’s financial reporting and accounting infrastructure; and the State’s

strategic goal of eliminating data redundancy and inconsistency. The risk of the State being unable to

fulfill its strategic goals will be assessed for each of the five options.

Project risk factors include such risks as project size and effort, requirement stability, and overall design

complexity. The project risk factors analyzed will include those risk factors that have historically been—

based on industry research and KPMG experience—the key determinants in a large-scale IT project’s

success or failure.

Continuation risk factors address risk associated with a fully installed system. These types of risk, which

include enhancement capability, scalability, and technical obsolescence, will be incurred under each of

the five options. The acknowledgement and assessment of continuation risk factors are crucial in

determining how well the IT system is positioned to serve an organization in future years.

For each option, we will assess the perceived level of risk for the three risk categories. This risk ranking

will then be applied to the final evaluation of the options presented.

Financial Analysis

In this analysis, we evaluated each IT option to measure the value of the investment. We started this

process by measuring the operating cost of FFMIS. Then we estimated the implementation costs for

Enhanced, Custom, COTS software, and Best of Breed solutions. Next, we estimated the cost of ongoing

operations of each new system, if implemented. The cost estimation of each option used the information

gathered in the IT Assessment and Requirements phases, which were performed before the Evaluation

Phase. The costs of implementation and operation are totaled for 15 years.

This evaluation also included the future benefits from improving the financial management practices and

enhancing productivity through increased leverage of technology based upon the Business Process

Reengineering (BPR) recommendations. We quantified the fiscal impact on the State of each option for

15 years. For each option, we calculated the total cost of ownership, savings, length of time required to

pay back the investment, the net present value of future cash flows, and the internal rate of return.

We made certain general assumptions during our analysis of the total cost of ownership and of perceived

savings from the BPR analysis. Sizing information used to compute the hardware capacity in terms of

annual transaction volume is shown in Exhibit 6-2.


Exhibit 6-2Hardware Capacity

SystemTransaction

Volume

FLAIR 89,000,000

COPES (Personnel) 27,000,000

SPURS (Purchasing) 18,000,000

LAS/PBS 3,000,000

CMS 20,000,000

Employees 250,000

Purchasing Vendors 50,000

Registered Users 12,000

Concurrent Users 2,500

Total 157,314,500

Server sizing was estimated using the information in Exhibit 6-3.

Exhibit 6-3Server Sizing

ProductionEnvironment Processor Speed Active Memory Storage Memory

Database Server(s): 12-24 @ ~550MHz 12GB 4.5TB

Application Server(s): 6 @ ~550MHz 4GB 36GB (Usable)

Web Server(s): 4 @ ~550MHz 1GB 9GB (Usable)

DevelopmentEnvironment Processor Speed Active Memory Storage Memory

Database Server(s): 3 @ ~550MHz 4GB 100GB

Application Server(s): 3 @ ~550MHz 1GB 9GB (Usable)

We estimated hardware costs for the new systems using the following assumptions:

! Three development environments are assumed to be required to support Development, QualityAssurance, and Training

! Hardware price is assumed to be decreasing every year at a rate of 4 percent (Source:GartnerGroup)

! A hardware upgrade schedule of once in 5 years is assumed in our cost estimation


We estimated software costs using current costs increased annually at a rate of 4 percent, which is

consistent with recent GartnerGroup studies.

We estimated personnel costs for each option using the following assumptions:

! Estimated State staff is assumed to be the existing State personnel who can be made available tothe project at no extra cost

! For the Enhanced option operating costs, we assumed that the existing data center cost structurewould continue

! For the Custom, COTS, and Best of Breed options, fewer staff will be needed to operate the newsystem. We assume that the remaining staff will be redeployed to realize the cost savings in IToperations

! Personnel costs are estimated to increase at the rate of 4 percent per year

! For the Custom, COTS, and Best of Breed options, we assumed a centralized model for the datacenter in lieu of a distributed model

We used a discount rate of 3 percent to compute the net present value based on the State’s current cost of

funds.

The cost estimates associated with each option during the next 15 years were assembled in the IT

Assessment and Evaluation Task. In evaluating the costs of each option, we estimated the initial costs of

hardware, software, implementation, and training. We also estimated the ongoing operational costs of

each option. The cost of ownership is computed as the cost of new system implementation and the cost of

operation.

Implementation costs in our study included the following:

! Hardware costs include the cost of new hardware required to run the selected system. Because theState is upgrading the desktops and communications network regardless of the options evaluated,we did not include the cost for these components in our hardware cost estimation. The hardwarecost estimation is based on the technical architecture we recommended. To estimate the capacityof the hardware, we compiled information about volume of transactions and number of users thefuture FFMIS would have. Using the vendors’ list price for the hardware components that wouldmeet the estimated capacity, we determined the hardware costs

! Software costs include the cost of any system software and utilities, software licenses, and bolt-onpackages

! Implementation costs include the cost associated with the software’s implementation such asconsulting services. Implementation costs have also been annualized to show the spread of theinvestment, as well as to apply the 5 percent increment in the consulting cost per year. IT projects


are subject to numerous risks. The end result of unavoidable or improperly mitigated risk on ITprojects is a delay in project schedule or an increase in the project cost. We have consideredproject risk in our analysis through the application of a risk multiplier to our projected cost. Thismultiplier was determined by considering specific risk areas identified for each option, whichwould increase project expense. We selected 10 risk factors from internal KPMG documentationand industry research, and used them to determine the risk multiplier. A risk multiplier of 1.093was applied to the base cost for the Enhanced option, 2.560 for the Custom option, 1.404 for theCOTS option, and 1.453 for the Best of Breed option. The detailed basis used to determine therisk multiplier for each option is provided in Appendix B

! Training costs include the cost of instruction for new systems, technology, and support staff userson the new hardware and software

The costs of operations in our study included the following costs necessary to support the system for the

next 15 years:

! Hardware costs of upgrades required to operate the selected system

! Software licenses maintenance costs for database, application, and other software tools

! Maintenance support staff costs necessary to support the operations, to maintain the applicationand architecture, and to provide help to end-users

! Upgrade costs include the cost of upgrading the application

The costs of consumables such as paper and toner, the facility cost to house the team, and the costs of

hardware are not included in the cost model.

Using the information we compiled in the BPR task, we estimated the costs and benefits from

improvements in process and financial management practices in the agencies in which we conducted the

high-level BPR. Then we extrapolated the known costs and benefits to the remaining agencies in State

government. The savings generated by the streamlined IT operations with the Custom, COTS, and Best of

Breed options are also included.

We summarized the total fiscal impact, including both the required investment and estimated benefits for

each of the five options for 15 years. Based on the 15-year estimated fiscal impacts, we calculated the

length of time each option will need to pay back the investment of the specific option, the net present

value of future cash flows, and the inherent internal rate of return.


Evaluation Summary

In the remainder of this section, we present each option in the following format:

! Option Description: Includes a general overview, general assumptions, sample technical archi-tectures, and proposed timeline

! Requirements Analysis: Describes the level of functionality provided by each option, as measuredagainst the requirements definition in Section 5

! Risk Analysis: Describes the primary risks associated with each option

! Financial Analysis: Describes the financial impact of choosing each option

Business Case Study 6—Options AnalysisAs Is

Option 1: As-Is

Overview

We have defined the As-Is option as leaving the existing legacy FFMIS subsystems in place during the

next 15 years, while making no major enhancements to the overall system. In this evaluation, we

measured the degree to which the present system meets the requirements definitions, and evaluated the

risks and financial impact associated with using the current, unmodified system to support the operations

of Florida’s State government.

Assumptions

The following assumptions were made to evaluate the As-Is option:

! No major modifications will be made to the system during the 15-year timeline underconsideration

! Agencies will continue to provide the minimum necessary work-around and shadow systems forprocessing needs that are not met by the current FFMIS subsystems

! Even though KPMG’s Functional Quality and Technical Quality assessments indicate that themajority of the systems require major functional and technical enhancements, this option assumesthat the State can function at the current service level of the legacy systems

! The FFMIS subsystems have approximately 2.7 million lines of COBOL programming languagecode. The State will continue to possess and train mainframe COBOL programmers formaintenance of these subsystems

Technical Architecture

The Department of Management Services (DMS) network is predominately a TCP/IP network that

includes SPURS and COPES. SPURS runs on an IBM mainframe, and COPES runs on a Unisys

Clearpath server. The architecture of SPURS is approximately 88 percent COBOL and 12 percent Natural

using an Adabas database engine. COPES architecture is all COBOL using Unisys’s DMS220 database

engine.

There has been a great deal of effort in web application development for applications operated by DMS.

Web-based applications such as SPURSView and Vendor Bid System can be accessed by both State

personnel inside the State architecture and by any vendor on the World Wide Web. Examples of ongoing

web initiatives include COPESView, COPES Direct, Employee Direct in COPES and Paperless

Purchasing Requisition System, and Statewide Vendor File in SPURS.


DMS also has a small, group of approximately 4,000 native SNA users on the network. Of the 4,000

users, approximately 500 are using SNA protocol to access COPES. Some users from the agencies pass

through DMS’s SNA network to access the Comptroller’s system and other SNA networks. DMS’s focus

is to replace native SNA and Unisys terminal emulation and print services with IP services. SNA network

will not support web-based and client/server applications as the State moves forward.

FLAIR and LAS/PBS reside on the mainframe in the Comptroller’s data center where communications

are predominately SNA. FLAIR and LAS/PBS’s architecture is mostly Natural with some COBOL. Some

work has been done on web initiatives. LAS/PBS has added client/server applications such as

Correspondence Tracking System, Budget Tracking System, CAS, In/Out Board, SITS, and GMS.

CMS is an IBM AS/400-based system using COBOL and RPG programming languages accessing an

IBM Universal Database. CMS uses a Visual Basic GUI to access the AS/400. Extensive web application

work is underway.

We have included a schematic of the proposed high-level architecture for the As-Is option in Appendix G.

Timeline

The current system will continue to operate as-is during the next 15 years.


The following is our analysis of how well the existing system meets both functional and technical

requirements. We outline the major requirements categories and present our scoring of the As-Is option

compared to the other four options.


We found that less than 60 percent of the overall information processing functional requirements are met

by the existing processing systems. The higher levels of satisfaction were found in the FLAIR Subsystem

(75 percent) and CMS (78 percent) with percentages as low as 35 percent for SPURS and 43 percent for

COPES.

Examination of the existing subsystems revealed an inadequate level of integration between the major

functional processes:


! Lack of a single Chart of Accounts limits the ability of the system to integrate financialinformation

! FFMIS subsystems have inconsistent edits and validation of data entry

! Multiple shadow systems are interfaced to rather than integrated with the five financial systems tomeet the reporting needs of the individual agencies

! Florida lacks a statewide data and technical architectural model

! FFMIS subsystems do not use a common data exchange method

! FFMIS computing platforms are not interoperable seamlessly

The analysis of current systems indicates that the flexible reporting requirements of the State are not met

to an acceptable level with this option:

! The system does not provide adequate ad hoc reports

! The system does not provide an adequate decision support system

! The system has limited online viewing and printing capability

The service level of the current FFMIS design does not provide timely access to current data:

! The online availability of FFMIS to end-users does not meet the needs of all users

! Users are not happy with the turn-around time, especially for the batch-process reports and for thecross-system updates

! Response time of the online transactions is satisfactory; the response time needed for the ad hocreports is not satisfactory

! Because the data center is decentralized at subsystem level, it is difficult to obtain timely andaccurate information when cross-system updates are involved

! Multiple help desks exist for FFMIS support that do not provide sufficient and effective service

! Legacy FFMIS subsystems are not user friendly and are difficult to navigate

! The project prioritization processes used at the IT support organizations do not ensure that allend-user needs are being met

The lack of integration and technological capabilities of the current subsystems lead to inefficient

utilization of existing human resources:

! FFMIS subsystems require manual and duplicate input

! Not having web-enabled applications like employee self-service and web-based procurement mayincrease end-user dissatisfaction for the system


! With this option, workflow is not available to automate processes, thus hindering productivity

! Because of salary constraints, it is difficult to attract and retain qualified staff. FFMIS trainingand online help facilities do not provide sufficient and effective service

The limitations of the current systems present major challenges to the State’s strategic direction:

! Keeping the systems as they are will be equivalent to putting the strategy on hold indefinitely

! Not all systems have web access

! An integrated financial policy cannot be implemented with this option

! Citizens will not have adequate access to the State’s information

We scored the As-Is option against the information processing and business operating requirements.

Exhibit 6-4 shows our scoring by subcategory for this option and a comparison to the other four options.

Exhibit 6-4Functional Requirements Matrix–As-Is Option

Category Wei

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General Ledger 15% 3.5 4.0 5.0 4.0 5.0

Human Resource 15% 2.0 3.0 5.0 4.0 5.0

Budgeting 5% 2.5 3.0 5.0 3.0 4.0

Cash Management and Investment 5% 3.0 4.0 5.0 4.0 5.0

Purchasing 10% 2.0 3.0 5.0 4.0 5.0

Information Processing Requirements 50% 1.3 1.7 2.5 2.0 2.5

Integration 5% 1.0 3.0 5.0 5.0 5.0

Flexible Reporting 5% 1.0 3.0 5.0 5.0 5.0

Service Level 5% 1.0 2.0 5.0 4.0 4.0

Human Resource Utilization 3% 1.0 3.0 5.0 4.0 4.0

Strategic Direction 2% 1.0 3.0 5.0 5.0 5.0

Business Operating Requirements 20% 0.2 0.6 1.0 0.9 0.9



The current system does not adequately meet the business operating requirements of the

State. The existing FFMIS subsystems lack integration and adequate flexible reporting,

and do not maximize the human resource potential of the State.


The architecture is scalable for the growing volume of transactions and number of users. However, the

biggest concern the State has is the ability of the system to adapt to rapidly increasing expectations and

changing technology. The system is becoming increasingly unwieldy and difficult to change. Hence, a

low score of 2 for this option:

! Changes to FFMIS legacy subsystems are often time-consuming, costly, and cumbersome

! FFMIS legacy subsystems have had limited enhancements or modifications during the last 2years

! The core technology of some of the subsystems (for example, SPURS and COPES) cannot adaptthe new generation of technology like web, middleware, and flexible reporting tools

Although IS management believes that the system is available to an adequate level, users have some

concerns regarding system availability:

! Intersystem updates do not always take place during weekends

! End-user expectations are changing. Users want access to the system 24 hours a day, 7 days perweek

! Users expect a faster response when new reports and analytical information are needed

Although the trained users are not complaining about the ease-of-use, a concern about lack of training

was expressed during our assessment. It is also difficult to get help when cross-system processes and

updates are involved because the help desk and data centers are decentralized among the subsystems.

Security is working as expected. However, FFMIS subsystems have multiple security controls and

policies. This causes the users to write down their user IDs and passwords and post them on their

computers, which compromises security. No centralized user profile is maintained; therefore it is difficult

to administer the security controls.

Although the State has an acceptable general backup and recovery plan, some of the subsystems lack such

plans. Because these subsystems (for example, COPES and SPURS) are part of dissimilar architecture, it

would be difficult to synchronize the disaster recovery process in case of a systemwide disaster.


The architectures of the five FFMIS subsystems are not integrated.

The current industry direction is to client/server-based computing with real-time integration between

financial subsystems. The core FFMIS subsystems have been in place for 15 to 25 years. A significant

number of the subsystems operate from mainframe environments. The subsystems integrate with one

another only via numerous interfaces. In addition, we note the following points:

! No data models are present in the legacy subsystems, although some code tables have been builtand are being used

! The legacy subsystems make very limited use of web applications and middleware technology

! The current subsystems make very limited use of open systems design

! There is limited availability of sophisticated development and test tools in the mainframeCOBOL world as compared to the client/server environment

We scored the As-Is option against the technical requirements that relate specifically to sustainability and

industry direction. Exhibit 6-5 shows our scoring by subcategory for this option and a comparison to the

other four options.


Exhibit 6-5Technical Requirements Matrix–As-Is Option

Category Wei

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Scalability 5% 2.0 3.0 4.0 5.0 4.0

System Availability 5% 2.0 3.0 5.0 5.0 5.0

Ease-of-Use 3% 2.0 3.0 4.0 4.0 4.0

Security 3% 3.0 3.0 5.0 5.0 5.0

Backup and Recovery 2% 1.0 3.0 5.0 5.0 4.0

Architectural Integration 2% 1.0 3.0 5.0 5.0 4.0

Sustainability 20% 0.4 0.6 0.9 1.0 0.9

Client/Server Environment 2% 1.0 2.0 5.0 5.0 5.0

Interoperability 2% 2.0 3.0 5.0 4.0 4.0

Uniform Data Models 2% 1.0 1.0 4.0 5.0 4.0

Web, Workflow, and Middleware 2% 1.0 3.0 5.0 4.0 5.0

Open Systems 1% 1.0 3.0 5.0 4.0 4.0

Development and Test Tools 1% 2.0 3.0 4.0 4.0 4.0

Industry Direction 10% 0.1 0.2 0.5 0.4 0.4


The core FFMIS subsystems are based on older technology and do not adequately meet

the State’s technical requirements related to industry direction. Specifically, the existing

subsystems do not have a single, uniform data model and lack real-time integration with

one another. In addition, the existing FFMIS subsystems did not compare well with the

other options under consideration for ease-of-use, backup and recovery plans, and

architectural integration.

Risk Analysis

The primary risks associated with leaving the existing system in place with no significant modifications

or enhancements are strategic risk and continuation risk.


Strategic Risk

Strategic risk relates to the possibility of the State not meeting its strategic information technology goals.

FFMIS was created by the Florida Legislature to provide the information necessary to carry out the intent

of the Legislature and to provide the necessary information for the effective operation of the State

government. FFMIS’s Coordinating Council has outlined three primary strategic issues:

! The existing financial management system and processes with which the State of Floridaconducts payroll, human resources, purchasing, cash management, and accounting and budgetingfunctions are not meeting the State’s needs

! The State does not have an enterprisewide financial management system that integrates financialinformation and standardizes policies and information

! The State’s current financial management information systems are not positioned to respondrapidly to changes in business processes or technology


Exhibit 6-6Strategic Risk Matrix–As-Is Option

Category Wei

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Management access to consolidated financialinformation

16.7% 5.0 3.0 1.0 1.0 1.0

Citizen access to financial information 16.7% 5.0 2.0 1.0 1.0 1.0

Employee access/self-service to administrativeinformation

16.7% 5.0 3.0 1.0 1.0 1.0

Perceived financial stability/bond rating 16.7% 4.0 3.0 1.0 1.0 1.0

Reduction of manual processes and redundantdata entry

16.7% 5.0 3.0 2.0 1.0 2.0

Reduction of agency feeder/shadow systems 16.7% 5.0 3.0 2.0 2.0 2.0

People/Process/Technology 100% – – – – –


The As-Is option will not fulfill the strategic requirements of the State, as laid out by

FFMIS’s Coordinating Council.


Project Risk

There is no project risk associated with the As-Is option.

Continuation Risk

Continuation risks are associated with the ongoing operations of the State’s financial system (1) after

project completion or (2) if the existing system is used as-is.

Significant risk would be incurred by continuing to operate the State’s financial information system as-is,

with no significant modifications or enhancements. We discuss significant continuation risks within the

context of how it relates to people, processes, and technology.

A significant risk to continuing operations with the existing system is the risk that FFMIS subsystem

owners will not be able to meet the staffing demands of the legacy system. As documented in Finding

IT-24 in Section 4, a common concern of the FFMIS technology staff is the difficulty of attracting and

retaining skilled technical employees. It was noted that FFMIS support organizations have shortages in a

number of key skill areas, such as the need for experienced COBOL and Natural language programmers.

Because of the rapid growth in usage of more expressive programming languages and development tools

in enterprisewide computing environments, it is our belief that the State will find it increasingly difficult

to attract and retain skilled IT professionals to maintain the FFMIS subsystems’ large legacy code base.

Process risk refers to the risk that the State cannot make changes to the core FFMIS subsystems to

support ongoing changes in the State’s business requirements, without considerable time and expense.

As noted in Finding IT-12 in Section 4, changes to the core FFMIS subsystems are often difficult and

costly. An example of this is the change being considered in FFMIS to add a two-digit field in the Chart

of Accounts—an effort that has been projected to cost over $900,000 to complete. Enhancement support

is a closely related issue. Because of the fragmented nature of the FFMIS subsystems, the older

technology used, and the fact that these subsystems support three data centers, any enhancements or

upgrades made to one subsystem require additional time and expense to determine its impact on the other

subsystems. The support initiative for these enhancements rests solely upon the State.

The risk of technical obsolescence is considerable under this option. It is our observation that the owners

of the five FFMIS subsystems have generally followed industry standards, which is the best defense

against both hardware and software obsolescence. However, these standards have been applied to what

might be considered today as a technically obsolete, enterprisewide financial system. Modern

enterprisewide financial systems stress real-time availability of data, a cohesive data and technical model,

system performance measurement tools, data consistency, and extensive management reporting


capabilities. Current FFMIS subsystems lack integration, data consistency, and a common Chart of

Accounts and do not provide a sufficient level of decision support information (see Finding IT-3 in

Section 4).

Another considerable technology-related risk is the risk to continuing operations if a catastrophic system

failure and data loss occurs. As noted in Finding IT-19 in Section 4, not all FFMIS subsystems have

backup and disaster recovery capabilities for the mainframe components of the system. Currently, DMS

and DOI do not have formal disaster recovery plans, strategies, or agreements for recovery of COPES,

SPURS, and CMS. Exhibit 6-7 shows our scoring by subcategory for this option and a comparison to the

other four options.

Exhibit 6-7Continuation Risk Matrix–As-Is Option

Category Wei

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System Leadership 10% 4.0 4.0 3.0 2.0 3.0

System Ownership 10% 4.0 4.0 3.0 3.0 3.0

Personnel Skill Set Availability 10% 5.0 4.0 3.0 3.0 3.0

System Sponsorship/Funding 10% 2.0 2.0 3.0 4.0 4.0

People 40% – – – – –

Stability of Vendor 6.7% 3.0 3.0 3.0 3.0 3.0

Enhancement Capability and Support 6.7% 4.0 4.0 3.0 2.0 3.0

System Flexibility 6.7% 5.0 5.0 2.0 3.0 3.0

Change Management 6.7% 4.0 4.0 3.0 1.0 2.0

Contingency Planning 6.7% 4.0 4.0 3.0 2.0 2.0

Post-Implementation Defect Rate 6.7% 3.0 3.0 5.0 2.0 2.0

Process 40% – – – – –

Post-Implementation Technical Obsolescence 5% 5.0 4.0 3.0 1.0 3.0

Disaster Recovery 5% 3.0 3.0 3.0 1.0 2.0

Adoption of Industry Standards 5% 5.0 4.0 3.0 1.0 2.0

Scalability 5% 2.0 2.0 3.0 2.0 2.0

Technology 20% – – – – –



The risk of further technological obsolescence is high under the As-Is option. System

flexibility is also questionable under this option, which may result in an inability of

FFMIS subsystems to keep pace with the State’s changing business requirements.

Financial Analysis

The costs involved in this option are designed to keep the system running for 15 years. We gathered

information from agencies to compile the costs of operating FFMIS. Costs included the cost of support

personnel and appropriated costs for hardware and software maintenance. After compiling this

information, we obtained the actual cost figures for the operations of the current system. Using KPMG’s

cost model, modified to suit the State of Florida’s requirements, we generated the operating-cost model

for the current system.

This operating cost model is extrapolated for 15 years. We used a decreasing rate of 4 percent for the

hardware cost and an increasing rate of 4 percent for the software and personnel costs. Total operations

costs for the As-Is option are shown in Exhibit 6-8.


Exhibit 6-8Operations Costs—As-Is Option

OperationsYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

Hardware

Support and Maintenance (1) $8,991 $8,452 $7,945 $7,468 $7,020 $6,599 $6,203 $5,831

New Hardware – – – – – – – –

Hardware Subtotals 8,991 8,452 7,945 7,468 7,020 6,599 6,203 5,831

Software

Support and Maintenance 2,218 2,396 2,587 2,794 3,018 3,259 3,520 3,802

License Costs – – – – – – – –

Software Subtotals (2)2,218 2,396 2,587 2,794 3,018 3,259 3,520 3,802

Staff (3)12,260 12,750 13,260 13,790 14,342 14,916 15,512 16,133

Undiscounted Costs 23,469 23,598 23,792 24,052 24,380 24,774 25,235 25,766

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

Hardware

Support and Maintenance (1) – – – – – – – –

New Hardware $5,481 $5,152 $4,843 $4,552 $4,279 $4,022 $3,781 –

Hardware Subtotals 5,481 5,152 4,843 4,552 4,279 4,022 3,781 $90,619

Software

Support and Maintenance 4,106 4,434 4,789 5,172 5,586 6,033 6,516 –

License Costs – – – – – – – –

Software Subtotals (2)4,106 4,434 4,789 5,172 5,586 6,033 6,516 $60,230

Staff (3)16,778 17,449 18,147 18,873 19,628 20,413 21,230 $245,481

Undiscounted Costs 26,365 27,035 27,779 28,597 29,493 30,468 31,526 $396,329

Assumptions: (1) Hardware Price Increases/(Decreases), (0.06) per annum; No New Hardware Is Purchased

(2) Software Price Increases/(Decreases), 0.08 per annum; No New Software Is Purchased

(3) Staff Cost Growth, 0.04 per annum


The net present value, internal rate of return, and payback period in years for the As-Is option are shown

in Exhibit 6-9.

Exhibit 6-9BPR Savings—As-Is Option

DiscountRate = 6% Year 01 Year 02 Year 03 Year 04 Year 05 Year 06 Year 07 Year 08

Implementation Costs – – – – – – – –

Operations Costs $(23,469) $(23,597) $(23,792) $(24,053) $(24,380) $(24,774) $(25,235) $(25,765)

TechnologyDependent Savings

– – – – – – – –

Subtotal (23,469) (23,597) (23,792) (24,053) (24,380) (24,774) (25,235) (25,765)

Other BPR Savings 19,250 26,257 27,046 27,857 28,692 29,554 30,442 31,356

Grand Total $(4,219) $2,660 $3,254 $3,804 $4,312 $4,780 $5,207 $5,591

Payback Period:Option 1

$(23,469) $(47,066) $(70,858) $(94,911) $(119,291) $(144,065) $(169,300) $(195,065)

Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15Total

Costs

Implementation Costs – – – – – – – –



– – – – – – – –

Subtotal (26,365) (27,035) (27,779) (28,597) (29,493) (30,468) (31,526) $(396,328)

NPV (of subtotal) – – – – – – – $(250,806)

Internal Rateof Return

– – – – – – – N/A

Other BPR Savings 32,296 33,265 34,262 35,290 36,350 37,441 38,564 $467,922

Grand Total $5,931 $6,230 $6,483 $6,693 $6,857 $6,973 $7,038 $71,594

Payback Period:Option 1

$(221,430) $(248,465) $(276,244) $(304,841) $(334,334) $(364,802) $(396,328) N/A

Business Case Study 6—Options AnalysisEnhanced

Option 2: Enhanced

Overview

This option focuses on a relatively low cost and quick technical upgrade of the legacy FFMIS subsystems

to achieve a certain level of integration among the subsystems. For this analysis, the key enhancements

are defined as improved reporting capability, creation of web-based front ends for the primary

subsystems, and improved integration among subsystems. The Enhanced option would satisfy a limited

number of the new functional requirements.

Using middleware technology, the five subsystems would be integrated with real-time, cross-system

database updates. Online data-capturing forms would be developed using web-enabling tools. COTS

reporting tools would be used to generate flexible reports for the FFMIS subsystems.

The State would need to conduct a study of the level of integration required to reasonably produce real-

time and consolidated reports. One hundred percent integration of the five subsystems may not be

achieved and may not be required. Because the State does not have a uniform Chart of Accounts and

business coding structure, the integration and real-time update of the financial information would need

several conversion tables to reflect a financial transaction in different systems. Because State agencies

maintain additional ledgers for funds different from the State’s ledgers for funds, careful analysis and

design of the updates would be necessary to avoid duplicating transactions at the State level.

Modern reporting tools are capable of producing web-enabled and flexible reports. The majority of the

reporting tools are capable of using middleware technology to access dissimilar databases to produce

consolidated reports. However, because of a lack of uniform data definition among the subsystems, the

enhanced system would have to use multiple gateways to update and retrieve the information. The

enhancements may increase the redundancy of the data because some consolidated reports will require

data stored in some uniform format.

The enhanced system would have more overhead processing because of real-time, cross-system updates,

GUI and web front ends, and additional reporting requirements. Careful planning and tuning of the

hardware and network would be necessary before implementation.

The Enhanced option would not consider the usage of automated workflow because automation and

workflow require modular design of the system with parameter-driven transactions. The core subsystems

of FFMIS generally lack such capability.


Prioritizing the needs of integration, reports, and web access and coordinating the enhancements and data

exchanges among subsystems would require a centralized program office focused on results, quality, and

standards.

Assumptions

The following assumptions were made to evaluate the Enhanced option:

! The enhancements will only be in the areas of data integration, web-enabling, and flexiblereporting. There will be limited functional enhancements within the core processing systems

! Workflow is considered outside the scope of the enhancement because of the requirement formodular, transaction-oriented trigger points

! The State will use middleware technology to facilitate real-time updates of the dissimilardatabases of the FFMIS subsystems

! All end-user interactions and all standard reports will be web-enabled

! The chosen reporting software will be able to access multiple databases to provide consolidatedreports

! External personnel will augment the State’s application development staff as necessary

! The duration of the undertaking will be 2 to 3 years

! Because data redundancy will continue to exist with this option, it is assumed that the State willdevelop standards for data access, which will designate the appropriate source of information forreporting purposes when the data exists in more than one system

! Because the standardization of data elements is nonexistent with dissimilar subsystems, multiplegateways and conversion tables are required to share the data across subsystems

! Manual reconciliation of Chart of Accounts information between separate systems will continue


The Enhanced option would require that existing SNA services to the desktop be completely replaced by

an IP network to allow web and client/server access to enhanced applications. This network technology

builds upon the existing direction of the State to migrate to an all IP network. The natural progression of

the State to retire older technology is maintained by the use of Citrix technology. Citrix allows users who

do not have the latest PC hardware and software to access all systems from either a local area network

connection (connections through the routed Metropolitan Area Network) or remotely (dial-in). Citrix

servers perform the application processing and send the updated screens to the end-user’s PC and accepts

keystrokes from the end-user’s PC keyboard.


The current applications (FLAIR, COPES, SPURS, LAS/PBS, and CMS) would remain on their existing

platforms with enhancements to both functionality and end-user interfaces implemented with tools from

SAGA and Unisys. These tools allow present application developers to generate web-enabled code in

their existing environment by separating business logic from the presentation code. The presentation code

becomes the application’s front end, which would execute on an application server that resides in front of

the firewall and accesses the existing or enhanced business logic code on the original platform. By having

the application servers in front of the firewall or in a DMZ, system security and integrity are maintained.

The high volume OnLine Transaction Processing (OLTP) databases, Adabas, IBM Universal Database,

and DMS2200, would have a middleware product such as SagaVista and BEA eLink that would allow

execution of a transaction on one system to trigger an event on another system so that updates are

instantaneous. This middleware product could also be used to map elements from one Chart of Accounts

to other Charts of Accounts as long as both accounts have an associated element.

This option would require a minimum investment in new hardware and software. The existing application

personnel would need to learn new application development; however, minimal training would be needed

to learn the new tools. This technology will give quick results since individual subsystems can be web-

enabled in a logical order by need and priority.

We have included a schematic of the proposed high-level architecture for the Enhanced option in

Appendix G.

Timeline

Certain phases of the new FFMIS such as the Travel and E-Mall modules would be operational in Fiscal

Year 2001. The remainder of the enhancements would be operational in either Fiscal Year 2002 or 2003,

as shown in Exhibit 6-10.


Exhibit 6-10Timeline for Implementation–Enhanced Option


Integration Solution

Phased Implementation

BPR Savings

7/1/

00

FY

01 1

/1/0

17/

1/01

7/1/

02

7/1/

03

7/1/

04

7/1/

05

7/1/

06

7/1/

07

FY

02 1

/1/0

2

FY

03 1

/1/0

3

FY

04 1

/1/0

4

FY

05 1

/1/0

5

FY

06 1

/1/0

6

FY

07 1

/1/0

7



The rankings provided by our study indicate that with the Enhanced option the State would gain a notable

functionality improvement of the information processing requirements compared to the legacy system.

The Enhanced option will meet an additional 20 percent of the requirements of the State and will deliver

an overall 75 percent of the application requirements evaluated. Significant improvement over the legacy

system is found in the Human Resource and Payroll applications, which will meet 73 percent of the

evaluated requirements versus 44 percent scored by the current system. The integration and flexible

reporting will serve to meet 74 percent of the budgeting system requirements versus 55 percent scored by

LAS/PBS. Web enablement and integration will meet a somewhat higher percentage of the requirements

in purchasing by raising the percentage to 58 as compared to that of 35 in the legacy system. The other

two areas—accounting and cash management—will also gain by integration and reporting, bringing their

percentages to 82 and 89, respectively, which is an improvement of about 10 percent over the legacy

system. Overall, the Enhanced option will meet about 50 percent the State’s new application

requirements.

Business processing requirements of the State will be met to an adequate level. However, many factors

limit the level of integration that can be achieved with this option:

! The nonstandard data definitions, redundant processes, and feeder and shadow systems willcontinue to exist and will significantly hamper the level of integration that can be achieved

! The five core subsystems will remain disjointed in their application processes. True applicationintegration will not be achieved with this option. For example, a requirement for an automatic


creation of the purchase order from the purchase requisition will not be fulfilled by the databaseintegration using middleware technology

! Without a uniform Chart of Accounts, consolidation of the financial statements and drilling downto the individual transaction from the consolidated reports will be cumbersome

! Systems developed using the COBOL language, (for example, COPES) are not friendly formiddleware programs. This might limit the level of integration

The flexible reporting requirements of the State can be met to an acceptable level with this option:

! The level of integration achieved during enhancement factors heavily into the level ofconsolidation

! The level of real-time, cross-system updates performed will significantly influence the timelinessof the report contents

! Lack of a uniform data model will also hamper the flexibility and friendliness of the reports

! Lack of a uniform data model will also limit the drill-down capability of a consolidated report

! Inability of the current system to produce reports because insufficient information has beengathered will not be addressed with this option. For example, performance-based programbudgeting reports will not be available with this option

The Enhanced option will provide an improved service level compared to the current system because of

real-time updates, web access, and flexible reports:

! The help and training will not improve over the current system

! It will be more difficult to get help for missed updates and to troubleshoot for the fiveindependent subsystems integrated using middleware technology

This option has the most potential for making best use of the existing IS personnel for both the project

and for operations, but the application will produce only a small (compared to other options) increase in

productivity:

! By extensively web-enabling COPES to facilitate employee self-service (travel and expenseclaims and interactive benefit management), the enhanced system can increase productivity ascompared to the legacy system

! Because redundant processes and systems will not be addressed with this option, they willcontinue to hinder productivity

! Lack of workflow and automated processes will continue to hinder productivity


Enhancing the legacy system will provide only a modest step in the strategic direction of the State’s

financial system and will stop considerably short of meeting the goal:

! Although this option provides a level of integration of the information at the State level, the coresystem remains agency-oriented, not State-oriented

! Integrated financial policy will still be difficult to achieve without a uniform Chart of Accounts

! Because the financial processing will not be significantly improved, this option will notcontribute to the improvement of the perceived stability of the State’s financial system

This option will not focus on reducing the redundancy in processes and systems.


Exhibit 6-11Functional Requirements Matrix–Enhanced Option

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General Ledger 15% 3.5 4.0 5.0 4.0 5.0

Human Resource 15% 2.0 3.0 5.0 4.0 5.0

Budgeting 5% 2.5 3.0 5.0 3.0 4.0


Purchasing 10% 2.0 3.0 5.0 4.0 5.0


Integration 5% 1.0 3.0 5.0 5.0 5.0


Service Level 5% 1.0 2.0 5.0 4.0 4.0





It is expected that the Enhanced option, as defined, will satisfy approximately 75 percent

of the information processing requirements of the State. Integration, flexible reporting,

and service level will be improved over the existing FFMIS subsystems.



The sustainability scores of the Enhanced option are based on the following key points:

! The Enhanced option will provide only a small improvement in scalability over the legacysystem. The architecture is scalable for the State’s growing number of transactions

! The functional scalability will not improve much over the legacy system because the core systemis the same as the legacy system. Adding an additional field or changing a process will be veryexpensive

! System availability will improve some over the legacy system because fewer batch updates orinterfaces are required. However, the option will not deliver a significant improvement inavailable time because the core subsystems will need almost the same level of operationaldowntime for online access because of maintenance and batch windows

! Ease-of-use will improve slightly over the legacy system because of flexible reports and webaccess. However, the core system and processes will continue with the same level of help andtraining available

! Security will be more user friendly and comfortable with the use a of web portal. However, adetailed security definition to restrict users to a certain level of access and functions, as well asthe ability to maintain the security profile centrally, will not be available with this option becauseof disparate core subsystems

! The backup and recovery system will be enhanced over the current level. However, because thereare five disparate subsystems with different databases, it will still be cumbersome

! Multiplatform technical architecture will continue to exist, but the use of middleware technologywill improve the technical integration both for updates and maintenance, to a certain degree. Thiswill be better than the current system, but will not be close to an integrated architecture

The industry direction scores of the Enhanced option are based on the following key points:

! The Enhanced option will not move the technical architecture to a total client/server environment.However, the reporting tools and web applications will improve the current architecture and moveto a client/server environment

! Interoperability of the system will see some improvement over the legacy system because ofmiddleware usage, but the systems themselves will remain noninteroperable

! The Enhanced option will not add any value to a data model because it uses conversion tables

! Web and middleware tools and technologies will be used in the Enhanced option; however, thelimitations of the core legacy systems do not allow for the use of truly integrated workflowtechniques


! Middleware and web applications are based on open-system technology. Because the core systemis not going to change, it is not going to make sufficient use of open-system technology

! The Enhanced option will use modern development and test tools, but the core system cannotmake use of these modern tools


Exhibit 6-12Technical Requirements Matrix–Enhanced Option

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Scalability 5% 2.0 3.0 4.0 5.0 4.0


Ease-of-Use 3% 2.0 3.0 4.0 4.0 4.0

Security 3% 3.0 3.0 5.0 5.0 5.0



Sustainability 20% 0.4 0.6 0.9 1.0 0.9





Open Systems 1% 1.0 3.0 5.0 4.0 4.0




The Enhanced option will not add any value to a uniform data model. Ease-of-use will

improve slightly over the legacy system because of an increased level of flexible

reporting and through web access.


Risk Analysis

The primary risks associated with enhancing the existing legacy system involve strategic, project, and

continuation risks.

Strategic Risk

We assume three major enhancements would be made to the existing legacy subsystems under this option.

These are web-enablement, flexible reporting, and database integration. While the proposed

enhancements would improve the usability and integration of the existing FFMIS subsystems—goals that

are in line with the State’s vision for information management—these changes would only manage to

fulfill 75 percent of the State’s requirements, as defined in the accompanying requirements definitions.

Therefore, we conclude that the strategic risk to the State is moderate. Exhibit 6-13 shows our scoring by

subcategory for this option and a comparison to the other four options.

Exhibit 6-13Strategic Risk Matrix–Enhanced Option

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16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 2.0 1.0 2.0




The risk of not meeting the State’s overall strategic goals under the Enhanced option is

moderate, based on improved management access to timely and accurate financial data

and the reduction in redundant data entry over the existing FFMIS subsystems. This

option does not, however, fulfill the State’s stated strategic goal of a single integrated

financial management system (IFMS).


Project Risk

Project risk is defined as the possibility that the IT development and implementation is not successful (on

time and reasonably within budget). By limiting the project to only three discrete, primarily independent

enhancements, project risk is significantly lowered. Market research shows clearly that larger projects

with larger timelines have, in general, a much greater probability of failure. Project risk, therefore, is

partially mitigated under the Enhanced option. Exhibit 6-14 shows our scoring by subcategory for this

option and a comparison to the other four options.

Exhibit 6-14Project Risk Matrix–Enhanced Option

Category Wei

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Project Leadership 6.7% 0.0 2.0 5.0 4.0 4.0

Culture of Organization 6.7% 0.0 2.0 4.0 4.0 4.0

Personnel Skill Set Availability 6.7% 0.0 2.0 4.0 4.0 4.0

Project Ownership 6.7% 0.0 2.0 4.0 4.0 5.0

Project Sponsorship/Funding 6.7% 0.0 2.0 5.0 4.0 4.0

Project Effort 6.7% 0.0 2.0 5.0 4.0 3.0

People 40% – – – – –

System Design Complexity 5% 0.0 2.0 5.0 4.0 3.0

System Development Methodology 5% 0.0 2.0 5.0 3.0 3.0

Implementation Strategy 5% 0.0 3.0 5.0 3.0 3.0

Change Management 5% 0.0 2.0 5.0 5.0 5.0

Process Quality Management 5% 0.0 2.0 5.0 1.0 2.0

Requirements Stability 5% 0.0 2.0 5.0 3.0 3.0

Project Length 5% 0.0 2.0 5.0 3.0 3.0

Training and Support 5% 0.0 2.0 5.0 3.0 3.0

Process 40% – – – – –

In-Project Technical Obsolescence 6.7% 0.0 3.0 5.0 1.0 2.0

Data Conversion and Cleansing 6.7% 0.0 0.0 4.0 3.0 3.0

Adoption of Industry Standards 6.7% 0.0 4.0 2.0 1.0 2.0




Industry evidence suggests that project size, effort, and duration are critical factors in IT

project success. By limiting the project to only three discrete, primarily independent

enhancements, project risk is significantly lowered.

Continuation Risk

Continuation risk addresses ongoing risks to the information system, during the 15-year timeframe

considered in this analysis, after project completion. Many of the same risks associated with the As-Is

option apply to the Enhanced option. The Enhanced option is at risk of technical obsolescence because its

core systems, which are built on older technology, will essentially remain in tact. The State’s ongoing

operations are also at risk because of the lack of formal disaster recovery plans for COPES, SPURS, and

CMS. Another continuation risk is to system flexibility. While the Enhanced option adds functionality to

the core systems, it in no way makes the system more adaptable to future changes. Exhibit 6-15 shows

our scoring by subcategory for this option and a comparison to the other four options.


Exhibit 6-15Continuation Risk Matrix–Enhanced Option

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People 40% – – – – –







Process 40% – – – – –




Scalability 5% 2.0 2.0 3.0 2.0 2.0



The Enhanced option shares many of the same continuation risks with the As-Is option.

The Enhanced option is at risk of technical obsolescence because its core systems, which

are built on older technology, will essentially remain in tact.

Financial Analysis

During the functional evaluation, we analyzed approximately 1,500 high-level requirements to derive the

number of functional requirements that will be met with enhancements. The Enhanced option focuses

mainly on the integration using middleware, web access to forms and screens, and flexible reporting using

reporting tools. Having this definition for the Enhanced option, we estimated 348 additional requirements

would be fulfilled with this option. Additionally, 16 other minor reporting and 30 minor interfacing


requirements identified in the evaluation of the legacy system and that would be included in this project

were also included in the cost estimation.

This number of high-level requirements is used as a base number to estimate the cost of development. By

performing random sampling of simple and complex requirements and by leveraging KPMG’s

experience, we estimated that an average development effort of 30 FTE days is necessary for each

requirement. Similarly for the minor reports, we estimated 5 FTE days, and for minor interfaces we

estimated 10 FTE days of development effort. The total development effort is computed as 10,820 FTE

days based on the number of requirements.

Adopting a GartnerGroup estimation for the percentage of effort for the software development life cycle,

we multiplied the development effort by 5 to get the total project time, which includes requirement

analysis, logical and physical design, coding, unit and integration testing, and implementation.

(Reference: GartnerGroup’s Sizing up the SDLC, published on October 29, 1998, which states that only

20 percent of the total project hours are used for the code construction.) Additionally, we assumed that 20

percent of the project effort is required to run the project office, plan the implementation schedule,

manage the expectations, ensure quality of deliverables, and monitor project cost and schedule.

Assuming a project duration of 2 years and using the total FTEs required, we estimated that

approximately 180 personnel are required for the implementation. We also assumed that 200 effective

working days are available per year. Because State personnel have to continue to support the legacy

system, it is assumed that the project team’s consultant-to-employee ratio will be 70:30. We split the total

effort required for the development also at 70:30 ratio between consultants and State personnel for the

cost estimation. The duration was estimated considering the manageable project team size as well as the

early returns.

We estimated a consultant’s cost per day as $2,000, and that of the employee as $225.

Hardware costs are computed based on the technical architecture recommended.

Training costs include preparing the training material and instructing the trainers. We assumed that the

Enhanced option would be implemented in at least four waves. With five consultants working to prepare

the training material for five subsystems in four phases, we estimate it would cost $1 million.

Software costs include the middleware, reporting tools, and web-enablement tools. We estimated the

software costs using a pricing model for SAGAVISTA.

We assumed that the State personnel required for the implementation project are the personnel supporting

the current system. This reduces the operating costs during implementation. However, we are assuming


that all personnel will continue to be part of the support system. Operations costs for the next 15 years for

the Enhanced option are shown in Exhibit 6-16.

Exhibit 6-16Operations Costs—Enhanced Option

Operations Year 01 Year 02 Year 03 Year 04 Year 05 Year 06 Year 07 Year 08

Hardware

Support andMaintenance (1)

$8,991 $8,452 $7,945 $7,468 $7,020 $6,599 $6,203 $5,831

New Hardware – – – 101 101 101 246 74


Software

Support andMaintenance

2,218 2,396 2,587 2,794 3,018 3,259 3,520 3,802

License Costs – – – 594 635 680 727 778


FFMIS Support Staff (3)11,585 10,050 10,560 13,790 14,342 14,916 15,512 16,133

Total Operations Costs

New System – – – $695 $736 $781 $973 $852

Old System (Option 1) $11,209 $10,848 $10,532 $10,262 $10,038 $9,858 $9,723 $9,633

Total w/Staff $22,794 $20,898 $21,092 $24,747 $25,116 $25,555 $26,208 $26,618

Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15Total

Costs

Hardware

Support andMaintenance (1)

$5,481 $5,152 $4,843 $4,552 $4,279 $4,022 $3,781

New Hardware 74 74 74 181 54 54 54

Hardware Subtotals 5,555 5,226 4,917 4,733 4,333 4,076 3,835 $91,807

Software

Support andMaintenance

4,106 4,434 4,789 5,172 5,586 6,033 6,516

License Costs 833 891 954 1,020 1,092 1,168 1,250


FFMIS Support Staff (3)16,778 17,449 18,147 18,873 19,628 20,413 21,230 $239,406


New System $907 $965 $1,028 $1,201 $1,146 $1,222 $1,304 –

Old System (Option 1) $9,587 $9,586 $9,632 $9,724 $9,865 $10,055 $10,297 –

Total w/Staff $27,272 $28,000 $28,807 $29,798 $30,639 $31,690 $32,831 $402,065

Assumptions: (1) Hardware Price Increases/(Decreases), (0.06) per annum, Maintenance Costs % of Purchase Price, 0.3 per annum: New Hardware Purchased Every 5 years(2) % Increase in Maintenance Cost Annually, 0.07 per annum(3) Staff Cost Growth, 0.04 per annum


Implementation costs for the Enhanced option are shown in Exhibit 6-17.

Exhibit 6-17Implementation Costs—Enhanced Option

ImplementationYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

New Hardware (1) – $335 $101 – – – – –

License Costs (2) – 3,700 555 – – – – –

Consulting (3) $11,077 42,981 45,130 – – – – –

Interfaces – – – – – – – –

Subtotal 11,077 42,981 45,130 – – – – –

Risk Adjusted Subtotal (4) 11,077 46,978 49,327 – – – – –

Training – – 1,000 – – – – –

Implementation Totals 11,077 46,978 50,327 – – – – –

Project Staff 749 2,700 2,700 – – – – –

Undiscounted Costs 11,826 53,713 53,683 – – – – –

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

New Hardware (1) – – – – – – – $436

License Costs (2) – – – – – – – $4,255

Consulting (3) – – – – – – –

Interfaces – – – – – – –

Subtotal – – – – – – –

Risk Adjusted Subtotal (4) – – – – – – –

Training – – – – – – –

Implementation Totals – – – – – – – $108,382

Project Staff – – – – – – – $6,149

Undiscounted Costs – – – – – – – $119,222

Assumptions: (1) Maintenance Costs % of Purchase Price, 30% per annum(2) Maintenance Costs % of Purchase Price, 15% per annum % Increase in Maintenance Cost Annually, 7% per annum(3) Consulting Costs Increases, 5% per annum(4) Risk Adjustment Factor, 1.0933


The net present value, internal rate of return, and payback period in years for the Enhanced option are

shown in Exhibit 6-18.

Exhibit 6-18BPR Savings—Enhanced Option

DiscountRate 6% Year 01 Year 02 Year 03 Year 04 Year 05 Year 06 Year 07 Year 08

ImplementationCosts

$(11,826) $(53,713) $(53,683) – – – – –

Operations Costs (22,794) (20,898) (21,092) $(24,747) $(25,116) $(25,555) $(26,208) $(26,618)


(354) 238 246 254 262 41,682 42,932 44,220

Subtotal (34,974) (74,373) (74,529) (24,493) (24,854) 16,127 16,724 17,602


Grand Total $(15,724) $(48,116) $(47,483) $3,364 $3,838 $45,681 $47,166 $48,958

Payback Period–Option 2

$(34,974) $(109,347) $(183,876) $(208,369) $(233,223) $(217,096) $(200,372) $(182,770)

Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Totals

ImplementationCosts

– – – – – – – $(119,222)



45,546 46,912 48,320 49,769 51,262 52,799 54,383 $478,471

Subtotal 18,274 18,912 19,513 19,971 20,623 21,109 21,552 $(42,816)

NPV (of subtotal) – – – – – – – $(96,638)

Internal Rate ofReturn

– – – – – – – (2%)


Grand Total $50,570 $52,177 $53,775 $55,261 $56,973 $58,550 $60,116 $425,106


$(164,496) $(145,584) $(126,071) $(106,100) $(85,477) $(64,368) $(42,816) N/A

Business Case Study 6—Options AnalysisCustom

Option 3: Custom

Overview

The Custom option would require a complete rewrite of the existing five FFMIS subsystems into one

integrated client/server application. This option would achieve 100 percent of the required functionality,

detailed in Chapter 5. The Custom option includes such features as web enabling, workflow, Windows

(2000/NT and future releases) compatible client programs, and document management.

We are not evaluating the particular suite of tools that would be used to develop the application, but

assume that most of the programming requirements would be handled in fourth-generation or higher

programming languages and development environments. All transactions with the databases would be

performed in Structured Query Language.

All data would be stored in a single, uniform, database format and would reside on a single database

server or cluster of database servers housed at a single data center. By adapting to an open client/server

system architecture, modern tools and design techniques would assist the State in achieving a flexible,

interoperable, and modular system, which can meet the future needs of the State.

A 6-year development cycle for this option would not include the initial requirements definition and

vendor bid/selection process. A semi-phased development and implementation approach would be used,

where core modules will be placed into production based on areas of functionality. A core group of 60

consultants would design, manage, and develop the application, while 100 State personnel would be

available to provide business process expertise during the analysis and design phases. In addition, we

assume that State personnel will actively participate in the coding, testing, and implementation phases.

The Custom option puts the responsibility for the quality of the product entirely on the State. To increase

the quality of the product, the State must give special attention to the following:

! A very focused and effective project office is necessary to manage expectations. The inability tomeet quality requirements and project milestones and deliverables could potentially result insignificant cost overruns

! Sufficient efforts should be invested in maintaining standards and ensuring a modular and genericparameter-driven design of the application

! Because the duration of the development project is about 6 years, changes in technology, businessrequirements, and industry standards will affect the course of the project. To maintain thestandards and quality of the product, the State will have to reinvest periodically in earlyimplementation modules


! To keep the system up-to-date with current technology after the implementation, the State has toinvest in upgrading the solution periodically. Otherwise, the State will run the risk ofobsolescence

Assumptions

The following assumptions were made to evaluate the Custom option:

! The Custom option will be based on client/server technology. The State can use the existingmainframe as the database host

! A custom-developed IT solution of this magnitude will take 6 years to design, build, andimplement

! To ensure inclusion and consideration of every business process and business rule in the customdesign, the State will dedicate personnel from multiple agencies to support this effort for theduration of the project

! External personnel will be used to augment the application development staff

! For the sake of simplicity, the Custom option assumes that the whole development effort will useone standard development tool set, without considering the probable changes in the technologyduring the project duration of 6 years

! No major enhancements will be made to the current system for the duration of the Custom option

! The Chart of Accounts and other business coding structures will be consolidated into one uniformstatewide system

! A committee will be assigned to oversee and coordinate the design and development project toensure agency requirements are prioritized and coordinated in the best interest of the State

! The designed solution will be a State-oriented system with consolidated requirements of Stateagencies and universities

! A Quality Assurance team will ensure the quality and standardization of the design. During theproject, if the standards change, the State will maintain the standards at an acceptable level

! Agency-specific requirements will continue to be supported by shadow and supplemental systemsmodified to interface with the custom FFMIS

! The integrated FFMIS will reduce the number of shadow and feeder systems and interfaces

! One data center and help desk will support the new FFMIS

! The network will be TCP/IP based by the time of implementation



The Custom option, like the Enhanced option, is predominately an IP network. The major change to the

overall system would be in the use of Unix-based applications and database servers for mission critical

systems. The custom rewrite of FFMIS applications would be accomplished on a separate platform. The

original data centers will continue to exist because other applications reside on those systems.

This option would require a major investment in new hardware and software. The new application

development platform will require extensive training of existing personnel and outside support assistance.

We have included a schematic of the proposed high-level architecture for the Custom option in

Appendix G.

Timeline

The first phases of the new FFMIS will be functional in year 4. Certain phases of the new FFMIS such as

the Travel and e-Mall modules would be operational in Fiscal Year 2001. The remainder of the modules

would not be operational until Fiscal Year 2005 or 2006. The entire system would be in place and

functional by the end of year 6, as shown in Exhibit 6-19.

Exhibit 6-19Timeline for Implementation–Custom Option




BPR Savings

7/1/

00

FY

01 1

/1/0

17/

1/01

7/1/

02

7/1/

03

7/1/

04

7/1/

05

7/1/

06

7/1/

07

FY

02 1

/1/0

2

FY

03 1

/1/0

3

FY

04 1

/1/0

4

FY

05 1

/1/0

5

FY

06 1

/1/0

6

FY

07 1

/1/0

7



As stated in the assumptions for this option, we scored this option with the highest scores for information

processing functional requirements. The key points in the analysis of functional requirements are:


! The Custom option is assumed to meet 100 percent of functionality

! The system will be designed to provide full integration among the core areas of functionality

! The system will meet 100 percent of the flexible reporting requirements

! A Custom option would satisfy all the State’s service level requirements. Service level will beaffected by spreading the computational load over the network to improve responsivenessbetween front-end and back-end processors and by reducing the number of batch updates to addreal-time system availability

! For maximum human resource utilization, the State should invest in defining and furtherautomating existing manual processes and incorporate these findings into the new Custom option

! The Custom option will be built to meet the strategic direction of the State


Exhibit 6-20Functional Requirements Matrix–Custom Option

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General Ledger 15% 3.5 4.0 5.0 4.0 5.0

Human Resource 15% 2.0 3.0 5.0 4.0 5.0

Budgeting 5% 2.5 3.0 5.0 3.0 4.0


Purchasing 10% 2.0 3.0 5.0 4.0 5.0


Integration 5% 1.0 3.0 5.0 5.0 5.0


Service Level 5% 1.0 2.0 5.0 4.0 4.0





A successfully designed and implemented Custom option should, under ideal

circumstances, meet 100 percent of the State’s functional requirements.



The sustainability scores of the Custom option are based on the following key points:

! Ideally, a custom-built solution should be 100 percent scalable. However, the Custom option willhave many unknowns. After factoring in the following difficulties in achieving the 100 percentscore, this option is awarded a score of 4 out of 5 for scalability

! Little data is available for a custom-built solution to scale the system with renewed processes andtechnology

! The option will be implemented over 6 years with multiple implementation phases among Stateagencies and universities. This lengthy implementation for the custom-built solution willnegatively affect the functional scalability of the system

! The following factors were considered while evaluating system availability with this option:

– A client/server environment will help with decentralized hardware management that shouldresult in a high percentage of up-time

– Real-time updates and full integration between system components will reduce the need forinterfaces and batch updates. This will effectively increase the availability of the application

! Because of the complexity of the system in general, ease-of-use will be perceived by the userpopulation based on the level of training received and the adequacy of training materialsprovided. In addition, ease-of-use is improved by providing context-sensitive online help and aconsistent appearance throughout front-end screens, forms, and reports. It is expected thatachieving the full satisfaction of the user population in this category will be difficult

! An effective and user-friendly security system is achievable with the Custom option

! The backup and recovery system will be enhanced over the current level. The best availablebackup and recovery solution can be achieved with the industry standard database and networkand computer architecture

! As a custom-built option, it is expected to have an integrated architecture

The industry direction scores of the Custom option are based on the following key points:

! A Custom option is assumed to be client/server based

! We assume that the State will use interoperable tools and will build the system using industry-standard, application-process integration techniques

! The State is expected to develop a uniform data model for the development effort. However,given the extended timeframe needed to design, build, and implement a custom-built solution, itis expected that uniformity will be difficult to enforce


! We assume that the custom solution will use web front-end screens for input as well as someinformation delivery and will incorporate workflow techniques to reduce manual processes.Middleware technology will be used for component integration

! We assume that the State will choose open systems to increase compatibility and interoperabilityamong components of the new system

! The State will have access to the most current and productive development and test tools underthis option


Exhibit 6-21Project Risk Matrix–Custom Option

Category Wei

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Scalability 5% 2.0 3.0 4.0 5.0 4.0


Ease-of-Use 3% 2.0 3.0 4.0 4.0 4.0

Security 3% 3.0 3.0 5.0 5.0 5.0



Sustainability 20% 0.4 0.6 0.9 1.0 0.9





Open Systems 1% 1.0 3.0 5.0 4.0 4.0




Total Score 100% 2.0 3.1 4.9 4.3 4.7


The Custom option should approach meeting 100 percent of the State’s technical

requirements. However, the shear magnitude, complexity, and duration of the Custom

option may negatively impact scalability, design as it relates to ease-of-use, and a truly

uniform data model.

Risk Analysis

The Custom option is in line with the State’s strategic vision of one integrated financial information

system for the State of Florida. Under this option, strategic risk is negligible.

Based on KPMG’s experience with custom-developed IT solutions, KPMG surveys, and market research

of large-scale IT development projects, we conclude that the risk of failure associated with this option is

large enough to render this option unacceptable to the State.

Strategic Risk

The strategic risk under this option is negligible. Exhibit 6-22 shows our scoring by subcategory for this


Exhibit 6-22Strategic Risk Matrix–Custom Option

Category Wei

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16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 2.0 1.0 2.0





Strategic risk under this option is negligible because a custom-developed solution should,

under the best circumstances, follow the strategic direction exactly as determined by the

State.

Project Risk

A 1998 Standish Group survey of 7,552 IT projects indicated that, in general, 28 percent of projects

surveyed failed, and 46 percent were “challenged” (source: GartnerGroup and Software Magazine). Only

26 percent of the projects surveyed were characterized as successes. The term challenged was defined as a

project that was completed or operational but was over budget, behind schedule, or had fewer features and

functions than originally planned. Exhibit 6-23 shows cost overruns as a percentage of original

estimation.

Exhibit 6-23IT Project Cost Overruns–Custom Option

40%

30%

20%

10%

0%

Res

po

nd

ents

Under20%

21%-50%

51%-100%

101%-200%

Over200%

Percent Over Budget

For projects in excess of $10 million, the failure rate is even higher. Of those larger projects, 51 percent

were challenged and 49 percent of projects failed. These figures are in line with similar research data

gathered for this analysis.

Specific project risks identified for a Custom option for the State of Florida include project length, size

and effort of project, design complexity, requirements stability, and the culture of the organization. The


funding source, as it relates to the budgeting process, was also identified as a risk factor. Exhibit 6-24

shows our scoring by subcategory for this option and a comparison to the other four options.

Exhibit 6-24Project Risk Matrix–Custom Option

Category Wei

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Project Effort 6.7% 0.0 2.0 5.0 4.0 3.0

People 40% – – – – –







Project Length 5% 0.0 2.0 5.0 3.0 3.0


Process 40% – – – – –






Based on industry research and KPMG experience with custom solutions, we conclude

that because of the size, complexity, project length, and organizational culture, the risk of

project failure associated with the Custom option is large enough to render this option

unacceptable to the State.


Continuation Risk

Continuation risk is present under the Custom option. However, it is mitigated by the technology upgrade

performed during the implementation. Adherence to “open” data format and communication standards,

which we are assuming will occur, will significantly reduce continuation risk. Risks to the State

associated with maintaining an up-to-date, modern IT system include skill set availability, leadership,

system ownership, and change management. It is assumed under the Custom option that a single,

comprehensive disaster recovery and fallback plan will be implemented. One final risk that warrants

mention is the risk that the resulting product will sustain a high post-implementation defect rate. This risk

can be mitigated through strict process and quality process management, and rigorous system testing

during the project development phases. Exhibit 6-25 shows our scoring by subcategory for the Custom


Exhibit 6-25Continuation Risk Matrix–Custom Option

Category Wei

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People 40% – – – – –







Process 40% – – – – –




Scalability 5% 2.0 2.0 3.0 2.0 2.0




A Custom option would significantly reduce the State’s exposure to continuation risk over

the As-Is and Enhanced options. However, experience indicates that the design

complexity and size of the project increase the risk of post-implementation defects and

increase the risks associated with change management.

Financial Analysis

We have estimated a cost range for a custom-developed, fully integrated information management system

to replace the State of Florida’s existing five FFMIS subsystems. The existing systems/functionality

considered for this cost estimate were FLAIR, COPES, SPURS, LAS/PBS, and CMS.

We have taken a top-down approach to estimating the costs of a custom-developed IFMS, as shown in

Exhibit 6-26. This exercise consisted of defining an initial frame of reference, or base cost estimate, for

the proposed system. Inputs to this activity were estimated application size, initial assumptions and

constraints, data on comparable projects, and industry cost data. The next phase was to review the base

cost estimate with internal KPMG specialists. This activity consisted of reviewing the project cost data,

attributes, initial assumptions, and constraints, and making revisions to the cost estimate. This review and

revision is an iterative process. From these activities, a final cost estimate was achieved.

Exhibit 6-26Methodology Flow Chart–Custom Option

Application SizeEstimated Source Lines

of Code (SLOC)To Build New System

Base Cost EstimateCustom IFMS

InitialAssumptions

and/orConstraints

KPMGCost Data and Comparables

IndustryCost Data

KPMGSpecialists

Revised CostEstimate

Custom IFMS

Review Project

Attributes and

Assumptions


In this section we discuss the following phases of our estimation process:

! Overall Assumptions

! Application Sizing

! Cost and Comparable Data

! Base Cost Estimate

! Review of Project Attributes and Assumptions

! Final/Revised Cost Estimate

Overall Assumptions

We initiated the estimating process by placing a baseline constraint on the project length of 6 years, which

we consider the maximum acceptable time to complete the proposed project. The proposed application

will be constructed using a fourth-generation language. An individual programming language and

development environment is not specified for the purpose of this cost estimation. The cost of the Custom

option was based on the assumption that both consulting personnel and State personnel will participate in

the design, development, and implementation of the proposed application.

Application Sizing

We used the total source lines of code (SLOC) of the existing system to provide a base size for the new

system under consideration. SLOC data was provided by each of the functional owners of the five FFMIS

subsystems. Much of the existing code base of the five FFMIS subsystems is written in the COBOL and

Natural programming languages.

Programming languages can be measured in terms of expressiveness; that is, 1 line of code written in a

high-level programming language might be 10 times more productive than 1 line of code written in a

lower level programming language. A well-known and ongoing study by Capers Jones of Software

Productivity Research, Inc., attempts to establish a code level for each of the most commonly used

programming languages. We have used these code-level conversion factors to estimate the total lines of

code in a generic fourth-generation language for the proposed system as shown in Exhibit 6-27.


Exhibit 6-27Conversion Factors of Programming Languages–Custom Option

ExistingLanguage

ExistingSystem

SLOCConversion

Factor

ProposedSystem

SLOCProposedLanguage

COBOL 2,674,188 0.19 501,410 4GL

Natural 1,919,723 0.38 719,896 4GL

RPG 12,048 0.36 4,330 4GL

MS Access 171,216 0.53 90,959 4GL

PL/SQL 20,354 1.69 34,347 4GL

Total 4,797,529 – 1,350,942 –

Based on the conversion process shown in Exhibit 6-27, we estimate that the proposed IFMS would

require approximately 1.35 million lines of generic fourth-generation language code.

Much of the industry data available on custom software development is represented as cost per function

point (FP). We therefore relied on the Capers Jones study to determine the number of function points for

the proposed project. Based on the study and our SLOC estimate of 1.35 million, we are estimating that

the proposed project would consist of 67, 547 function points. The following software size estimates are

used:

! Application size is in SLOC: 1,350,000

! Application size in FPs: 67,547

Cost and Comparable Data

We analyzed cost data on comparable projects and gathered industry data on large-scale IT projects to

determine costs to apply to our SLOC- and FP-based estimates. The costs are presented in Exhibit 6-28.


Exhibit 6-28Project Cost Estimates–Custom Option

Project/Industry Data Code $/SLOC SDLC $/SLOC Code $/FP SDLC $/FP

PC1 $12.60 $64.70 $251.94 $1,294

IC1 20.78 – – –

IC2 – – – 1,134

IC3 – – 250.00 1,250

IC4 – – – 1,000

SDLC=Software Development Life Cycle

PC1=Florida Retirement System, RIM Project, 2000

IC1=“Economics of rewriting lost source code,” Caper Jones

IC2=“Measuring the Software Process,” Garmus and Herron, Prentice Hall, 1996

IC3=“Expected Value of Software Projects,” Hrubin Systems, Inc., 1999

IC4=PMI, San Diego Presentation, Artemis Management Systems, Inc., 1998

Based on our review of industry data and on comparable project data, we applied a cost to construct code

of $12.60 per SLOC and a cost per FP for the entire Software Development Life Cycle (SDLC) of $1,250.

Base Cost Estimate

We used three methods to arrive at a base cost estimate. These were cost per SLOC, cost per FP, and an

estimation based on cost per hour. The information is presented in Exhibit 6-29.

Exhibit 6-29SLOC, FP, and Hourly Cost Estimates–Custom Option

Basis Metric Cost Per Total Code

SLOC 1,350,000 $12.60 $17,010,000

FP 67,547 250.00 16,886,750

Hours 102,923 250.00 25,730,700

Hours were derived from an estimated productivity rate of 21 FP per person-month converted to person-

hours. The total hours from this method were multiplied by 20 percent to arrive at estimated coding hours.

The rate of $250 per hour is based on a blended consulting rate.

We applied a confidence weighting to the figures in Exhibit 6-29 to arrive at a single cost to construct

code for the project, which is shown in Exhibit 6-30. Our confidence rating is based on our experience

with the derivation method used and knowledge of the data source.


Exhibit 6-30Cost-to-Construct Estimates–Custom Option

BasisTotalCode Weight Total

SLOC $17,010,000 0.6 $10,206,000

FP 16,886,750 0.2 3,377,350

Hours 25,730,700 0.2 5,146,140

Estimated Cost to Construct Code $18,729,490

We applied our estimated cost to construct code of $18,729,490 to the SDLC. We adopted a

GartnerGroup estimate on the percentage of effort for the SDLC for client/server environments. This

estimate, along with associated cost estimates, is shown in Exhibit 6-31.

Exhibit 6-31Basic Cost Estimates–Custom Option

Phase Effort Cost

Requirements and Analysis 15% $14,047,118

Logical Design 10% $9,364,745

Physical Design 15% $14,047,118

Code Construction 20% $18,729,490

Unit Testing 15% $14,047,118

System Testing 15% $14,047,118

Implementation 10% $9,364,745

Total 100% $93,647,450

We adopted $93,647,450 as our base cost estimate for the Custom option.

Review of Project Attributes and Assumptions

KPMG specialists reviewed the SDLC costs presented in Exhibit 6-31. Considerable attention was paid to

the similarities and differences between the proposed project and the Florida Retirement System’s

Reengineering, Modernization, and Improvement (RIM) project. The RIM system is a complete,

integrated custom system—at the time of this writing—being implemented by KPMG. We performed a

comparison analysis between the proposed project and the RIM project to determine gaps in complexity

that should be reflected in our cost estimate. The results of this phase of the cost estimation process are

shown in the Exhibit 6-32.


Exhibit 6-32Comparison of RIM and Proposed Project Costs–Custom Option

Phase Effort Cost MultiplierRevised

CostRevised

Effort

Requirements and Analysis 15% $14,047,118 1.5 $21,070,676 17%

Logical Design 10% 9,364,745 1.5 14,047,118 11%

Physical Design 15% 14,047,118 1.2 16,856,541 13%

Code Construction 20% 18,729,490 1.1 20,602,439 16%

Unit Testing 15% 14,047,118 1.1 15,451,829 12%

System Testing 15% 14,047,118 1.3 18,261,253 15%

Implementation 10% 9,364,745 2.0 18,729,490 15%

Total – $93,647,450 – $125,019,346 –

In addition to the revised cost total in Exhibit 6-32, we applied a standard 20 percent project management

expense (Program Office). The resulting total development cost (excluding State personnel costs, some

training costs, database fees, and hardware expense) is estimated to be approximately $150 million.

Based on the revised cost estimate and internal discussion and review at this stage of the analysis, we

further refined the following project assumptions, shown in Exhibit 6-33.

Exhibit 6-33Proposed Project Cost Estimates–Custom Option

Total Estimated Cost (in millions) $150

Total SLOC 1,486,036

Language 4GL

Total FPs 74,302

Total Hours 576,000

Max Acceptable Time to Completion (years) 6

Total Person-Hours per Year 96,000

Total Days per Staff Year 200

Total Hours per Staff Year 1,600

Average # Consulting Staff per Year 60

Total Estimated Cost per SLOC $101

Total Estimated Cost per FP $2,020

Estimated Hours/FP 7.75

These numbers appear to be reasonably in line with industry data collected on large-scale, custom-

developed solutions.


For a separate verification of our cost totals, we used Quantitative Software Management, Inc.’s

SLIM 4.0. SLIM is a well-known cost-estimating model/tool that has been validated over a 15-year

period with thousands of completed projects. Using the software size estimate in SLOC described earlier,

we ran our solution based on a peak staff constraint of 160 available staff (60 consulting, 100 available

State personnel), and an estimated 1,486,036 SLOC to produce. A resulting cost estimate of $184 million

was produced, with a peak development staff of 90 persons and an estimated time to completion of 88

months. In general, we concluded that this exercise and result affirmed our independent cost-estimation

results.

Final/Revised Cost Estimate

We arrived at a preliminary cost estimate of $150 million. This figure does not include State personnel

costs, hardware and database costs, and software development tool costs. We present these costs in

Exhibit 6-34.

Exhibit 6-34Final/Revised Cost Estimate–Custom Option

Development Costs $150,023,215

State Personnel 27,000,000

Hardware Costs 30,000,000

Database Fees 5,000,000

Software Costs 1,500,000

Total $213,523,215

Our best estimate of costs to develop a custom IFMS for the State of Florida is $220 million. This figure

represents a best case scenario (low estimate) in our estimated cost range. We developed a risk adjustment

factor for the Custom option, described earlier, that we apply to development costs of $150 million. We

estimated, given the scope, complexity, and organizational structure, that an appropriate risk multiplier of

2.56 is warranted for this option.

We therefore present a cost range of $214 million to $448 million for the Custom option.

Operations costs over the next 15 years for the Custom option are shown in Exhibit 6-35.


Exhibit 6-35Operations Costs—Custom Option

OperationsYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

Hardware

Support and Maintenance (1) $8,991 $8,452 $7,945 $7,468 $7,020 $6,599 $6,203 –

New Hardware – – – – – – – $6,615


Software

Support and Maintenance 2,218 2,396 2,587 2,794 3,018 3,259 3,520 –

License Costs – – – – – – – 500

Software Subtotals (2)2,218 2,396 2,587 2,794 3,018 3,259 3,520 500



New System – – – – – – – $7,115


Total w/Staff $23,469 $18,818 $19,292 $19,552 $19,880 $20,274 $20,735 $13,385

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

Hardware

Support and Maintenance (1)– – – – – – – –

New Hardware – – – – $4,854 – – –

Hardware Subtotals – – – – 4,854 – – $64,147

Software

Support and Maintenance – – – – – – – –

License Costs $535 $572 $613 $655 701 $750 $803 –

Software Subtotals (2)535 572 613 655 701 750 803 $24,921



New System $535 $572 $613 $655 $5,555 $750 $803 –

Old System (Option 1) – – – – – – – –

Total w/Staff $7,056 $7,354 $7,666 $7,990 $13,183 $8,684 $9,054 $216,392

Assumptions: (1) Hardware Price Increases/(Decreases), (6.0%) per annum(2) New Hardware Purchased Every 5 years % Increase in Maintenance Cost Annually, 7.0% per annum(3) Staff Cost Growth, 4.0% per annum


Implementation costs for the Custom option are shown in Exhibit 6-36.

Exhibit 6-36Implementation Costs—Custom Option

ImplementationYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

New Hardware (1) – – $9,013 – – – – –

License Costs (2) – – 5,000 $803 $859 $919 $983 –

Consulting (3) $7,590 $34,937 17,066 28,822 31,595 42,241 23,213 –

Interfaces – – – – 2,667 4,000 1,333 –

Subtotal 7,590 34,937 17,066 28,822 34,262 46,241 24,546 –

Risk Adjusted Subtotal (4) 7,590 89,439 43,689 73,783 87,710 118,376 62,838 –

Training – 1,600 – – – 8,853 24,450 –

Implementation Totals 7,590 91,039 43,689 73,783 87,710 127,229 87,288 –

Project Staff 560 4,780 4,500 4,500 4,500 4,500 4,500 –

Undiscounted Costs 8,150 95,819 62,202 79,086 93,069 132,648 92,771 –

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

New Hardware (1) – – – – – – – $9,013

License Costs (2) – – – – – – – $8,564

Consulting (3) – – – – – – – –

Interfaces – – – – – – – –

Subtotal – – – – – – – –

Risk Adjusted Subtotal (4) – – – – – – – –

Training – – – – – – – –


Project Staff – – – – – – – $27,840


Assumptions: (1) Maintenance Costs for 5 years included in Purchase Price(2) Maintenance Costs % of Purchase Price, 0.15 per annum % Increase in Maintenance Cost Annually, 0.07 per annum(3) Consulting Cost Increases, 0.05 per annum(4) Risk Adjustment Factor, 2.56

The net present value, internal rate of return, and payback period in years for the Custom option are



Exhibit 6-37BPR Savings—Custom Option

DiscountRate 6% Year 01 Year 02 Year 03 Year 04 Year 05 Year 06 Year 07 Year 08

ImplementationCosts

$(8,150) $95,819) $(62,202) $(79,086) $(93,069) $(132,648) $(92,771) –

Operations Costs (23,469) (18,818) (19,292) (19,552) (19,880) (20,274) (20,735) $(13,385)


(176) 5,858 6,034 6,216 6,403 6,595 6,792 84,495

Subtotal (31,795) (108,779) (75,460) (92,422) (106,546) (146,327) (106,714) 71,110


Grand Total $(12,545) $(82,522) $(48,414) $(64,565) $(77,854) $(116,773) $(76,272) $102,466

Payback Period-Option 3

$(31,795) $(140,574) $(216,034) $(308,456) $(415,002) $(561,329) $(668,043) $(596,933)

Year 09 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Totals

ImplementationCosts

– – – – – – – $(563,745)



88,297 90,947 93,676 96,486 99,381 102,361 105,432 $798,797

Subtotal 81,241 83,593 86,011 88,496 86,197 93,677 96,378 $18,660

NPV (of subtotal) – – – – – – – $(166,387)

Internal Rate ofReturn

– – – – – – – (1%)


Grand Total $113,537 $116,858 $120,273 $123,786 $122,547 $131,118 $134,942 $486,582

Payback Period-Option 3

$(515,692) $(432,099) $(346,088) $(257,592) $(171,395) $(77,718) $18,660 15 Years

Business Case Study 6—Options AnalysisCOTS

Option 4: COTS

Overview

The industry trend is to implement a COTS solution to obtain an integrated solution in less time than is

necessary to implement a custom-built solution. We considered three industry leaders in COTS

solutions—SAP, PeopleSoft, and Oracle—for the purpose of evaluation. We evaluated these three

Enterprise Resource Planning (ERP) packages using the State’s 1,500 high-level requirements. However,

it is important to note that this analysis is not intended to recommend a specific ERP package.

The COTS option contains all financial management, human resources, and payroll systems. The option

also assumes that all modules are acquired from the same vendor. Statistics show that a COTS software

implementation without major modifications will produce faster and better return on investment

compared to enhanced COTS solutions. In this option, we evaluated the SAP, PeopleSoft, and Oracle

packages with minimal enhancements that include only additional reports, minor interfaces, and minor

modifications. This approach is commonly referred as a “vanilla” COTS solution.

ERP packages were evaluated based on the functionality available with their latest releases. Functionality

that is planned for future releases was not considered during the evaluation. The State’s software

procurement and implementation will not occur for several years, and ERP packages may have additional

functionality by then.

The implementation assumes a single production instance of the software with a single database and

database server using multiple application servers being configured in an N-tier client/server

environment. The database server and application servers, as well as the ERP software, would be

supported by a centralized technical support staff and help desk housed in a single data center.

The COTS option would replace all five major existing systems, including FLAIR, SPURS, COPES,

LAS/PBS, and CMS. There would be no separate agency-level accounting system as in the current

configuration. Generally all agencies would share common tables for items such as objects, accounts,

funds, vendors, items, and projects. The tables would have a minimal number of designated fields, which

would be under semi-autonomous agency-level control to satisfy truly unique agency requirements. The

ERP software would not replace agency-specific revenue and unique operations software.

The implementation would be completed in approximately 3½ years. The financials portion would be

rolled out in three separate phases where agencies and universities go live at 2- to 3-month intervals. The

HR and Payroll implementation would take place in two phases. Careful planning of the implementation

strategy is necessary.


We assume that the vendor will provide training to the core implementation team of 100 FTEs during the

first 6 months of the project and that consultants will “train the trainers” who will then train the agency-

level users just before the go-live period.

Assumptions

The following assumptions were made to evaluate the COTS option:

! A single COTS solution will be used for all the State FFMIS including the universities

! Because the ERP’s industry solutions provide modules built on generally accepted governmentprocesses, the State will adapt to these standard processes wherever feasible

! The Chart of Accounts and other business coding structures will be consolidated into oneuniform, statewide system

! The COTS option will be implemented without significant process modifications. However,normal table configuration, minor modifications, additional reports, and interfaces identified inthe documented requirements are included in the evaluation of the COTS implementation

! A carefully planned, multiphased implementation approach will be adopted for the COTSimplementation

! One help desk and a data center will support FFMIS

! The network will be TCP/IP-based by the time of implementation


The architecture for Option 4 is identical to Option 3. The only difference is in the application server. All

the attributes of Option 3 are the same for Option 4, except for the COTS package. Extensive training in

the programming language of the selected ERP package is required to make any modifications to meet

government business needs. We have included a schematic of the proposed high-level architecture for the

COTS solution in Appendix G.

Timeline

The proposed timeline calls for full implementation within 3½ years and is shown in Exhibit 6-38.

Certain phases of the new FFMIS such as the Travel and E-Mall modules will be operational in Fiscal

Year 2001. The remainder of the modules will be operational in Fiscal Year 2004 or 2005.


Exhibit 6-38Timeline for Implementation–COTS Option




BPR Savings

7/1/

00

FY

01 1

/1/0

17/

1/01

7/1/

02

7/1/

03

7/1/

04

7/1/

05

7/1/

06

7/1/

07

FY

02 1

/1/0

2

FY

03 1

/1/0

3

FY

04 1

/1/0

4

FY

05 1

/1/0

5

FY

06 1

/1/0

6

FY

07 1

/1/0

7



The evaluation summary of the COTS packages for the State’s functional information processing

requirements is shown in Exhibit 6-39. The basic score represents the total functionality provided by

COTS packages as delivered. The minimum score shows the functionality delivered with minimal

enhancements which include reports, minor interfaces, and minor modifications. The versions evaluated

were SAP 4.6A, PeopleSoft 7.5, and Oracle 11.02.

Exhibit 6-39Evaluation of ERP Packages–COTS Option

SAP PeopleSoft Oracle

Basic Minimum Basic Minimum Basic Minimum

Functional Area

Accounting 90% 95% 87% 94% 86% 91%

Cash and Investments 86% 97% 82% 93% 32% 50%

Budget 54% 70% 49% 71% 63% 90%

Human Resources 84% 93% 91% 98% 58% 93%

Purchasing 81% 88% 75% 80% 80% 85%

Overall 84% 92% 82% 91% 70% 87%

Considering a 5 percent margin of error, all evaluated COTS packages scored similarly. In some

functional areas, some packages are weaker than others, but overall score averages are close. For


example, PeopleSoft scores better than SAP in human resources, and SAP provides better functionality

for purchasing and accounting.

In summary, the implementation of the COTS option will achieve an average of approximately 80 percent

of the required functionality, as defined in the accompanying requirements definition, without

modification. It will achieve 90 percent or better functionality with only minor modifications, simple

interfaces, and simple reports, which can be developed during implementation.

We scored the COTS option as average in meeting the functional requirements. The COTS solution

provides more than 80 percent of the functionality in accounting, cash management, human resources,

and purchasing. However, none of the evaluated ERP packages provided the necessary functionality

required to support the budget approval process. Therefore, the score is 3 in this functional area for the

COTS packages.

Other highlights for the COTS option evaluation results are:

! ERP packages are generally weak in the following areas:

– Legislative approval of budget issues

– Web-enabled vendor bid management system

– Travel profiles and reservations for the employees

– Cash and accrual basis of accounting

! Oracle Financials has low functionality in investment management

! All evaluated packages have specialized functionality for government and higher education needs

A summary of the business operating requirements follows:

! ERP packages bring the best possible integrated solution to the State. The integration is deliveredat both the database and process levels. ERP solutions have been proven over the years and acrossindustries, and are known for their high degree of integration

! The COTS option provides the best available tool for flexible reporting. Many of the reportingneeds are packaged in the delivered solution. The integrated software and database offer effectiveand flexible reporting

! The COTS option will support an acceptable level of service:

– A client/server architecture helps to maximize responsiveness by spreading the computationalload and by better using the power of the PC and desktop computers

– Accessibility of the system will also be enhanced because the front end will be independentof back-end applications. For example, browser software and a GUI front end on PCs can


interact with UNIX-based back-end applications. Use of web-enabled forms and reports isassumed in rating accessibility

– A reduced number of batch updates will add to the real-time availability of the system

– Additional processing time is required for the COTS option because of the GUI and real-timevalidation of almost every data field. Generic processes and table-driven processing logic willalso cause the system response time to be less than the response time of a custom-developedsolution

! A COTS option generally increases productivity by automating processes and eliminatingredundant processes. Use of workflow and web-based applications such as employee self-servicewill increase productivity. However, the COTS options will need relatively more end-user and ITpersonnel training. It is also difficult to retain COTS-trained IT personnel because they are inhigh demand

! The COTS option promotes the enterprise vision and therefore it supports the State-orientedFFMIS subsystems. The integrated accounting and fund management functionality will provide astrong foundation for perceived financial stability



Exhibit 6-40Functional Requirements Matrix–COTS Option

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General Ledger 15% 3.5 4.0 5.0 4.0 5.0

Human Resource 15% 2.0 3.0 5.0 4.0 5.0

Budgeting 5% 2.5 3.0 5.0 3.0 4.0


Purchasing 10% 2.0 3.0 5.0 4.0 5.0


Integration 5% 1.0 3.0 5.0 5.0 5.0


Service Level 5% 1.0 2.0 5.0 4.0 4.0





The implementation of a COTS option will achieve approximately 80 percent of the

required functionality without modification, as defined in the accompanying requirements

definition. The key areas of weakness, with respect to the specific needs of the State of

Florida, are in the budgeting modules.


The sustainability scores of the COTS option are based on the following key points:

! The COTS option scores best in this category. The generic design and the amount of industrybenchmark information available for planning makes the COTS option the best scalable solution.COTS vendors constantly invest in new technology, and it is available to customers throughupgrades. The client/server architecture is expected to be scalable

! A client/server environment will help the decentralized hardware management by producing ahigh percentage of up-time


! Real-time updates and an integrated solution will reduce the need for interfaces and batchupdates. This will effectively increase the availability of the application

! The complexity of COTS screens is a concern in general. In addition, COTS products tend to usegeneric terminology instead of the State’s business terminology. The following factors weigh infavor and against the ease-of-use of a COTS solution:

– The usage of web applications, a GUI, and a browser front end will enhance usabilityconsiderably over the current system. However, not all screens are web-enabled in the currentversions of COTS packages, but this is changing very rapidly

– COTS solutions will provide training materials and training sessions

– COTS solutions provide online, context-sensitive help screens

– COTS solutions have a consistent appearance for all screens, forms, and reports

– Because COTS solutions have a generic design, they have more information in the screensand more screens and menu items to navigate through. However, ERP packages provide toolsto customize the screens, report formats, and menus

– COTS solutions use many generic business terms. Because it is considerable work tocustomize the terminology, the COTS vendors recommend that customers acclimate to thegeneric terminology rather than change it. This is a common concern for the end-users untilthey become familiar with the new system

! COTS solutions generally provide effective, configurable, and easily manageable security.Security is verified once during logon, and a user profile keeps track of user access to variousfunctions, fields, and reports for different activities such as display, update, and authorize

! The backup and recovery system will be enhanced over the current level. COTS solutions provideutilities for backup and recovery. With the industry-standard database, and network and computerarchitecture, the best available disaster recovery system can also be implemented

! Because COTS vendors support and recommend an integrated architecture, we are expecting theState to follow the norm

The industry direction scores of the COTS option are based on the following key points:

! COTS packages are client/server-based. However, not all COTS solutions are web-enabled. Moreprocessing is required on the desktop, and therefore higher end clients are required. Additionalbandwidth is needed because forms must be downloaded to the PC at request time

! COTS solutions are designed to be interoperable, but their application process interfaces are notfreely available. Other software vendors will have to work with the ERP vendors to make theirsoftware operable with a COTS solution. However, many tools and software are available in themarket that can operate with a COTS solution

! The COTS option provides a uniform data model


! The COTS option will use modern technology like web and workflow to the fullest extent

! ERP software vendors make the code available for the customer to modify, but the solution itselfdoes not make use of open-system technology

! COTS solutions provide good development and test tools, which are usually proprietary tools


Exhibit 6-41Technical Requirements Matrix–COTS Option

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Scalability 5% 2.0 3.0 4.0 5.0 4.0


Ease-of-Use 3% 2.0 3.0 4.0 4.0 4.0

Security 3% 3.0 3.0 5.0 5.0 5.0



Sustainability 20% 0.4 0.6 0.9 1.0 0.9





Open Systems 1% 1.0 3.0 5.0 4.0 4.0




There are general concerns about the complexity of COTS screens. Positive aspects of a

COTS solution include a truly uniform data model, superior systems security,

architectural integration, and backup and recovery.


Risk Analysis

Like the Custom option, the COTS option has substantial project risk. The ERP concept and current

technology will adequately mitigate strategic risks. Continuation risks are present, but are mitigated to a

large degree because of the regular cycle of upgrades provided by the top-tier ERP solution providers.

ERP software packages are the industry standard for very large organizations.

Strategic Risk

Strategic risk under this option is minimal. Exhibit 6-42 shows our scoring by subcategory for this option

and a comparison to the other four options.

Exhibit 6-42Strategic Risk Matrix–COTS Option

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16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 2.0 1.0 2.0




We consider that strategic risk under the COTS option is negligible and that this option

will satisfy the strategic direction of the State. Because of the unique needs of State

agencies, it is likely that many agency feeder systems will remain in place.

Project Risk

Project risks should be given a considerable amount of attention. As indicated in the risk analysis section

for the Custom option, large-scale IT development projects are historically very risky propositions.


Canceled or delayed projects can be very costly to an organization, and the potential loss is magnified for

larger projects. COTS solutions are no exception. Therefore, it is imperative that adequate steps be taken

to mitigate such risks.

A recent GartnerGroup study on ERP delivery was conducted. With respect to on-time delivery, 55

percent of the 600 companies surveyed indicated that delivery was “about as expected,” while 32 percent

claimed delivery was “later than expected.” Ten percent indicated that the project was dropped. These

numbers compare slightly more favorably than IT projects in overall success rates. According to the

GartnerGroup, “Enterprises that approach ERP projects with realistic expectations, skilled management,

and adequate resources face reduced, not increased, risks compared to build-from-scratch internal

projects” (GartnerGroup SPA-06-9382, Feb. 1999). In general, market research supports the notion that a

limited customization approach taken in an ERP implementation produces a greater probability of a

successful implementation.



Exhibit 6-43Project Risk Matrix–COTS Option

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Project Effort 6.7% 0.0 2.0 5.0 4.0 3.0

People 40% – – – – –







Project Length 5% 0.0 2.0 5.0 3.0 3.0


Process 40% – – – – –






Although top-tier ERP vendors and third-party implementers of ERP solutions have

experience gained from thousands of implementations installed worldwide, significant

exposure to project risk remains. Specific factors relating to project risk under this option

include change management, overall system design complexity, and organizational

factors.


Continuation Risk

Continuation risks are present in the COTS option. Although the risk of technical obsolescence is

decreased by regular ERP vendor-supplied software upgrades, industry experience has shown that too

much customization in an installation can make system upgrades costly, time consuming, and in some

extreme cases, impossible. There is also a risk that the funding requirements of such regular upgrade

cycles might not be met.


Exhibit 6-44Continuation Risk Matrix–COTS Option

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People 40% – – – – –







Process 40% – – – – –




Scalability 5% 2.0 2.0 3.0 2.0 2.0




The risk of technical obsolescence is decreased by regular ERP vendor-supplied software

upgrades. However, industry experience has shown that too much customization in an

installation can make system upgrades costly, time consuming, and in some extreme

cases, impossible.

Financial Analysis

The method used to estimate the cost of implementation is different from the Custom option and the

Enhanced option because of the nature of ERP implementation projects.

A COTS solution requires a high level of planning for the implementation strategy, a business blue print,

and a uniform definition of the organizational and business coding structure. The preparation includes the

project office, core team, hardware, and support structure. This planning and preparation phase also

includes the training of the project’s core team members.

Individual module implementation costs for a functional consultant’s time were determined by estimating

the duration for actual module configuration and testing. The number of consultants estimated varied

from 2 to 6 per module, based on our experience with similar implementations, and taking into account

the size and complexity of the State and its many diverse agencies.

A list of 1,500 high-level requirements was compared to the capabilities of the COTS solution, to derive

the number of requirements that can be fulfilled with this option. Further enhancements needed to meet

the State’s requirements were classified into categories from simple reports to complex interfaces and

modifications of business logic. Time estimates, ranging from 5 days for simple reports to 30 days for

complex changes, were assigned and priced at $2,000 per day. The COTS option includes only costs for

minor enhancements, minor reports, and simple interfaces because we assumed that the COTS option

includes ERP software implementation without major modifications to the package.

We made the following assumptions in our analysis:

! Based on our experience with similar engagements, costs of technical support consultants will beapproximately equal to the cost of functional consultants, or 40 percent of the total cost

! Approximately 20 percent of the total project effort will be required for the project office to planimplementation, manage expectations and quality of deliverables, and monitor project costs andschedule, based on our experience with similar projects


! The number of employees involved in the project will be the equivalent of 100 FTEs for 36months

! Consultants costs per day will be $2,000 including expenses; partners and senior managers willbe $2,400 per day. These rates are inclusive of expenses. Employee costs will be $225 per day.Working days per year are assumed to be 200

Operating costs were computed based on the number of personnel needed to support a COTS solution and

the other bolt-on applications.

Seventeen percent of the software costs estimated for implementation is used to compute the software

maintenance license fee.

Because ERP vendors release upgrades almost every year and they continue to provide support for the

releases for about 5 years, we accounted for one upgrade in every 3 years. Upgrade of an ERP solution

usually lasts 6 months.

Operations costs over the next 15 years for the COTS option are shown in Exhibit 6-45.


Exhibit 6-45Operations Costs—COTS Option

Operations Year01

Year02

Year03

Year04

Year05

Year06

Year07

Year 08

Hardware

Support and Maintenance (1) $8,991 $8,452 $7,945 $7,468 $7,020 – – –

New Hardware – – – – – – $6,615 –

Hardware Subtotals 8,991 8,452 7,945 7,468 7,020 – 6,615 –

Software

Support and Maintenance 2,218 2,396 2,587 2,794 3,018 $5,920 – –

License Costs – – – – – 3,893 4,165 $4,457

Software Subtotals (2) 2,218 2,396 2,587 2,794 3,018 9,813 4,165 4,457

FFMIS Support Staff (3) 12,260 10,220 8,760 9,290 9,569 7,612 7,916 8,233


New System – – – – – $3,893 $10,780 $4,457

Old System (Option 1) $11,209 $10,848 $10,532 $10,262 $10,038 $5,920 – –

Total w/Staff $23,469 $21,068 $19,292 $19,552 $19,607 $17,425 $18,696 $12,690

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

Hardware

Support and Maintenance (1) – – – – – – –

New Hardware – – – $4,854 – – –

Hardware Subtotals – – – 4,854 – – – $51,345

Software

Support and Maintenance $4,000 – – 4,000 – – $4,000

License Costs 4,769 $5,102 $5,460 5,842 $6,251 $6,688 7,156

Software Subtotals (2) 8,769 5,102 5,460 9,842 6,251 6,688 11,156 $84,716

FFMIS Support Staff (3) 8,562 8,905 9,261 9,631 10,017 10,417 10,834 $141,487


New System $4,769 $5,102 $5,460 $10,696 $6,251 $6,688 $7,156 –

Old System (Option 1) $4,000 – – $4,000 – – $4,000 –

Total w/Staff $17,331 $14,007 $14,721 $24,327 $16,268 $17,105 $21,990 $277,548

Assumptions: (1) Hardware Price Increases/(Decreases), (6.0%) per annum(2) New Hardware Purchased Every 5 years % Increase in Maintenance Cost Annually, 7.0% per annum(3) Staff Cost Growth, 4.0% per annum

Implementation costs for the COTS option are shown in Exhibit 6-46.


Exhibit 6-46Implementation Costs—COTS Option

ImplementationYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

New Hardware (1) – $9,013 – – – – – –

License Costs (2) – – $26,000 $3,400 $3,638 – – –

Consulting (3) $7,590 5,683 29,546 47,740 22,333 – – –

Interfaces 2,667 4,000 1,333 – – – –

Subtotal 7,590 8,350 33,546 49,073 22,333 – – –

Risk Adjusted Subtotal (4) 7,590 11,723 47,099 68,898 31,356 – – –

Training – 1,600 – 8,853 24,450 – – –

Implementation Totals 7,590 13,323 47,099 77,751 55,806 – – –

Project Staff 560 2,530 4,500 4,500 2,250 – – –

Undiscounted Costs 8,150 24,866 77,599 85,651 61,694 – – –

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

New Hardware (1) – – – – – – – $9,013

License Costs (2) – – – – – – – $33,038

Consulting (3) – – – – – – – –

Interfaces – – – – – – – –

Subtotal – – – – – – – –

Risk Adjusted Subtotal (4) – – – – – – – –

Training – – – – – – – –


Project Staff – – – – – – – $14,340


Assumptions: (1) Maintenance Costs for 5 years included in Purchase Price(2) Maintenance Costs % of Purchase Price, 15% per annum % Increase in Maintenance Cost Annually, 7% per annum(3) Consulting Cost Increases, 5% per annum(4) Risk Adjustment Factor, 1.40444

The net present value, internal rate of return, and payback period in years for the COTS option are shown

in Exhibit 6-47.


Exhibit 6-47BPR Savings—COTS Option

DiscountRate 6%

Year01

Year02

Year03

Year04

Year05

Year06

Year07

Year08

Implementation Costs $(8,150) $(24,866) $(77,599) $(85,651) $(61,694) – – –

Operations Costs (23,469) (21,068) (19,292) (19,552) (19,607) $(17,425) $(18,696) $(12,690)


(176) 5,858 6,034 6,216 6,403 80,220 83,821 86,336

Subtotal (31,795) (40,076) (90,857) (98,987) (74,898) 62,795 65,125 73,646


Grand Total $(12,545) $(13,819) $(63,811) $(71,130) $(46,206) $92,349 $95,567 $105,002


$(31,795) $(71,871) $(162,728) $(261,715) $(336,613) $(273,818) $(208,693) $(135,047)

Year09

Year10

Year11

Year12

Year13

Year14

Year15

Totals

Implementation Costs – – – – – – – $(257,960)



88,926 91,595 94,344 97,174 100,089 103,090 106,183 $956,113

Subtotal 71,595 77,588 79,623 72,847 83,821 85,985 84,193 $420,605

NPV (of subtotal) – – – – – – – $133,770


– – – – – – – 12%


Grand Total $103,891 $110,853 $113,885 $108,137 $120,171 $123,426 $122,757 $888,527


$(63,452) $14,136 $93,759 $166,606 $250,427 $336,412 $420,605 10 Years

Business Case Study 6—Options AnalysisBest of Breed

Option 5: Best of Breed

Overview

The recommended Best of Breed option is designed to take the best functionality from both existing

State-developed software and COTS software. Because COTS financial systems have integrated modules,

selecting individual financial modules from various COTS solutions is not a viable option. All of the

evaluated ERP solutions lack certain functionality related to the following general areas:

! Budgeting functionality contained in LAS/PBS that relates to tracking of issues and variousnarrative information is necessary to publish the formal budget

! Bid management tracking, reporting, and manipulation are incorporated in a custom systemalready in use

! E-Mall capabilities are scheduled to be developed by the State during the next 2 years

The Best of Breed option should encompass the retention of these State-owned and developed

applications, and they should be interfaced with the selected ERP solution.

In addition, the Student Administration module is sufficiently self-contained, and a student administration

system could be acquired from a COTS vendor other than the COTS vendor for the financial applications.

Many entities have historically chosen HR and payroll systems from one vendor and the financial

modules from another. Mixing modules from different ERP packages occurred as a result of the quality of

specific products available in the marketplace at different times, rather than conscious decisions to

implement a Best of Breed solution. Because of the size and complexity of the State’s financial structure

and budgetary process, we recommend a single vendor for both HR and payroll and financial systems.

The additional functionality that might be obtained by selecting separate vendors would be overshadowed

by having to support two different databases and train IT personnel in the use of two different toolkits.

The following areas also represent functionality that is lacking in the COTS software:

! Simultaneous cash basis of accounting, modified accrual, and accrual basis of accounting (COTSsolutions are designed to use the accrual basis of accounting)

! Interfaces between the travel reservations system and the integrated financial systems

These areas of functionality should be custom-developed using the development tools provided with the

selected COTS solution.


The Best of Breed option assumes that all pertinent features of LAS/PBS and the bid management system

have been incorporated through interfaces and that the remaining enhancements have been made based on

the requirements definition to ensure 100 percent functionality has been met.

We recommend that the State web-enable the LAS/PBS application components in the Best of Breed

solution.

A key distinction between the COTS option and the Best of Breed option involves the State University

System (SUS). Universities, being the engines of innovation, provide the impetus for economic, technical,

and social progress in modern societies. Like other areas of society, they are also undergoing radical

changes to face the competition to provide quality teaching at a lower cost. An IT solution that integrates

every process of the universities from the fund management to the teaching, research, and student services

will help the universities to reduce the cost of administration. Universities are uniquely autonomous in

their functions but remain accountable to State government. This unique status of the universities must be

properly addressed by the IT solution implemented by Florida. To highlight this relation, the SUS can be

viewed as shown in Exhibit 6-48.

Exhibit 6-48Interrelation of Financial Management and Student Administration Systems

Organization Management! Budget! Accounting! Funds Management! Revenue Management

Human Resource! Position and Recruitment! Personnel Administration! Personnel Development! Time and Leave! Benefits! Payroll! Travel Services

Business Support! Procurement! Inventory Management! Facility Maintenance! Cash and Treasury! Investment Project Management

Customer Relationship Management! Market Research and Brand Marketing! Relationship Management! Alumni Services

Teaching! Curriculum Planning! Student Administration! Teaching and Examination! Studies

Research! Planning and Program Management! Administration of Programs

Student Services! Career Planning and Placement! Financial Aid! Housing! Campus and Media Services

Records Management! Data Warehousing! Workflow and Approvals

State’s FFMIS System Student Administration System


As illustrated in Exhibit 6-48, the SUS can be split into two major components: a Financial Management

System and a Student Administration System. Because it is possible that one ERP package may have

higher functionality for the SUS and yet have lower functionality for State government (or vice versa),

limiting both the SUS and the rest of State government to a single package could compromise the overall

functionality of both installations. Permitting, but not requiring, a dual FFMIS implementation will allow

the SUS to choose the best available ERP solution to manage the unique functionality in supporting the

students, staff, and curriculum. Finally, the ERP package selected by the State will interface with the

SUS’s Student Administration System and Financial Management System.

Assumptions

! The Best of Breed option consists of a COTS-centric solution

! Because this option is COTS-centric, all assumptions associated with the COTS option are validwith the Best of Breed option

! The budget appropriation functionality of LAS/PBS will interface with the State’s choice of anERP package. This may need some enhancements especially with a new consolidated Chart ofAccounts

! Some significant modifications within the COTS option will be required to meet the special needsof the State. This will include, but not be limited to, the bid management, travel reservation, andtravel expense reimbursement systems depending on the COTS packages chosen

! The COTS package must be used in conjunction with some additional specialization tools forreport distribution, document image management, and mails

! Some LAS/PBS components remaining in the Best of Breed option will be web-enabled

! The existing Vendor Bid System will remain in place


The Best of Breed option is the same as the COTS option. However, in the Best of Breed option, two of

the existing FFMIS applications, Vendor Bid System and LAS, will remain on their original platforms.

The ERP package for the State University System might be different from the COTS package for the

State’s Financial Management System. These remaining applications will undergo some enhancements to

meet the requirements as stated and agreed to in the systems requirements workshop. A new interface

should be written to allow the new COTS package and the existing applications to share data. We have

included a schematic of the high-level architecture for the Best of Breed solution in Appendix G.


Timeline

The proposed timeline shown in Exhibit 6-49 calls for full implementation within 3½ years. Certain

phases of the new FFMIS such as the Travel and E-Mall modules will be operational in Fiscal Year 2001.

The remainder of the modules will be operational in Fiscal Year 2004 or 2005.

Exhibit 6-49Timeline for Implementation–Best of Breed Option




BPR Savings

7/1/

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FY

01 1

/1/0

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7/1/

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03

7/1/

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7/1/

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7/1/

06

7/1/

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FY

02 1

/1/0

2

FY

03 1

/1/0

3

FY

04 1

/1/0

4

FY

05 1

/1/0

5

FY

06 1

/1/0

6

FY

07 1

/1/0

7



The Best of Breed option will combine ERP, application bolt-ons, and other modifications to allow nearly

100 percent functionality. We have reservations about this option meeting requirements for automation of

issue tracking and legislative approval process of the budget. Therefore, we scored this with 4 instead of

5, while all other functional areas have scored 5.

A summary of our evaluation of the business operating requirements follows:

! ERP packages bring the best possible integrated solution to the State. The integration is deliveredat both the database and process levels. COTS solutions have been proven over the years, andacross industries they are known for their integration. The COTS solution will be combined withthe web solutions the State has implemented with LAS/PBS

! The Best of Breed option provides the best available tool for flexible reporting. Many reportingneeds are packaged in the delivered solution. Integrated software and databases provide the bestplace to begin effective and flexible reporting. Web applications are feeding into the COTSsolution, and therefore reporting requirements will be served from the COTS option. With LAS,


specific issue-tracking reports might need to be outside the COTS package. However, a majorityof the forecasting and planning models will be generated inside the COTS software

! The Best of Breed option will support an acceptable level of service:

– Client/server architecture helps to maximize responsiveness by spreading the computationalload and by better using the power of PC and desktop computers

– System accessibility will also be enhanced because the front end can be independent of back-end applications. For example, browser software and a GUI front end on PCs can interactwith UNIX-based back-end applications. Use of web-enabled forms and reports is assumed inrating accessibility

– A reduced number of batch updates will add to the real-time availability of the system

– Additional processing time is required for the Best of Breed option because of the GUI andreal-time validation of almost every data field. Generic processes and table-driven processinglogic will also cause the system response time to be less than the response time of a custom-developed solution

– Because LAS/PBS will continue as a solution, accessibility will improve with web access, butresponsiveness will only improve marginally. There is general satisfaction with theavailability of LAS/PBS

The Best of Breed option generally increases human resource utilization and productivity by automating

processes and eliminating redundant processes. Use of workflow and web-based applications such as

employee self-service will increase productivity. However, the Best of Breed option will need relatively

more end-user and IT personnel training. It is also difficult to retain COTS-trained IT personnel because

they are in high demand.

The Best of Breed option will promote the enterprise vision and therefore supports the State’s strategic

direction of the FFMIS subsystems. Integrated accounting and fund management functionality will

provide a strong foundation for perceived financial stability.



Exhibit 6-50Functional Requirements Matrix–Best of Breed Option

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General Ledger 15% 3.5 4.0 5.0 4.0 5.0

Human Resource 15% 2.0 3.0 5.0 4.0 5.0

Budgeting 5% 2.5 3.0 5.0 3.0 4.0


Purchasing 10% 2.0 3.0 5.0 4.0 5.0


Integration 5% 1.0 3.0 5.0 5.0 5.0


Service Level 5% 1.0 2.0 5.0 4.0 4.0





The Best of Breed option, as defined, derives its core functionality from an ERP package,

while leaving in place systems such as the Vendor Bid System and LAS/PBS that

generally scored well compared to the high-level functional requirements. This option,

therefore, scored the highest in meeting functional requirements.


The sustainability scores of the Best of Breed option are based on the following key points:

! The scalability provided by the Best of Breed option will be limited slightly because of legacycomponents. The generic design and the amount of industry benchmark information available forplanning makes COTS the best scalable solution. LAS/PBS is a legacy component and isexpected to be functionally less scalable. COTS vendors constantly invest in new technology, andit is available to customers through upgrades. This type of constant upgrade will not be availablewith legacy components. The COTS client/server architecture is expected to be scalable;however, LAS/PBS is not client/server architecture


! A client/server environment will help decentralized hardware management by providing a highpercentage of up-time and system availability. Real-time updates and an integrated solution willreduce the need for interfaces and batch updates. This will effectively increase the availability ofthe application. There is general satisfaction with the availability of LAS/PBS

! COTS packages use complex screens, navigation, and generic terminology instead of the State’sbusiness terminology, which is a concern. The following factors weigh in favor of and against theease-of-use for the Best of Breed option:

– The usage of web applications, a GUI, and a browser front end will enhance the usabilityconsiderably over the current system. However, not all screens are web-enabled in the currentversions of COTS packages, but this is changing very rapidly

– COTS packages provide training materials and training sessions

– COTS packages provide online, context-sensitive help

– COTS packages have a consistent appearance for all screens, forms, and reports

– Because COTS packages have a generic design, they have more information on the screensand more screens and menu items to navigate through. However, COTS packages providetools to customize the screens, report formats, and menus

– COTS packages use many generic business terms. Because it is considerable work tocustomize the terminology, COTS vendors recommend that customers acclimate to thegeneric terminology rather than change it. This is a common concern for end-users until theybecome familiar with the new system

! A web portal can provide a gateway to COTS and other bolt-on components with a single logon.The Best of Breed option will provide effective, configurable, and easily manageable security.Security is verified once during logon, and a user profile keeps track of the user access to variousfunctions, fields, and reports for activities such as display, update, and authorize

! The backup and recovery system will be enhanced compared to what now exists. The Best ofBreed option will provide utilities for backup and recovery. With the industry-standard databaseand network and computer architecture, the best available disaster recovery system can also beimplemented

! LAS/PBS requires a different set of backup and recovery procedure. This increases the risk of thedatabases not being synchronized during recovery

! Architecture will not be ideally integrated with COTS and some legacy components. BecauseLAS/PBS is a very small component, we believe architectural integration will be better thanaverage overall for FFMIS

The industry direction scores of the Best of Breed option are based on the following key points:


! The Best of Breed option is significantly client/server-based

! The Best of Breed option is designed to be interoperable. However, its application processinterfaces are not freely available. Other software vendors will have to work with the COTSvendors to make their software interoperate. Many software tools are available in the market thatcan operate with COTS packages

! The Best of Breed option provides the best possible uniform data model for the State. Other bolt-on applications will need to conform to the new uniform data model

! The Best of Breed option will use modern technology such as web and workflow to the fullestextent. The integration of ERP with bolt-on applications will make use of the middleware tools

! COTS software vendors make the code available for the customer to modify, but the solutionitself does not make use of open-system technology

! COTS packages, which are a major portion of the Best of Breed option, provide gooddevelopment and test tools (which are generally proprietary tools)



Exhibit 6-51Technical Requirements Matrix–Best of Breed Option

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Scalability 5% 2.0 3.0 4.0 5.0 4.0


Ease-of-Use 3% 2.0 3.0 4.0 4.0 4.0

Security 3% 3.0 3.0 5.0 5.0 5.0



Sustainability 20% 0.4 0.6 0.9 1.0 0.9





Open Systems 1% 1.0 3.0 5.0 4.0 4.0




The technical requirements of the State are met under the Best of Breed option.

Shortcomings in this area compared to the COTS solution resulted from the continuation

of legacy system components, which negatively affected scalability, backup and recovery

execution, architectural integration, and our scoring for uniform data models.

Risk Analysis

The risks associated with a Best of Breed option are primarily project and continuation risk.

Strategic Risk

Strategic risk under this option is minimal. Exhibit 6-52 shows our scoring by subcategory for this option

and a comparison to the other four options.


Exhibit 6-52Strategic Risk Matrix–Best of Breed Option

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16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 1.0 1.0 1.0



16.7% 5.0 3.0 2.0 1.0 2.0




We conclude that strategic risk under the Best of Breed option is negligible because this

option will satisfy the strategic direction of the State. One strategic risk shortfall is that

under this option the existing budgeting system will continue to operate as an

independent system, instead of being fully integrated into the core COTS system.

Project Risk

With the core portion of the implementation consisting of a COTS solution, a significant degree of risk

for cost overruns or project failure is unavoidable. While the definition of the Best of Breed option leaves

the existing budgeting system and the Vendor Bid System in place, interfaces will have to be rewritten or

modified to integrate these separate subsystems with the integrated core financial and HR system.

Overall, a Best of Breed option would see no appreciable reduction in risks from the slightly reduced

effort and complexity of the implementation.

Additional project risks to successful completion include those attributable to project ownership, system

sponsorship and funding, and organizational culture. We assumed for this option that the budgeting

system would remain under the ownership of the Executive Office of the Governor, while the core

financial systems would migrate under one single owner. The split ownership of the systems being

affected during such a significant implementation adds risk to the process. Other project risks, also


identified under the Custom and COTS options, include system design complexity, system development

methodology, and implementation strategy.


Exhibit 6-53Project Risk Matrix–Best of Breed Option

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Project Effort 6.7% 0.0 2.0 5.0 4.0 3.0

People 40% – – – – –







Project Length 5% 0.0 2.0 5.0 3.0 3.0


Process 40% – – – – –







The core portion of implementation will consist of a COTS option and therefore is subject

to a significant degree of project risk. While the definition of the Best of Breed option

leaves the existing appropriation system and Vendor Bid System in place, interfaces must

be rewritten or modified to integrate these separate subsystems with the integrated core

financial and HR systems. We conclude that a Best of Breed solution would not have an

appreciable reduction in project risk from the slightly reduced effort and complexity of

the implementation.

Continuation Risk

The same continuation risks present under the COTS option apply to the Best of Breed option. In

addition, because one of the systems being left in place is built upon older technology, that portion of the

system incurs a higher degree of risk of technical obsolescence.



Exhibit 6-54Continuation Risk Matrix–Best of Breed Option

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People 40% – – – – –







Process 40% – – – – –




Scalability 5% 2.0 2.0 3.0 2.0 2.0



The continuation risk under this option is acceptable and scored slightly worse than the

COTS option only because of legacy components that will be left in place under this

option. The risk of technical obsolescence is decreased by regular ERP vendor-supplied

software upgrades on the core system, which would not apply to the LAS/PBS or Vendor

Bid System.

Financial Analysis

The method used to derive costs for the Best of Breed option is very similar to the method used for the

COTS option. Because this option attempts to meet 100 percent of functional requirements by enhancing


the COTS option and by bolting on existing systems to the COTS option, the cost of implementation is

higher.

A COTS-centric solution requires a high level of planning for the implementation strategy, a business

blue print, and a uniform definition of the organizational and business coding structure. Preparation

includes the project office, core team, hardware, and support structure. This planning and preparation

phase also includes the training of the project’s core team members.

The individual module implementation cost of a functional consultant’s time was determined by

estimating the duration for actual module configuration and testing. The number of consultants estimated

varied from two to six per module, based on our experience with similar implementations, and taking into

account the size and complexity of the State and its many diverse agencies.

A list of 1,500 high-level requirements was compared to the functionality available with the COTS option

to derive the number of requirements that can be fulfilled with the Best of Breed option. Further

enhancements needed to meet the State’s requirements were classified into categories from simple reports

to complex interfaces and modifications of business logic. Time estimates, ranging from 5 days for simple

reports to 30 days for complex changes, were assigned and priced at $2,000 per day. The Best of Breed

option includes the cost of enhancements needed for a COTS solution and additional interfaces needed to

be built to integrate with the bolt-on systems.

We made the following assumptions for this analysis:

! Based on our experience with similar engagements, the number and costs for technical supportconsultants will be approximately equal to the cost of functional consultants, or 40 percent of thetotal cost

! Based on our experience with similar projects, approximately 20 percent of the total project effortwill be required to plan implementation, manage expectations and quality of deliverables, andmonitor the cost and time

! The number of employees involved in the project will be the equivalent of 100 FTEs for 36months

! Consultants costs per day were estimated to be $2,000 including expenses. Partners and seniormanagers were assumed to cost $2,400 per day. These rates are inclusive of expenses. Employeecosts are assumed to be $225 per day. Working days per year are assumed to be 200

! Operating cost were computed based on the number of personnel needed to support a COTSsolution and the other bolt-on solutions

! Seventeen percent of the software cost estimated for implementation is used to compute thesoftware maintenance license fee


! Because ERP vendors release upgrades almost every year and they continue to provide supportfor the releases for about 5 years, we accounted for one upgrade in every 3 years.Implementations of an ERP upgrade usually requires approximately 6 months

Operations costs over the next 15 years for the Best-of-Breed option are shown in Exhibit 6-55.

Exhibit 6-55Operations Costs—Best of Breed Option

Operations Year01

Year02

Year03

Year04

Year05

Year06

Year07

Year 08

Hardware

Support and Maintenance (1) $8,991 $8,452 $7,945 $7,468 $7,020 $1,077 $1,013 $952

New Hardware – – – – – – 9,604 –

Hardware Subtotals 8,991 8,452 7,945 7,468 7,020 1,077 10,617 952

Software

Support and Maintenance 2,218 2,396 2,587 2,794 3,018 6,212 312 334

License Costs – – – – – 3,893 4,165 4,457




New System – – – – – $3,893 $13,769 $4,457

Old System (Option 1) $11,209 $10,848 $10,532 $10,262 $10,038 $7,289 $1,325 $1,286

Total w/Staff $23,469 $21,068 $19,292 $19,552 $21,184 $20,434 $24,716 $15,750

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

Hardware

Support and Maintenance (1) $895 $841 $791 $743 $699 $657 $617 –

New Hardware – – – 7,048 – – – –

Hardware Subtotals 895 841 791 7,791 699 657 617 $64,813

Software

Support and Maintenance 4,357 382 409 4,438 468 501 4,536 –

License Costs 4,769 5,102 5,460 5,842 6,251 6,688 7,156 –




New System $4,769 $5,102 $5,460 $12,890 $6,251 $6,688 $7,156 –


Total w/Staff $20,429 $17,149 $17,917 $29,778 $19,593 $20,508 $25,478 $316,317

Assumptions: (1) Hardware Price Increases/(Decreases), (6.0%) per annum(2) New Hardware Purchased every 5 years % Increase in Maintenance Cost Annually, 7.0% per annum(3) Staff Cost Growth, 4.0% per annum


Implementation costs for the Best of Breed option are shown in Exhibit 6-56.

Exhibit 6-56Implementation Costs—Best of Breed Option

ImplementationYear

01Year

02Year

03Year

04Year

05Year

06Year

07Year

08

New Hardware (1) – $13,086 – – – – – –

License Costs (2) – – $26,000 $3,400 $3,638 – – –

Consulting (3) $7,590 5,683 32,866 52,506 23,677 – – –

Interfaces 2,667 4,000 1,333 - – – –

Subtotal 7,590 8,350 36,866 53,839 23,677 – – –

Risk Adjusted Subtotal (4) 7,590 12,135 53,578 78,247 34,410 – – –

Training – 1,600 – 8,853 24,450 – – –

Implementation Totals 7,590 13,735 53,578 87,100 58,860 – – –

Project Staff 560 2,530 4,500 4,500 2,250 – – –

Undiscounted Costs 8,150 29,351 84,078 95,000 64,748 – – –

Year09

Year10

Year11

Year12

Year13

Year14

Year15

TotalCosts

New Hardware (1) – – – – – – – $13,086

License Costs (2) – – – – – – – $33,038

Consulting (3) – – – – – – –

Interfaces – – – – – – –

Subtotal – – – – – – –

Risk Adjusted Subtotal (4) – – – – – – –

Training – – – – – – –


Project Staff – – – – – – – $14,340


Assumptions: (1) Maintenance Costs for 5 years Included in Purchase Price(2) Maintenance Costs % of Purchase Price, 15% per annum % Increase in Maintenance Cost Annually, 7% per annum(3) Consulting Cost Increases, 5% per annum(4) Risk Adjustment Factor, 1.45333


The net present value, internal rate of return, and payback period in years for the Best of Breed option are


Exhibit 6-57BPR Savings—Best-of-Breed Option

DiscountRate 6%

Year01

Year02

Year03

Year04

Year05

Year06

Year07

Year08

Implementation Costs $(8,150) $(29,351) $(84,078) $(95,000) $(64,748) – – –

Operations Costs (23,469) (21,068) (19,292) (19,552) (21,184) $(20,434) $(24,716) $(15,750)


(176) 5,858 6,034 6,216 6,403 80,220 83,821 86,336

Subtotal (31,795) (44,561) (97,336) (108,336) (79,529) 59,786 59,105 70,586


Grand Total $(12,545) $(18,304) $(70,290) $(80,479) $(50,837) $89,340 $89,547 $101,942


$(31,795) $(76,356) $(173,692) $(282,028) $(361,557) $(301,771) $(242,666) $(172,080)

Year09

Year10

Year11

Year12

Year13

Year14

Year15

Totals

Implementation Costs – – – – – – – $(281,327)



88,926 91,595 94,344 97,174 100,089 103,090 106,183 $956,113

Subtotal 68,497 74,446 76,427 67,396 80,496 82,582 80,705 $358,469

NPV (of subtotal) – – – – – – – $92,965


– – – – – – – 10%


Grand Total $100,793 $107,711 $110,689 $102,686 $116,846 $120,023 $119,269 $826,391


$(103,583) $(29,137) $47,290 $114,686 $195,182 $277,764 $358,469 11 Years

Business Case Study 7—Recommendation


7. Recommendation7.1 Introduction

KPMG has evaluated the five core subsystems—FLAIR, COPES, SPURS, LAS/PBS, and CMS—of the

Florida Financial Management Information System (FFMIS). KPMG used a bottoms-up approach to

arrive at a recommendation for the State of Florida. Exhibit 7-1 illustrates this multiphased approach.

Exhibit 7-1Multiphased, Bottom-up Approach

KPMG initiated the State of Florida Business Case Study for FFMIS by first defining the objectives,

scope, and approach to achieve the best possible decision-useful recommendation. The second task

assessed the current IT environment as it relates to the five core FFMIS subsystems. This task involved

administering functional and technical quality questionnaires, interviewing State technical and functional

personnel, and studying system documentation.

KPMG and the State Study Advisory Council worked to define the five options that were considered and

evaluated in the Study. A summary of those five options is presented in Exhibit 7-2.

Exhibit 7-2Financial System Options






Define Objectivesand Approach of

Study

Assess CurrentIT Environment

Perform Business ProcessReengineering Study

Gather Functional andTechnical Requirements

Evaluate Options

7—Recommendation Business Case Study


KPMG’s Business Process Reengineering (BPR) Team then conducted an in-depth analysis of 16 key

business processes that were identified by State leadership as appropriate for process reengineering. This

analysis consisted of interviewing State personnel, conducting workshops, and reviewing best practices.

Simultaneously, KPMG’s IT Team performed a high-level requirements gathering and evaluation study.

More than 1,500 functional and technical system requirements were gathered by conducting an in-depth

documentation review, interviews, and requirements workshops.

KPMG evaluated each option in three primary categories: functionality, risk, and financial impact. The

functionality provided by each option was evaluated against the business and technical requirements that

were gathered over the course of the Business Case Study. KPMG identified and analyzed three general

categories of risk: project risk, continuation risk, and strategic risk. Finally, KPMG estimated project and

maintenance costs for each option and quantified the fiscal impact on the State of each option over a 15-

year period.

In this section, KPMG first describes its vision for the State’s technology infrastructure. A side-by-side

comparison of how each option scored in functionality, risk, and financial impact is provided. Finally,

KPMG presents its recommendation, explains the rationale for the recommendation, describes an

implementation strategy, and provides a summary of costs and savings for the recommended option.



7.2 Vision

The State is assessing its strategic financial system options during unparalleled hardware, software, and

networking innovation and technological development. Adopting a bold vision for an integrated financial

management system will help place Florida at the forefront of state government financial and technology

leadership and innovation.

A new integrated financial management system (IFMS) for the State of Florida should promote and

support the following:

! User and technical capabilities that promote high-quality custom service and governmentaccountability with consequences

! The flexibility to adapt to technological change and innovation

! The commitment to reassess and change State financial management policies, processes, andpractices

! An enterprise view of State government

! Comprehensive e-commerce applications and capabilities

Exhibit 7-3 presents a potential vision for FFMIS that represents a significant set of enhanced capabilities

compared to the current system.

Exhibit 7-3FFMIS Vision

Existing FFMIS

Departmental Focus

Stovepipe System Architecture

Extensive “Dumb Terminals” and “Green Screens”

Inconsistent Chart of Accounts

Limited Integrated Performance Data

Limited Contract Management and Tracking

No CFO Drives Financial Management

No Single Source Drives FFMIS Policy

Excessive Ad Hoc Reporting

Extensive Manual Reconciliations

Four Data Centers

Limited e-commerce

Rigid Financial Policies Embedded in Statute

Focus on Expensive Preventive Controls

Future FFMIS

Statewide Enterprise Focus

Integrated System Structure

Enhanced Desktop Capabilities

Consistent and Integrated Chart of Accounts

Enhanced Integrated Performance Data

Enhanced Contract Management Support System

CFO Drives Financial Management

CFO and Governor Drive FFMIS

Standard Management and Financial Reporting

Automated Reconciliations

Consolidated Data Center Support Structure

Fully Integrated e-commerce

Flexible Financial Policies Set by Administrative Rule

Focus on Employee Efficiency with Cost-Effective Detective Controls



The State’s technology vision, at its core, should center on providing the highest level of data integration

and delivery, across functional areas, to serve three constituencies—State leadership, State employees,

and Florida citizens.

The result of such integration is the superior delivery of timely and accurate, decision-useful data. The

integrated approach allows for a more efficient and effective government through the full use of the latest

data delivery mediums, such as the Internet, and promotes participation in State government by Florida’s

citizens.



7.3 Evaluation Methodology

KPMG’s study focused on evaluating each option to assess its ability to meet the State’s functional and

technical requirements, its exposure to risk, and its financial impact on the State. KPMG quantified its

assessment of each option in each of these areas to facilitate a direct comparison to form the basis of the

final recommendation.

Functionality/Requirements Analysis

The functionality provided by each option was evaluated against the functional and technical

requirements gathered over the course of the Business Case Study. Our in-depth evaluation of the

requirements is described in Section 6. The total score was weighted 70 percent to the functional

requirements and 30 percent to the technical requirements.

The evaluations were performed by both KPMG and State workgroups and reviewed by the core Business

Case Study team to identify and resolve major inconsistencies and omissions in the rankings provided.

The following external groups assisted in the requirements scoring process:

! Functional and technical State personnel, identified as specialists in each of the five FFMISsubsystems being evaluated, performed the rankings for the As-Is and Enhanced options. Theseevaluation results were refined by KPMG technical and functional specialists who examined thecurrent processes and environment and compared them to the best practices and potentialimprovements available with current technological solutions

! KPMG personnel experienced in custom system design and development also assisted

! The KPMG core team and external resources specializing in each of the three ERP packagesolutions being considered participated in the evaluation of the COTS and Best of Breed options.The packages considered included SAP, Oracle, and PeopleSoft. The rankings allowed us toprovide a composite score for a generic ERP solution for comparison against the other options

Section 6 describes our assessment of the functionality provided by each of the options and provides a

qualitative score for each requirement category. Exhibit 7-4 shows a comparison of each of the five

options.


The scoring of the functional requirements attempted to measure the total functionality, as would be

perceived by the users of the system, provided under each of the defined options—As-Is, Enhanced,

Custom, COTS, and Best of Breed.



Exhibit 7-4Qualitative Analysis Requirements Matrix

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General Ledger 15.0 3.5 4.0 5.0 4.0 5.0

Human Resource 15.0 2.0 3.0 5.0 4.0 5.0

Budgeting 5.0 2.5 3.0 5.0 3.0 4.0

Cash Management and Investment 5.0 3.0 4.0 5.0 4.0 5.0

Purchasing 10.0 2.0 3.0 5.0 4.0 5.0


Integration 5.0 1.0 3.0 5.0 5.0 5.0

Flexible Reporting 5.0 1.0 3.0 5.0 5.0 5.0

Service Level 5.0 1.0 2.0 5.0 4.0 4.0

Human Resource Utilization 3.0 1.0 3.0 5.0 4.0 4.0

Strategic Direction 2.0 1.0 3.0 5.0 5.0 5.0


Fu

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Scalability 5.0 2.0 3.0 4.0 5.0 4.0

System Availability 5.0 2.0 3.0 5.0 5.0 5.0

Ease of Use 3.0 2.0 3.0 4.0 4.0 4.0

Security 3.0 3.0 3.0 5.0 5.0 5.0

Backup and Recovery 2.0 1.0 3.0 5.0 5.0 4.0

Architectural Integration 2.0 1.0 3.0 5.0 5.0 4.0

Sustainability 20% 0.4 0.6 0.9 1.0 0.9

Client/Server Environment 2.0 1.0 2.0 5.0 5.0 5.0

Interoperability 2.0 2.0 3.0 5.0 4.0 4.0

Uniform Data Models 2.0 1.0 1.0 4.0 5.0 4.0

Web, Workflow, and Middleware 2.0 1.0 3.0 5.0 4.0 5.0

Open Systems 1.0 1.0 3.0 5.0 4.0 4.0

Development and Test Tools 1.0 2.0 3.0 4.0 4.0 4.0


Te

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Total Score 100% 2.0 3.1 4.9 4.3 4.7

Measures 0 through 5: 0 means no functionality, 3 is average, and 5 meets complete functionality



Exhibit 7-4 shows the qualitative functional requirements score for each option under consideration.

Because the functional requirements constitute 70 percent of the total requirements score, the highest

possible score (complete functionality) is 3.5.

Overall, the As-Is option scored very poorly—scoring 1.5 of out of 3.5—when compared to the defined

functional requirements. The current FFMIS subsystems do not provide adequate service levels,

integration, and reporting capability. In particular, the existing FFMIS subsystems meet less than 60

percent of the overall defined functional requirements.

The Enhanced option scored higher than the As-Is option. By making enhancements that will use

middleware technology, improve employee and citizen access through web technology, and use improved

reporting tools, this option can improve overall system functionality over the existing FFMIS subsystems.

However, because of the older technology and fragmented design currently in place and the scope of the

proposed enhancements, functionality would not be improved to the level that can be achieved through a

complete system redesign. In general, our analysis shows that the Enhanced option, as defined, would

satisfy approximately 75 percent of the information processing requirements of the State. Integration,

flexible reporting, and service level will all be improved over the existing FFMIS subsystems.

A successfully designed and implemented Custom option should, under ideal circumstances, meet 100

percent of the State’s functional requirements. By definition, the Custom option, if successfully

completed, would deliver the highest level of functionality.

The three ERP solutions examined as part of the COTS option should provide between 80 and 90 percent

of functionality desired by the State, with only limited enhancements. The average of the COTS option

functional score was 2.9 out of 3.5. In general, the appropriation modules are the key weakness in

meeting the specific needs of the State of Florida.

The Best of Breed option derives its core functionality from the COTS option, while leaving in place

systems such as the Vendor Bid System and LAS that generally rated well during requirements scoring

and would not be easily replaced with full functionality in the COTS option. With additional custom

development and bolt-on subsystems, the functionality delivered by a COTS system could be extended

beyond 95 percent. The COTS option uses the assumption of the RFP that the entire State of Florida will

act as one enterprise. In the IT and BPR analyses, KPMG noted significant differences in the way the

State University System (SUS) uses its financial management systems, including important interfaces

with the SUS Student Information System (SIS). The

Study scope did not include an analysis of the SIS, but

we are aware that the ERP packages considered in the

Study have significant differences in their SISs. Also,

our experience indicates that most large states permit

The Custom and Best of Breed options wouldprovide the highest level of user functionalityfor the State of Florida.



different financial management systems; therefore, the Best of Breed option permits a dual track of the

ERP vendor selection for the SUS and for the rest of State government. This scenario represents the Best

of Breed option, which rated a functional score of 3.4 out of 3.5.


A set of technical requirements was defined based on the proposed system’s future sustainability and the

current industry direction for enterprise financial systems.

The technical requirements score represents 30 percent of the total requirements score, and therefore the

technical scores are based on a maximum of 1.5. As shown in Exhibit 7-4, the Custom and COTS options

scored the highest of all the options presented with equal scores of 1.4 out of 1.5 for both. The Best of

Breed option scored 1.3, while the Enhanced and As-Is options scored 0.8 and 0.5, respectively.

In general, the core FFMIS subsystems are based on older technology and do not adequately meet the

State’s technical requirements related to industry direction. Specifically, the existing subsystems do not

have a single uniform data model and lack real-time integration with one another. In addition, the existing

FFMIS subsystems did not score well against the other options under consideration for ease-of-use,

backup and recovery plans, and architectural integration. For these reasons, the As-Is option scored

poorly in our evaluation against the technical requirements.

The Enhanced option would not change the technical score significantly over the As-Is option. Ease-of-

use will improve slightly over the legacy system because of an increased level of flexible reporting and

through web access. However, a primary change that is critical in the technical scoring of this analysis—a

uniform data model—would not be made under this option. The key determinant in the technical

requirements scoring for this option is the fact that the core system continues to use the same legacy

applications.

The Custom option should approach achieving 100 percent of the State’s technical requirements.

However, the shear magnitude, complexity, and duration of the Custom option may negatively affect

scalability and design as it relates to ease-of-use and a uniform data model. For these reasons, the

technical requirements score for the Custom option was 1.4 out of 1.5.

General concerns about users becoming comfortable

with the complexity of ERP screens affected the

technical requirements scoring of both the COTS and

Best of Breed options. Positive aspects of a COTS

solution include a uniform data model, superior

systems security, architectural integration, and

Based on the set of technical requirementsthat have been defined, the Custom, COTS,and Best of Breed options are clearly superioralternatives to maintaining the present FFMISsubsystems or enhancing the existingsubsystems.



comprehensive backup and recovery functionality. The technical requirements of the State were met

under the Best of Breed option. Shortcomings of a Best of Breed approach compared to a pure ERP

solution resulted from the continuation of legacy system components, which negatively affected

scalability, backup and recovery execution, architectural integration, and our scoring for uniform data

models.

Total Requirements Scores

The scoring approach determined the degree to which each option satisfies the functional and technical

requirements of the State and is a key determinant in our final recommendation.

As illustrated in Exhibit 7-4, the Custom option would be expected to provide the highest level of

functionality compared to the requirements as defined. The Custom option scored 4.9 out of 5 total points

using our scoring method. The Best of Breed option and COTS option scored 4.7 and 4.3 respectively.

Both the As-Is option and the Enhanced option scored 3.1 or lower, which can be interpreted as meeting

less than 62 percent of the State’s functional and technical requirements.

Based solely on our functional and technical requirements scoring, without considering risk and cost, the

Custom, COTS, and Best of Breed options appear to be the best options for the State.

Risk Evaluation

Overview

Each of the options has been evaluated based on its exposure to strategic risk, project risk, and

continuation risk:

! Strategic risk relates to the risk of not meeting the State’s strategic information technology goalsand applies uniformly to all of the options presented in this analysis

! Project risk relates directly to all options except the As-Is option. We have defined the primaryrisk elements or risk factors associated with large-scale IT projects for each of the options

! Continuation risk applies to all of the options presented and relates to the risks associated with theongoing operations of the State’s financial system either after project completion or if the existingsystem remains as-is

For the qualitative scoring, we assigned a score to each individual risk element contained in the three

major risk categories. The scores were based on the following scale: 0 = no risk, 1 = low risk,



3 = moderate risk, 5 = high risk. Exhibit 7-5 presents the consolidated results of the qualitative risk

analysis.

KPMG based its strategic risk criteria on the strategic goals and directions set forth by the FFMIS

Coordinating Council, the Financial Management Information Board (FMIB), and legislative intent

through the FFMIS Act as cited in Florida Statutes Chapter 215.90-215.96. Chapter 215.93 of the 1999

Florida Statutes states: “The Florida Financial Management Information System shall be fully

implemented and shall be upgraded as necessary to ensure the efficient operation of an integrated

financial management information system and to provide necessary information for the effective

operation of state government.” Strategic risk factors include management, employee, and citizen access

to data, perceived financial stability as it relates to the State’s financial reporting and accounting

infrastructure, and the State’s strategic goal of eliminating data redundancy and inconsistency. Failure to

mitigate strategic risk adequately can result in lack of legislative, employee, and citizen support of the

State’s financial management information system.

Project risk factors analyzed included those risk factors that, based on industry research and KPMG

experience, have historically been the key determinants in a large-scale IT project’s success or failure.

Project risk factors include project size and effort, requirements stability, experience, and overall design

complexity. Failure to mitigate these risk factors adequately can result in the project being severely over

budget, behind schedule, or implemented with reduced functionality.



Exhibit 7-5Qualitative Risk Analysis Matrix

Category Wei

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erce

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ge

As-

Is

En

han

ced

Cu

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CO

TS

Bes

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f B

reed

Management Access to Consolidated Financial Information 16.7 5.0 3.0 1.0 1.0 1.0

Citizen Access to Financial Information 16.7 5.0 2.0 1.0 1.0 1.0

Employee Access/Self-Service to Administrative Information 16.7 5.0 3.0 1.0 1.0 1.0

Perceived Financial Stability/Bond Rating 16.7 4.0 3.0 1.0 1.0 1.0

Reduction of Manual Processes and Redundant Data Entry 16.7 5.0 3.0 2.0 1.0 2.0

Reduction of Agency Feeder/Shadow Systems 16.7 5.0 3.0 2.0 2.0 2.0


Str

ate

gic

Ris

k


Project Leadership 6.7 0.0 2.0 5.0 4.0 4.0

Culture of Organization 6.7 0.0 2.0 4.0 4.0 4.0

Personnel Skill Set Availability 6.7 0.0 2.0 4.0 4.0 4.0

Project Ownership 6.7 0.0 2.0 4.0 4.0 5.0

Project Sponsorship/Funding 6.7 0.0 2.0 5.0 4.0 4.0

Project Effort 6.7 0.0 2.0 5.0 4.0 3.0

People 40% – – – – –

System Design Complexity 5.0 0.0 2.0 5.0 4.0 3.0

System Development Methodology 5.0 0.0 2.0 5.0 3.0 3.0

Implementation Strategy 5.0 0.0 3.0 5.0 3.0 3.0

Change Management 5.0 0.0 2.0 5.0 5.0 5.0

Process Quality Management 5.0 0.0 2.0 5.0 1.0 2.0

Requirements Stability 5.0 0.0 2.0 5.0 3.0 3.0

Project Length 5.0 0.0 2.0 5.0 3.0 3.0

Training and Support 5.0 0.0 2.0 5.0 3.0 3.0

Process 40% – – – – –

In-Project Technical Obsolescence 6.7 0.0 3.0 5.0 1.0 2.0

Data Conversion and Cleansing 6.7 0.0 0.0 4.0 3.0 3.0

Adoption of Industry Standards 6.7 0.0 4.0 2.0 1.0 2.0


Pro

jec

t R

isk




Category Wei

gh

tP

erce

nta

ge

As-

Is

En

han

ced

Cu

sto

m

CO

TS

Bes

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f B

reed

System Leadership 10.0 4.0 4.0 3.0 2.0 3.0

System Ownership 10.0 4.0 4.0 3.0 3.0 3.0

Personnel Skill Set Availability 10.0 5.0 4.0 3.0 3.0 3.0

System Sponsorship/Funding 10.0 2.0 2.0 3.0 4.0 4.0

People 40% – – – – –

Stability of Vendor 6.7 3.0 3.0 3.0 3.0 3.0

Enhanced Capability and Support 6.7 4.0 4.0 3.0 2.0 3.0

System Flexibility 6.7 5.0 5.0 2.0 3.0 3.0

Change Management 6.7 4.0 4.0 3.0 1.0 2.0

Contingency Planning 6.7 4.0 4.0 3.0 2.0 2.0

Post-Implementation Defect Rate 6.7 3.0 3.0 5.0 2.0 2.0

Process 40% – – – – –

Post-Implementation Technical Obsolescence 5.0 5.0 4.0 3.0 1.0 3.0

Disaster Recovery 5.0 3.0 3.0 3.0 1.0 2.0

Adoption of Industry Standards 5.0 5.0 4.0 3.0 1.0 2.0

Scalability 5.0 2.0 2.0 3.0 2.0 2.0


Co

nti

nu

ati

on

Ris

k


Total All Risk Categories/Weighted Average – 2.9 2.8 3.0 2.2 2.5

Measures: 0–N/A or No Risk; 1–Minimal Risk; 3–Average Risk; 5–High Risk

Examples of large, high-risk State of Florida projects include the custom-built FLORIDA system

undertaken by the Department of Health and Rehabilitative Services (HRS) now known as the

Department of Children and Families (DCF). The FLORIDA project was beset with budget problems

(costing between two and three times its original estimate), scheduling problems (delayed for 3 to 5 years

to achieve full operational capabilities), and functionality problems (requiring a 6-month learning period

for low-level field staff who turn over approximately every 12 months). The system failures resulted in

lawsuits and countersuits. Another example of a State of Florida high-risk project is the Statewide

Automated Child Welfare Information System (SACWIS). This custom system has been in the planning

stages for more than 5 years, and the State recently decided to change directions and move to internal

staff and away from outsourcing the project. The project has had scheduling problems, and the final

budget impact and functionality impact are as yet unknown.



Continuation risk factors address risks associated with a fully installed system. These risks, which include

enhanced capability, scalability, and technical

obsolescence, would be incurred under each of the

five options. The acknowledgement and assessment

of continuation risk factors are crucial in determining

how well the IT system is positioned to serve an

organization in future years. Failure to mitigate these

factors adequately could result in an information

system whose long-term effectiveness is significantly

impaired.

Strategic Risk

Exhibit 7-5 shows the qualitative risk scoring for each option under consideration. Again, in the

qualitative risk analysis, a score of 1 represents low risk, while a score of 5 represents high exposure to

risk.

As shown in Exhibit 7-5, the Custom, COTS, and Best of Breed options, clearly present the least strategic

risk to the State. The COTS option scored the lowest (least exposure to risk) at an average of 1.2, while

the Custom and Best of Breed options both scored 1.3. The As-Is option in the qualitative scoring

represents the highest exposure to this category of risk, scoring a 4.8 out of 5, while the Enhanced option

scored 2.8.

The exposure to strategic risk under the Custom, COTS, and Best of Breed options is minimal because

these options are in line with the strategic goals set forth by the FFMIS Coordinating Council.

Specifically, the goals of providing timely and accurate data to leadership, management and employees,

and citizens are accommodated best under these options. The risk under the As-Is option of not fulfilling

the strategic goals set forth by the FFMIS Coordinating Council ranks highest among all of the options

presented. Although the Enhanced option would improve the usability and integration of the existing

FFMIS subsystems—goals that are in line with the

State’s vision for information management—these

changes would still only fulfill 75 percent of the

State’s requirements as they are defined in the

accompanying requirements definitions. Therefore,

the strategic risk to the State under the Enhanced

option is moderate.

The three distinct categories of risk areequally important in determining the successor failure of the IT system. We have given therisk categories equal weight in the finalqualitative analysis. Within each of these riskcategories, the individual risk elements arecategorized under people, process, andtechnology.

Based on the qualitative risk analysisperformed during the study, the Custom,COTS, and Best of Breed options, ifsuccessfully implemented, ensure the leastexposure to strategic risk for the State ofFlorida.



Project Risk

Project risk is defined as the possibility that the IT development/implementation is not successful. KPMG

defined success as delivered on time with desired functionality and within the budget. Market research

demonstrates clearly that larger projects with larger timelines have a much greater probability of failure.

Exhibit 7-5 demonstrates that the Custom option, scoring an average of 4.5 out of 5, exposes the State to

an unacceptable level of project risk. Project risk under the COTS and Best of Breed options are

significant as well, scoring 3.2 and 3.3, respectively. The Enhanced option scored 2.1. A score of 0 (no

risk) was given to the As-Is option because there is no associated project risk under this option.

Specific project risks identified in a Custom option for the State include project length, size, and effort;

design complexity; requirements stability; and the culture of the organization. Funding source, as it relates

to the budgeting process, was also identified as a significant risk factor. Any one of these risks under the

Custom option, if not properly mitigated, could result in significant project delays. Project delays and

extended timelines in a project of this magnitude could add tens of millions of dollars to the cost of the

completed project and possibly result in cancellation if milestones and deliverables are not met.

The COTS and Best of Breed options have significant project risk, as well. However, a significant

difference from the Custom option is the reduced time for implementation. It is expected that a Custom

option would require a minimum of 6 years to implement, while the COTS and Best of Breed options

would require 4 years for complete implementation. Because a strong correlation exists between project

length and project failure, we scored the risk in the COTS and Best of Breed options lower in this

category. Side effects of reduced project length include reduced risk of in-project technical obsolescence

and reduced possibility of requirements changes. Other factors giving the COTS and Best of Breed

options lower risk scores include better process quality management and implementation strategy due to

vendor experience with past implementations. A reduced risk associated with system development

methodology was also noted, because the core modules of the ERP solutions are prebuilt. Another

consideration was that the top-tier ERP vendor products have generally undergone a continual process of

revision spanning many years, resulting in a more efficient and effective product. The three vendors

analyzed in this study are reported to have spent more than $500 million annually updating and enhancing

their products.

It is generally agreed that customization of a COTS solution dramatically increases costs and risk of

project failures. For this reason, we defined the

COTS solution as having limited customization.

The Enhanced option has moderate exposure to

project risk. By limiting the project to only three

Based on our qualitative analysis of projectrisk, the Custom option exposes the State toan unacceptable level of project risk. TheCOTS and Best of Breed solutions also incursignificant exposure to project risk.



discrete, primarily independent enhancements under the Enhanced option, project risk is significantly

lowered. Because there is no project under the As-Is option, there is no associated project risk.

Continuation Risk

Continuation risk applies to all the options and relates to the risks associated with the ongoing operations

of the State’s financial system, either after project completion or if the existing system is used As-Is

(whichever is applicable).

In our qualitative analysis, the COTS option scored the lowest (least exposure) to continuation risk with a

score of 2.3. The Best of Breed and Custom options scored 2.8 and 3.1, respectively. The Enhanced and

As-Is options had the highest exposure to continuation risk scoring 3.6 and 3.8 out of 5, respectively.

The As-Is option scored poorly because of the increased risk of technological obsolescence and lack of

system flexibility. Enhancing the existing system under the Enhanced option will not reduce this risk

significantly. Another factor affecting both of these options is the likelihood that it will be increasingly

difficult in future years to maintain a staff with the knowledge and skill set to operate and maintain these

older systems and technologies.

A major risk affecting the Custom option is the risk of

post-implementation defects. The Custom solution

presents a greater risk to technical obsolescence than

either the COTS or Best of Breed solutions because of

an ERP vendor’s schedule of revisions and upgrades.

The likelihood of such continual upgrades under a Custom option is less.

Total Average Risk Scores

The three distinct categories of risk that have been defined and compared under each option are all

equally important in determining the success or failure of the IT system under consideration.

When weighing each of the three risk categories

equally, an average risk score of 2.2 was given to the

COTS option. Scores of 2.5 and 2.8 were given to the

Best of Breed option and Enhanced option,

respectively. The As-Is option ranked fourth with a

score of 2.9, and the Custom option ranked last with

the highest average risk score at 3.0.

The COTS and Best of Breed options providethe least exposure to continuation risk.

After considering strategic, project, andcontinuation risks for each of the options, theCOTS, Best of Breed, and Enhanced optionsrepresent the most viable options, withoutconsideration of functionality and financialimpact, to the State.



Financial Impact

The financial impact of each option has been measured against four major components: the operational

savings, net present value of the savings, internal rate of return, and payback period in years. As described

in detail in Section 6, implementation costs have been risk adjusted to provide the most reasonably

conservative cost estimate. Operational costs are the ongoing costs of operating the infrastructure to

support the various options. BPR savings are the

savings from reengineered business processes. These

two elements are combined to produce the net

savings for each option. The discounted present value

of the net savings is shown as the net present value.

Exhibit 7-6 shows a comparison of the financial figures for all the options.

Exhibit 7-6Summary of Financial Assessment(dollar amounts are in thousands)

Option Imp

lem

enta

tio

nC

os

ts

Op

erat

ion

s C

ost

s

Tec

hn

olo

gy-

Rel

ated

BP

RS

avin

gs

Net

Fis

cal

Imp

act

(Tec

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olo

gy

Sav

ing

s O

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NP

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No

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Rel

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BP

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Net

Fis

cal

Imp

act

All

Rec

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IRR

Yea

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ayb

ack

As-Is – $(396,328) – $(396,328) $(250,806) $467,922 $71,594 N/A –

Enhanced $(119,222) (402,065) $478,471 (42,816) (96,638) 467,922 425,106 (2%) –

Custom (563,745) (216,392) 798,797 18,660 (166,387) 467,922 486,582 (1%) 15

COTS (257,960) (277,548) 956,113 420,605 133,770 467,922 888,527 12% 10

Best of Breed (281,327) (316,317) 956,113 358,469 92,965 467,922 826,391 10% 11

The As-Is option has no implementation costs because this option perpetuates the existing FFMIS

subsystems. Operational costs are higher in comparison with the Custom option, COTS option, and the

Best of Breed option because multiple systems are being used to run the FFMIS applications. BPR

savings are available immediately upon implementation but are lower than other options because the

majority of the savings, require IT system changes.

The COTS and Best of Breed option providethe most favorable fiscal impact.



The Enhanced option operations costs are higher because the existing systems would be left in place and

additional equipment would be added to enhance these systems. Additional BPR savings over the As-Is

option would be achieved through the IT changes.

The Custom option has the most expensive implementation costs and years to payback because of the

costs and time to develop all the required applications and the time delay until the BPR savings are

achieved. This option has the lowest operations costs because the assumption was made that all the

applications would be optimized to run on a common system.

The COTS and Best of Breed options show the best net present value and internal rate of return. They

both achieve payback in year 7; however, the COTS option has the highest net present value and internal

rate of return because of lower implementation and operations costs. The Best of Breed option costs are

higher because of the need to maintain several existing FFMIS subsystems to provide functionality and to

support current web initiatives.



7.4 KPMG Recommendation

In earlier sections, KPMG compared the options to the State’s vision and evaluated risk and financial

impacts. From our analysis, as represented in Exhibit 7-7, COTS and Best of Breed options are the only

two viable choices for the State’s financial management information system.

Exhibit 7-7Minimum Requirements Analysis Ratings

(dollar amounts are in thousands)

Functionality Financial

Raw Score Weighted Score Raw Savings (Cost) Weighted Score Total

Option A B A + B

As-Is 2.00 40 $(396,328) – 40

Enhanced 3.10 62 (42,816) 22 84

Custom 4.90 98 18,660 25 123

COTS 4.30 86 420,605 50 136

Best of Breed 4.70 94 358,469 46 140

The COTS option, as defined during evaluation, is a “vanilla” solution without major modification to the

ERP software. As documented in our analysis, ERP packages are generally weak (at the time of

evaluation) in certain key areas such as supporting the legislative approval of budget issues, web-enabled

vendor bid management system, travel profiles, reservations for the employees, and cash and accrual

based accounting. Because these functions are essential for the State, KPMG defined the Best of Breed

option as an ERP-centric option delivering the additional essential functionality either by custom

development or by integrating with other software solutions. This option is designed to take the best

functionality from both existing State-developed software and COTS. The added functionality the State

gains by the Best of Breed option comes with some additional risk as presented in Exhibit 7-7; however,

the additional functionality outweighs the added risk and additional cost.

KPMG recommends that the State implement a new financial management information system using an

ERP package enhanced for the State’s needs and interfaced with a few bolt-on systems. This

recommended Best of Breed option takes the best functionality from both existing State-developed

software and COTS. The recommended solution will interface with the following:



! Budgeting functionality contained in LAS/PBS that relates to tracking of issues and variousnarrative information that are necessary to publish the formal budget

! Bid management tracking, reporting, and manipulation that exists in an existing custom systemalready in use

! The State-developed e-Mall because the State would be implementing this function before thepossible ERP implementation

Also, the Best of Breed option would have the following enhancements for the ERP package:

! The COTS option will need to expand the accrual basis of accounting found in the ERP packagesto include cash and modified accrual basis of accounting

! Vendor complaint management does not exist in COTS ERP solutions

In addition, the Student Administration is sufficiently self-contained and a student administration system

could be acquired from an ERP vendor that differs from the ERP vendor for the financial applications.

Recognizing the important differences between general government and Florida’s higher education

system, our recommendation enables a dual track software selection and implementation strategy to

accommodate, but not require, separate software packages for the State University System and the

remainder of State government.

The Best of Breed option is the best practical option to meet the functionality required by the State. With

this option, the State would be able to blend the best practices of the industry with that of the State

wherever the off-the-shelf solution does not meet a requirement. Although KPMG recommends

enhancements to the selected ERP package in some specific areas, we suggest that the State exercise due

diligence for all the enhancements by considering the effect of the modifications during the upgrade

process.

The Best of Breed option is an ERP implementation for most part. As discussed in Section 6, an above-

average risk is associated with large-scale implementation projects. To reduce the risk significantly,

KPMG recommends that a dedicated project management office be established—one that is capable of

maintaining vision, quality, and time. KPMG also recommends that the Executive Office of the Governor

take ownership of the project.

Exhibit 7-8 illustrates a timeline for the implementation of the integrated solution. We overlaid a line on

the chart to graphically represent the estimated early savings (both technology based and nontechnology

based) from the State’s implementation of recommendations before the full system implementation.



Exhibit 7-8Timeline for Solution Implementation

RFP Bid Requirements Definition

RFP Requirements Definition Vendor Selection


Integration RFP Preparation

Integration Vendor Selection

Integration Solution (Design, Build & Test)

Implementation

Implementation of BPR Recommendations

1/1/00 1/1/01 1/1/02 1/1/03 1/1/04 1/1/05

7/1/00 7/1/01 7/1/02 7/1/03 7/1/04 7/1/05

FY01 FY02 FY03 FY04 FY05

Savings

—$45M

—$30M

—$15M

—0

It is important to have a detailed requirements definition for the State’s FFMIS before selecting the ERP

vendor. The requirements definition should focus on the detailed processes of all the State agencies and

universities related to the accounting and human resource functions. After selecting the ERP package, the

State should refine the requirements at the data element level. The State will be able to use the

requirements definition phase to require the ERP vendors and integrators to demonstrate the critical

processes. The requirements definition phase will help the State to understand the capabilities of the ERP

packages and will help ERP integrators to speed implementation. The requirements definition phase will

consist of three distinct tasks:

! State-prepared RFP for requirements definition

! State selection of vendor for the requirements definition

! Vendor-led requirements definition

This process will take 13 months. The compiled list of requirements will be the input to the request for

proposal for implementing the new FFMIS.

Implementation will have the following overlapping subtasks:

! Develop the implementation RFP (3 months)

! Select the ERP vendor and the integrator (6 months)

! Design, build, and test the new solution (3 years)

! Implement the solution ( 2½ years)



The implementation process will take approximately 4 years.

For simplicity, we assumed that accounting and human resource modules of the chosen ERP vendor will

be built once and will be implemented in phases. With this approach, the first rollout of the solution will

be 3½ years after the start of the process including the requirements definition. The requirements are

defined already, and with proper planning, control, and approval, the State could roll out the solution

agency-by-agency starting 6 to 9 months before the time shown in our timeline. This process could result

in the first rollout in less than 3 years from the beginning of the process.




Business Case Study Appendix A—Innovative Practices

Final ReportPage A-1

kpmg

Appendix A—Innovative PracticesThis Appendix includes the results of research conducted through the Internet, publications review, and

interviews with other State governments to identify innovative practices used today for the selected

processes. The information in this section summarizes key process improvement strategies that companies

and government agencies have successfully applied. These innovative practices are organized by process.

Management Reporting

Data Warehouse: Accounting and human resource information is stored in relational databases that are

accessible to a broad cross-section of state employees. Applying user-friendly query tools, employees at

all levels of an organization are able to access the warehouse at any time to develop tailored management

reports without system technician intervention. (Sources: Oregon and Washington State)

Financial Reporting

Develop a system with a single set of cash ledgers for each fund: States implement a financial

management system with a single set of cash ledgers for each agency fund. Delays are thus eliminated in

reconciling items between two sets of accounting records. (Sources: Texas, Maryland, Michigan, District

of Columbia)

Statewide intranet: A secure, reliable statewide network provides capability to share, review, and edit

financial information and data files online. (Sources: Washington (State), West Virginia, others)

Comprehensive Annual Fiscal Report (CAFR) development software: Governments acquire or

develop software that helps collect, organize, and present financial statements compliant with

Governmental Accounting Standards Board (GASB) CAFR standards. (Sources: Maryland, other states)

Accounting Reconciliation

Automated statewide financial management system with single set of ledgers for each fund: States

implement a financial management system with a set of ledgers for each agency fund. (Sources: Texas,

Maryland, Michigan, District of Columbia)

Statewide intranet: A secure, reliable statewide network provides agencies with the capability to share,

review, and edit financial information and data files online. (Sources: Washington State, West Virginia,

others)

Business Case Study Appendix A— Innovative Practices


kpmg

Online banking/automated reconciliation: Businesses maintain their bank account registers online

where banks can conduct automated account reconciliations daily. (Sources: Most large commercial

banks)

Accounting for Payments from Multiple Accounts

EASY invoice approval system: This electronic invoice approval system facilitates decentralized

approval and payment of invoices. An invoice is received, accounting information is posted, and the

transaction is submitted for payment. The central staff conducts an online review of the transaction.

(Source: U.S. Environmental Protection Agency)

PAID vendor remittance system: An extranet application provides vendors with access to a remittance

database, which can be queried by date, invoice number, payment amount, agency, and other data

available, eliminating the need for mailing remittance advices to vendors. Payment is made by EFT, then

vendors query the system for supporting information. Access is controlled by passwords and user IDs.

(Source: NASA)

Invoice inquiry system: The invoice inquiry system provides vendors and travelers information

regarding the status of invoice payments. An Integrated Voice Response system, entered by using an 800

telephone number, offers access to this information from anywhere in the world. Payments are made

through EFT, and vendors are able to receive remittance information through this system. Access is

controlled with a personal identification number. (Source: Center for Disease Control and Prevention)

Flow of Federal Funds

Remittance-based payment requests: States construct templates to store fund-specific information in

ASAP payment request. Federal fund payments are returned with template data (fund, agency, revenue

code, and CFDA code), providing the State Treasurer with information needed to identify the correct

recipient agency. (Source: Oklahoma)

By October 1, 2002, all federal civilian agencies will be required to use either ASAP or PMS to process

federal fund payment requests electronically from state government agencies.

U.S. electronic grants project: Now in beta testing, this system will permit grants customers to

exchange data and files (for example, applications and funding requests) with federal agency databases

through data screens running via an Internet web browser.

Travel Reimbursement

Exhibit A-1 shows the cost comparison analysis performed by GELCO and Amadeus.



kpmg

Exhibit A-1Cost Comparison

$38.05

$113.85 $110.58

$47.43

GELCO

Man

ual

Autom

ated

AMADEUS

Man

ual

Autom

ated

Department of Defense—Army Tradoc: GELCO Travel Management Software was implemented and

efficiency increased. Thirty-seven processing steps were reduced to nine; process time of 5.4 hours was

reduced by 77 percent; an 11-day cycle time was reduced to 3 days, and processing costs were reduced by

76 percent. (Source: GELCO’s Government Agency Reengineering Report, 1998)

Online submission and reimbursement of travel expenses: The travel reimbursement form is

completed and submitted by the traveler online, using the Management Administrative Reporting System

(MARS). This initiative is a critical component of a comprehensive reengineering effort initiated 2 years

ago. (Source: Reengineering of Statewide Financial, Budget, and Procurement Systems; Kentucky, 1999)

Online travel authorization, encumbrance, submission of travel expenses, and use of preferred

travel agencies: Travel authorization, encumbrance, and reimbursement are completed online via the

Travel Request and Reimbursement Information Processing System (TRRIPS). A “Ghost Card”—issued

through Diner’s Club—is used for booking airline fares, eliminating the need for the traveler to charge

airline tickets on his or her personal credit card. The Ghost Card is an account the university has with the

travel agency, which allows airline tickets to be billed directly to the agency. (Source: University of

Florida)

Web-based expense reporting system: Use of a web-based expense reporting system allows a traveler to

take advantage of remote access capability. When travel is completed, expense data is downloaded from

the bank’s clearing house credit card issuers. Expenses are then coded and charged to the correct budget

entity. In addition, the web-based system has the ability to audit expenses online to ensure compliance

with the company’s policy. (Source: Merrill Lynch)



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Purchasing Commodities and Services

Interior Department Electronic Acquisition System: This system automates the complete procurement

process from requisition to closeout. It operates in a Windows-based environment with an interface to the

financial system. (Source: U.S. Department of the Interior)

One-stop shopping: An Internet-driven procurement program links Los Angeles County to 25,000

suppliers. It provides online approvals and routing from the employee’s desktop and instant access to

centralized databases with contract vendors. (Source: Los Angeles County, California)

MS market: This intranet-based corporate purchasing application allows employees to place orders for

goods and services in less than 3 minutes and receive them the next day. The application is linked directly

to the SAP R/3 accounting system. Administrative costs are decreased from $60 to $5 per order, and the

central purchasing unit staff is reduced by 90 percent. (Source: Microsoft Corporation)

U.S. Department of Agriculture PCard Management System: The system provides delegation of

approval to individuals making purchase. It allows users to approve or dispute transactions, assign

accounting codes, and establish property records via computer. The reconciliation of PCard transactions is

automated. (Source: U.S. Department of Agriculture)

U.S. Army micro purchase reengineering using PCard: PCard will replace 90 percent of commercial

purchases for supplies and services that are valued under $2,500. The Army is using internal controls

inherent in the PCard program to streamline and reengineer business practices surrounding the use of the

card. The U.S. Army Audit Agency estimates savings of over $100 per transaction. (Sources: Federal

Government, U.S. Army)

Rate and Position Administration

Personnel budget is administered by a process called “personnel years,” whereby the Legislature

appropriates 95 percent of a position’s salary to an agency that requests a new position and saves 5

percent. The state uses this mechanism to save salary dollars and phase in positions. Furthermore,

positions are controlled at the agency level and agency heads are held accountable for their divisions.

(Source: California)

Salaries are paid from the personnel services line item in its budget. Funding is generated at the agency

level, by leaving positions vacant for a period of time, filling positions at a lower salary than that of the

incumbent, or filling positions and reallocating the salaries among other employees. Agencies have

limited authority to transfer money between personnel services and other operating accounts. (Source:

South Carolina)



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Salary reserve is separate from the appropriation amount similar to salary rate. The budget office will

only approve a hire if salary reserve is available. (Source: North Carolina)

Certified Forward

Prior year obligations of the state carry forward into the next fiscal year automatically: Departments

determine the validity of encumbrances and payables as the audit department reviews specific items by

law. OPB and individual departments monitor outstanding obligations with more scrutiny as the items

remain outstanding further into the fiscal year. (Source: Georgia)

Prior year outstanding obligations are accommodated through the budget process: Estimates are

made on how much needs to be carried forward, and an amount is included in next year’s budget request

under the title of reappropriation amount. Along with next year’s budget, a reappropriation amount is

allotted to cover encumbrances that carry over to the next fiscal year. (Source: Hillsborough County)

Cash Receipts and Cash Management

Automated telephone credit card tax payment system: This automated system enables taxpayers to

pay their current secured property tax bills with a credit card and a touch-tone telephone. The system uses

an interactive voice system that is available 24 hours a day, 7 days a week. (Source: Riverside County,

California)

Online interactive DMV: The site includes an “express lane,” which gives citizens the ability to renew

registrations, apply for duplicate registrations, and pay civil motor vehicle citations using a credit card

and a secure web browser. (Source: Massachusetts)

California State Accounting and Reporting System (CALSTARS): This comprehensive, automated

departmental accounting and reporting system accurately and systematically accounts for all revenue,

receipts, expenditures, disbursements, and property of the state. (Source: California)

Online resources for students (STAR Online): This system allows for electronic money transfer after a

bank routing code and account number are provided. Students may elect to pay tuition using this system.

(Source: University of Washington)

Accounts Receivable

SunPass toll card and acceptance of credit cards and certified funds for payment: The Florida

Department of Transportation, in an effort to eliminate accounts receivable, has initiated statewide

acceptance of a prepaid toll card, which will phase out the use of toll charge accounts during the next

year. The Department has also mandated that any payment received for goods or services must be paid by



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credit card or by certified funds. It is the Department’s intent to completely eliminate accounts receivable

within 2 years. Other efforts include an Internet shopping cart for credit card purchases. (Source: Florida)

Set Off Program: An automated collection system of delinquent accounts receivable uses computer

efficiency to match master files of delinquent accounts with state payments in process. Payments are set

off against debt, in effect saying to the debtor: “You owe agency X money and, unless you can prove that

your debt is invalid, we will collect by setting it off against the money the State owes you.” (Source:

Kansas)

Clean Hands Act: District law (D.C. Law 11-118, D.C. Code 47-2861 et seq.) requires applicants to

certify that they do not owe more than $100 to the District of Columbia government. (Source: District of

Columbia)

Mandatory Electronic Funds Transfer (EFT) capabilities and electronic (paperless) accounts

receivable billing: The University of Florida is investigating the success of the University of

Washington’s STAR Online, which allows for electronic money transfer after a bank routing code and

account number are provided. Students may elect to pay tuition using this system. The University of

Florida also hopes soon to use electronic billing of accounts receivable. (Source: University of

Washington)

Asset Management

$5,000 threshold for tracking assets: The Government Finance Officers Association (GFOA) has issued

an opinion that government organizations should consider establishing a $5,000 capitalization threshold

for tracking assets. The $5,000 threshold captures the vast majority of assets that should be included for

financial reporting purposes. The recommendation is based on the fact that capitalization is a financial

reporting issue and should therefore be set at the most cost-effective threshold that meets financial

reporting requirements. (Source: Kentucky)

Conduct inventory on a random test basis: GFOA recommends that government organizations conduct

a physical inventory count on capitalized assets on a rotating basis. The need for an annual inventory can

be reduced if the government uses a perpetual inventory system, similar to what the state has in place.

Each item must be counted at least once within a 5-year period.

Business Case Study Appendix B—Risk Multiplier

Final ReportPage B-1

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Appendix B—Risk MultiplierA risk-adjusted contingency rate was used in our analysis to account for the perceived risk of additional

project expense associated with each option. This rate was used in place of a standard 10 percent

contingency rate often used when estimating projects. The risk-adjusted rate was derived from the

“Project Risk” portion of KPMG’s risk scoring table used in Section 6 of this Study.

Ten significant risk factors were selected from internal KPMG documentation and industry research. Each

of the 10 risk factors falls under the category of People, Process, and Technology. These risk elements

are:

People

! Project Leadership/Project Ownership—Experienced project management is lacking and thereis no single project owner

! Organizational Culture and Experience—Organization does not have a strong IT culture anddepth of similar-sized project experience

! Personnel Skill Set Availability and Turnover—Staff has inadequate skill-set for IT projectand turnover is high

! Project Sponsorship and Funding—Project does not have strong executive managementsupport and proper funding

Process

! Requirements Stability—Requirements for application are not stable

! Project Size, Effort, and Length—Project scope is significant and duration is expected to begreater than 3 years

! Process Quality Management—Risk of introducing poor design and/or code into the applicationis high

! System Development Methodology and Implementation Strategy—Risk of poor orinconsistently applied development methodology and/or implementation strategy is high

Technology

! System Design Complexity—Risk that the new project encounters delays and/or fails because ofapplication design complexity is high

! In-Project Technical Obsolescence—Risk that major industry-wide technology changes occurduring project life cycle is high

Appendix B—Risk Multiplier Business Case Study


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Based on KPMG’s experience and industry research, we believe that the risk elements previously

described adequately address the primary risks associated with large-scale IT development projects.

We have applied weightings, which are based on industry data from IT project failures, to the following

categories:

! People: 40 percent

! Process: 40 percent

! Technology: 20 percent

Although the improper assessment of risk in one particular area—such as requirements instability—can

result in the failure of a project, multiple reasons are often cited for the failure of a particular IT project.

We have attempted to capture this behavior in our assessment of risk and how that risk applies to project

cost.

A sample risk matrix is shown in Exhibit B-1.

Exhibit B-1Sample Risk Matrix

None Minimal Average HighRisk Factors 0.000 0.002 0.007 0.020 0.060 0.180PeopleProject Leadership and Project Ownership 1Organizational Culture and Experience 1Personnel Skill Set Availability and Turnover 1Project Sponsorship/Funding 1ProcessRequirements Stability 1Project Size, Effort, and Length 1Process Quality Management 1System Development Methodology and Implementation Strategy 1TechnologySystem Design Complexity 1In-Project Technical Obsolescence 1

Total by Column 0.000 0.000 0.000 0.200 0.000 0.000Total (All Columns) 0.200Option Cost Multiplier (1 + Total) 1.200

Risks to Successful Project Execution

For each option, we have determined its level of exposure to each risk element. We have assigned a rank

for each risk element from a range of “no risk” to “high risk.”

The factors we apply to each risk element based on perceived level of risk (0.000-0.180) were derived as

follows:



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! We have assigned a base multiplier of 1.00 to projects with no risk

! We have assigned a base multiplier of 1.20 for a project with average risk. This means that alarge-scale IT project that is determined to have an “average” exposure to each of the 10 riskelements is expected to be completed within 20 percent over the initial cost estimate. Thispercentage is based on market research and KPMG experience

! We have assigned a base multiplier of 2.80 for projects deemed “high risk.” This means that anIT project that has been deemed to have a high risk exposure to each of the 10 risk elements inour matrix will be delivered at 180 percent over original cost estimates. This maximum wasderived by studying project success/failure rates and characteristics of successful/failed projects,and is supported by industry data

! In the context of large-scale IT projects, the probability of project failure increases at anincreasing rate, as exposure to risk increases

A graphical representation of our risk assumptions is shown in Exhibit B-2.

Exhibit B-2Risk Curve

0%20%40%60%80%

100%120%140%160%180%200%

None Minimal Average High

Risk Assessed

Co

nti

ng

ency

F

acto

r

Source data for the risk multiplier derived for this analysis was gathered from a number of sources. One

significant source of data was compiled by the Standish Group, Inc.

A 1998 Standish Group survey of IT projects indicated that 28 percent of all IT projects fail, 46 percent

are either over budget or overdue, and only 26 percent succeed. For large-scale IT projects, the failure rate

is even greater. The report shows that for projects OF more than $10 million, the failure rate is 49 percent.

Exhibit B-3 shows the percentage over original cost estimates of all projects surveyed. These findings

were based on a survey of 7,552 software development projects.



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Exhibit B-3IT Project Cost Overruns

Source: The Standish Group International, Inc., 1998

0%

10%

20%

30%

40%

Under 20% 21-50% 51-100% 101-200% Over 200%

Percent Over Budget

Res

po

nd

ents

The following risk multiplier matrices were constructed for each of the options that had a project

component.



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Option 2: Enhanced

None Minimal Average HighRisk Factors 0.000 0.002 0.007 0.020 0.060 0.180PeopleProject Leadership and Project Ownership 1Organizational Culture and Experience 1Personnel Skill Set Availability and Turnover 1Project Sponsorship/Funding 1ProcessRequirem ents Stability 1Project Size, Effort, and Length 1Process Quality M anagem ent 1System Developm ent M ethodology and Im plem entation Strategy 1TechnologySystem Design Com plexity 1In-Project Technical Obsolescence 1



Option 3: Custom

None Minimal Average HighRisk Factors 0.000 0.002 0.007 0.020 0.060 0.180PeopleProject Leadership and Project Ownership 1Organizational Culture and Experience 1Personnel Skill Set Availability and Turnover 1Project Sponsorship/Funding 1ProcessRequirem ents Stability 1Project Size, Effort, and Length 1Process Quality M anagem ent 1System Developm ent M ethodology and Im plem entation Strategy 1TechnologySystem Design Com plexity 1In-Project Technical Obsolescence 1





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Option 4: COTS

None Minimal Average HighRisk Factors 0.000 0.002 0.007 0.020 0.060 0.180PeopleProject Leadership and Project O wnership 1O rganizational Culture and Experience 1Personnel Skill Set Availability and Turnover 1Project Sponsorship/Funding 1ProcessRequirem ents Stability 1Project Size, Effort, and Length 1Process Quality M anagem ent 1System Developm ent M ethodology and Im plem entation Strategy 1TechnologySystem Design Com plexity 1In-Project Technical O bsolescence 1



Option 5: Best of Breed

None Minimal Average HighRisk Factors 0.000 0.002 0.007 0.020 0.060 0.180PeopleProject Leadership and Project O wnership 1O rganizational Culture and Experience 1Personnel Skill Set Availability and Turnover 1Project Sponsorship/Funding 1ProcessRequirem ents Stability 1Project Size, Effort, and Length 1Process Quality M anagem ent 1System Developm ent M ethodology and Im plem entation Strategy 1TechnologySystem Design Com plexity 1In-Project Technical O bsolescence 1



Business Case Study Appendix C—List of Participants

Final ReportPage C-1 kpmg

Appendix C—List of ParticipantsName Organization Participation in BCS

Bill Tuck BCS LAS/PBS, SPURS Requirements Workshop

Jim Colbert BCS COPES Requirements Workshop

Anne Blankenship BOR LAS/PBS Requirements Workshop

Jim Kersh BOR COPES Requirements Workshop

Debra Funkhouser Citrus Functional Quality Questionnaire

Dennis Boulnois Citrus Functional Quality Questionnaire

Dianne Screws Citrus Functional Quality Questionnaire

Jayne Whitaker Citrus Functional Quality Questionnaire

Patrick Jackson Citrus Functional Quality Questionnaire

Emily Beck Comptroller FLAIR Requirements Workshop

Eric Walden Comptroller FLAIR Requirements Workshop

Linda Sharpton Comptroller FLAIR Requirements Workshop

Mike Gomez Comptroller FLAIR Requirements Workshop

Molly Merry Comptroller FLAIR Requirements Workshop

Patti Calhoun Comptroller FLAIR Requirements Workshop

Bob Bugbee DBF Functional Quality Questionnaire

Bruce Berger DBF Functional Quality Questionnaire

Cindy Sauls DBF COPES Requirements Workshop

Ginger Daniels DBF Functional Quality Questionnaire

Robbie Stroud DBF Functional Quality Questionnaire

Susan Rayman DBF Functional Quality Questionnaire

Tom Alfsen DBF Functional Quality Questionnaire

Zadok Coxwell DBF CMS,COPES, FLAIR Requirements Workshop

Bob Sloyer DBPR Functional Quality Questionnaire

Dottie Gough DBPR Functional Quality Questionnaire

Jeannie Evans DBPR Functional Quality Questionnaire

Mary Ann Covington DBPR Functional Quality Questionnaire

Mary Horne DBPR Functional Quality Questionnaire

Pam McGinnis DBPR Functional Quality Questionnaire

Terry Burns DBPR Functional Quality Questionnaire

Bo Scearce DC Functional Quality Questionnaire

Cathy Leggett DC Functional Quality Questionnaire

Delores Alcorn DC Functional Quality Questionnaire

John Kelley DC Functional Quality Questionnaire

Johnnie Ruth Caldwell DC Functional Quality Questionnaire

Lynn Roberts DC Functional Quality Questionnaire

Marilyn Washington DC Functional Quality Questionnaire

Martha Evans DC Functional Quality Questionnaire

Business Case Study Appendix C— List of Participants

Final ReportPage C-2

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Name Organization Participation in BCS

Mary Huff DC Functional Quality Questionnaire

Renee Hermeling DC Functional Quality Questionnaire

Steve Rowan DC Functional Quality Questionnaire

Trish Perego DC Functional Quality Questionnaire

Annette Kittrell DCA Functional Quality Questionnaire

Becky Essman DCA Functional Quality Questionnaire

David Perrin DCA Functional Quality Questionnaire

Debbie Parks DCA Functional Quality Questionnaire

Gloria Cobb DCA Functional Quality Questionnaire

Karen Peyton DCA Functional Quality Questionnaire

Karen Shiver DCA Functional Quality Questionnaire

Elwood McElhaney DCF Functional Quality Questionnaire

Leona Strickland DCF Functional Quality Questionnaire

Leona Strickland DCF LAS/PBS Requirements Workshop

Mike Wolfe DCF FLAIR Requirements Workshop

Mike Wolfe DCF Functional Quality Questionnaire

Monica O'Neal DCF Functional Quality Questionnaire

Sandy Holm DCF Functional Quality Questionnaire

Toni Estes DCF Functional Quality Questionnaire

Wayne Clotfelter DCF Functional Quality Questionnaire

Dean Modling DEP FLAIR Requirements Workshop

Dean Modling DEP Functional Quality Questionnaire

Gail O'Kelly DEP Functional Quality Questionnaire

Gwenn Godfrey DEP Functional Quality Questionnaire

Joe Young DEP Functional Quality Questionnaire

John Cherry DEP SPURS Requirements Workshop

Mona Strickland DEP Functional Quality Questionnaire

Audrey Fleck DJJ Functional Quality Questionnaire

Clayton Tew DJJ Functional Quality Questionnaire

Cleta Wolverton DJJ Functional Quality Questionnaire

Joan Briggs DJJ Functional Quality Questionnaire

Joseph Kennedy DJJ Functional Quality Questionnaire

Neilda Wild DJJ Functional Quality Questionnaire

Paul G. Bryant DJJ Functional Quality Questionnaire

Vicki J. Harris DJJ Functional Quality Questionnaire

Vivian Chambliss DJJ Functional Quality Questionnaire

Dan Moniz DMS COPES Requirements Workshop

Ellen Guthrie DMS COPES Requirements Workshop

Jimmy Powell DMS SPURS Requirements Workshop

Kevin Thompson DMS SPURS Requirements Workshop

Merrill Moody DMS COPES Requirements Workshop




Cathy Tarleton DOACS COPES Requirements Workshop

Elaine Cooper DOACS Functional Quality Questionnaire

Frances Coyle DOACS Functional Quality Questionnaire

Jay Howard DOACS Functional Quality Questionnaire

John Reeves DOACS Functional Quality Questionnaire

Lisa Crutchfield DOACS Functional Quality Questionnaire

Stanton Beaszley DOACS Functional Quality Questionnaire

Sue Baker DOACS Functional Quality Questionnaire

Mary Huff DOC COPES Requirements Workshop

Thomas Lemacks DOC FLAIR Requirements Workshop

Bonnie Lewis DOE Functional Quality Questionnaire

D.R.Carlson DOE Functional Quality Questionnaire

F.D.Phillips DOE Functional Quality Questionnaire

Gwen Rittman DOE Functional Quality Questionnaire

Joyce Bradwell DOE Functional Quality Questionnaire

Norman Holley DOE Functional Quality Questionnaire

Sharon Snyder DOE Functional Quality Questionnaire

Tanner Holloman DOE Functional Quality Questionnaire

Cindy Cooley DOH Functional Quality Questionnaire

Doug Woodlief DOH Functional Quality Questionnaire

Ella Hinson DOH FLAIR Requirements Workshop

Ella Hinson DOH Functional Quality Questionnaire

Jackie Gaston DOH Functional Quality Questionnaire

Jim Brewer DOH Functional Quality Questionnaire

Jodi DiMinno DOH Functional Quality Questionnaire

Mark Gressel DOH Functional Quality Questionnaire

Penny Dyer DOH Functional Quality Questionnaire

Rosey Dollar DOH Functional Quality Questionnaire

Sharon Hill DOH Functional Quality Questionnaire

Susan Hensley DOH Functional Quality Questionnaire

Wayne Summerlin DOH FLAIR Requirements Workshop

Wayne Summerlin DOH Functional Quality Questionnaire

Carolyn Ballentine DOI Functional Quality Questionnaire

Claude Sellers DOI Functional Quality Questionnaire

Debra Bradley DOI Functional Quality Questionnaire

Herb Yohner DOI Functional Quality Questionnaire

Hilary Walz DOI Functional Quality Questionnaire

Jean Whitten DOI Functional Quality Questionnaire

Jim Godfrey DOI Functional Quality Questionnaire

Kelly West DOI Functional Quality Questionnaire

Kimberly Gillard DOI Functional Quality Questionnaire



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Linda Young DOI Functional Quality Questionnaire

Miram Gray DOI Functional Quality Questionnaire

Nancy Donaldson DOI Functional Quality Questionnaire

Nick Tschiggfrey DOI Functional Quality Questionnaire

Paula Crosby DOI Functional Quality Questionnaire

Sharon Doxsee DOI Functional Quality Questionnaire

Stephanie Lliff DOI Functional Quality Questionnaire

Tim Ellinor DOI Functional Quality Questionnaire

Tim Ellinor DOI SPURS Requirements Workshop

Anne Clark DOL Functional Quality Questionnaire

Dawn McWilliams DOL Functional Quality Questionnaire

William Babiez DOL Functional Quality Questionnaire

Al Hewitt DOR Functional Quality Questionnaire

Barbie Phillips DOR Functional Quality Questionnaire

Bobbie Chappell DOR Functional Quality Questionnaire

Darrell Smith DOR LAS/PBS Requirements Workshop

Diane Whitfield DOR Functional Quality Questionnaire

Lewis Gray DOR Functional Quality Questionnaire

Sherrie Ferrell DOR Functional Quality Questionnaire

Yvonne Hutto DOR Functional Quality Questionnaire

Cynthia Leland DOS Functional Quality Questionnaire

D.Miller DOS Functional Quality Questionnaire

K.McCullars DOS Functional Quality Questionnaire

Kathy Hutchins DOS Functional Quality Questionnaire

L.Wilson DOS Functional Quality Questionnaire

S.Cousins DOS Functional Quality Questionnaire

Shiela Cozzocrea DOS Functional Quality Questionnaire

Tammie Mercier DOS Functional Quality Questionnaire

Art Wright DOT Functional Quality Questionnaire

Bernie Schneider DOT Functional Quality Questionnaire

Bernie Schneider DOT LAS/PBS Requirements Workshop

Bill Kynoch DOT LAS/PBS Requirements Workshop

Deanna Trahan DOT Functional Quality Questionnaire

Deborah Hall DOT SPURS Requirements Workshop

Denise Trykowski DOT Functional Quality Questionnaire

Evelyn Rodriguez DOT Functional Quality Questionnaire

Gaylia Boerner DOT Functional Quality Questionnaire

James Hicks DOT Functional Quality Questionnaire

Jim Oakley DOT FLAIR Requirements Workshop

Jim Oakley DOT Functional Quality Questionnaire

Judy Harrison DOT Functional Quality Questionnaire




Lois White DOT FLAIR Requirements Workshop

Lois White DOT Functional Quality Questionnaire

Lynn Schwekendiek DOT Functional Quality Questionnaire

Mike Soto DOT FLAIR Requirements Workshop

Rita Hebert DOT Functional Quality Questionnaire

Ron McCloud DOT Functional Quality Questionnaire

Amelia Wilson Elder Affairs Functional Quality Questionnaire

Brenda Jackson Elder Affairs Functional Quality Questionnaire

Chrissy Singletary Elder Affairs Functional Quality Questionnaire

Collette Banks Elder Affairs Functional Quality Questionnaire

Cynthia Reeves Elder Affairs Functional Quality Questionnaire

Jodi Bailey Elder Affairs Functional Quality Questionnaire

Joe Mezzatesta Elder Affairs Functional Quality Questionnaire

Tony Redman Elder Affairs Functional Quality Questionnaire

Trish Heinze Elder Affairs Functional Quality Questionnaire

Wendy Evans Elder Affairs Functional Quality Questionnaire

Alice Sasser EOG LAS/PBS Requirements Workshop

Asalene Robinson EOG Functional Quality Questionnaire

Catherine Heth EOG Functional Quality Questionnaire

Cynthia Kelly EOG LAS/PBS Requirements Workshop

John Hamilton EOG Functional Quality Questionnaire

Ken Allman EOG Functional Quality Questionnaire

Linda Keillor EOG LAS/PBS Requirements Workshop

Phil Fleming EOG Functional Quality Questionnaire

Sandra Brooks EOG Functional Quality Questionnaire

Skip Martin EOG LAS/PBS Requirements Workshop

Stephanie Cunha EOG Functional Quality Questionnaire

Teresa Brossette EOG Functional Quality Questionnaire

Anthony Montero FAU Functional Quality Questionnaire

Carol Sashi FAU Functional Quality Questionnaire

Ed Schiff FAU Functional Quality Questionnaire

Edwin Bemmel FAU Functional Quality Questionnaire

Joan Lehmann FAU Functional Quality Questionnaire

Kathi Danes FAU Functional Quality Questionnaire

Lionel Gnanasselan FAU Functional Quality Questionnaire

Marie Mascaro FAU Functional Quality Questionnaire

Patricia Seita FAU Functional Quality Questionnaire

Patrick Beauvoir FAU Functional Quality Questionnaire

Robert Pope FAU Functional Quality Questionnaire

Amy Lewis FDHC Functional Quality Questionnaire

Bill Barrett FDHC Functional Quality Questionnaire



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Bill Perry FDHC Functional Quality Questionnaire

Dianne Spooner FDHC Functional Quality Questionnaire

Doug McCleeary FDHC Functional Quality Questionnaire

Elinor Schroeder FDHC Functional Quality Questionnaire

Janet Parramore FDHC Functional Quality Questionnaire

Janice Bragg FDHC Functional Quality Questionnaire

Jim Sewell FDHC Functional Quality Questionnaire

Mike Harris FDHC Functional Quality Questionnaire

Nancy Pfiester FDHC Functional Quality Questionnaire

Sandra Tyer FDHC Functional Quality Questionnaire

Carol McCallum FDLE Functional Quality Questionnaire

Charlotte Fraser FDLE Functional Quality Questionnaire

Gaines Howerton FDLE Functional Quality Questionnaire

Jerry Hendry FDLE Functional Quality Questionnaire

Karen Austin FDLE Functional Quality Questionnaire

Pat Johnson FDLE Functional Quality Questionnaire

Sylvia Holloway FDLE Functional Quality Questionnaire

Teddy Payne FDLE Functional Quality Questionnaire

Alisa Roberson FDLES Functional Quality Questionnaire

Barbara Chance FDLES Functional Quality Questionnaire

Barbara Matthews FDLES Functional Quality Questionnaire

Carolyn Bryant FDLES Functional Quality Questionnaire

Darnell West FDLES Functional Quality Questionnaire

De-Laine Edwards FDLES Functional Quality Questionnaire

Donna Arden FDLES Functional Quality Questionnaire

Donna Pottle FDLES Functional Quality Questionnaire

Fred Thomas FDLES Functional Quality Questionnaire

Jeannine Evans FDLES Functional Quality Questionnaire

Jim Connor FDLES Functional Quality Questionnaire

Laurette Adams FDLES Functional Quality Questionnaire

Lisa Simpson FDLES Functional Quality Questionnaire

Mary Blake FDLES Functional Quality Questionnaire

Midge Grant FDLES Functional Quality Questionnaire

Regina Barker FDLES Functional Quality Questionnaire

Sam Omeke FDLES Functional Quality Questionnaire

Shirley Trotman FDLES Functional Quality Questionnaire

Ted Meredith FDLES Functional Quality Questionnaire

A.R. Kikel FDVA Functional Quality Questionnaire

Cora Stagner FDVA Functional Quality Questionnaire

Karl Dalke FDVA Functional Quality Questionnaire

Ken Dirmitt FDVA Functional Quality Questionnaire




Tami Klee FDVA Functional Quality Questionnaire

Dawn Williams FL Army NG Functional Quality Questionnaire

Peggy Evans FL Army NG Functional Quality Questionnaire

Brenda Poulos Florida Courts Functional Quality Questionnaire

Charlotte Jerrett Florida Courts Functional Quality Questionnaire

David Pepper Florida Courts Functional Quality Questionnaire

Delcynth Schloss Florida Courts Functional Quality Questionnaire

Georgia Franklin Florida Courts Functional Quality Questionnaire

Juanita Wilson Florida Courts Functional Quality Questionnaire

Kelly McMullen Florida Courts Functional Quality Questionnaire

Kimber Perkins Florida Courts Functional Quality Questionnaire

Wally Morris Florida Courts Functional Quality Questionnaire

Andrea McPherson FSU Functional Quality Questionnaire

Sandra McVey FSU Functional Quality Questionnaire

Annette Rossi GFC Functional Quality Questionnaire

Barbie Levins GFC Functional Quality Questionnaire

Cheryl Carico GFC Functional Quality Questionnaire

CindyHoffman GFC Functional Quality Questionnaire

Dorene McClintock GFC Functional Quality Questionnaire

Karen Baggett GFC Functional Quality Questionnaire

Karen L'Heureux GFC Functional Quality Questionnaire

Robin Rollins GFC Functional Quality Questionnaire

Rod Schlieder GFC Functional Quality Questionnaire

Sharon Bussey GFC Functional Quality Questionnaire

Bill Johnson HSMV Functional Quality Questionnaire

Brenda Mathews HSMV Functional Quality Questionnaire

Ed Martin HSMV Functional Quality Questionnaire

Ed Nelson HSMV Functional Quality Questionnaire

Jim Hage HSMV Functional Quality Questionnaire

Keith Veitimger HSMV Functional Quality Questionnaire

Laura Adams HSMV Functional Quality Questionnaire

Laura Bruce HSMV Functional Quality Questionnaire

Mary Ann Thorner HSMV Functional Quality Questionnaire

Musette Lewis HSMV Functional Quality Questionnaire

Neil Standley HSMV Functional Quality Questionnaire

Russ Rothman HSMV Functional Quality Questionnaire

Russ Rothman HSMV SPURS Requirements Workshop

Stuart Strickland HSMV Functional Quality Questionnaire

Bruce Burns Legislature Functional Quality Questionnaire

Candace Ardley Legislature Functional Quality Questionnaire

Carolyn Hicks Legislature Functional Quality Questionnaire



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Cynthia Kelly Legislature Functional Quality Questionnaire

Debbie Kline Legislature Functional Quality Questionnaire

Jim Windsor Legislature Functional Quality Questionnaire

Lisa Swindle Legislature Functional Quality Questionnaire

Lurea Thurman Legislature Functional Quality Questionnaire

Mike Mentillo Legislature Functional Quality Questionnaire

Tom Lonchar Legislature Functional Quality Questionnaire

Jim Colbert OAG CMS Requirements Workshop

Jim Colbert OAG FLAIR Requirements Workshop

Jim Colbert OAG SPURS Requirements Workshop

Barbara Harris PSC COPES Requirements Workshop

Barbara Harris PSC Functional Quality Questionnaire

Barbara Taylor PSC Functional Quality Questionnaire

Evelyn Sewell PSC Functional Quality Questionnaire

Frantk Harrison PSC Functional Quality Questionnaire

Karen Belcher PSC Functional Quality Questionnaire

Marian Ellis PSC Functional Quality Questionnaire

Steve Wharton PSC Functional Quality Questionnaire

Donna Nichols SUS SPURS Requirements Workshop

Bruce Gillander Treasury CMS Requirements Workshop

John Burch Treasury CMS Requirements Workshop

Meriam Grey Treasury CMS Requirements Workshop

Rob Allen Treasury CMS Requirements Workshop

Sharon Doxsee Treasury CMS Requirements Workshop

Kimberly McMurray Treasury CMS Requirements Workshop

Frank Green UFL Functional Quality Questionnaire

Kim Boynton UFL Functional Quality Questionnaire

Lawanna Reaves UFL Functional Quality Questionnaire

Murphy Miller UFL Functional Quality Questionnaire

Anne Hoover UNF Functional Quality Questionnaire

Annie Willis UNF Functional Quality Questionnaire

Ellery Griffis UNF Functional Quality Questionnaire

Leslie Mizell UNF Functional Quality Questionnaire

Ricky Arjune UNF Functional Quality Questionnaire

Eric Walden USF Functional Quality Questionnaire

Gloria Resmondo UWF Functional Quality Questionnaire

Christy Gregg BPR Admin Services Director

Christy Gregg BPR Agency for Health Care Administration

Mike Gresham BPR Department of Agriculture and Consumer Services

Bill Monroe BPR Department of Banking and Finance

Bruce Berger BPR Department of Banking and Finance




Cindy Mazzara BPR Department of Banking and Finance

Doug Darling BPR Department of Banking and Finance

Lance Smith BPR Department of Banking and Finance

Robert Milligan BPR Department of Banking and Finance

Steven Ritacco BPR Department of Banking and Finance

Tom McGurk BPR Department of Banking and Finance

William H. McKeown BPR Department of Banking and Finance

William Huffcut BPR Department of Banking and Finance

Dean Mokling BPR Department of Banking and Finance

Emily Beck BPR Department of Banking and Finance

Raymond Marsh BPR Department of Banking and Finance

Richard Sieg BPR Department of Banking and Finance

Tom Clemons BPR Department of Business and Professional Regulation

Mercedes Scarabin BPR Department of Children and Families

Amy Karimipour BPR Department of Children and Families

Becky Rogers BPR Department of Children and Families

Bert Wilkerson BPR Department of Children and Families

Bill Woods BPR Department of Children and Families

Bob Burton BPR Department of Children and Families

Buddy Croft BPR Department of Children and Families

Burton Marshall BPR Department of Children and Families

Carolyn Love BPR Department of Children and Families

Chuck Tardif BPR Department of Children and Families

Cricket Lee BPR Department of Children and Families

Dana Sweat BPR Department of Children and Families

David DiSalvo BPR Department of Children and Families

Dick Chatel BPR Department of Children and Families

Don Winstead BPR Department of Children and Families

Emily Hamby BPR Department of Children and Families

Frank Green BPR Department of Children and Families

Frank Lior BPR Department of Children and Families

Gary Drzewiecki BPR Department of Children and Families

Irma Velez BPR Department of Children and Families

Judy G. BPR Department of Children and Families

Kathy Jones BPR Department of Children and Families

Katie Joiner BPR Department of Children and Families

Keith Veitinger BPR Department of Children and Families

Ken Wilson BPR Department of Children and Families

Kenneth Jones BPR Department of Children and Families

Marilyn Van Dusseldorp BPR Department of Children and Families

MaryAnn Whitley BPR Department of Children and Families



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Maryanne Perry BPR Department of Children and Families

Maryanne Thorner BPR Department of Children and Families

Michael Williams BPR Department of Children and Families

Monica Thames BPR Department of Children and Families

Nancy Donaldson BPR Department of Children and Families

Nick Tishfry BPR Department of Children and Families

Pam Venoors BPR Department of Children and Families

Pat Shuler BPR Department of Children and Families

Paul Mauck BPR Department of Children and Families

Paula Crosby BPR Department of Children and Families

Richard Jeter BPR Department of Children and Families

Rita Smith BPR Department of Children and Families

Robert Fierro BPR Department of Children and Families

Sabrina Donovan BPR Department of Children and Families

Sandra Gantt BPR Department of Children and Families

Sandy Holm BPR Department of Children and Families

Sheela Moudgil BPR Department of Children and Families

Suzanne Sindldecker BPR Department of Children and Families

Thomas Tonner BPR Department of Children and Families

Thomas Towns BPR Department of Children and Families

Tom Sealey BPR Department of Children and Families

Tom Seawell BPR Department of Children and Families

Toni Estis BPR Department of Children and Families

Wayne Clothfelter BPR Department of Children and Families

Yvonne Bryant BPR Department of Children and Families

Michael Sparks BPR Department of Citrus

Lynn Ekholm BPR Department of Community Affairs

Bill Thurber BPR Department of Corrections

Joyce Hobson BPR Department of Education

Susan Tucker BPR Department of Elder Affairs

Myra Williams BPR Department of Environmental Protection

Thomas W. Arnold BPR Department of Health

Deana Metcalf BPR Department of Highway Safety and Motor Vehicle

Ed Martin BPR Department of Highway Safety and Motor Vehicle

Janet Moran BPR Department of Highway Safety and Motor Vehicle

Joe McKaskill BPR Department of Highway Safety and Motor Vehicle

Laura Bruce BPR Department of Highway Safety and Motor Vehicle

Neil Standley BPR Department of Highway Safety and Motor Vehicle

Russ Rothman BPR Department of Highway Safety and Motor Vehicle

Sandy DeLopez BPR Department of Highway Safety and Motor Vehicle

Yvonne Brown BPR Department of Highway Safety and Motor Vehicle




John Birch BPR Department of Insurance Treasurer

Kimberly McMurray BPR Department of Insurance Treasurer

Bruce Gillander BPR Department of Insurance Treasurer

Claude Sellars BPR Department of Insurance Treasurer

David Rodriquez BPR Department of Insurance Treasurer

Jim Godfrey BPR Department of Insurance Treasurer

Ken Jones BPR Department of Insurance Treasurer

Ken Nipper BPR Department of Insurance Treasurer

Tim Ellinor BPR Department of Insurance Treasurer

Elaine Bryant BPR Department of Juvenile Justice

Harrison Guess BPR Department of Juvenile Justice

Bob Allen BPR Department of Labor and Employment Security

Altha Manning BPR Department of Labor and Employment Security

Fredrick L. Thomas BPR Department of Labor and Employment Security

Neil W. Meoni BPR Department of Labor and Employment Security

Tom Thompson BPR Department of Labor and Employment Security

Jerry McDaniel BPR Department of Law Enforcement

Teddy Payne BPR Department of Law Enforcement

Barbara Goltz BPR Department of Lottery

Sharon Larson BPR Department of Management Services

Charles Ghini BPR Department of Management Services

Jay Young BPR Department of Management Services

Jimmy Powell BPR Department of Management Services

Linda Nelson BPR Department of Management Services

Pat Sampey BPR Department of Management Services

Sheree Keeler BPR Department of Management Services

Gary Vanlandingham BPR Department of Military Affairs

Lt. Col. Micky Duren BPR Department of Military Affairs

Gerald Johnson BPR Department of Revenue

Maria Johnson BPR Department of Revenue

Nancy Wittenberg BPR Department of Revenue

Hal Lench BPR Department of State

Annette Dan BPR Department of Transportation

Art. Wright BPR Department of Transportation

Bill Knoch BPR Department of Transportation

Carl Cavanaugh BPR Department of Transportation

Christina Smith BPR Department of Transportation

Dave Ferguson BPR Department of Transportation

George Cole BPR Department of Transportation

Jean Whitten BPR Department of Transportation

Joe Kowalski BPR Department of Transportation



kpmg


Juanita Moore BPR Department of Transportation

Laura Kelly BPR Department of Transportation

Lois White BPR Department of Transportation

Mike Wolfe BPR Department of Transportation

Nelson Hill BPR Department of Transportation

Rod Whit BPR Department of Transportation

Tereasa Stewart BPR Department of Transportation

Terry Cappellini BPR Department of Transportation

Edward McElhaney BPR Department or Children and Families

Marcia Sharma BPR Division of Retirement

David Colburn BPR Florida Legislature

Dr. Bob Bradley BPR Florida Legislature

Eliza Hawkins BPR Florida Legislature

Alice Sasser BPR Florida Legislature

Elton Revell BPR Florida Legislature

Jana Walling BPR Florida Legislature

Mallory Horne BPR Florida Legislature

Marsha Belcher BPR Florida Legislature

Mike Peters BPR Florida Legislature

Paul Belcher BPR Florida Legislature

Curtis Bullock BPR Florida University System

Dr. Paul Gallagher BPR Florida University System

Dr. Rovert Carroll BPR Florida University System

John R. Carnaghi BPR Florida University System

Larry Reese BPR Florida University System

Robert F. Fagin BPR Florida University System

William F. Merck, II BPR Florida University System

Sandra Porter BPR Game and Fresh Water Fish Commission

David Field BPR Gelco, Department of Defense

Shirley Captura BPR Gelco, Department of Defense

Donna Arduin BPR Office of the Governor

Ed Levin BPR Office of the Governor

Kenneth L. Allman BPR Office of the Governor

Linda Keillor BPR Office of the Governor

Roy Cales BPR Office of the Governor

Sally Bradshaw BPR Office of the Governor

Sandra Sartin BPR Office of the Governor

John Turcotte BPR OPPAGA

Shirley Miller BPR Parole Commission

James A. Ward BPR Public Service Commission

Steve Tribble BPR Public Service Commission




William F. “Bill” James BPR State Board of Administration

Kelly McMullen BPR State Courts Administrator

Lisa Goodner BPR State Courts Administrator

Joe Lazor BPR State Technology Office

Mary Christopher BPR State Technology Office

Donna Nichols BPR State University System

Tim Frost BPR Tallahassee Community College

Catie Joynor BPR University of Florida

Dottie Haskew BPR University of Florida

E. Hamby BPR University of Florida

Earl Robbins BPR University of Florida

Gerald Schaffer BPR University of Florida

Irma Vellessa BPR University of Florida

Kathy Jones BPR University of Florida

M. Whitley BPR University of Florida

M. Williams BPR University of Florida

Randy Staples BPR University of Florida

Ruth Harris BPR University of Florida

Seri Austin BPR University of Florida

Stuart Hoskins BPR University of Florida

Anne Blankenship BPR University of Florida (Board of Regents)



kpmg


ID Name Start Finish Duration Deliverable1 Project Launch 4/3/00 5/22/00 7 wks

2 Review/confirm Terms of Reference (ToR),Scope, Objectives

4/3/00 4/17/00 2 wks Project Constitution

3 Review / confirm business needs and anticipatedbenefits

4/17/00 5/15/00 4 wks BNAB - Definition of business needs& anticipated benefits

4 Select Processes 4/21/00 4/25/00 1.75 days Skeleton Path Plan

5 Define and agree Project Managementtechniques.

4/27/00 5/4/00 1 wk PM Techniques

6 Define and agree change management approach(for organizational issues)

4/27/00 5/4/00 1 wk Change Management Strategy

7 Define and agree requirements for linkage withother methodologies.

4/27/00 5/4/00 1 wk Linkages

8 Define organization, people and supportrequirements

5/8/00 5/22/00 2 wks Project Organigramme and JDs

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable9 Project Model 5/15/00 3/26/01 45 wks

10 Business Needs 6/5/00 7/12/00 5.55 wks

11 Foundation - "as-is" fact-find 6/5/00 6/28/00 3.5 wks

12 Business Vision and Objectives 6/12/00 6/29/00 2.63 wks

13 Constraints 6/30/00 7/12/00 1.75 wks

14 Business Process Design 6/23/00 8/28/00 9.18 wks

15 Business Process design needs 6/23/00 7/19/00 3.5 wks

16 Select ERP base business model templates 7/19/00 7/20/00 0.23 wks

17 Create and maintain ERP enterprise businessmodel

7/20/00 8/3/00 2 wks

18 Schedule ERP process modeling workshops 8/3/00 8/4/00 0.23 wks

19 Conduct ERP process modeling workshops 8/4/00 8/25/00 3 wks

20 Agree initial ERP enterprise business model 8/25/00 8/28/00 0.23 wks

21 System Solution & Feasibility 7/6/00 10/16/00 14.43 wks

22 Review ERP technical status 7/6/00 7/19/00 1.75 wks

23 System Vision: Outline design of the ERPsystem and business processes

7/6/00 7/25/00 2.63 wks

24 Organizational Impact 7/25/00 8/7/00 1.75 wks

25 Identify detailed requirements 8/28/00 9/21/00 3.5 wks

26 Interfacing review 8/28/00 9/8/00 1.75 wks

27 Gap Analysis - existing systems Vsrequirements

9/21/00 10/3/00 1.75 wks

28 Gap Analysis - requirements Vs ERP 10/3/00 10/16/00 1.75 wks

29 Implementation Strategy 5/15/00 3/26/01 45 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable30 Establish ERP architectural options 9/27/00 10/10/00 1.75 wks

31 Estimate costs and benefits per option 10/3/00 10/23/00 2.63 wks

32 Focus on delivery of benefits - Cost/BenefitModel

5/15/00 3/26/01 200 days

33 Collate and agree requirements report 9/27/00 10/23/00 3.5 wks

34 ERP Architecture & ImplementationStrategy

9/8/00 9/21/00 1.75 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable35 Design, Prototype & Construction 1/4/00 12/19/02 154.55 wks

36 Prepare to Prototype 1/4/00 12/19/02 154.55 wks

37 Prepare / review / agree design topics,descriptions and sign off.

10/23/00 10/26/00 3 days

38 Review technical environment and planERP installation

10/26/00 11/30/00 4.97 wks

39 Review planned technical solution 10/26/00 11/1/00 0.88 wks

40 Investigate technical environment 10/26/00 10/27/00 0.88 days

41 Collate requirements 10/26/00 11/8/00 1.75 wks

42 Establish options and recommendations 11/14/00 11/20/00 0.88 wks

43 Detail the approach / Technical Plan 11/22/00 11/23/00 0.88 days

44 Review and agree Technical Plan 11/17/00 11/30/00 1.75 wks Technical Plan

45 Install hardware, communicationsequipment, system software, and ERP

11/30/00 11/21/02 103.1 wks

46 Order/acquire equipment, provisions,services etc for Development System

11/30/00 12/25/00 3.5 wks

47 Prepare site(s) / physical environmentfor Development System

11/30/00 12/25/00 3.5 wks

48 Install & test equipment, services etcfor Development System

12/1/00 12/26/00 3.5 wks Installation sign off

49 Monitor needs for further phases ofinstallation

11/30/00 10/3/01 43.75 wks

50 Order/acquire hardware, software andservices for Live Configuration

9/23/02 10/3/02 1.75 wks

51 Prepare Site(s) for Live Configuration 11/30/00 12/25/00 3.5 wks

52 Install and test Live Configuration 10/29/02 11/21/02 3.5 wks Installation sign off(s)

53 Design and set up backup/recoveryprovisions (development & test

11/21/02 12/5/02 2 wks

54 Design and set up system security provisions 12/5/02 12/19/02 2 wks

55 Define, agree and instigate change controlprocedures

10/26/00 8/31/01 44.14 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable56 Define and agree change control

protocol10/26/00 10/30/00 1.75 days CCP (Change Control Protocol)

57 Communicate procedures to team andother people involved

10/30/00 11/1/00 1.75 days

58 Operate the Change Control Protocol 10/30/00 8/31/01 43.75 wks Change Control

59 Define and instigate Project Teamresponsibilities and techniques for technical

11/14/00 10/3/01 46.09 wks

60 Define and agree needs for support 11/14/00 11/17/00 2.63 days

61 Define and agree responsibilities 11/22/00 11/24/00 1.75 days Development Sys Admin

62 Provide support 11/30/00 10/3/01 43.75 wks

63 Issues - control, escalate, resolve 1/4/00 12/18/00 49.88 wks

64 Define and agree issue controlmechanism

1/4/00 1/10/00 0.88 wks ICP - Issues Control Protocol

65 Communicate Issues Controlmechanism to all participants

1/10/00 1/21/00 1.75 wks

66 Operate Issues Control 1/10/00 12/18/00 49 wks Issues Control

67 Plan & prepare ERP prototyping facilities 12/25/00 12/26/00 0.23 wks

68 Plan and Initiate Team Training Process 12/20/00 1/25/01 5.2 wks

69 Plan, prepare and conduct ERP and generaltraining for project participants

12/20/00 1/11/01 3.22 wks

70 Identify team's training needs 12/20/00 12/22/00 1.75 days

71 Identify options, recommendations &training plan

12/21/00 12/25/00 1.75 days Project Team Training Plan

72 Prepare training facilities and materials 12/20/00 1/2/01 1.75 wks Project Team Courses

73 Provide / attend training 12/25/00 1/11/01 2.63 wks Project Team Training

74 Team building and education 1/11/01 1/12/01 0.23 wks

75 Present approach to user community andteam

1/12/01 1/25/01 1.75 wks Briefings

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable76 Build base model 1/25/01 4/2/01 9.45 wks

77 Select Business Processes from ERPReference Model

1/25/01 1/26/01 0.23 wks

78 Configure initial ERP system as prototypingmodel

1/26/01 1/29/01 0.23 wks

79 Build core testing data for prototyping 1/29/01 1/30/01 0.23 wks

80 Design / prototype by topic 1/25/01 4/2/01 9.45 wks

81 Define, agree and set up ERPOrganizational Structures

1/25/01 4/2/01 9.45 wks

82 Design / prototype Human Resources 1/25/01 2/14/01 2.93 wks

83 Human Resources 1/25/01 2/14/01 2.93 wks Implementation Paper forDesign/Prototype of Human

84 Master Data 1/25/01 2/1/01 1.13 wks Implementation Paper forDesign/Prototype of Master Data

85 Basic data 1/25/01 1/26/01 0.23 wks Implementation Paper forDesign/Prototype of Basic data

86 Personal data 1/26/01 1/29/01 0.23 wks Implementation Paper forDesign/Prototype of Personal data

87 Data relevant topayment

1/29/01 1/30/01 0.23 wks Implementation Paper forDesign/Prototype of Data relevant

88 Internal data 1/30/01 1/31/01 0.23 wks Implementation Paper forDesign/Prototype of Internal data

89 Planning data 1/31/01 2/1/01 0.23 wks Implementation Paper forDesign/Prototype of Planning data

90 Time Data 2/1/01 2/9/01 1.13 wks Implementation Paper forDesign/Prototype of Time Data

91 Shift schedule 2/1/01 2/2/01 0.23 wks Implementation Paper forDesign/Prototype of Shift schedule

92 Negative time rec. 2/2/01 2/5/01 0.23 wks Implementation Paper forDesign/Prototype of Negative time

93 PDC/positive t.rec. 2/5/01 2/7/01 0.23 wks Implementation Paper forDesign/Prototype of PDC/positive

94 Incentive wages 2/7/01 2/8/01 0.23 wks Implementation Paper forDesign/Prototype of Incentive wages

95 Other 2/8/01 2/9/01 0.23 wks Implementation Paper forDesign/Prototype of Other

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable96 Travel Expenses 2/9/01 2/14/01 0.68 wks Implementation Paper for

Design/Prototype of Travel97 Environment 2/9/01 2/12/01 0.23 wks Implementation Paper for

Design/Prototype of Environment98 Options 2/12/01 2/13/01 0.23 wks Implementation Paper for

Design/Prototype of Options99 Settings 2/13/01 2/14/01 0.23 wks Implementation Paper for

Design/Prototype of Settings

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable100 Prototype process 1/4/00 9/23/02 141.8 wks

101 Data Conversion Strategy 1/4/00 1/25/00 3.02 wks

102 Establish requirements 1/4/00 1/14/00 1.75 wks

103 Establish and evaluate options 1/10/00 1/21/00 1.75 wks

104 Agree approach(es) to Data Conversion 1/21/00 1/25/00 1.75 days Data Conversion Strategy

105 Prepare discussion papers 1/5/00 6/23/00 24.5 wks Discussion Papers

106 Set up, execute and manage ERP prototypingworkshop

1/4/00 1/5/00 0.23 wks

107 Manage, control refresh core data forprototyping

1/5/00 1/6/00 0.23 wks

108 Design\prototype by topic 1/5/00 8/14/00 31.78 wks

109 Design / prototype Financial accounting 1/5/00 2/8/00 4.95 wks

110 Financial accounting 1/5/00 2/8/00 4.95 wks Financial accounting

111 Financial Accounting 1/5/00 1/7/00 0.45 wks Financial Accounting

112 Financial Accounting projectscope

1/5/00 1/6/00 0.23 wks Financial Accounting project scope

113 Environment 1/6/00 1/7/00 0.23 wks Environment

114 Master data 1/7/00 1/13/00 0.9 wks Master data

115 Bus. transactions 1/7/00 1/10/00 0.23 wks Bus. transactions

116 Business transactions 1/10/00 1/11/00 0.23 wks Business transactions

117 Closing 1/11/00 1/12/00 0.23 wks Closing

118 Tools 1/12/00 1/13/00 0.23 wks Tools

119 Extended general ledger 1/13/00 1/24/00 1.35 wks Extended general ledger

120 Basic Data 1/13/00 1/14/00 0.23 wks Basic Data

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable121 Planning 1/17/00 1/18/00 0.23 wks Planning

122 Actual Posting 1/18/00 1/19/00 0.23 wks Actual Posting

123 Periodic Processing 1/19/00 1/20/00 0.23 wks Periodic Processing

124 Reporting 1/20/00 1/21/00 0.23 wks Reporting

125 Tools 1/21/00 1/24/00 0.23 wks Tools

126 Consolidation 1/24/00 2/2/00 1.35 wks Consolidation

127 Master records 1/24/00 1/25/00 0.23 wks Master records

128 Individual financial statementdata

1/25/00 1/26/00 0.23 wks Individual financial statement data

129 Currency translation 1/26/00 1/27/00 0.23 wks Currency translation

130 Posting documents 1/28/00 1/31/00 0.23 wks Posting documents


132 Corporate standard report 2/1/00 2/2/00 0.23 wks Corporate standard report

133 Preparations for consolidation 2/2/00 2/8/00 0.9 wks Preparations for consolidation



136 Fixed Assets Accounting 2/4/00 2/7/00 0.23 wks Fixed Assets Accounting

137 Extended G/L accounting 2/7/00 2/8/00 0.23 wks extended G/L accounting

138 Design / prototype Asset Management 7/10/00 8/14/00 5.18 wks

139 Implementation Guide AssetAccounting

7/10/00 8/14/00 5.18 wks Implementation Guide AssetAccounting

140 Asset Accounting project range 7/10/00 7/13/00 0.68 wks Asset Accounting project range

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable141 Select functions 7/10/00 7/11/00 0.23 wks Select functions

142 Specify areas ofresponsibility

7/11/00 7/12/00 0.23 wks Specify areas of responsibility

143 Specify information flow 7/12/00 7/13/00 0.23 wks Specify information flow

144 Asset Accounting environment 7/13/00 7/18/00 0.68 wks Asset Accounting environment

145 Define authorizations 7/13/00 7/14/00 0.23 wks Define authorizations

146 Index specifications 7/14/00 7/17/00 0.23 wks Index specifications

147 System Administration Guide 7/17/00 7/18/00 0.23 wks System Administration Guide

148 Valuation of fixed assets 7/18/00 8/1/00 2.03 wks Valuation of fixed assets

149 Define chart of depreciation 7/18/00 7/19/00 0.23 wks Define chart of depreciation

150 Define depreciation areas 7/20/00 7/21/00 0.23 wks Define depreciation areas

151 Asset Accounting companycodes

7/21/00 7/24/00 0.23 wks Asset Accounting company codes

152 Valuation key 7/24/00 7/25/00 0.23 wks Valuation key

153 Net Worth Tax 7/25/00 7/26/00 0.23 wks Net Worth Tax

154 Insurance 7/26/00 7/27/00 0.23 wks insurance

155 Investment Support 7/27/00 7/28/00 0.23 wks Investment Support

156 Leasing types 7/28/00 7/31/00 0.23 wks Leasing types

157 Revaluation 7/31/00 8/1/00 0.23 wks Revaluation

158 Activities 8/2/00 8/9/00 1.13 wks Activities

159 Document types for postingin fixed assets

8/2/00 8/3/00 0.23 wks Document types for posting in fixedassets

160 Document number ranges 8/3/00 8/4/00 0.23 wks Document number ranges

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable161 Transaction types 8/4/00 8/7/00 0.23 wks Transaction types

162 Post depreciation 8/7/00 8/8/00 0.23 wks Post depreciation

163 Settlement of asset underconstruction

8/8/00 8/9/00 0.23 wks Settlement of asset underconstruction


165 Sort criteria for asset reports 8/9/00 8/10/00 0.23 wks criteria for asset reports

166 Asset history sheet 8/10/00 8/11/00 0.23 wks Asset history sheet

167 Call up of reports 8/11/00 8/14/00 0.23 wks Call up of reports

168 Design / prototype Treasury 1/18/00 1/21/00 0.68 wks

169 Finalize Position 1/18/00 1/21/00 0.68 wks Finalize Position


171 Structure 1/19/00 1/20/00 0.23 wks Structure

172 Tools 1/20/00 1/21/00 0.23 wks Tools


174 Human Resources 1/21/00 2/11/00 2.93 wks Human Resources

175 Master Data 1/21/00 1/31/00 1.13 wks Master Data

176 Basic data 1/21/00 1/24/00 0.23 wks Basic data

177 Personal data 1/24/00 1/25/00 0.23 wks Personal data

178 Data relevant to payment 1/25/00 1/26/00 0.23 wks Data relevant to payment

179 Internal data 1/26/00 1/27/00 0.23 wks Internal data

180 Planning data 1/28/00 1/31/00 0.23 wks Planning data

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable181 Time Data 1/31/00 2/7/00 1.13 wks Time Data

182 Shift schedule 1/31/00 2/1/00 0.23 wks Shift schedule

183 Negative time rec. 2/1/00 2/2/00 0.23 wks Negative time rec.

184 PDC/positive t.rec. 2/2/00 2/3/00 0.23 wks PDC/positive t.rec.

185 Incentive wages 2/3/00 2/4/00 0.23 wks Incentive wages

186 Other 2/4/00 2/7/00 0.23 wks Other

187 Travel Expenses 2/7/00 2/11/00 0.68 wks Travel Expenses


189 Options 2/8/00 2/9/00 0.23 wks Options

190 Settings 2/10/00 2/11/00 0.23 wks Settings

191 Consolidate ERP prototyping results 8/15/00 8/16/00 0.23 wks

192 Resolve outstanding policy issues 2/4/02 2/5/02 0.23 wks

193 Final ERP Gap Analysis 2/11/02 2/12/02 0.23 wks

194 Build 8/15/00 9/23/02 109.83 wks

195 Create detailed specifications for non-ERPIT development work

2/18/02 3/28/02 5.63 wks

196 Specify Data Conversion approaches 2/18/02 3/20/02 4.5 wks

197 Specify Data conversionapproaches for Financial

2/18/02 2/25/02 5 days

198 Specify Data conversionapproaches for Asset

2/25/02 3/5/02 5 days

199 Specify Data conversionapproaches for Treasury

3/5/02 3/12/02 5 days

200 Specify Data conversionapproaches for Human Resources

3/13/02 3/20/02 5 days

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable201 Specify Interface extraction 2/18/02 3/28/02 5.63 wks

202 Specify interface extraction forFinancial accounting

2/18/02 2/25/02 5 days

203 Specify interface extraction forAsset Management

2/25/02 3/5/02 5 days

204 Specify interface extraction forControlling

3/5/02 3/12/02 5 days

205 Specify interface extraction forTreasury

3/13/02 3/20/02 5 days

206 Specify interface extraction forHuman Resources

3/20/02 3/28/02 5 days

207 Finalize interface design 4/1/02 9/23/02 25 wks

208 Finalize interface design Financialaccounting

4/1/02 5/6/02 5 wks

209 Finalize interface design AssetManagement

5/6/02 6/10/02 5 wks

210 Finalize interface design Controlling 6/10/02 7/15/02 5 wks

211 Finalize interface design Treasury 7/15/02 8/19/02 5 wks

212 Finalize interface design HumanResources

8/19/02 9/23/02 5 wks

213 Finalize data conversion design 4/1/02 9/23/02 25 wks

214 Finalize data conversion designFinancial accounting

4/1/02 5/6/02 5 wks

215 Finalize data conversion design AssetManagement

5/6/02 6/10/02 5 wks

216 Finalize data conversion designControlling

6/10/02 7/15/02 5 wks

217 Finalize data conversion designTreasury

7/15/02 8/19/02 5 wks

218 Finalize data conversion design HumanResources

8/19/02 9/23/02 5 wks

219 Configure system parameters, codes,structures, etc

8/15/00 8/16/00 0.23 wks

220 Configure system parameters, codes,structures Financial accounting

8/15/00 8/16/00 0.23 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable221 Configure system parameters, codes,

structures Asset Management8/15/00 8/16/00 0.23 wks

222 Configure system parameters, codes,structures Controlling

8/15/00 8/16/00 0.23 wks

223 Configure system parameters, codes,structures Treasury

8/15/00 8/16/00 0.23 wks

224 Configure system parameters, codes,structures Human Resources

8/15/00 8/16/00 0.23 wks

225 Set up & test coding structures 8/15/00 9/20/00 5.25 wks

226 Set up & test coding structuresFinancial Accounting

8/15/00 9/20/00 5.25 wks

227 Set up & test coding structures forAsset Management

8/15/00 9/20/00 5.25 wks

228 Set up & test coding structuresControlling

8/15/00 9/20/00 5.25 wks

229 Set up & test coding structuresTreasury

8/15/00 9/20/00 5.25 wks

230 Set up & test coding structures HumanResources

8/15/00 9/20/00 5.25 wks

231 Set up screens, queries & report writer etc 4/1/02 4/2/02 0.23 wks

232 Set-up screens, queries & reportFinancial accounting

4/1/02 4/2/02 0.23 wks

233 Select screen variant for documententry

4/1/02 4/2/02 0.23 wks

234 Define report allocation 4/1/02 4/2/02 0.23 wks

235 Define report variants forpayment notices

4/1/02 4/2/02 0.23 wks

236 Define report variants for accountstatements

4/1/02 4/2/02 0.23 wks

237 Define report variants for b/echarges statement

4/1/02 4/2/02 0.23 wks

238 Define report variants for internaldocuments

4/1/02 4/2/02 0.23 wks

239 Define report variants forindividual letters

4/1/02 4/2/02 0.23 wks

240 Define report variants fordocument statements

4/1/02 4/2/02 0.23 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable241 General reports 4/1/02 4/2/02 0.23 wks

242 Day end reports 4/1/02 4/2/02 0.23 wks

243 Month end reports 4/1/02 4/2/02 0.23 wks

244 Year end reports 4/1/02 4/2/02 0.23 wks

245 Reporting 4/1/02 4/2/02 0.23 wks

246 Maintain Report WriterLanguages

4/1/02 4/2/02 0.23 wks

247 Display Control Report 4/1/02 4/2/02 0.23 wks

248 Set-up screens, queries & report AssetManagement

4/1/02 4/2/02 0.23 wks

249 Screen layout for the asset masterrecord

4/1/02 4/2/02 0.23 wks

250 Screen layout for the depreciationarea

4/1/02 4/2/02 0.23 wks

251 Reporting 4/1/02 4/2/02 0.23 wks

252 Sort criteria for asset reports 4/1/02 4/2/02 0.23 wks

253 Call up of reports 4/1/02 4/2/02 0.23 wks

254 Set-up screens, queries & reportTreasury

4/1/02 4/2/02 0.23 wks

255 Report und Variantenauswahl 4/1/02 4/2/02 0.23 wks

256 Reporting 4/1/02 4/2/02 0.23 wks

257 Define report headings 4/1/02 4/2/02 0.23 wks

258 Set-up screens, queries & report HumanResources

4/1/02 4/2/02 0.23 wks

259 Screen control 4/1/02 4/2/02 0.23 wks

260 Fast entry screens 4/1/02 4/2/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable261 Entry screens 4/1/02 4/2/02 0.23 wks

262 Build / modify existing non-ERP applicationsoftware

2/12/02 2/13/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable263 Readiness & Rollout 6/27/95 6/5/03 414.55 wks

264 Create Production Environment 6/27/95 2/5/01 292.88 wks

265 Review technical environment and planproduction ERP system installation

6/27/95 1/30/01 291.98 wks




269 Revise the approach / Technical Plan 1/16/01 1/17/01 0.88 days


271 Implement 'live' ERP client systems -hardware/software

1/30/01 1/31/01 0.23 wks

272 Implement live communications & network 1/31/01 2/1/01 0.23 wks

273 Implement 'live' ERP server systems -hardware / software / database

2/1/01 2/2/01 0.23 wks

274 Set up, transport and verify liveconfiguration

2/2/01 2/5/01 0.23 wks

275 Set up documentation and procedures 6/29/00 2/11/03 136.7 wks

276 Prepare and instigate operators' instructions,procedures and manual

2/5/01 3/26/01 7 wks

277 Design and agree processing approach 2/5/01 2/22/01 2.63 wks

278 Define Backup, Recovery, Restore,Re-organization procedures

2/5/01 2/16/01 1.75 wks

279 Define archiving and off-site backupprocedures

2/5/01 2/16/01 1.75 wks

280 Review, update and test DisasterRecovery Procedure

2/5/01 2/22/01 2.63 wks

281 Define Report Distribution methodsand procedures

2/5/01 2/16/01 1.75 wks

282 Define security and access controls andprocedures

2/5/01 3/1/01 3.5 wks

'95 '96 '97 '98 '99 '00 '01 '021995 1996 1997 1998 1999 2000 2001 2002

ID Name Start Finish Duration Deliverable283 Document Operators procedures 2/5/01 3/26/01 7 wks Ops Manual / Documentation

284 Prepare and instigate User Procedures andUser Manual / electronic information

3/26/01 5/1/01 5.25 wks

285 System Control 3/26/01 4/6/01 1.75 wks

286 Coding structures 3/26/01 5/1/01 5.25 wks

287 Prepare and instigate User Proceduresand User Manual/Electronic

3/26/01 3/27/01 0.23 wks

288 G/L Accounting 3/26/01 3/27/01 0.23 wks

289 Extended general ledger 3/26/01 3/27/01 0.23 wks

290 Menu-Driven report generator 3/26/01 3/27/01 0.23 wks

291 Accounts receivable 3/26/01 3/27/01 0.23 wks

292 Information system 3/26/01 3/27/01 0.23 wks

293 Accounts payable 3/26/01 3/27/01 0.23 wks


295 Consolidation functions 3/26/01 3/27/01 0.23 wks

296 PC Data entry 3/26/01 3/27/01 0.23 wks

297 Cash management and forecast 3/26/01 3/27/01 0.23 wks

298 Electronic Banking 3/26/01 3/27/01 0.23 wks

299 Central financial budgeting andfinancial resources management

3/26/01 3/27/01 0.23 wks

300 Inter-company businesstransactions

3/26/01 3/27/01 0.23 wks

301 Business area accounting 3/26/01 3/27/01 0.23 wks

302 Account interest calculation(interest scale)

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable303 Prepare and instigate User Procedures

and User Manual/Electronic3/26/01 3/27/01 0.23 wks

304 Management of investmentprojects

3/26/01 3/27/01 0.23 wks

305 Tax depreciation simulation -basic functions

3/26/01 3/27/01 0.23 wks

306 Assets Accounting - basicfunctions

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

308 Cost element accounting 3/26/01 3/27/01 0.23 wks

309 Cost center accounting 3/26/01 3/27/01 0.23 wks

310 Planning of functionaldependencies

3/26/01 3/27/01 0.23 wks

311 Basic functions 3/26/01 3/27/01 0.23 wks

312 Unit costing 3/26/01 3/27/01 0.23 wks

313 Open-item management 3/26/01 3/27/01 0.23 wks

314 Settlement 3/26/01 3/27/01 0.23 wks


316 Activity and allocation bases 3/26/01 3/27/01 0.23 wks

317 Product Costing 3/26/01 3/27/01 0.23 wks

318 Product costing analysis 3/26/01 3/27/01 0.23 wks

319 Product cost controlling 3/26/01 3/27/01 0.23 wks

320 Executive Information System -Management data base

3/26/01 3/27/01 0.23 wks

321 Executive Information SystemData presentation

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable323 Material master record 3/26/01 3/27/01 0.23 wks

324 Vendor master record(purchasingfunctions)

3/26/01 3/27/01 0.23 wks

325 Classification 3/26/01 3/27/01 0.23 wks

326 Document management 3/26/01 3/27/01 0.23 wks

327 Link to graphic subsystems 3/26/01 3/27/01 0.23 wks

328 Basic Purchasing Functions 3/26/01 3/27/01 0.23 wks

329 Contracts/delivery schedulingagreements

3/26/01 3/27/01 0.23 wks

330 Quota agreements 3/26/01 3/27/01 0.23 wks

331 Subcontract order processing 3/26/01 3/27/01 0.23 wks

332 Vendor evaluation 3/26/01 3/27/01 0.23 wks

333 Purchasing information system 3/26/01 3/27/01 0.23 wks

334 Goods Receipt 3/26/01 3/27/01 0.23 wks

335 Inventory management 3/26/01 3/27/01 0.23 wks

336 Physical inventory 3/26/01 3/27/01 0.23 wks

337 Interface for inventory sampling 3/26/01 3/27/01 0.23 wks

338 Inventory sampling 3/26/01 3/27/01 0.23 wks

339 Inventory controlling 3/26/01 3/27/01 0.23 wks

340 Basic invoice verificationfunctions

3/26/01 3/27/01 0.23 wks

341 Balance sheet valuation procedure 3/26/01 3/27/01 0.23 wks

342 Link to EDI Interface 3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008



344 Basic component for inspectionmanagement

3/26/01 3/27/01 0.23 wks

345 Master data and inspectionplanning

3/26/01 3/27/01 0.23 wks

346 Feature-specific inspection resultsrecording

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

348 Organization and Planning 3/26/01 3/27/01 0.23 wks

349 Elementary job, position andworkplace description

3/26/01 3/27/01 0.23 wks

350 HR Plan connection for ERPstructure graphics

3/26/01 3/27/01 0.23 wks

351 ERP structure Graphics for UNIX 3/26/01 3/27/01 0.23 wks

352 Qualifications/Requirements 3/26/01 3/27/01 0.23 wks

353 External training administration 3/26/01 3/27/01 0.23 wks

354 Education and trainingadministration

3/26/01 3/27/01 0.23 wks

355 Room reservation planning 3/26/01 3/27/01 0.23 wks

356 Career and succession planning 3/26/01 3/27/01 0.23 wks

357 Personnel cost planning 3/26/01 3/27/01 0.23 wks

358 Personnel master dataadministration

3/26/01 3/27/01 0.23 wks

359 Interface for international payrollaccounting

3/26/01 3/27/01 0.23 wks

360 Time data administration 3/26/01 3/27/01 0.23 wks

361 Attendance times 3/26/01 3/27/01 0.23 wks

362 Individual incentive wages (dataentry / calculation)

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable363 Group incentive wages (data entry

/ calculation)3/26/01 3/27/01 0.23 wks

364 Travel expenses (basic version) 3/26/01 3/27/01 0.23 wks

365 Travel expense supplements forinternational implementations

3/26/01 3/27/01 0.23 wks

366 Cost distribution for one businesstrip

3/26/01 3/27/01 0.23 wks

367 Common payroll elements 3/26/01 3/27/01 0.23 wks

368 Automatic processing ofgarnishments of wages (Germany)

3/26/01 3/27/01 0.23 wks

369 Calculation of statutory sick payand statutory maternity pay (GB)

3/26/01 3/27/01 0.23 wks

370 Limited master data 3/26/01 3/27/01 0.23 wks

371 Limited payroll basis 3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

373 Connection to optical archivingsystem

3/26/01 3/27/01 0.23 wks

374 Message control - extendedfunctions

3/26/01 3/27/01 0.23 wks

375 ERP Office basic functions (ERPmail, ERP file, ERP find)

3/26/01 3/27/01 0.23 wks

376 ERP Office - external sending 3/26/01 3/27/01 0.23 wks

377 ERP access 3/26/01 3/27/01 0.23 wks

378 Basis EDI interface 3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

380 ERP printer drivers 3/26/01 3/27/01 0.23 wks

381 Basic communications functions 3/26/01 3/27/01 0.23 wks

382 Communication module forconnection to external systems

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable383 Connection of ERP to external

systems3/26/01 3/27/01 0.23 wks

384 ERP comm basic function 3/26/01 3/27/01 0.23 wks

385 Extended function library forapplications

3/26/01 3/27/01 0.23 wks

386 Translation tool,terminology/glossary, database

3/26/01 3/27/01 0.23 wks

387 Function modules for integrationof optical storage and document

3/26/01 3/27/01 0.23 wks

388 ERP-COMM Development library 3/26/01 3/27/01 0.23 wks

389 Development library for TCP/IPtransport protocol for AIX

3/26/01 3/27/01 0.23 wks

390 On-line tool information model 3/26/01 3/27/01 0.23 wks

391 Agree user procedures anddocumentation

3/26/01 4/12/01 2.63 wks Procedures / documentation & signoff

392 Set up / revise and agree communicationsplan

5/1/01 5/14/01 1.75 wks Communications Plan

393 Implement change management program 5/14/01 2/11/03 91.25 wks

394 Define the change managementroll-out organization

5/14/01 6/7/01 3.5 wks

395 Build and maintain sponsorship 6/7/01 5/28/02 50.75 wks

396 Identify, brief and educate full changemanagement roll-out support team

5/28/02 6/11/02 2 wks

397 Project team support for ChangeManagement process

6/11/02 2/11/03 35 wks

398 Prepare & distribute tools and materialsfor supporting the roll-out

5/14/01 12/26/01 32.38 wks

399 Plan, prepare and conduct user andmanagement training and education

6/29/00 11/13/01 71.7 wks

400 Training Needs Analysis 6/29/00 7/24/00 3.5 wks Profile Matrix

401 Training Approach 7/24/00 8/17/00 3.5 wks Training Approach

402 Devise and plan training program 8/17/00 9/5/00 2.63 wks Outline specs

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable403 Develop training courses and materials 5/1/01 8/7/01 14 wks Courses & materials

404 Mobilize trainers 5/1/01 7/13/01 10.5 wks Schedules

405 Set up training environments 5/1/01 7/13/01 10.5 wks Training Environment

406 Invite and prepare attendees 8/7/01 9/25/01 7 wks Invites / advance prep

407 Deliver training and monitorattendance

9/25/01 11/13/01 7 wks Training + log

408 Devise and handover post-liveeducation and training

8/7/01 8/31/01 3.5 wks Post-live training schedule

409 Plan, prepare and conduct operationstraining

12/25/00 2/23/01 8.75 wks

410 Operations - Training Needs Analysisand Approach

12/25/00 1/5/01 1.75 wks Operations Training Approach

411 Develop operations training programand materials

1/5/01 1/18/01 1.75 wks Ops courses & materials

412 Plan, schedule, invite, conduct andmonitor operations training

1/18/01 2/23/01 5.25 wks Ops training

413 Plan, prepare and conduct support stafftraining

11/13/01 1/28/02 10.83 wks

414 Support staff Training Needs Analysisand approach

11/13/01 11/28/01 9.63 days Support Training Approach IP

415 Develop support staff training programand materials

11/28/01 12/13/01 9.63 days Support training materials

416 Plan, schedule, invite, conduct andmonitor support staff training

12/13/01 1/28/02 28.88 days Support training

417 Verify System 6/23/00 12/18/02 129.6 wks

418 Plan, prepare and conduct User / System /Acceptance and Integration testing

6/23/00 8/14/01 59.31 wks

419 Review needs and requirements fortesting and acceptance

6/23/00 7/6/00 1.75 wks

420 Identify and assess options 6/30/00 7/12/00 1.75 wks

421 Agree approach to testing andacceptance

7/6/00 7/19/00 1.75 wks

422 Detail Testing Approach 7/19/00 7/31/00 1.75 wks Testing Approach

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable423 Agree Testing Approach 8/14/00 8/21/00 0.88 wks

424 Prepare individual Test Objectives 8/21/00 8/31/00 1.75 wks Test Objectives

425 Prepare test detailed definitions andexpected results

12/12/00 3/30/01 15.75 wks Test Definitions

426 Prepare testing environment 3/30/01 4/25/01 3.5 wks Test Environment

427 Conduct test cycles 4/25/01 5/31/01 5.25 wks Test Log / Incident Reports & log

428 Review results and control remedialactions

5/31/01 7/6/01 5.25 wks Incident control

429 Review and accept results 7/6/01 8/14/01 5.25 wks Sign off

430 Plan, prepare and conduct technical tuningand volume testing

9/23/02 12/4/02 10.5 wks

431 Review requirements for technicaltesting

9/23/02 10/3/02 1.75 wks

432 Assess options for Technical Testing 9/23/02 10/3/02 1.75 wks

433 Agree approach to Technical Testing 9/23/02 10/3/02 1.75 wks

434 Define detail of technical testingapproach

9/23/02 10/3/02 1.75 wks

435 Agree Technical Testing 9/23/02 9/27/02 0.88 wks Technical Tuning & Testing

436 Prepare testing environment(s) 9/23/02 10/3/02 1.75 wks Technical Environment

437 Define tests 9/23/02 12/4/02 10.5 wks Test Objectives

438 Prepare test data 9/23/02 10/29/02 5.25 wks Test Definitions

439 Conduct test runs 9/23/02 11/11/02 7 wks Logs / Incident Reports

440 Tune System 9/23/02 11/11/02 7 wks

441 Review results and accept technicalperformance

9/23/02 11/4/02 6.13 wks Test sign off

442 Evaluate testing and report results 12/4/02 12/18/02 2 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable443 Rollout 9/23/02 6/5/03 36.75 wks

444 Define, plan and agree handover / cutover 9/23/02 10/10/02 2.63 wks

445 System handover - needs &requirements

9/23/02 10/10/02 2.63 wks

446 System handover options andrecommendations

9/23/02 10/3/02 1.75 wks

447 System handover detailed plan 9/23/02 10/3/02 1.75 wks

448 Review and agree System handover 9/23/02 10/3/02 1.75 wks System handover IP

449 Define and agree terms of reference for liveuser support activity

9/23/02 10/16/02 3.5 wks

450 Requirements for live admin & support 9/23/02 10/3/02 1.75 wks

451 Options and recommendations 9/23/02 10/3/02 1.75 wks

452 Detailed approach, organization andstaffing for live admin & support

9/23/02 10/16/02 3.5 wks

453 Agree System Support andAdministration

9/23/02 10/3/02 1.75 wks System Support & Admin

454 Acquire and start support team staff 9/23/02 10/16/02 3.5 wks

455 Plan and instigate phased transition to liveoperation and support and phasing out of

9/23/02 10/29/02 5.25 wks

456 Devise and agree Transition Plan 9/23/02 10/3/02 1.75 wks Transition Plan

457 Transition / shared support of thesystem

9/23/02 10/29/02 5.25 wks

458 Sign off end of Project Team support 9/23/02 9/24/02 0.88 days Transition sign off

459 Establish conversion environment 9/23/02 9/30/02 1 wk

460 Load start up data 9/23/02 6/5/03 36.75 wks

461 Data validation & purification 9/23/02 6/5/03 36.75 wks Clean data

462 Manual Data Loading 9/23/02 9/27/02 0.88 wks Data Load

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable463 Automated Data Conversion &

Loading9/23/02 9/27/02 0.88 wks Data Load

464 Acceptance of start up data 9/23/02 10/10/02 2.63 wks

465 Define validation processes, tests andcontrols


466 Validate data and controls 9/23/02 9/27/02 3.5 days Logs

467 Apply manual corrections / rerun /revalidate as required

9/23/02 9/27/02 0.88 wks

468 Accept start up data 9/23/02 9/24/02 0.88 days Sign off

469 Conduct final operations review 9/23/02 9/24/02 0.23 wks

470 Conduct final production / data controlreview

9/23/02 9/24/02 0.23 wks

471 Conduct final user review 9/23/02 9/24/02 0.23 wks

472 Decision to go live 9/23/02 9/24/02 0.88 days Decision to go live

473 Early care 9/23/02 9/24/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable474 Quality Audit 6/5/03 6/19/03 1.96 wks

475 Check deliverables against QA checklist 6/5/03 6/12/03 0.88 wks Deliverables checklist / CAR(Corrective Action Requests) & log

476 Check required work against project tracking data 6/12/03 6/18/03 0.88 wks Processes checklist / CAR(Corrective Action Requests) & Log

477 QA signoff 6/18/03 6/19/03 0.88 days QA Sign off

'03 '04 '05 '06 '07 '08 '09 '102003 2004 2005 2006 2007 2008 2009 2010

ID Name Start Finish Duration Deliverable478 Terminate Project 6/19/03 10/2/03 14.88 wks

479 Identify / confirm new roles for all project staff 6/19/03 10/2/03 14.88 wks Appraisals / Organigrammes / Jobs

480 File / archive materials, correspondence etc 6/19/03 7/21/03 4.38 wks Demobilization Plan IP

481 Return / redeploy accommodation and equipmentetc

6/19/03 7/8/03 2.63 wks

482 Prepare Project Completion Report 6/19/03 7/2/03 1.75 wks Project Completion Report / Letter

483 Collate / prepare Work Books and Owner'sManual

6/19/03 7/2/03 1.75 wks Work Book(s) & Owners Manual

'03 '04 '05 '06 '07 '08 '09 '102003 2004 2005 2006 2007 2008 2009 2010

Business Case Study Appendix E—Research Documents

Draft Final ReportPage E-1 kpmg

Appendix E—Research DocumentsLAS/PBS

Executive Summary, The Plan for the Redesign of the LAS/PBS, OPB Systems Design and Development

Executive Summary, Option Assessment for the Redesign of the LAS/PBS, OPB Systems Design and Development

Executive Summary, Users' Needs Assessment for the Redesign of the LAS/PBS, OPB Systems Design andDevelopment

The Revised Plan for the Redesign of the LAS/PBS, OPB Systems Design and Development

Option Assessment for the Redesign of the LAS/PBS, OPB Systems Design and Development

Users' Needs Assessment for the Redesign of the LAS/PBS, OPB Systems Design and Development

Primary Functions Supported by LAS/PBS


State of Florida Legislative Budget Request Instructions Fiscal Year 2000-2001, EOG, OPB (LBRI)

State Budgeting Overview

Interview Questionnaires

System Design and Development Operational and Organizational Chart

Current LAS/PBS platform

LAS/PBS primary data entities stored

Flow Chart-budget request process

LAS/PBS data dictionary listing 1997-1998

Chapter 216, Florida Statutes (1999)

Functional Quality Questionnaires September 1999

CMA

Chart-Bureau of Banking functions

ACH project with Infinity Software Development description

Florida Treasury web site description

Listing of Interfaces with non-FFMIS systems 1999

Florida Electronic Data Interchange-survey of the states, state of Florida response

AS400 Client Server-table/view listing for Treasury apps

Receipt Verification System (RVS) compiled 1999

Receipt Verification System (RVS): application description

Receipt Verification System (RVS): primary data entities sorted

Receipt Verification System (RVS): item counts

Receipt Verification System (RVS): system application field types

Receipt Verification System (RVS): file descriptions

Receipt Verification System (RVS): program/module listing

Receipt Verification System (RVS): tutorial

Receipt Verification System (RVS): site information file

Receipt Verification System (RVS): office codes report



CMA

Receipt Verification System (RVS): treasurer's concentration account

Receipt Verification System (RVS): daily reports

Receipt Verification System (RVS): daily reports issued to agencies through network

Receipt Verification System (RVS): BAI list

Receipt Verification System (RVS): currency codes

Account Reconciliation System (ARS) compiled 1999

Account Reconciliation System (ARS): application description

Account Reconciliation System (ARS): daily reports

Account Reconciliation System (ARS): monthly reports

Consolidated Revolving Account System (CRA) compiled 1999

Consolidated Revolving Account System (CRA): application description

Consolidated Revolving Account System (CRA): system application field types

Consolidated Revolving Account System (CRA): item counts

Consolidated Revolving Account System (CRA): CRA VB to Access documentation

Consolidated Revolving Account System (CRA): consolidated revolving account BIA v2

Consolidated Revolving Account System (CRA): primary data entities stored

Consolidated Revolving Account System (CRA): Daily reports

Consolidated Revolving Account System (CRA): reconciled monthly bank statement

EFT Return Items-Dept of Revenue EFT Account compiled 1999

EFT Return Items-Dept of Revenue EFT Account: application description

EFT Return Items-Dept of Revenue EFT Account: primary data entities stored

EFT Return Items-Dept of Revenue EFT Account: RVS EFT Returned Items access application description/tutorial

EFT Return Items-Dept of Revenue EFT Account: ris.mdb MS Access database description

EFT Return Items-Dept of Revenue EFT Account: RVSR codes

EFT Return Items-Dept of Revenue EFT Account: data element description

EFT Return Items-Dept of Revenue EFT Account: daily reports

Clearing Account System compiled 1999

Clearing Account System: application description

Clearing Account System: system application field types

Clearing Account System: quarterly report

Receipt verification process (REC) and FLAIR-Processes and verifies state agency deposits compiled 1999

Receipt verification process (REC) and FLAIR: process description

Receipt verification process (REC) and FLAIR: process description chart

Receipt verification process (REC) and FLAIR: list of primary data entities sorted

Receipt verification process (REC) and FLAIR: application description-REC Daily Receipts System

Receipt verification process (REC) and FLAIR: field types

Receipt verification process (REC) and FLAIR: various reports

Debit Memorandum and Manual Receipt Process (REC)-processing of return checks, EFTs , and manualTreasurer's receipts compiled 1999

Debit Memorandum and Manual Receipt Process (REC): process description

Debit Memorandum and Manual Receipt Process (REC): primary data entities stored



CMA

Debit Memorandum and Manual Receipt Process (REC): app screenshots-AS400 Manual TRs, Memos andAdjustments

Debit Memorandum and Manual Receipt Process (REC): app screenshots-chargebacks in MS Access

Debit Memorandum and Manual Receipt Process (REC): app screenshots-EFT Returns processing

Debit Memorandum and Manual Receipt Process (REC): reports

State Warrant Paying Process (WRT)-payment of state warrants issued by the office of the controller compiled 1999

State Warrant Paying Process (WRT): description of paying of state warrant process

State Warrant Paying Process (WRT): primary data entities sorted

State Warrant Paying Process (WRT): WRT process chart

State Warrant Paying Process (WRT): warrant system notes (description, tables, views)

State Warrant Paying Process (WRT): application field types

State Warrant Paying Process (WRT): reports

Accounting for Investment Inventory (CAMRA)-process investment transactions and interest activity compiled 1999

Accounting for Investment Inventory (CAMRA): process description

Accounting for Investment Inventory (CAMRA): primary data entities sorted

Accounting for Investment Inventory (CAMRA): application description

Accounting for Investment Inventory (CAMRA): daily reports

Accounting for Investment Inventory (CAMRA): monthly reports

Investment Fund Accounting and Interest Allocation (INV) compiled 1999

Investment Fund Accounting and Interest Allocation (INV): process description

Investment Fund Accounting and Interest Allocation (INV): primary data entities sorted

Investment Fund Accounting and Interest Allocation (INV): field types

Investment Fund Accounting and Interest Allocation (INV): application description-TRS (Transfer Transactions)system

Investment Fund Accounting and Interest Allocation (INV): reports

Certificate of Deposit Placement Program (TDI) compiled 1999

Certificate of Deposit Placement Program (TDI): process description

Certificate of Deposit Placement Program (TDI): primary data entities sorted

Certificate of Deposit Placement Program (TDI): application description

Certificate of Deposit Placement Program (TDI): reports

Demand Accounts (Treasury Bank Ledger) (DEM) compiled 1999

Demand Accounts (Treasury Bank Ledger) (DEM): process description

Demand Accounts (Treasury Bank Ledger) (DEM): primary data entities stored

Demand Accounts (Treasury Bank Ledger) (DEM): field types

Demand Accounts (Treasury Bank Ledger) (DEM): reports generated

State Fund Accounting (BGA) compiled 1999

State Fund Accounting (BGA): description

State Fund Accounting (BGA): primary data entities stored

State Fund Accounting (BGA): application description

State Fund Accounting (BGA): field types

State Fund Accounting (BGA): reports



CMA

Liquidation of Investments Process (DIS) compiled 1999

Liquidation of Investments Process (DIS): application description

Liquidation of Investments Process (DIS): primary data entities stored

Liquidation of Investments Process (DIS): field types

Liquidation of Investments Process (DIS): journal transfers

Cash management procedures manual

Functional Quality Questionnaires

FLAIR

Central Accounting Functions Overview

FLAIR Payroll Functions

Questionnaires

Staff Chart

Comtroller's Data Communication Network Diagram

Hardware description

Entity Diagrams

List of data entities stored

Comprehensive description of central accounting reports

Department of accounting standard reports

Transaction counts by month

Comprehensive listing of payroll reports

Data received by agency

Data interfaces by file/agency

Approved batch input by agency

Central accounting data interfaces by file/agency

Comprehensive description of central accounting reports

Notes on Wakulla Springs Meeting, May 18, 1999, discussions of current projects

Complete file listing by name-database formats

Designation of Information Security Personnel-policy

Terminal Devices, data communications services, and access requests-policy

Office of Comptroller, Department of Banking and Finance, Agency Strategic Plan 2000-2005

Procedures Manual, State Automated Management Accounting Subsystem (includes functions, chart of accounts,report requests)

Invoice Tracking (IT) through EDI Approval and Distribution Manual

Purchasing Card Agency Approval and Distribution Manual

Property Manual, State Automated Management Accounting Subsystem

Contract and Grants Manual, State Automated Management Accounting Subsystem


Application Inventory

Report on number of Warrants & EFTs for Fiscal Year 98/99



FLAIR

Application Technology Quality Questionnaire

COPES

COPES system functions

Interview Questionnaire COPES

Platform description

Primary data entities stored

Listing of COPES and COPESview reports

Current database schema

COPES Users Manual (HR)


SPURS

Interview Questionnaire SPURS


SPURS Purchasing Manual

FFMIS Integrated Human Resources Payroll Project

HR/PAYROLL Manual-Book 1




BPR

Florida Department of Transportation; Financial Management System, Volume I, WPA Users Manual

KPMG; Modernization of State Government Financial Management Business Case Analysis Study;Communications Plan–August 1999

Florida Department of Transportation; Financial Management System; Project Cost Management (PCM)

Florida Department of Transportation; on-line SF37 System; Users Manual–February 1998

Florida Information Resource Management System (FLAIR) Modules

Budget Module

Revenue and Receipt Module

Individuals and Organizations Index Module

Purchasing and Contracting Module

Client Benefits Module

Personnel/Payroll and Employee Benefits Modules

Miscellaneous Encumbrances and Expenditures Module

Disbursements Module



BPR

Fixed Assets Module

Florida Department of Transportation; Financial Management System–Federal Programs Management, UsersManual–January 1998

Florida Department of Transportation; Payroll Processing System, Users Manual

State of Florida FLAIR Transaction Listing, Property Manual

State University System of Florida; Annual IRM Report–Fiscal Year 1997/98

State of Florida Human Resources and Payroll Index System Implementers

State University System of Florida–Payroll Processing Index

Global Networked Business Approach and Architecture

University of Florida; Budget Transfers and Conversions

University of Florida; Managing Your US Budget

State University System of Florida; 1999–2000 Allocations Summary and Workpapers

University of Florida; University Property Services–Users Manual and Operating Procedures

University of Florida; University Disbursement Services

Department of Transportation; Work Program Instruction

Department of Transportation; 2020 Florida Transportation Plan

Department of Transportation; Work Program-Finance and Budget Overview

Department of Transportation; Developing the Work Program

Department of Transportation; Florida Interstate Highway System

Department of Transportation; Financial Plans for State Transportation Trust Fund

Department of Transportation; Cash Forecast Report

Department of Transportation; Program and Resource Plan

Department of Transportation; State Planning and Research Program

Department of Transportation; 1998 Comprehensive Annual Financial Report

Department of Transportation; Florida’s Tentative Five Year Work Program

Department of Transportation; Annual Performance Report

Department of Transportation; Contract Funds Management Manual

Department of Transportation; Executive Committee Meetings

Department of Transportation; Performance and Production Review

Department of Children and Families; Vouchering-General Procedures

Department of Children and Families; Official Travel of Staff Employees and Non-Employees

Department of Insurance and Treasurer; Internal Policies and Procedures

Department of Highway Safety and Motor Vehicles; Briefing Book, Making Highways Safe Through Service,Education and Enforcement

Florida Highway Patrol; Traffic Homicide Investigations

Florida Highway Patrol; Bureau of Investigation, 1998 Annual Report

Florida Highway Patrol; 1998 Annual Uniform Crime Report and Offense and Arrest Summary

Florida Highway Patrol; Contraband Interdiction Program, 1998 Annual Report

Florida Highway Patrol; Pre-Employment, Written Testing and Applicant Processing, 1997-99

Florida Highway Patrol; Final Report, Staff Inspection

Department of Highway Safety and Motor Vehicles; Agency Strategic Plan, SFY 2000-05

Department of Highway Safety and Motor Vehicles; Revenue Report, 1997-98



BPR

Department of Highway Safety and Motor Vehicles; Quarterly Report, April to June 1999

Department of Highway Safety and Motor Vehicles; Legislative Budget Request

Department of Highway Safety and Motor Vehicles; Agency Capital Improvements Program, SFY 2000-05

University of Florida; Domestic Travel Workshop

University of Florida; Disbursement Services, Introduction to T.R.R.I.P.S.

Automated Collection System of Delinquent Accounts Receivable, State of Kansas,http://da.state.ks.us/ar/setoff/overview.htm, 9/10/1999.

Small Purchase Order Transaction System (SPOTS), State of Oregon, http://scd.das.state.or.us/spots.htm,9/15/1999.

On-line Fixed Asset Inventory System, State of North Dakota, 7/1999.

Gelco Travel Manager, Colorado State University, U.S. Department of Defense, Gelco Government Network,9/15/1999.

Sam II HR/Payroll, State of Missouri, http://www.state.mo.us/mo/samii, 9/14/1999.

UW Online, University Online Administrative Systems, University of Washington,http://www.washington.edu/admin/adminsystems/INTRO.htm, 9/23/1999.

Mississippi Management and Reporting System (MMRS), State of Mississippi, http://www.mmrs.state.ms.us,9/13/1999.

California State Accounting and Reporting System, (CALSTARS), California Department of Finance,http://www.dof.ca.gov/html/calstars/backgrnd.htm, 9/24/1999.

What’s new in the Fed EC, Federal Electronic Commerce Program Office, http://ec.fed.gov/bestprac/index.htm,10/12/1999.

Enterprise Kentucky–Emerging Technologies, State of Kentucky,http://www.state.ky.us/agencies/emgtech/index.htm, 10/12/1999.

“The Check is in the E-Mail”, Todd Newcombe, Government Technology,http://www.govtech.net/publications/eCommerce/Mar99/checkmail/checkmail.shtm, March 1999.

“Minnesota Treasurer: Managing the State’s Money”, State of Minnesota’s Web Site,http://www.state.mn.us/ebranch/treas/question/invest/manage.htm, 9/13/1999.

SAM-State Accounting System on-line documentation, State of Nevada, http://www.clan.lib.nv.us, 9/14/1999.

State of Utah Accounting Policies and Procedures, Federal Revenues, Revenues–FIACCT 07, State of Utah,7/1/1998.

Statewide Employee Management System (SEMA4), State of Minnesota,www.finance.state.mn.us/agencyapps/sema4, 9/13/1999.

Quality Assurance Office Homepage, State of Ohio, www.state.oh.us/das/dhr/qualassur.html, 9/14/1999.

Internal Control Guide, Commonwealth of Massachusetts, Office of State Comptroller,www.state.ma.us/osc/Homeview/CONTROL/asest2.htm, 1998.

Florida International University Operations Analysis and Management Review-Purchasing Department-FinalReport, Management of America, Inc, Tallahassee, Florida, August 27, 1997.

Florida International University Operations Analysis and Management Review-Human Resources Office-FinalReport, Management of America, Inc., Tallahassee, Florida, August 27, 1997.

Florida International University Operations Analysis and Management Review-Controller’s Office-Final Report,Management of America, Inc., Tallahassee, Florida, August 27, 1997.

Monthly Management Report (MMR), Florida Department of Insurance, Treasurer and State Fire Marshall, Divisionof Administration, May 1999.

Unaudited Financial Statements For Fiscal Year ended June 30, 1999, State University System of Florida,June/1999.

IFMS System Prototype, Integrated Financial Management System, Interim Report, October 19, 1999.

FDOT documentation related to procurement, fiscal policies and procedures, financial reports, and management

http://www.state.ky.us/agencies/emgtech/index.htm

http://www.govtech.net/publications/eCommerce/Mar99/checkmail/checkmail.shtm

http://www.clan.lib.nv.us/

http://www.finance.state.mn.us/agencyapps/sema4

http://www.state.oh.us/das/dhr/qualassur.html

http://www.state.ma.us/osc/Homeview/CONTROL/asest2.htm



BPRreports.

Costing

“Patterns of Software Systems Failure and Success”, GartnerGroup, Inc., Dec. 1995.

PMI, San Diego Presentation, Artemis Management Systems, Inc., 1998.

“Economics of rewriting lost source code”, Caper Jones.

“AD Project Risk: Get a Grip”, SPA-04-8384, M. Light, GartnerGroup, Inc., 1998.

HRubin Systems, Inc., NY, 1996.

“Expected Value of Software Projects”, Hrubin Systems, Inc.

IEEE Computer, Mar. 1995.

“Updated Year 2000 Report”, Appendix F, “Initial List of Prioritized Systems by Agency”, State of Florida, 1997.

Estimating Techniques Paper – TP039, KPMG Internal, April 1998.

COCOMO 2.0 Software Cost Estimation Model, University of Southern California Center for Software Engineering.

KPMG/Client Calculation (Client Confidential).

“Is ERP Doing So Bad?”, SPA-06-9382, GartnerGroup, Inc., Feb, 1999.

Standish Group Survey quoted in Gartner Report, 1998.

“AD: A look at the Data”, GartnerGroup, March 27, 1998.

Florida Division of Retirement/KPMG Custom AD engagement

KPMG PEAT/Peoplesoft/TIMEnX integration

Office of Student Financial Services Web development

“Measuring the Software Process”, Garmus and Herron, Prentice Hall, 1996.

“Software Project Estimation – A workbook for Macro-Estimation of Software Development Effort and Duration”,International Software Benchmarking Standards Group.

“The value of AD Benchmarking”, Strategic Analysis Report, GartnerGroup, Inc., 26 Sep. 1995.

“Searching for ‘average’ Software Development Productivity”, G-05-7953, GartnerGroup, Inc., 21 Dec. 1995.

“AD Methodologies: what does the data tell us?”, GartnerGroup, Inc., 25 Feb. 1998.

“Sizing up the SDLC”, QA-05-9676, GartnerGroup, Inc., 20 Oct. 1998.

“The Benchmark, Release 5”, ISBSG, www.isbsg.org.au/bmarkr5.htm, 1999.

ID Name Start Finish Duration Deliverable1 Project Launch 4/3/00 5/22/00 7 wks

2 Review/confirm Terms of Reference (ToR),Scope, Objectives

4/3/00 4/17/00 2 wks Project Constitution

3 Review / confirm business needs and anticipatedbenefits

4/17/00 5/15/00 4 wks BNAB - Definition of business needs& anticipated benefits

4 Select Processes 4/21/00 4/25/00 1.75 days Skeleton Path Plan

5 Define and agree Project Managementtechniques.

4/27/00 5/4/00 1 wk PM Techniques

6 Define and agree change management approach(for organizational issues)

4/27/00 5/4/00 1 wk Change Management Strategy

7 Define and agree requirements for linkage withother methodologies.

4/27/00 5/4/00 1 wk Linkages

8 Define organization, people and supportrequirements

5/8/00 5/22/00 2 wks Project Organigramme and JDs

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable9 Project Model 5/15/00 3/26/01 45 wks

10 Business Needs 6/5/00 7/12/00 5.55 wks

11 Foundation - "as-is" fact-find 6/5/00 6/28/00 3.5 wks

12 Business Vision and Objectives 6/12/00 6/29/00 2.63 wks

13 Constraints 6/30/00 7/12/00 1.75 wks

14 Business Process Design 6/23/00 8/28/00 9.18 wks

15 Business Process design needs 6/23/00 7/19/00 3.5 wks

16 Select ERP base business model templates 7/19/00 7/20/00 0.23 wks

17 Create and maintain ERP enterprise businessmodel

7/20/00 8/3/00 2 wks

18 Schedule ERP process modeling workshops 8/3/00 8/4/00 0.23 wks

19 Conduct ERP process modeling workshops 8/4/00 8/25/00 3 wks

20 Agree initial ERP enterprise business model 8/25/00 8/28/00 0.23 wks

21 System Solution & Feasibility 7/6/00 10/16/00 14.43 wks

22 Review ERP technical status 7/6/00 7/19/00 1.75 wks

23 System Vision: Outline design of the ERPsystem and business processes

7/6/00 7/25/00 2.63 wks

24 Organizational Impact 7/25/00 8/7/00 1.75 wks

25 Identify detailed requirements 8/28/00 9/21/00 3.5 wks

26 Interfacing review 8/28/00 9/8/00 1.75 wks

27 Gap Analysis - existing systems Vsrequirements

9/21/00 10/3/00 1.75 wks

28 Gap Analysis - requirements Vs ERP 10/3/00 10/16/00 1.75 wks

29 Implementation Strategy 5/15/00 3/26/01 45 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable30 Establish ERP architectural options 9/27/00 10/10/00 1.75 wks

31 Estimate costs and benefits per option 10/3/00 10/23/00 2.63 wks

32 Focus on delivery of benefits - Cost/BenefitModel

5/15/00 3/26/01 200 days

33 Collate and agree requirements report 9/27/00 10/23/00 3.5 wks

34 ERP Architecture & ImplementationStrategy

9/8/00 9/21/00 1.75 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable35 Design, Prototype & Construction 1/4/00 12/19/02 154.55 wks

36 Prepare to Prototype 1/4/00 12/19/02 154.55 wks

37 Prepare / review / agree design topics,descriptions and sign off.

10/23/00 10/26/00 3 days

38 Review technical environment and planERP installation

10/26/00 11/30/00 4.97 wks



41 Collate requirements 10/26/00 11/8/00 1.75 wks


43 Detail the approach / Technical Plan 11/22/00 11/23/00 0.88 days


45 Install hardware, communicationsequipment, system software, and ERP

11/30/00 11/21/02 103.1 wks

46 Order/acquire equipment, provisions,services etc for Development System

11/30/00 12/25/00 3.5 wks

47 Prepare site(s) / physical environmentfor Development System

11/30/00 12/25/00 3.5 wks

48 Install & test equipment, services etcfor Development System

12/1/00 12/26/00 3.5 wks Installation sign off

49 Monitor needs for further phases ofinstallation

11/30/00 10/3/01 43.75 wks

50 Order/acquire hardware, software andservices for Live Configuration

9/23/02 10/3/02 1.75 wks

51 Prepare Site(s) for Live Configuration 11/30/00 12/25/00 3.5 wks

52 Install and test Live Configuration 10/29/02 11/21/02 3.5 wks Installation sign off(s)

53 Design and set up backup/recoveryprovisions (development & test

11/21/02 12/5/02 2 wks

54 Design and set up system security provisions 12/5/02 12/19/02 2 wks

55 Define, agree and instigate change controlprocedures

10/26/00 8/31/01 44.14 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable56 Define and agree change control

protocol10/26/00 10/30/00 1.75 days CCP (Change Control Protocol)

57 Communicate procedures to team andother people involved

10/30/00 11/1/00 1.75 days

58 Operate the Change Control Protocol 10/30/00 8/31/01 43.75 wks Change Control

59 Define and instigate Project Teamresponsibilities and techniques for technical

11/14/00 10/3/01 46.09 wks

60 Define and agree needs for support 11/14/00 11/17/00 2.63 days

61 Define and agree responsibilities 11/22/00 11/24/00 1.75 days Development Sys Admin

62 Provide support 11/30/00 10/3/01 43.75 wks

63 Issues - control, escalate, resolve 1/4/00 12/18/00 49.88 wks

64 Define and agree issue controlmechanism

1/4/00 1/10/00 0.88 wks ICP - Issues Control Protocol

65 Communicate Issues Controlmechanism to all participants

1/10/00 1/21/00 1.75 wks

66 Operate Issues Control 1/10/00 12/18/00 49 wks Issues Control

67 Plan & prepare ERP prototyping facilities 12/25/00 12/26/00 0.23 wks

68 Plan and Initiate Team Training Process 12/20/00 1/25/01 5.2 wks

69 Plan, prepare and conduct ERP and generaltraining for project participants

12/20/00 1/11/01 3.22 wks

70 Identify team's training needs 12/20/00 12/22/00 1.75 days

71 Identify options, recommendations &training plan

12/21/00 12/25/00 1.75 days Project Team Training Plan

72 Prepare training facilities and materials 12/20/00 1/2/01 1.75 wks Project Team Courses

73 Provide / attend training 12/25/00 1/11/01 2.63 wks Project Team Training

74 Team building and education 1/11/01 1/12/01 0.23 wks

75 Present approach to user community andteam

1/12/01 1/25/01 1.75 wks Briefings

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable76 Build base model 1/25/01 4/2/01 9.45 wks

77 Select Business Processes from ERPReference Model

1/25/01 1/26/01 0.23 wks

78 Configure initial ERP system as prototypingmodel

1/26/01 1/29/01 0.23 wks

79 Build core testing data for prototyping 1/29/01 1/30/01 0.23 wks

80 Design / prototype by topic 1/25/01 4/2/01 9.45 wks

81 Define, agree and set up ERPOrganizational Structures

1/25/01 4/2/01 9.45 wks


83 Human Resources 1/25/01 2/14/01 2.93 wks Implementation Paper forDesign/Prototype of Human

84 Master Data 1/25/01 2/1/01 1.13 wks Implementation Paper forDesign/Prototype of Master Data

85 Basic data 1/25/01 1/26/01 0.23 wks Implementation Paper forDesign/Prototype of Basic data

86 Personal data 1/26/01 1/29/01 0.23 wks Implementation Paper forDesign/Prototype of Personal data

87 Data relevant topayment

1/29/01 1/30/01 0.23 wks Implementation Paper forDesign/Prototype of Data relevant

88 Internal data 1/30/01 1/31/01 0.23 wks Implementation Paper forDesign/Prototype of Internal data

89 Planning data 1/31/01 2/1/01 0.23 wks Implementation Paper forDesign/Prototype of Planning data

90 Time Data 2/1/01 2/9/01 1.13 wks Implementation Paper forDesign/Prototype of Time Data

91 Shift schedule 2/1/01 2/2/01 0.23 wks Implementation Paper forDesign/Prototype of Shift schedule

92 Negative time rec. 2/2/01 2/5/01 0.23 wks Implementation Paper forDesign/Prototype of Negative time

93 PDC/positive t.rec. 2/5/01 2/7/01 0.23 wks Implementation Paper forDesign/Prototype of PDC/positive

94 Incentive wages 2/7/01 2/8/01 0.23 wks Implementation Paper forDesign/Prototype of Incentive wages

95 Other 2/8/01 2/9/01 0.23 wks Implementation Paper forDesign/Prototype of Other

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable96 Travel Expenses 2/9/01 2/14/01 0.68 wks Implementation Paper for

Design/Prototype of Travel97 Environment 2/9/01 2/12/01 0.23 wks Implementation Paper for

Design/Prototype of Environment98 Options 2/12/01 2/13/01 0.23 wks Implementation Paper for

Design/Prototype of Options99 Settings 2/13/01 2/14/01 0.23 wks Implementation Paper for

Design/Prototype of Settings

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable100 Prototype process 1/4/00 9/23/02 141.8 wks

101 Data Conversion Strategy 1/4/00 1/25/00 3.02 wks

102 Establish requirements 1/4/00 1/14/00 1.75 wks

103 Establish and evaluate options 1/10/00 1/21/00 1.75 wks

104 Agree approach(es) to Data Conversion 1/21/00 1/25/00 1.75 days Data Conversion Strategy

105 Prepare discussion papers 1/5/00 6/23/00 24.5 wks Discussion Papers

106 Set up, execute and manage ERP prototypingworkshop

1/4/00 1/5/00 0.23 wks

107 Manage, control refresh core data forprototyping

1/5/00 1/6/00 0.23 wks

108 Design\prototype by topic 1/5/00 8/14/00 31.78 wks

109 Design / prototype Financial accounting 1/5/00 2/8/00 4.95 wks


111 Financial Accounting 1/5/00 1/7/00 0.45 wks Financial Accounting

112 Financial Accounting projectscope

1/5/00 1/6/00 0.23 wks Financial Accounting project scope



115 Bus. transactions 1/7/00 1/10/00 0.23 wks Bus. transactions

116 Business transactions 1/10/00 1/11/00 0.23 wks Business transactions

117 Closing 1/11/00 1/12/00 0.23 wks Closing

118 Tools 1/12/00 1/13/00 0.23 wks Tools

119 Extended general ledger 1/13/00 1/24/00 1.35 wks Extended general ledger

120 Basic Data 1/13/00 1/14/00 0.23 wks Basic Data

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable121 Planning 1/17/00 1/18/00 0.23 wks Planning

122 Actual Posting 1/18/00 1/19/00 0.23 wks Actual Posting

123 Periodic Processing 1/19/00 1/20/00 0.23 wks Periodic Processing


125 Tools 1/21/00 1/24/00 0.23 wks Tools


127 Master records 1/24/00 1/25/00 0.23 wks Master records

128 Individual financial statementdata

1/25/00 1/26/00 0.23 wks Individual financial statement data

129 Currency translation 1/26/00 1/27/00 0.23 wks Currency translation

130 Posting documents 1/28/00 1/31/00 0.23 wks Posting documents


132 Corporate standard report 2/1/00 2/2/00 0.23 wks Corporate standard report

133 Preparations for consolidation 2/2/00 2/8/00 0.9 wks Preparations for consolidation



136 Fixed Assets Accounting 2/4/00 2/7/00 0.23 wks Fixed Assets Accounting

137 Extended G/L accounting 2/7/00 2/8/00 0.23 wks extended G/L accounting

138 Design / prototype Asset Management 7/10/00 8/14/00 5.18 wks

139 Implementation Guide AssetAccounting

7/10/00 8/14/00 5.18 wks Implementation Guide AssetAccounting

140 Asset Accounting project range 7/10/00 7/13/00 0.68 wks Asset Accounting project range

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable141 Select functions 7/10/00 7/11/00 0.23 wks Select functions

142 Specify areas ofresponsibility

7/11/00 7/12/00 0.23 wks Specify areas of responsibility

143 Specify information flow 7/12/00 7/13/00 0.23 wks Specify information flow

144 Asset Accounting environment 7/13/00 7/18/00 0.68 wks Asset Accounting environment

145 Define authorizations 7/13/00 7/14/00 0.23 wks Define authorizations

146 Index specifications 7/14/00 7/17/00 0.23 wks Index specifications

147 System Administration Guide 7/17/00 7/18/00 0.23 wks System Administration Guide

148 Valuation of fixed assets 7/18/00 8/1/00 2.03 wks Valuation of fixed assets

149 Define chart of depreciation 7/18/00 7/19/00 0.23 wks Define chart of depreciation

150 Define depreciation areas 7/20/00 7/21/00 0.23 wks Define depreciation areas

151 Asset Accounting companycodes

7/21/00 7/24/00 0.23 wks Asset Accounting company codes

152 Valuation key 7/24/00 7/25/00 0.23 wks Valuation key

153 Net Worth Tax 7/25/00 7/26/00 0.23 wks Net Worth Tax

154 Insurance 7/26/00 7/27/00 0.23 wks insurance

155 Investment Support 7/27/00 7/28/00 0.23 wks Investment Support

156 Leasing types 7/28/00 7/31/00 0.23 wks Leasing types

157 Revaluation 7/31/00 8/1/00 0.23 wks Revaluation

158 Activities 8/2/00 8/9/00 1.13 wks Activities

159 Document types for postingin fixed assets

8/2/00 8/3/00 0.23 wks Document types for posting in fixedassets

160 Document number ranges 8/3/00 8/4/00 0.23 wks Document number ranges

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable161 Transaction types 8/4/00 8/7/00 0.23 wks Transaction types

162 Post depreciation 8/7/00 8/8/00 0.23 wks Post depreciation

163 Settlement of asset underconstruction

8/8/00 8/9/00 0.23 wks Settlement of asset underconstruction


165 Sort criteria for asset reports 8/9/00 8/10/00 0.23 wks criteria for asset reports

166 Asset history sheet 8/10/00 8/11/00 0.23 wks Asset history sheet

167 Call up of reports 8/11/00 8/14/00 0.23 wks Call up of reports

168 Design / prototype Treasury 1/18/00 1/21/00 0.68 wks

169 Finalize Position 1/18/00 1/21/00 0.68 wks Finalize Position


171 Structure 1/19/00 1/20/00 0.23 wks Structure

172 Tools 1/20/00 1/21/00 0.23 wks Tools


174 Human Resources 1/21/00 2/11/00 2.93 wks Human Resources

175 Master Data 1/21/00 1/31/00 1.13 wks Master Data

176 Basic data 1/21/00 1/24/00 0.23 wks Basic data

177 Personal data 1/24/00 1/25/00 0.23 wks Personal data

178 Data relevant to payment 1/25/00 1/26/00 0.23 wks Data relevant to payment

179 Internal data 1/26/00 1/27/00 0.23 wks Internal data

180 Planning data 1/28/00 1/31/00 0.23 wks Planning data

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable181 Time Data 1/31/00 2/7/00 1.13 wks Time Data

182 Shift schedule 1/31/00 2/1/00 0.23 wks Shift schedule

183 Negative time rec. 2/1/00 2/2/00 0.23 wks Negative time rec.

184 PDC/positive t.rec. 2/2/00 2/3/00 0.23 wks PDC/positive t.rec.

185 Incentive wages 2/3/00 2/4/00 0.23 wks Incentive wages

186 Other 2/4/00 2/7/00 0.23 wks Other

187 Travel Expenses 2/7/00 2/11/00 0.68 wks Travel Expenses


189 Options 2/8/00 2/9/00 0.23 wks Options

190 Settings 2/10/00 2/11/00 0.23 wks Settings

191 Consolidate ERP prototyping results 8/15/00 8/16/00 0.23 wks

192 Resolve outstanding policy issues 2/4/02 2/5/02 0.23 wks

193 Final ERP Gap Analysis 2/11/02 2/12/02 0.23 wks

194 Build 8/15/00 9/23/02 109.83 wks

195 Create detailed specifications for non-ERPIT development work

2/18/02 3/28/02 5.63 wks

196 Specify Data Conversion approaches 2/18/02 3/20/02 4.5 wks

197 Specify Data conversionapproaches for Financial

2/18/02 2/25/02 5 days

198 Specify Data conversionapproaches for Asset

2/25/02 3/5/02 5 days

199 Specify Data conversionapproaches for Treasury

3/5/02 3/12/02 5 days

200 Specify Data conversionapproaches for Human Resources

3/13/02 3/20/02 5 days

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable201 Specify Interface extraction 2/18/02 3/28/02 5.63 wks

202 Specify interface extraction forFinancial accounting

2/18/02 2/25/02 5 days

203 Specify interface extraction forAsset Management

2/25/02 3/5/02 5 days

204 Specify interface extraction forControlling

3/5/02 3/12/02 5 days

205 Specify interface extraction forTreasury

3/13/02 3/20/02 5 days

206 Specify interface extraction forHuman Resources

3/20/02 3/28/02 5 days

207 Finalize interface design 4/1/02 9/23/02 25 wks

208 Finalize interface design Financialaccounting

4/1/02 5/6/02 5 wks

209 Finalize interface design AssetManagement

5/6/02 6/10/02 5 wks

210 Finalize interface design Controlling 6/10/02 7/15/02 5 wks

211 Finalize interface design Treasury 7/15/02 8/19/02 5 wks

212 Finalize interface design HumanResources

8/19/02 9/23/02 5 wks

213 Finalize data conversion design 4/1/02 9/23/02 25 wks

214 Finalize data conversion designFinancial accounting

4/1/02 5/6/02 5 wks

215 Finalize data conversion design AssetManagement

5/6/02 6/10/02 5 wks

216 Finalize data conversion designControlling

6/10/02 7/15/02 5 wks

217 Finalize data conversion designTreasury

7/15/02 8/19/02 5 wks

218 Finalize data conversion design HumanResources

8/19/02 9/23/02 5 wks

219 Configure system parameters, codes,structures, etc

8/15/00 8/16/00 0.23 wks

220 Configure system parameters, codes,structures Financial accounting

8/15/00 8/16/00 0.23 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable221 Configure system parameters, codes,

structures Asset Management8/15/00 8/16/00 0.23 wks

222 Configure system parameters, codes,structures Controlling

8/15/00 8/16/00 0.23 wks

223 Configure system parameters, codes,structures Treasury

8/15/00 8/16/00 0.23 wks

224 Configure system parameters, codes,structures Human Resources

8/15/00 8/16/00 0.23 wks

225 Set up & test coding structures 8/15/00 9/20/00 5.25 wks

226 Set up & test coding structuresFinancial Accounting

8/15/00 9/20/00 5.25 wks

227 Set up & test coding structures forAsset Management

8/15/00 9/20/00 5.25 wks

228 Set up & test coding structuresControlling

8/15/00 9/20/00 5.25 wks

229 Set up & test coding structuresTreasury

8/15/00 9/20/00 5.25 wks

230 Set up & test coding structures HumanResources

8/15/00 9/20/00 5.25 wks

231 Set up screens, queries & report writer etc 4/1/02 4/2/02 0.23 wks

232 Set-up screens, queries & reportFinancial accounting

4/1/02 4/2/02 0.23 wks

233 Select screen variant for documententry

4/1/02 4/2/02 0.23 wks

234 Define report allocation 4/1/02 4/2/02 0.23 wks

235 Define report variants forpayment notices

4/1/02 4/2/02 0.23 wks

236 Define report variants for accountstatements

4/1/02 4/2/02 0.23 wks

237 Define report variants for b/echarges statement

4/1/02 4/2/02 0.23 wks

238 Define report variants for internaldocuments

4/1/02 4/2/02 0.23 wks

239 Define report variants forindividual letters

4/1/02 4/2/02 0.23 wks

240 Define report variants fordocument statements

4/1/02 4/2/02 0.23 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable241 General reports 4/1/02 4/2/02 0.23 wks

242 Day end reports 4/1/02 4/2/02 0.23 wks

243 Month end reports 4/1/02 4/2/02 0.23 wks

244 Year end reports 4/1/02 4/2/02 0.23 wks

245 Reporting 4/1/02 4/2/02 0.23 wks

246 Maintain Report WriterLanguages

4/1/02 4/2/02 0.23 wks

247 Display Control Report 4/1/02 4/2/02 0.23 wks

248 Set-up screens, queries & report AssetManagement

4/1/02 4/2/02 0.23 wks

249 Screen layout for the asset masterrecord

4/1/02 4/2/02 0.23 wks

250 Screen layout for the depreciationarea

4/1/02 4/2/02 0.23 wks

251 Reporting 4/1/02 4/2/02 0.23 wks

252 Sort criteria for asset reports 4/1/02 4/2/02 0.23 wks

253 Call up of reports 4/1/02 4/2/02 0.23 wks

254 Set-up screens, queries & reportTreasury

4/1/02 4/2/02 0.23 wks

255 Report und Variantenauswahl 4/1/02 4/2/02 0.23 wks

256 Reporting 4/1/02 4/2/02 0.23 wks

257 Define report headings 4/1/02 4/2/02 0.23 wks

258 Set-up screens, queries & report HumanResources

4/1/02 4/2/02 0.23 wks

259 Screen control 4/1/02 4/2/02 0.23 wks

260 Fast entry screens 4/1/02 4/2/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable261 Entry screens 4/1/02 4/2/02 0.23 wks

262 Build / modify existing non-ERP applicationsoftware

2/12/02 2/13/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable263 Readiness & Rollout 6/27/95 6/5/03 414.55 wks

264 Create Production Environment 6/27/95 2/5/01 292.88 wks

265 Review technical environment and planproduction ERP system installation

6/27/95 1/30/01 291.98 wks




269 Revise the approach / Technical Plan 1/16/01 1/17/01 0.88 days


271 Implement 'live' ERP client systems -hardware/software

1/30/01 1/31/01 0.23 wks

272 Implement live communications & network 1/31/01 2/1/01 0.23 wks

273 Implement 'live' ERP server systems -hardware / software / database

2/1/01 2/2/01 0.23 wks

274 Set up, transport and verify liveconfiguration

2/2/01 2/5/01 0.23 wks

275 Set up documentation and procedures 6/29/00 2/11/03 136.7 wks

276 Prepare and instigate operators' instructions,procedures and manual

2/5/01 3/26/01 7 wks

277 Design and agree processing approach 2/5/01 2/22/01 2.63 wks

278 Define Backup, Recovery, Restore,Re-organization procedures

2/5/01 2/16/01 1.75 wks

279 Define archiving and off-site backupprocedures

2/5/01 2/16/01 1.75 wks

280 Review, update and test DisasterRecovery Procedure

2/5/01 2/22/01 2.63 wks

281 Define Report Distribution methodsand procedures

2/5/01 2/16/01 1.75 wks

282 Define security and access controls andprocedures

2/5/01 3/1/01 3.5 wks

'95 '96 '97 '98 '99 '00 '01 '021995 1996 1997 1998 1999 2000 2001 2002

ID Name Start Finish Duration Deliverable283 Document Operators procedures 2/5/01 3/26/01 7 wks Ops Manual / Documentation

284 Prepare and instigate User Procedures andUser Manual / electronic information

3/26/01 5/1/01 5.25 wks

285 System Control 3/26/01 4/6/01 1.75 wks

286 Coding structures 3/26/01 5/1/01 5.25 wks


3/26/01 3/27/01 0.23 wks

288 G/L Accounting 3/26/01 3/27/01 0.23 wks

289 Extended general ledger 3/26/01 3/27/01 0.23 wks

290 Menu-Driven report generator 3/26/01 3/27/01 0.23 wks

291 Accounts receivable 3/26/01 3/27/01 0.23 wks


293 Accounts payable 3/26/01 3/27/01 0.23 wks


295 Consolidation functions 3/26/01 3/27/01 0.23 wks

296 PC Data entry 3/26/01 3/27/01 0.23 wks

297 Cash management and forecast 3/26/01 3/27/01 0.23 wks

298 Electronic Banking 3/26/01 3/27/01 0.23 wks

299 Central financial budgeting andfinancial resources management

3/26/01 3/27/01 0.23 wks

300 Inter-company businesstransactions

3/26/01 3/27/01 0.23 wks

301 Business area accounting 3/26/01 3/27/01 0.23 wks

302 Account interest calculation(interest scale)

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008



304 Management of investmentprojects

3/26/01 3/27/01 0.23 wks

305 Tax depreciation simulation -basic functions

3/26/01 3/27/01 0.23 wks

306 Assets Accounting - basicfunctions

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

308 Cost element accounting 3/26/01 3/27/01 0.23 wks

309 Cost center accounting 3/26/01 3/27/01 0.23 wks

310 Planning of functionaldependencies

3/26/01 3/27/01 0.23 wks

311 Basic functions 3/26/01 3/27/01 0.23 wks

312 Unit costing 3/26/01 3/27/01 0.23 wks

313 Open-item management 3/26/01 3/27/01 0.23 wks

314 Settlement 3/26/01 3/27/01 0.23 wks


316 Activity and allocation bases 3/26/01 3/27/01 0.23 wks

317 Product Costing 3/26/01 3/27/01 0.23 wks

318 Product costing analysis 3/26/01 3/27/01 0.23 wks

319 Product cost controlling 3/26/01 3/27/01 0.23 wks

320 Executive Information System -Management data base

3/26/01 3/27/01 0.23 wks

321 Executive Information SystemData presentation

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable323 Material master record 3/26/01 3/27/01 0.23 wks

324 Vendor master record(purchasingfunctions)

3/26/01 3/27/01 0.23 wks

325 Classification 3/26/01 3/27/01 0.23 wks

326 Document management 3/26/01 3/27/01 0.23 wks

327 Link to graphic subsystems 3/26/01 3/27/01 0.23 wks

328 Basic Purchasing Functions 3/26/01 3/27/01 0.23 wks

329 Contracts/delivery schedulingagreements

3/26/01 3/27/01 0.23 wks

330 Quota agreements 3/26/01 3/27/01 0.23 wks

331 Subcontract order processing 3/26/01 3/27/01 0.23 wks

332 Vendor evaluation 3/26/01 3/27/01 0.23 wks

333 Purchasing information system 3/26/01 3/27/01 0.23 wks

334 Goods Receipt 3/26/01 3/27/01 0.23 wks

335 Inventory management 3/26/01 3/27/01 0.23 wks

336 Physical inventory 3/26/01 3/27/01 0.23 wks

337 Interface for inventory sampling 3/26/01 3/27/01 0.23 wks

338 Inventory sampling 3/26/01 3/27/01 0.23 wks

339 Inventory controlling 3/26/01 3/27/01 0.23 wks

340 Basic invoice verificationfunctions

3/26/01 3/27/01 0.23 wks

341 Balance sheet valuation procedure 3/26/01 3/27/01 0.23 wks

342 Link to EDI Interface 3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008



344 Basic component for inspectionmanagement

3/26/01 3/27/01 0.23 wks

345 Master data and inspectionplanning

3/26/01 3/27/01 0.23 wks

346 Feature-specific inspection resultsrecording

3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

348 Organization and Planning 3/26/01 3/27/01 0.23 wks

349 Elementary job, position andworkplace description

3/26/01 3/27/01 0.23 wks

350 HR Plan connection for ERPstructure graphics

3/26/01 3/27/01 0.23 wks

351 ERP structure Graphics for UNIX 3/26/01 3/27/01 0.23 wks

352 Qualifications/Requirements 3/26/01 3/27/01 0.23 wks

353 External training administration 3/26/01 3/27/01 0.23 wks

354 Education and trainingadministration

3/26/01 3/27/01 0.23 wks

355 Room reservation planning 3/26/01 3/27/01 0.23 wks

356 Career and succession planning 3/26/01 3/27/01 0.23 wks

357 Personnel cost planning 3/26/01 3/27/01 0.23 wks

358 Personnel master dataadministration

3/26/01 3/27/01 0.23 wks

359 Interface for international payrollaccounting

3/26/01 3/27/01 0.23 wks

360 Time data administration 3/26/01 3/27/01 0.23 wks

361 Attendance times 3/26/01 3/27/01 0.23 wks

362 Individual incentive wages (dataentry / calculation)

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable363 Group incentive wages (data entry

/ calculation)3/26/01 3/27/01 0.23 wks

364 Travel expenses (basic version) 3/26/01 3/27/01 0.23 wks

365 Travel expense supplements forinternational implementations

3/26/01 3/27/01 0.23 wks

366 Cost distribution for one businesstrip

3/26/01 3/27/01 0.23 wks

367 Common payroll elements 3/26/01 3/27/01 0.23 wks

368 Automatic processing ofgarnishments of wages (Germany)

3/26/01 3/27/01 0.23 wks

369 Calculation of statutory sick payand statutory maternity pay (GB)

3/26/01 3/27/01 0.23 wks

370 Limited master data 3/26/01 3/27/01 0.23 wks

371 Limited payroll basis 3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

373 Connection to optical archivingsystem

3/26/01 3/27/01 0.23 wks

374 Message control - extendedfunctions

3/26/01 3/27/01 0.23 wks

375 ERP Office basic functions (ERPmail, ERP file, ERP find)

3/26/01 3/27/01 0.23 wks

376 ERP Office - external sending 3/26/01 3/27/01 0.23 wks

377 ERP access 3/26/01 3/27/01 0.23 wks

378 Basis EDI interface 3/26/01 3/27/01 0.23 wks


3/26/01 3/27/01 0.23 wks

380 ERP printer drivers 3/26/01 3/27/01 0.23 wks

381 Basic communications functions 3/26/01 3/27/01 0.23 wks

382 Communication module forconnection to external systems

3/26/01 3/27/01 0.23 wks

'01 '02 '03 '04 '05 '06 '07 '082001 2002 2003 2004 2005 2006 2007 2008

ID Name Start Finish Duration Deliverable383 Connection of ERP to external

systems3/26/01 3/27/01 0.23 wks

384 ERP comm basic function 3/26/01 3/27/01 0.23 wks

385 Extended function library forapplications

3/26/01 3/27/01 0.23 wks

386 Translation tool,terminology/glossary, database

3/26/01 3/27/01 0.23 wks

387 Function modules for integrationof optical storage and document

3/26/01 3/27/01 0.23 wks

388 ERP-COMM Development library 3/26/01 3/27/01 0.23 wks

389 Development library for TCP/IPtransport protocol for AIX

3/26/01 3/27/01 0.23 wks

390 On-line tool information model 3/26/01 3/27/01 0.23 wks

391 Agree user procedures anddocumentation

3/26/01 4/12/01 2.63 wks Procedures / documentation & signoff

392 Set up / revise and agree communicationsplan

5/1/01 5/14/01 1.75 wks Communications Plan

393 Implement change management program 5/14/01 2/11/03 91.25 wks

394 Define the change managementroll-out organization

5/14/01 6/7/01 3.5 wks

395 Build and maintain sponsorship 6/7/01 5/28/02 50.75 wks

396 Identify, brief and educate full changemanagement roll-out support team

5/28/02 6/11/02 2 wks

397 Project team support for ChangeManagement process

6/11/02 2/11/03 35 wks

398 Prepare & distribute tools and materialsfor supporting the roll-out

5/14/01 12/26/01 32.38 wks

399 Plan, prepare and conduct user andmanagement training and education

6/29/00 11/13/01 71.7 wks

400 Training Needs Analysis 6/29/00 7/24/00 3.5 wks Profile Matrix

401 Training Approach 7/24/00 8/17/00 3.5 wks Training Approach

402 Devise and plan training program 8/17/00 9/5/00 2.63 wks Outline specs

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable403 Develop training courses and materials 5/1/01 8/7/01 14 wks Courses & materials

404 Mobilize trainers 5/1/01 7/13/01 10.5 wks Schedules

405 Set up training environments 5/1/01 7/13/01 10.5 wks Training Environment

406 Invite and prepare attendees 8/7/01 9/25/01 7 wks Invites / advance prep

407 Deliver training and monitorattendance

9/25/01 11/13/01 7 wks Training + log

408 Devise and handover post-liveeducation and training

8/7/01 8/31/01 3.5 wks Post-live training schedule

409 Plan, prepare and conduct operationstraining

12/25/00 2/23/01 8.75 wks

410 Operations - Training Needs Analysisand Approach

12/25/00 1/5/01 1.75 wks Operations Training Approach

411 Develop operations training programand materials

1/5/01 1/18/01 1.75 wks Ops courses & materials

412 Plan, schedule, invite, conduct andmonitor operations training

1/18/01 2/23/01 5.25 wks Ops training

413 Plan, prepare and conduct support stafftraining

11/13/01 1/28/02 10.83 wks

414 Support staff Training Needs Analysisand approach

11/13/01 11/28/01 9.63 days Support Training Approach IP

415 Develop support staff training programand materials

11/28/01 12/13/01 9.63 days Support training materials

416 Plan, schedule, invite, conduct andmonitor support staff training

12/13/01 1/28/02 28.88 days Support training

417 Verify System 6/23/00 12/18/02 129.6 wks

418 Plan, prepare and conduct User / System /Acceptance and Integration testing

6/23/00 8/14/01 59.31 wks

419 Review needs and requirements fortesting and acceptance

6/23/00 7/6/00 1.75 wks

420 Identify and assess options 6/30/00 7/12/00 1.75 wks

421 Agree approach to testing andacceptance

7/6/00 7/19/00 1.75 wks

422 Detail Testing Approach 7/19/00 7/31/00 1.75 wks Testing Approach

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable423 Agree Testing Approach 8/14/00 8/21/00 0.88 wks

424 Prepare individual Test Objectives 8/21/00 8/31/00 1.75 wks Test Objectives

425 Prepare test detailed definitions andexpected results


426 Prepare testing environment 3/30/01 4/25/01 3.5 wks Test Environment

427 Conduct test cycles 4/25/01 5/31/01 5.25 wks Test Log / Incident Reports & log

428 Review results and control remedialactions

5/31/01 7/6/01 5.25 wks Incident control

429 Review and accept results 7/6/01 8/14/01 5.25 wks Sign off

430 Plan, prepare and conduct technical tuningand volume testing

9/23/02 12/4/02 10.5 wks

431 Review requirements for technicaltesting

9/23/02 10/3/02 1.75 wks

432 Assess options for Technical Testing 9/23/02 10/3/02 1.75 wks

433 Agree approach to Technical Testing 9/23/02 10/3/02 1.75 wks

434 Define detail of technical testingapproach

9/23/02 10/3/02 1.75 wks

435 Agree Technical Testing 9/23/02 9/27/02 0.88 wks Technical Tuning & Testing

436 Prepare testing environment(s) 9/23/02 10/3/02 1.75 wks Technical Environment

437 Define tests 9/23/02 12/4/02 10.5 wks Test Objectives

438 Prepare test data 9/23/02 10/29/02 5.25 wks Test Definitions

439 Conduct test runs 9/23/02 11/11/02 7 wks Logs / Incident Reports

440 Tune System 9/23/02 11/11/02 7 wks

441 Review results and accept technicalperformance

9/23/02 11/4/02 6.13 wks Test sign off

442 Evaluate testing and report results 12/4/02 12/18/02 2 wks

'00 '01 '02 '03 '04 '05 '06 '072000 2001 2002 2003 2004 2005 2006 2007

ID Name Start Finish Duration Deliverable443 Rollout 9/23/02 6/5/03 36.75 wks

444 Define, plan and agree handover / cutover 9/23/02 10/10/02 2.63 wks

445 System handover - needs &requirements

9/23/02 10/10/02 2.63 wks

446 System handover options andrecommendations

9/23/02 10/3/02 1.75 wks

447 System handover detailed plan 9/23/02 10/3/02 1.75 wks

448 Review and agree System handover 9/23/02 10/3/02 1.75 wks System handover IP

449 Define and agree terms of reference for liveuser support activity

9/23/02 10/16/02 3.5 wks

450 Requirements for live admin & support 9/23/02 10/3/02 1.75 wks

451 Options and recommendations 9/23/02 10/3/02 1.75 wks

452 Detailed approach, organization andstaffing for live admin & support

9/23/02 10/16/02 3.5 wks

453 Agree System Support andAdministration

9/23/02 10/3/02 1.75 wks System Support & Admin

454 Acquire and start support team staff 9/23/02 10/16/02 3.5 wks

455 Plan and instigate phased transition to liveoperation and support and phasing out of

9/23/02 10/29/02 5.25 wks

456 Devise and agree Transition Plan 9/23/02 10/3/02 1.75 wks Transition Plan

457 Transition / shared support of thesystem

9/23/02 10/29/02 5.25 wks

458 Sign off end of Project Team support 9/23/02 9/24/02 0.88 days Transition sign off

459 Establish conversion environment 9/23/02 9/30/02 1 wk

460 Load start up data 9/23/02 6/5/03 36.75 wks

461 Data validation & purification 9/23/02 6/5/03 36.75 wks Clean data

462 Manual Data Loading 9/23/02 9/27/02 0.88 wks Data Load

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable463 Automated Data Conversion &

Loading9/23/02 9/27/02 0.88 wks Data Load

464 Acceptance of start up data 9/23/02 10/10/02 2.63 wks

465 Define validation processes, tests andcontrols


466 Validate data and controls 9/23/02 9/27/02 3.5 days Logs

467 Apply manual corrections / rerun /revalidate as required

9/23/02 9/27/02 0.88 wks

468 Accept start up data 9/23/02 9/24/02 0.88 days Sign off

469 Conduct final operations review 9/23/02 9/24/02 0.23 wks

470 Conduct final production / data controlreview

9/23/02 9/24/02 0.23 wks

471 Conduct final user review 9/23/02 9/24/02 0.23 wks

472 Decision to go live 9/23/02 9/24/02 0.88 days Decision to go live

473 Early care 9/23/02 9/24/02 0.23 wks

'02 '03 '04 '05 '06 '07 '08 '092002 2003 2004 2005 2006 2007 2008 2009

ID Name Start Finish Duration Deliverable474 Quality Audit 6/5/03 6/19/03 1.96 wks

475 Check deliverables against QA checklist 6/5/03 6/12/03 0.88 wks Deliverables checklist / CAR(Corrective Action Requests) & log

476 Check required work against project tracking data 6/12/03 6/18/03 0.88 wks Processes checklist / CAR(Corrective Action Requests) & Log

477 QA signoff 6/18/03 6/19/03 0.88 days QA Sign off

'03 '04 '05 '06 '07 '08 '09 '102003 2004 2005 2006 2007 2008 2009 2010

ID Name Start Finish Duration Deliverable478 Terminate Project 6/19/03 10/2/03 14.88 wks

479 Identify / confirm new roles for all project staff 6/19/03 10/2/03 14.88 wks Appraisals / Organigrammes / Jobs

480 File / archive materials, correspondence etc 6/19/03 7/21/03 4.38 wks Demobilization Plan IP

481 Return / redeploy accommodation and equipmentetc

6/19/03 7/8/03 2.63 wks

482 Prepare Project Completion Report 6/19/03 7/2/03 1.75 wks Project Completion Report / Letter

483 Collate / prepare Work Books and Owner'sManual

6/19/03 7/2/03 1.75 wks Work Book(s) & Owners Manual

'03 '04 '05 '06 '07 '08 '09 '102003 2004 2005 2006 2007 2008 2009 2010

Business Case Study Appendix G—High Level Infrastructure Schematic

Draft Final Report Page G-4 kpmg

DMS SOPHIA

INTERNETCONNECTION

Hub

ComptrollerWeb Server

(existing)

Secure Link

AS/400620

Unisys

Router

Vendor Bid System

Sun E10000(existing)

InternetUUNet

TallahasseeRouted MAN

Router

Hub

Firewall

CMS Web Serverwith built-in

FirewallAS/400730e

Hub

OtherState Servers

DMZRouter

State of Florida Business Case StudyHigh Level Infrastructure

Best of Breed Option

Router

Router

Hub

ExternalWeb Server

E3000(existing)

ExternalDNS

(existing)

Hub

Inside DMZ Traffic

IBM Mainframe

LASIBM 9672-R76

HubCAMRA

Firewall

Proxy Server(existing)

Router

T1

RemoteAccess

(new)

Citrix Server

(new)

Web Server(new Unix)

New ERPApplication Server(s)

(new Unix)

Firewall(new)

Database Server(new Unix)

Hub(new)

Router(new)

Hub(new)

New SUS ERPApplication Server(s)

(new Unix)

SUS Database Server(new Unix)

Date post:	09-Feb-2022
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