Proprietary and Confidential

Transforming UT

Modernization and Business Productivity Initiative

TASSCC

March 21, 2014

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Transforming UT

Societal and Economic Pressures Facing Higher Education Today

• Affordability• Accessibility• Transparency• Accountability• Innovation• Reduced state support• Protracted Recession

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Transforming UT

Administrative Initiatives to Improve Agility and Reduce Costs

• Administrative Systems Modernization

• Shared Services

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• Open and transparent communication

• Involvement of key stakeholders

• Strong governance

• Adoption of best practice business processes

• Customization used only where needed for operational or competitive advantage

• Opportunities for career development

Guiding Principles

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Transforming UT

–Current Environment–Drivers to Change–Plan for Change–Expected Gains–Anticipated Challenges

Administrative Systems Modernization

Current Technical Environment

• 25+ years custom developed administrative systems– Mainframe – Adabas/Natural

• Upgrades over time to add web capability

• Developers embedded in the business area

• Well-established developer community and training program

• Increasing adoption of third party vendor products for specific business needs

• Increasing development using other platforms and languages

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Administrative Systems Modernization

• 2004 – Commission of 125

• 2006 – Core Application Strategy for the Enterprise (CASE)

• 2009 – Strategic IT Accountability Board (SITAB) Report

• 2012 – Administrative Systems Master Plan (ASMP)

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Drivers to Change

Case for Change

– Desire to take advantage of technological advancements

– Mitigate risks of relying on aging technology toolset (Adabas/Natural are reaching end of life)

– Integration with third party open standard systems is very difficult and expensive in the current environment

– Up-to-date standards and best practices are difficult with current toolset

– Difficulty attracting and retaining workforce

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Administrative Systems Master Plan (ASMP)

1. Create business driven systems and data management

2. Modernize the administrative IT infrastructure

3. Strengthen systems development processes

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ASMP Requirements

• What will it take to re-tool and re-train workforce?

• What is an appropriate strategy for customization?

• What does the market currently offer?

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Buy vs Build Considerations

Technology Waves – Administrative Systems

IA, MSA, Integral, Tesseract

Software 2000, SSA

SAP, Oracle, PeopleSoft,

SunGard

Salesforce,Workday, Google

Mainframe

Client Server

Mini

Cloud/SaaS

Workday, Inc. (NYSE symbol: WDAY)

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Established in 2005 by PeopleSoft founders Dave Duffield and Aneel Bhusri.

Mobile first, consumer-based design methodology with single code line.

Committed to serving the higher education ERP market.

Human resource, payroll and finance applications are fairly mature. Presently building student system designed to interact with today’s students (e.g. social media, mobility). UT Austin is participating as a strategic design partner.

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Higher Education Texas State and Local Commercial

Workday Customers

Architecture

Communication Site

Database

Application

• Create Business Driven Systems and Data Management

• Modernize the Administrative IT Infrastructure

• Strengthen the Systems Development Processes

ASMPAdministrative Systems

Master Plan

2012

• Implement Workday for HR/Payroll and Finance. Student-TBD.

• Transition all other mainframe-based systems off mainframe.

• Develop Strategic Reporting Master Plan and Enhance IQ

• Implement Open Systems Technical Architecture (Integration and Development)

• Develop, Test and Deploy Standards and Methodology Processes

• Create Business Driven Systems and Data Management

• Modernize the Administrative IT Infrastructure

• Strengthen the Systems Development Processes

ASMPAdministrative Systems

Master PlanAdministrative Systems

Modernization Program

2012 2014

• Workday Implementation– HR/Payroll/Timekeeping– Finance– Integrations

• Student System Replacement– Document current processes, requirements, stakeholder needs– Initiate policy changes that will facilitate transition– Participate as design partner for Workday Student

• Organizational Readiness– Communication including web presence/branding– Stakeholder engagement– Training 18

Administrative Systems Modernization Program

ASMP 2.0

• New Technical Architecture– Open standards technology stack for hosting non-Workday

applications, including custom development– Development, deployment and execution infrastructure and tools– Integration environment

• Transition all mainframe-based systems off of mainframe– Comprehensive inventory– Develop roadmaps for transition/replacement

• Data Management– Strategic Reporting– Business Intelligence– Data Governance

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Administrative Systems Modernization Program

ASMP 2.0

• Front of next wave of technology• Faster implementation• Best practice business processes• Intuitive modern user experience – attract and retain staff• More robust self-service• Enhanced mobile capabilities• Better analytics and access to data for decision-making• Improved ability to integrate disparate systems

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Expected Gains

• Major change on multiple fronts• Culture shift – institutional level prioritization of

resources• Hundreds of integration points• Scheduled down times with Workday• Loss of ability to customize• Scope and scale of effort to transition distributed

systems• Workforce impacts• Financing

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Anticipated Challenges

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Transforming UT

–Drivers to Change–Current Environment–Plan for Change–Moving Forward–Financial Strategy

Shared Services

• Percentage of University’s budget– 1984-85: 47%

– Today: 13%

– Undergraduate tuition remains low, ranking second lowest in 2012-13 out of a 12-institution national comparison group

• Cost to operate has risen (principally due to inflation)– Forced to limit salary merit increases

– Funding for merit derived from closing unoccupied positions or laying off staff

– Remaining staff left with an increased workload

– Declining ability to attract and retain the best talent

• Revenues to fund general operations are expected to remain flat or in decline for the foreseeable future

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Steadily declining state support (general revenue)

Drivers to Change

2013

Committee on Business Productivity ReportSmarter Systems for a Greater UT

–13 Distinguished Leaders in Business–Advice on aspects of the University’s business operations and

processes that could be improved, streamlined, and leveraged to better effect

–Recommendations on asset utilization, technology commercialization, and administrative service transformation

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Drivers to Change

• Administrative workforce*:– Total of ~12,000 staff and students (~8,500 Full-time Equivalents**(FTEs))

– Total administrative headcount supporting HR, Finance, Procurement, IT = 4,500 staff (~2,500 FTEs)

• Administrative activities are:– Highly decentralized operations with manual processes

– Supported by administrative systems at end-of-life

• Annual attrition:– Historical attrition trends for UT Austin staff supporting HR, Finance, Procurement, IT ranges from 500-

600 people per year

– Across all administrative staff, recent turnover attributed to layoffs ranges from 150-200 people annually per year

• Limited shared services exists on campus today including:– McCombs School of Business (McCombs)

– College of Liberal Arts (CoLA)

– Central Business Office (CBO)

– Information Technology Services Customer Support Services (ITS CSS)

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Current Business Environment

* Administrative workforce refers to non-faculty employees at UT Austin. Total administrative headcount and attrition ranges for HR, Finance, Procurement, and IT are estimates for initial planning purposes and will be updated over time.** FTE = Full-time Equivalent and NOT Full-time Employee.

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Key Milestones

Shared Service Plan Phase

Campus Dialogue

FY 13-14

Plan PhaseBegin

Draft PlanRelease

Report toPresident

Plan Phase

Campus Dialogue

Plan for Change

Plan Phase activities included:• Number of participants across campus: more than 250• Number of workshops, interviews, and group meetings: more than 100Additional Campus Dialogue activities included:• Number participants across campus: hundreds• Number of sessions across campus: about 40

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Campus Dialogue Feedback SummaryFive key themes emerged from Campus Dialogue that have changed the proposed Shared Services Implementation Plan.

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Feedback Response1. Look at what UT Austin is already

doing in shared services

2. Be thoughtful and diligent in the approach to shared services

3. Include campus input into decision-making

4. Be transparent and track progress of shared services

5. Be sensitive to the impacts the proposed changes will have on the UT Austin community

1. Build around a core of existing shared services

2. Take more time and pilot with volunteers to collect UT Austin specific data on shared services

3. Establish ongoing governance framework and expand communication

4. Transparently track and report existing and future progress of shared services

5. Tailor workforce transition approach to UT Austin culture

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Key Milestones

Governance

Administrative Pilots(HR, Finance, Procurement)

IT Pilots(End User Service, Infrastructure as a Service, Network, Data Center)

Service Infrastructure(Tools, Processes, Skil ls, Technical and Physical infrastructure)

Assessment of Pilots(Service Delivery Quality, Staff Opportunities, Savings)

FY 13 - 14 FY 14 - 15

Plan & Prepare

Transition Volunteers

Operate Pilots

Operate Pilots

Implement Improvements

Deploy to Pilots

PilotApproval

Shared Services Decisions

PilotReview

PilotReview

PilotReview

Establish Govern Pilots

Assess Assess Assess Assess

Plan & Prepare

Plan & Prepare

Prepare

Transition Volunteers

Track Benefits

Proposed Implementation Plan and Timeline for Pilots

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Based on input from Campus Dialogue, the pilots have lengthened the implementation timetable and the investment is now expected to pay back in Year 8.

Expected perpetual annual benefits remain $30-40M.

Financials: Investment and Savings for Proposed Plan

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• ASMP 2.0 initiatives will have significant cost ~ $100M

• Modernized systems will help Shared Services to realize maximum efficiencies and cost savings

• Savings from Shared Services used to pay back cost of ASMP 2.0

• Future savings re-invested in core mission

Bringing It All Together

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Questions?