Transcript Simplify Automate Streamline Initiating Transformational Change: The CSU Procure-to-Pay Initiative UC – CSU Shared Services Conference PLANNING TRACK July 11, 2013

Simplify
Automate
Streamline
Initiating Transformational Change:
The CSU Procure-to-Pay Initiative
UC – CSU Shared Services Conference
PLANNING TRACK
July 11, 2013
Larry Furukawa-Schlereth
Vice-President for Administration and Finance and Chief Financial
Officer at Sonoma State University
Michael P. Redmond
Senior Director
CSU Chancellor’s Office Budget and Special Initiatives
Initiating Transformational Change:
The CSU Procure-to-Pay Initiative
Overview of the CSU P2P Initiative
The California State University Procure to Pay Shared
Services Initiative seeks to:
• leverage the success of implementing the CSU Common
Financial System
• improve the efficiency and effectiveness of processes to
purchase and pay for goods and services
A transformational redesign of processes is being considered
which is very similar to those now common in the private
sector and currently being adopted successfully by other
higher education institutions.
3
Overview of the CSU P2P Initiative
These changes would seek to:
• Implement a common process approach across the university
• Deploy a common system to support common processes
• Implement shared services
• Enable strategic procurement
• Support movement to electronic invoicing and payments
• Provide metrics for managing services and promote continuous
improvement
4
Overview of the CSU P2P Initiative
The transformation effort will be a multi-year project and require
significant investment in time and financial resources.
Some aspects of the proposed design, such as expanded
strategic sourcing and wider use of electronic payment options,
are already underway.
Once fully implemented, proposed changes represent an overall
cost savings opportunity of tens of millions of dollars per year
5
Steps Leading to Transformational Change:
•
•
•
•
•
•
•
•
•
Project Background and Process
The Initiative Charge
Methodology for Current State Assessment
Current State Analysis Results
Future State Design Goals
Future State Design Guiding Principles
Future State Development Methodology
Future State Business Process Design
Where we are now
6
Project Background and Process:
December 2011
Presidents Armiñana and Morishita initiate Procure-to-Pay
(P2P) synergy review
January 2012
Common Financial Systems (CFS) Steering Committee reestablished to lead review
April 2012
Sub-committee of financial services associate vice presidents
appointed to conduct detailed review and recommend
improvements
July 2012
Sub-committee completed current state assessment
November 2012
High level future state design completed and presented.
December 2012
CFS Steering Comm. accepted sub-committee’s work and
developed its final report
February 2013
Approval is given by Chancellor and CSU Presidents to move
forward with detailed design and planning.
7
The Initiative Charge
• Describe a Future State Procure-to-Pay (P2P) system for CSU
• Identify and estimate the opportunities for savings and efficiencies
in the proposed Future State
The following functions were assessed:
Choosing and
sourcing
needed goods
and services
Placing orders
or creating
contracts
Receiving a
good or service
Handling invoices
or expense
documentation
Paying invoices
8
Methodology for Current State Assessment
• Identified core business processes for analysis
• Developed detailed process maps
• Surveyed campus representatives to validate process maps and gather
process issues
• Attempted to develop transaction counts by process and costs of each
using several sources
 Found that current systems cannot provide transaction data at the
process level for all types.
 Different campus practices contribute to inconsistencies in existing
data.
 Lack of relevant process metrics inhibits potential improvements and
usable management data.
9
Current State Analysis Results
The Committee identified inefficiencies in current processes including:
• Inefficient methodologies for supporting common requirements
• Lack of holistic process automation
• Fragmented approach to strategic procurement
These inefficiencies were seen as driving up costs, extending cycle time,
required significant manual handling and produced many errors.
10
Future State Design Goals
• Improve quality of processes
• Reduce cost
• Simplify the purchaser’s and vendor’s experience
• Maintain or improve the ability to meet compliance
requirements
• Can work within a shared-services environment
11
Future State Design Guiding Principles
• Processes can be simplified and standardized
• Policies and procedures can be changed
• Organization structures can be changed
• Roles and responsibilities can be changed
• Automation necessary to support the design will be implemented
• Savings opportunities will be identified and estimated based on a
high level conceptual design
Note: Costing of implementation to be conducted in the detailed design
phase
12
Future State Development Methodology
The Sub-Committee performed the following steps:
•
•
Visualized a desired Future State process framework
Interviewed other universities for their processes (UC Davis, UC
Berkeley, University of Michigan and Stanford)
•
Obtained leading practice information from vendors and other
organizations (U.S. Bank, Wells Fargo, IO Consulting, and Oracle)
•
Synthesized the information into a sustainable and workable
design, and
•
Measured the probable impacts of the design utilizing participating
campus and system-wide financial data
13
Future State Business Process Design
Catalog
Direct
Purchase Order
Purchaser
Use Common
Front-end
Single on-line
entry point
portal for all
transaction
types
Full Service
Purchase Order
Miscellaneous
Direct Payment
Employee
Reimbursements
14
Future State Catalog:
Purchaser on-line shopping from shared catalogs at CSU negotiated terms.
•
•
•
•
•
•
Provides optimum pricing for the CSU
Drives strategic sourcing to the desktop
Most expeditious for the purchaser (using automation and workflow)
Captures management data not available today
Replaces much of current Procurement Card (P-card) transactions
Should eventually encompass 50% or more of all purchases
15
Future State Direct Purchase Orders:
Purchase of goods and services <$10,000 * which are not offered through
on-line catalogs and do not require a contract.
•
•
•
•
•
Focuses Procurement Dept effort on more value-added transactions
Saves labor time
Expeditious for the purchaser (using automation and workflow)
Significantly reduces individual use of P-Card
Enables identification of new catalog opportunities and spend analytics
to decrease reliance on this approach over time
* $10,000 threshold will cover 96% of current commodity transactions
16
Future State Full Service Purchase Orders:
Transactions of > $10,000 or for purchases of any value requiring a contract.
• Automated processes and online guidance for purchaser
• Focuses Procurement Dept added value on higher dollar transactions
(75% of commodity transaction dollars)
• Expeditious for the purchaser (using automation and workflow)
• Cycle time can be reduced and can be measured through service level
agreements (SLA)
17
Future State Full Service Purchase Orders (cont):
Workflow for Purchases Requiring a Contract
• Automated process with online guidance and workflow
• Compliance with delegations of authority enforced via workflow
• Electronic document management
• Focuses Procurement Dept added value on higher dollar transactions
• Cycle time can be reduced and can be measured through service level
agreements (SLA)
18
Future State Miscellaneous Direct Payments
Payment requests for goods and services where a Purchase Order is
not necessary. (e.g., registrations, honoraria, etc.)
• Common data capture in an automated system
• Expeditious for the purchaser and approver (using automation
and workflow)
• Activity can be monitored
• Use of this method would be minimized
19
Future State Employee Reimbursements
Reimbursement to employees for business related expenses including travel.
• Data is captured through common smart-forms
• Expeditious for the purchaser and approver (using automation and
workflow)
• Simplifies compliance with travel policy/ procedures
• Reduces cycle time, i.e. time from reimbursement request to payment
20
Key Design Components of Future State
Purchaser/Department
 Online access with user friendly
front-end.
 One-Door Access Point for all
transaction types
 Online Guide for purchasers
 Catalog shopping options
Processing Unit
 Automated Workflow
 Electronic document
management
 One Supplier Master file
 Automated Requisition & P.O .
 Electronic Invoicing
 Electronic Payments
Supplier




Supplier self-service
Electronic P.O.
Electronic Invoicing
Electronic Payment
 Automated Workflow
 Electronic document management
 Metrics/management information
 Standard travel process/forms
21
Enabling Technologies Required for Future State
• E-procurement
• Supplier self-service
• Catalog management
• Workflow
• Imaging and document management
• Online Help
• Business Intelligence
• Analytic applications
22
P2P Opportunities for Savings and Efficiencies
With full participation, and after complete implementation, the overall
cost savings opportunity available to the CSU was conservatively
estimated at $30 million per year.
The three main areas identified for savings opportunities are:
• Spending reductions through strategic sourcing integrated with
shared E-Procurement catalogs - $27 million
• Reduced or reallocated labor processing time by 10% by eliminating
process steps and manual touch points - $2.8 million
• Better cash management and reduced costs through electronic
payments - $1.0 million
23
Reduced or Reallocated Labor Processing Time and Manual
Touch Points
• Fewer Vendors and Reduced Vendor Maintenance Time
• Directing more purchases to strategic vendors
• Online self-service for vendors
• Obtaining complete vendor information
• One vendor master file vs. 24
• Increase Threshold for Purchases Using the Direct P.O. Method
• 96% of FY 2010-11 commodity transactions were under $10,000 in value but
covered only 25% of the related spend.
• Increasing the threshold will save processing time, yet still provide
appropriate oversight for majority of dollars expended
• Fully automated process will reduce touch time
• Paperless processes will save printing, mailing, paper, filing time and storage
space
24
Utilizing Electronic Payments
• In fiscal year 2011-12, the University processed nearly 290,000 payments,
96% of which were issued via paper check.
• Electronic payments (Automated Clearinghouse, Electronic Funds Transfer
or credit cards):
• Are faster, cheaper and not as prone to fraud
• Can provide rebates or payment discounts
• Electronic payments translate to lower costs for suppliers and leverages
CSU’s negotiating position.
25
P2P Review Conclusions and Recommendation
Based on projected savings and
improved service potential, the
Committee recommended proceeding
with and ROI Validation Analysis and
Detailed Project Planning to move to
the Future State P2P design.
Simplify
Automate
Streamline
26
Critical Success Factors:
• Executive leadership
• Comprehensive planning and implementation strategy that progressively
moves the CSU to meet the Future State design
• Process centric design approach
• Actively engaged management throughout the organization
• Adequate resources including effective change management
(early/ongoing) for effective customer adoption
• Empowered and accountable Global Process Owner to maintain
policy/procedure consistency
• Shared services managed and measured through Service Level Agreements
for accountability and continuous improvement
• Maximum benefit can only be achieved with universal participation
• Purchasers must find the on-line system easy to use
27
P2P Where Are We Now
•
•
•
•
P2P Executive Steering Committee
P2P Project Validation
Current Status
Next Steps
28
P2P 2013 Executive Steering Committee
Members
Rubin Armiñana
President, Sonoma State University
Leroy Morishita
President, CSU East Bay
Laurence Furukawa-Schlereth
Vice President, Administration & Finance/CFO,
Sonoma State University
Benjamin Quillian
Executive Vice Chancellor/CFO
Ephraim Smith
Executive Vice Chancellor/CAO
Lars Walton
Chief of Staff, CSU Office of the Chancellor
Advisory Staff
Robert O’ Leary
Oracle Advisor
Michael Redmond
Sr. Dir. CO Budgets & Special Initiatives
Chancellor’s Office
29
P2P Project Validation
30
Current Status
• Proposals have been received from seven reputable firms
• The process to review proposals has begun, campus
support is needed
• Communication to various constituencies has begun
• Recruitment for an Executive Director for Shared
Services is in progress
31
Next Steps
Mobilize Project
Groundwork Required
Establish Governance
PeopleSoft 9.2 Upgrade
Change Management and
Communications Planning
Finalize CFS Conversion
Empower Interim Project
Team
E-Procurement/Catalog
Consultant and Request for
Proposal
Business Intelligence
Coordinate Consultant
Activities
Document Management
Hire Executive Director
Organizational and Staffing
Metrics
Quick Wins
Strategic Sourcing
Electronic Payments
Management of Credit Cards
Travel Policies and
Procedures
Common Forms
Map Data Configuration i.e.
Chart of Accounts
Policy/Procedure/Practices
Review
32
THANKS FOR THE INTEREST
• Questions
• Comments
33