Transcript Transformational Roadmap: CFOB

Aboriginal Affairs and Northern Development Canada
Affaires autochtones et Développement du Nord Canada
Internal Services Transformation
at Health Canada and
Aboriginal Affairs and Northern Development Canada
Jamie Tibbetts / Pamela d’Eon
Assistant Deputy Ministers and Chief Financial Officers
HC and AANDC
Financial Management
Institute - Capital Chapter
Professional Development
Day - September 25, 2014
Purpose of Presentation
• To share the recent experiences of the Finance sectors of Health
Canada (HC) and Aboriginal Affairs and Northern Development
Canada (AANDC) in transforming internal services
• To specifically focus on the collaborative and ground-breaking
work of HC and AANDC in the domain of Grants and
Contributions management and systems as well as financial
systems.
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Today you get to hear from both sides of the coin
• To demonstrate how collaboration is the way of the future
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Health Canada: A Snapshot
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A large, decentralized department (over $3.6B and 9,000 FTEs) in multiple
regions and branches
Part of a larger Health Portfolio which includes
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Public Health Agency of Canada
Canadian Institutes of Health Research
Patented Medicine Prices Review Board
Canadian Food Inspection Agency
Canadian Northern Economic Development Agency
A sizable Grants and Contributions program (almost half of its appropriation)
A substantial First Nations and Inuit programming element (70%)
Shared jurisdiction between federal and provincial / territorial governments
Significant long-term issues of affordability and sustainability of health care
Substantial Economic Action Plan reductions ($200M and 1048 FTEs)
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Aboriginal Affairs and Northern Development Canada:
A Snapshot
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A large, decentralized department (over $8.1B and 4700 FTEs) in multiple
regions and branches
Part of a larger AANDC Portfolio which includes
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Canadian Polar Commission
Registry of the Specific Tribunal
Indian Residential Schools
Truth and Reconciliation Commission
A Grants and Contributions program of $6.8B that represents 84% of its
appropriation
South of 60: 80% of resources are used to fund programs delivered by First
Nations community government, Tribal Councils etc.
» Most funds are for basic provincial / municipal type services to individuals on
reserves
» Provincial standards guide program delivery leading to variability across regions
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Aboriginal Affairs and Northern Development Canada:
A Snapshot (cont’d)
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North of 60: Minister has the lead responsibility for the North, including the
Northern Strategy
» A province-like regulatory role in water and oil and gas management
» AANDC manages land and resources in Nunavut. This role was devolved in
Yukon and Northwest Territories
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A significant gap still exists in the socio-economic conditions of First Nations
and Inuit communities compared to those of other communities.
Economic Action Plan reductions ($160M and 480 FTEs)
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HC / CFOB Pre-Transformation State (“The Before”)
• Classic departmental services provided in traditional forms, such as:
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14 accounting offices; 12 procurement offices
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Accounts payable / procurement processing reflected a combination of
electronic and manual processing
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Portfolio stovepipes (HC vs. PHAC)
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Multiple types of financial management transactions handled locally and
inconsistently
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Grants and contributions supported by outmoded, inefficient systems
and inconsistent processes and service delivery models
• Grants and contributions related to First Nations handled in silos
• Despite the 2006 Blue Ribbon panel report on Grants and Contributions
(“From Red Tape to Clear Results”), progress was far from complete
• Bottom line: Ripe for Transformation
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AANDC/CFO Sector Pre-Transformation State (“The Before”)
• Departmental back office services had not changed its business
practices in many years.
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The focus was on operational efficiencies and effectiveness
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AANDC was on an outdated version of Oracle Financials
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This partnership was an opportunity to align to the GoC direction on
financial systems - SAP
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Accounts payables / procurement processing reflected a combination of
electronic and manual processing
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Not all business processes were common or standardized and neither
were the structures that provided the services
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AANDC: CFO Sector Pre-Transformation State (cont’d)
• AANDC’s grants and contribution system (GCIMS) (see Annex A)
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A web-based solution owned by GoC (no license fees) and designed with
multiple functions ensuring compliance to the Treasury Board Policy on
Transfer Payments and the work of the Blue Ribbon Panel
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Automated for the full implementation of the funding agreement
management cycle, integrated with AANDC’s central document
management system (e-compliant) and reporting tool
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GCIMS provides access to recipient for managing proposals,
applications, agreements, budgets, financials, reporting deliverables, etc.
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Proven stable technology that has benefited from several audits in recent
years.
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The Impetus for Change
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HC and AANDC took advantage of the 2011 Strategic and Operational
Review (SOR) exercise to re-examine many of the back-office entities
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SOR put focus on cost of programs, identification of new efficiencies and
adoption of innovative approaches
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The low-hanging fruit was long gone
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New and engaged leadership seized this opportunity to devise and implement a
major transformation that was long overdue
CFO sectors in both departments developed, costed, tested and
implemented a Roadmap which would not only achieve aggressive SOR
reduction targets but also result in a Finance sector which is leaner, more
integrated, more standardized, more automated, more partnered, more
reflective of shared services, with clearer accountabilities and
strengthened financial management capability
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The Transformation Components for HC
The 4 major elements of transformation for HC involved:
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Migrating to shared services with Public Health Agency of Canada
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Implementing Procure to Pay (P2P) for HC and PHAC (and now AANDC)
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P2P has automated the procurement and payment processes from beginning to end
through the use of electronic approvals, routing, email notification and processing
capabilities with HC’s SAP ERP system
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Renewal of financial advisory services nationally
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Partnering with AANDC in support of a mutual interest in grants and
contributions management
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The Transformation Components for AANDC
The 3 major elements of transformation for AANDC involved:
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Standardizing AANDC’s business processes and back-office models for
procurement and finance
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Centralization of accounting services and hubs from 11 offices to 2 (NCR-Ottawa
and Winnipeg)
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Centralization of procurement services in hubs from 11 offices to 2 (NCR-Ottawa
and British Colombia)
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Creation of one standard Business Management Unit for all sectors
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Standardization of executive outer office administrative service
Partnering with HC in support of a well functioning, GoC-aligned SAP financial
system, including the Procure to Pay (P2) functionality
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The Transformation Components for AANDC (cont’d)
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Standardization of improvements to the Funding Agreements Annual Cycle,
including joint efforts with HC when and where it made sense; i.e.
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General Assessment Tool
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Recipient Audits Supply Arrangement
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Recipient Audits
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Canada Common Funding Agreement model
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First Nations Transparency Act - implementation effort
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The AANDC – HC Affinity
• Our mandates are complementary:
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AANDC supports Aboriginal people and Northerners in their efforts to
improve social well-being and economic prosperity; develop healthier,
more sustainable communities; and participate more fully in Canada's
political, social and economic development
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HC’s goal is for Canada to be among the countries with the healthiest
people in the world, and one of its primary objectives is to support the
delivery of healthcare to First Nations and Inuit
• Our methods are similar:
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Many of HC’s and AANDC’s programs are delivered through grants and
contributions programs (70% of HC appropriation and 84% of AANDC’s
appropriation)
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The AANDC – HC Affinity (cont’d)
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Our infrastructures were in need of attention / upgrade
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Systems, processes, policies, procedures not standardized, streamlined or
integrated
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HC not well served by its Gs & Cs systems, although its SAP was performing well
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AANDC’s financial system needed to be replaced and was not aligned to the GoC
direction on SAP
Client focus was not sharp enough
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Massive potential for business and program collaboration with respect to First
Nations to give better service and less overlap, duplication and inefficiency
HC’s patience with the speed of Gs & Cs progress was getting thin
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Gs & Cs management had been the source of criticism
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AANDC’s GCIMS as a GoC owned system supported AANDC’s primary business
needs was performing well
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The will to move the yardsticks had been intensifying in both departments
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The Solution: An HC / AANDC Partnership
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Blue Ribbon Panel Report made 32 recommendations on how to improve and
streamline the management of grants and contributions
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OAG report in 2008 recommended that HC modernize and rationalize its approach
to managing Gs & Cs
Synergies between departments made partnership very compelling:
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Standardizing and harmonizing the application and approval process
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Sharing audits and financial statements
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Reducing administrative burden both internally and externally (single agreement,
single recipient)
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Using technology to facilitate access to programs for recipients
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Sharing agreement models, recipient reporting tools and processes
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Sharing back-office support capabilities
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The Solution: An HC / AANDC Partnership (cont’d)
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Collaboration is the new black!
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The age of stovepipes, departmental uniqueness, system and process
customization to meet local needs, legacy systems, and serving only departmental
masters is over
As part of “internal services”, we --- the finance community --- are moving in
the direction of the public service as a single employer:
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One massively integrated system
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Interconnected and interoperable processes
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Common skills sets and qualifications
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Unlimited career mobility across organizations
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Standardization and commoditization of services
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Universal performance management expectations
We need to seize opportunities when they present themselves and manage
the risks of moving forward
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The Solution: An HC / AANDC Partnership (cont’d)
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In this specific case, collaboration led to partnership which enabled a single
platform solution, resulting in two complementary but discrete projects:
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HC to migrate to AANDC’s grants and contributions management system
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AANDC to adopt HC’s SAP financial system (previously Oracle)
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2 MOUs were signed and the detailed work was launched
Provides multi-faceted benefits to both departments for leveraging:
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Shared internal services between the two departments
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Future common back-office solutions
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Front office processes such as a single service window experience through a
common system and business processes
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Lower cost & risk by leveraging existing capabilities
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Align with broad GoC directions (common and shared services)
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Current Status
• The path to implementation was fraught with difficulty
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Long list of differences - system and cultural among them - which at times
challenged the success of the projects
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The change management agenda was significant
• However, the vision prevailed because this was the right thing to do
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SAP capability to AANDC has been delivered
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First and second wave of HC users of AANDC’s Gs & Cs system on-boarded
in April and September 2014
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We expect to achieve steady state status in FY 2015/16
• AANDC is now able to leverage the benefits of HC’s SAP and P2P
implementation at very low cost and risk
• HC is able to leverage the benefits of AANDC’s web-based GCIMS that
is now capable of supporting separate departments and is fully
integrated with SAP
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The Outcome (“The After”)
• Common systems infrastructure to support AANDC and HC (and
PHAC)
• A single set of comprehensive, best-in-breed business processes
• Harmonized client interface and improved service and control
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One policy, one plan, one agreement, reporting process and one audit
• Departments able to contain the associated up-front investments
and on-going support costs by jointly supporting the combined
operation
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Opportunity to re-align and share other back-office support functions
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Focus on concrete action, consolidation of efforts, and creating a culture
of collaboration across departments, both in HQ and regions
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Lessons Learned
1. “Pick the right dance partner”
» Do a proper diagnostic and risk assessment
» Ensure both business sides are on board and committed
» Secure unqualified senior level support
2. Don’t underestimate cost, time and effort --- decisions must be arrived at
through consensus
» This is much harder to do than working in stovepipes
» Change management considerations are real
3. Be prepared to accept risks
» But mitigate them by learning the lessons of those before you
4. Implement up-front sound, multi-tiered governance and support it with the
right documentation and discipline
» MOUs, Master Agreements, SLAs, Project Charters…
5. Be aware of the typical project trajectory and dependencies
» Start-up can be a heady time but the “devil is (always) in the details”
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Lessons Learned (cont’d)
6. A systems-under-development audit can be helpful
7. Adopt an incremental cost approach
» Need to promote transparency, cost certainty and a “no surprises” approach
8. Go for the win / win
» Be prepared to lose a little something and to cede some control in the pursuit of
the greater good
9. Working together with the right partners is the way of the future
» Payoff means greater efficiency, fewer errors, better service, and, last but not
least, a much deserved and cherished reputation for YOU as an agent of change
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Wrap-Up
 Through 3 years of focused effort, HC’s CFO Branch and
AANDC’s CFO Sector has achieved a wholesale transformation
 Although this partnership piece is only part of this puzzle, it
represents a very significant component and accomplishment
 The path has been neither simple nor easy, but ultimately, every
one wins --- clients / recipients, program managers, finance
professionals and the taxpayer through enlightened, enriched,
and harmonized program support
 It is highly satisfying to “do the right thing”, especially in the face
of non-trivial complexities, roadblocks and cultural impediments
Questions / comments?
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Annex A - GCIMS Business Architecture
GoC GCIMS Business Drivers
Alignment with GCIMS Functional Pillars
GCIMS
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