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Gap aanalysis final presentation

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Strategy Analysis needs input from strategies issues meanwhile the mission objectives will be the targets to achieve. These will create gaps between them and gap analysis will give indications the …

Strategy Analysis needs input from strategies issues meanwhile the mission objectives will be the targets to achieve. These will create gaps between them and gap analysis will give indications the strategic plan to achieve objective of an organization.

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  • 1. Advanced Data Concepts, LLC State of Wisconsin Procurement Analysis Project Desired Future Situation & Detailed Recommendations January 2001
  • 2. © 2000 Advanced Data Concepts, LLC State of Wisconsin 2 CONTENTS  INTRODUCTION  RECOMMENDATIONS – GAP ANALYSIS – IMPERATIVES – SYSTEM OPTIONS  ORGANIZATIONAL & POLITICAL CONSIDERATIONS  IMPLEMENTATION GAME PLAN  BEST PRACTICES PROCESS MAPS  APPENDICES – GLOSSARY – CASE STUDIES – E-PROCUREMENT VENDOR LISTING – SUPPORTING CHARTS – Data Warehouse Project - Development & Implementation
  • 3. © 2000 Advanced Data Concepts, LLC State of Wisconsin 3 PROJECT OBJECTIVES, DEFINED BY THE INTERAGENCY GROUP, DROVE INTENSIVE SET OF INTERVIEWS AND ANALYSES INTRODUCTION OBJECTIVESOBJECTIVES DESIGN GUIDELINES PHILOSOPHY • Identify and realize efficiencies from common business needs • Reengineer procurement/purchasing processes and implement performance metrics • Define and understand successful procurements • Make purchasing a strategic asset • Provide quality goods and services for the best possible price • Encourage participation of other units of government and vendors • Identify and accommodate different business requirements and needs • Make it easy and timely • Provide timely and accurate information to all participants • Leverage the State’s scale and scope • Use technology effectively throughout the procurement cycle
  • 4. © 2000 Advanced Data Concepts, LLC State of Wisconsin 4 ADVANCED DATA CONCEPTS COMPLETED AN INTENSIVE TEN WEEK EFFORT TO ANALYZE THE STATE’S PROCUREMENT OPERATIONS INTRODUCTION State of Wisconsin Management Team Current Situation Analysis Desired Future Situation Model Detailed/Global Recommend. State Agencies and UW Campuses • Data Collection • Interviews (10 agencies) • Surveys (all others) • Document •Process •Systems • Validate • Best Practices • Reengineered Business Processes • Performance Metrics • Data Model • Vendor Analysis • Detailed Requirements • Data Schema • Vendor Management • Impact • Cost • Implementation time • Politics A D C S E R V I C E S A D C S E R V I C E S
  • 5. © 2000 Advanced Data Concepts, LLC State of Wisconsin 5  In November 2000, ADC provided SBOP with a picture of the current procurement situation in the State of Wisconsin  This document now answers the questions: – What is the Desired Future State? – How do we get there? RECOMMENDATIONS TO FACILITATE WISCONSIN MOVING FROM ITS CURRENT STATE TO A DESIRED FUTURE STATE HAVE BEEN DEVELOPED INTRODUCTION
  • 6. © 2000 Advanced Data Concepts, LLC State of Wisconsin 6 Buyer/Supplier ManagementPurchasing as a Strategic Asset EMBRACING THE FOLLOWING STRATEGIC FRAMEWORK WILL DRIVE PROCUREMENT & OPERATIONAL EXCELLENCE Strategic Planning • Continuous Learning & Innovation • Review Buying and Supplier Behavior • Strategic Sourcing • Key Performance Indicators Technology Architecture • Enterprise Application Solution • E-Procurement • Data Warehousing • N-Tier / Client-Server Architecture Business Process Re- Engineering • Best Practices • Imperatives • Organization Impact • Commodity Code Standardization • Human Capital Development Vendor Management • VendorNet • E-Procurement • Supplier Performance Measurement INTRODUCTION
  • 7. © 2000 Advanced Data Concepts, LLC State of Wisconsin 7 THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS  THE FOLLOWING IMPERATIVES MUST BE ADDRESSED TO REALIZE IMPROVEMENT OPPORTUNITIES IN THE PROCUREMENT CYCLE. INTRODUCTION – Leverage Large Volume Purchases - achieve maximum vendor discount – Expand Use of Cross-Functional Teams - develop sourcing strategies for high volume and complex purchases – Approval Process - decrease approvals to one per transaction (requisition and purchase order) – Commodity Coding - standardize on UN/SPSC naming convention – Purchasing Card Reporting and Management - report on P-Card purchases by commodity and dollar amount – Purchasing as a Strategic Asset – establish purchasing as an integral part of the strategic planning process
  • 8. © 2000 Advanced Data Concepts, LLC State of Wisconsin 8 THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS  KEY IMPERATIVES CONTINUED … INTRODUCTION – Expand Training Program - provide a continuous improvement program for SBOP and agency procurement staff – Standardization and Consolidation - institute a standardization program to achieve cost savings – VendorNet Official State Bidders List - eliminate all bidders list but VendorNet – Vendor Data Rationalization - WISMART the only vendor table for State – Key Performance Indicators - for Staff, Vendors and Customer Satisfaction – Develop Data Warehouse - for the analysis of statewide purchasing activity and spend data
  • 9. © 2000 Advanced Data Concepts, LLC State of Wisconsin 9 THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS  SYSTEMS SOLUTIONS – Near-Term, Immediate:  Begin development of Data Warehouse to capture data for the analysis of statewide purchasing activity and spend data [Also listed as an Imperative]  Conduct detailed feasibility study to determine best approach for dedicated statewide procurement solution that automates the requisition to payment process  Enhance in-house purchasing system (e.g., PurchasePlus)  Purchase procurement software package (e.g. PurchasingNet, Compusearch Software – Prism, Dynamic Software, MRO Software, …) – Medium-Term:  Utilize E-Procurement – use reverse auctions and/or strategic sourcing for new purchases where feasible  Chief Information Officer – centralize technology initiatives under leadership statewide executive – Long-Term:  Adopt the implementation of an Enterprise Application System (EAS); also referred to as an Enterprise Resource Planning (ERP) System  Includes consideration of upgrading WisMART (AMS Advantage 3.0 Software) and migrating all agencies to WisMART in conjunction with retaining newly deployed statewide procurement system INTRODUCTION
  • 10. © 2000 Advanced Data Concepts, LLC State of Wisconsin 10 WE HAVE TRIED TO ENSURE THAT RECOMMENDATIONS ARE CONSISTENT WITH THE INTERAGENCY GOALS  Please reference exhibit on the following page. INTRODUCTION
  • 11. © 2000 Advanced Data Concepts, LLC State of Wisconsin
  • 12. © 2000 Advanced Data Concepts, LLC State of Wisconsin RECOMMENDATIONS GAP ANALYSIS
  • 13. © 2000 Advanced Data Concepts, LLC State of Wisconsin 13 GAP ANALYSIS  ADC created 85 process maps that outline the current situation in ten agencies, including the University of Wisconsin  Gap analysis charts, on the following pages, identify changes required to migrate current processes to best practices GAP ANALYSIS
  • 14. © 2000 Advanced Data Concepts, LLC State of Wisconsin 14 AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A SB O P U W System Expand Use of P-Card Extend to All Small Dollar Purchases Expand Use to Statewide Contracts Add Language in Bids Accepting P-Card Payments Add Requirement for Bidders to Identify Reporting Level Negotiate With Statewide Vedors to Provide Level Three Reporting Negotiate With Visa to Obtain Level Three Reporting Reconcile Level Two Information With Commodity Codes for Reporting GAP ANALYSIS – P. CARD GAP ANALYSIS
  • 15. © 2000 Advanced Data Concepts, LLC State of Wisconsin 15 GAP ANALYSIS – SIMPLIFIED BID GAP ANALYSIS AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Automate Obtain Quote Before Requisition Entered Automated Validation of Account Codes Online, Real Time Requisition Approval Reduce Number of Approvals Eliminate Evaluation Committee System Generates Purchase Order (PO) On-Line PO Approval Electronically Transmit PO to Vendor
  • 16. © 2000 Advanced Data Concepts, LLC State of Wisconsin 16 GAP ANALYSIS – SEALED BID GAP ANALYSIS AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Automate Requisition Entered by End-User Automated Validation of Account Codes 1 Online, Real Time Requisition Approval Reduce Number of Approvals System Calculates Lowest Bidder System Generates Purchase Order (PO) On-Line Purchase Order Approval Electronically Transmit PO to Vendor 1. UW's PeopleSoft software will allow full automation, including end user requisitioning, automated account validation and online PO approval when the system-wide implementation is completed.
  • 17. © 2000 Advanced Data Concepts, LLC State of Wisconsin 17 GAP ANALYSIS – DIRECT CHARGE AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Continue Current Process Eliminate Requisition Reduce Use of Direct Charge GAP ANALYSIS
  • 18. © 2000 Advanced Data Concepts, LLC State of Wisconsin 18 GAP ANALYSIS – REQUEST FOR PROPOSAL (RFP) AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Continue Current Process Maximize Automated Processes GAP ANALYSIS
  • 19. © 2000 Advanced Data Concepts, LLC State of Wisconsin 19 GAP ANALYSIS – STATEWIDE RELEASE GAP ANALYSIS AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Continue Current Practice Automate Eliminate Pre-Approval Reduce Number of Approvals End-User Enters Requisition Automated Validation of Account Codes 1 On-Line Requistion Approval System Generates Purchase Order (PO) On-Line Purchase Order Approval Electronically Transmit PO to Vendor 1. UW's PeopleSoft software will allow full automation, including end user requisitioning, automated account validation and online PO approval when the system-wide implementation is completed.
  • 20. © 2000 Advanced Data Concepts, LLC State of Wisconsin 20 GAP ANALYSIS – ACCOUNTS PAYABLE AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A U W System Continue Current Process On-line Receiving & Invoicing Automated 2/3 Way Match Implement Enterprise Procurement GAP ANALYSIS
  • 21. © 2000 Advanced Data Concepts, LLC State of Wisconsin 21 GAP ANALYIS – REQUEST FOR BID (SBOP) AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A SB O P U W System Leverage Large Volume With Accurate Spend Data Use Standards Committee(s) Develop Sourcing Strategy Develop Performance Standards for All Contracts Inititate E-Procurement Solutions GAP ANALYSIS
  • 22. © 2000 Advanced Data Concepts, LLC State of Wisconsin 22 AGENCY RECOMMENDED ACTION D O T D O C D W D D H & FS D N R D A TC P C om m erce D O A SB O P U W System No Registration Fee Registration Required to Bid Vendors With Current Contracts Required to Register With VenorNet Develop Performance Standards for All Contracts Charge Fees for Automated Services Capability to Accept Online Payment Enhance Search Engine GAP ANALYSIS - VENDOR NET (STATE BIDDRS LIST) GAP ANALYSIS
  • 23. © 2000 Advanced Data Concepts, LLC State of Wisconsin RECOMMENDATIONS IMPERATIVES
  • 24. © 2000 Advanced Data Concepts, LLC State of Wisconsin 24 IMPERATIVES REPRESENT FOUNDATIONAL RECOMMENDATIONS THAT MUST BE ADDRESSED BY THE STATE TO ENSURE SUCCESS – Leverage Large Volume Purchases – Cross-Functional Teams – Approval Process – Commodity Coding – Purchasing Card Reporting and Management – Purchasing as a Strategic Asset – Expand Training Program – Standardization and Consolidation – VendorNet State Bidders List – Vendor Data Rationalization – Key performance Indicators  Imperatives have been identified in the following areas: IMPERATIVES
  • 25. © 2000 Advanced Data Concepts, LLC State of Wisconsin 25 LEVERAGING LARGE VOLUME PURCHASES Desired Future State  Leverage large volume purchases to achieve maximum vendor discount Business Case for Action  Currently not all agencies consistently utilize statewide contracts therefore lessening volumes – Usage on statewide office supply contract $4 to $5 million – UW utilizes different office supply contract; year to date expenditures approximately $5 million – DWD did not utilize statewide office supply vendor for a three year period.  Combination of this volume would result in the state leveraging lower costs from the office supply vendor and insuring states customer service requirements would be met  State has no official purchasing classification system and spend data cannot be aggregated for evaluation IMPERATIVES
  • 26. © 2000 Advanced Data Concepts, LLC State of Wisconsin 26 LEVERAGING LARGE VOLUME PURCHASES … Recommendation(s)  SBOP must identify and manage classification system that would allow the aggregation of purchasing spend data by commodity  Aggregated commodity spend data must be used to identify the largest volume commodities  Items within the largest volume commodities must be standardized so that number of items is reduced while item volume is increased  SBOP must obtain data from municipalities and school districts that utilize their contract. This information must be included in quantity and spend estimates provided to vendors in solicitation  Solicitations methods must require vendor to offer maximum cost saving and customer services Approach  A standard commodity code must be adopted  Baseline spend data must be gathered on all commodities purchased statewide  Standards committees must be formed to consolidate items in commodities with multiple items purchased in large quantities  As new leveraging opportunities are uncovered, SBOP must determine the procurement method that will result in the highest savings. For example: – Strategic Sourcing solicitations – Reverse auctions – Discounts based on quantity thresholds – Rebates based on quantity thresholds – Discounts in return for contract extensions IMPERATIVES
  • 27. © 2000 Advanced Data Concepts, LLC State of Wisconsin 27 USING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS Desired Future State  Standards Committees are used to leverage large volume purchases and to develop a sourcing strategy Business Case for Action  According to Purchasing Online, a supply chain magazine, the use of cross- functional teams is the best of the best practices in supply management  In his book, Balanced Sourcing, Timothy Laseter indicates that using multi- functional teams is a winning sourcing strategy  Wisconsin currently uses standard committees to develop RFB/RFPs  Standards committees are not used consistently by agencies or SBOP staff members
  • 28. © 2000 Advanced Data Concepts, LLC State of Wisconsin 28 USING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS Recommendation(s)  SBOP should increase the use standards committees to develop RFB/RFPs  SBOP should use cross-functional teams to develop sourcing strategies on all high- volume state-wide commodities. The strategy may include: – Standardization – E-commerce opportunities – Strategic vendor partnering opportunities – Volume discount sourcing  These teams should set client goals and objectives and be held responsible for the success and/or failure of the initiative. Approach  Identify staff in agencies to participate in cross-functional teams  To ensure team success, they will need – Organizational resource availability – Supplier participation and involvement – High level of internal and external decision-making authority – Effective team leadership – Performance evaluation and rewards
  • 29. © 2000 Advanced Data Concepts, LLC State of Wisconsin 29 APPROVAL PROCESS Desired Future State  Approvals done on-line via automated workflow: – Requisition would be entered on-line by program end-users – One approval for requisitions – Purchase Orders would be created by copying information from requisition – One approval for purchase orders – One approval for releases against a master ageement Business Case for Action  Five of the nine agencies reviewed have manual requisitioning and purchase order processes  Many departments require multiple approvals (manual or online) of requisitions and purchase orders  Manual budget checking in non- automated agencies add to required approvals and slows processing  Routing paper requisitions and/or rekeying information into multiple systems – increases processing time – reduces customer satisfaction IMPERATIVES
  • 30. © 2000 Advanced Data Concepts, LLC State of Wisconsin 30 APPROVAL PROCESS … Recommendation(s)  Implement an automated purchasing system with online budget verification  The automated purchasing system should accommodate decentralization to the end user level  The system should maintain an online vendor file, accessible to all users  System should have automated workflow Approach  Non-automated agencies should streamline paper process  Non-automated agencies should implement an automated purchasing system – Automated requisitions include: • commodity codes • commodity description • accounting string(s) - pre- encumbrance – System creates purchase orders by copying requisition information, releasing pre-encumbrance and performing an encumbrance against accounting string(s) IMPERATIVES
  • 31. © 2000 Advanced Data Concepts, LLC State of Wisconsin 31 COMMODITY CODING … Desired Future State  Create a standardized naming convention that: – Allows the standardized coding of purchases – Allows the compilation of aggregate purchase information in a unified framework permitting search and analysis – Integrates procurement card statement categories with all purchase transactional data Business Case for Action  State Bureau of Procurement (SBOP) is required by statute to report on Purchases throughout the state  No Statewide naming convention exists for purchasing data  Base line spend data by purchase is necessary for: – Standardization – Workload management – Performance measure development – Strategic sourcing – E-Procurement – Negotiating better pricing agreements with vendors  Currently base line spend data cannot be produced on a timely and accurate basis IMPERATIVES
  • 32. © 2000 Advanced Data Concepts, LLC State of Wisconsin 32 COMMODITY CODING … Recommendation(s)  Select UN/SPSC classification system as State’s commodity coding system – Code maintains good hierarchical groupings – Allows reporting on a contractible group – Identifies all buyable products and services and places them into a logical hierarchical classification – Has a pilot commodity coding project with Visa  Set SBOP staff as the state-wide mangers of the code – Will determine code classifications – Make decisions about adding new code – Liaison to code management company for developing new code when required  Approach  SBOP should: – Work with IT to determine most efficient way to disseminate code throughout enterprise – Develop procedures for code application and maintenance – Develop a cross functional groups to facilitate code implementation through all agencies – Provide all changes to code – Determine how items should be classified in response to agency question – Develop a continuous training program on use and value of commodity code  End user to add commodity code description to system requisition IMPERATIVES
  • 33. © 2000 Advanced Data Concepts, LLC State of Wisconsin 33 PURCHASING CARD REPORTING AND MANAGEMENT Desired Future State  Report on P-Card purchases by commodity and dollar amount  Maximize the utilization of P-Cards throughout state agencies  Utilize P-Cards for ordering on statewide contracts Business Case for Action  Utilization of P-Cards for low dollar hi-volume purchases is a best practice  According to the study on corporate procurement practices conducted by the Hackett Group: – P-Cards, when used with other best practices, can reduce the cost of a transaction from $9.50 to $1.87. – P-Cards can reduce the cost of making a payment by 85%.  The state is expected to expend $50+million dollars using P-Cards this fiscal year however individual purchases cannot be identified or aggregated by commodity IMPERATIVES
  • 34. © 2000 Advanced Data Concepts, LLC State of Wisconsin 34 PURCHASING CARD REPORTING AND MANAGEMENT … Business Case for Action  Vendors that accept Visa report purchases using Merchant Category Codes (MCCs) – codes are tiered – merchants that are coded at level two provide data on dollars spent via a general classification code – merchants coded at level three can provide more itemized expenditure information and a commodity code can be added to each record – Currently Visa has a pilot program with Dun & Bradstreet to utilize its UN/SPSC commodity code  Identification of P-Card purchases will allow: – Required oversight and reporting of state purchases – Identification of commodities where volume discounts are likely – Identification of commodities for E- Procurement initiatives Recommendation(s)  Require current bank/Visa to provide level 3 reporting for companies that currently have it  Include level 3 reporting as a requirement in all supply bids where the volume is expected to exceed $1million  Request that all current suppliers on high volume contracts, with 2 years or more left on their contract become level three vendors  Cross reference current level 2 reporting to commodity codes and develop reports IMPERATIVES
  • 35. © 2000 Advanced Data Concepts, LLC State of Wisconsin 35 Approach  SBOP obtain level 3 reports from bank for all level 3 vendors  Require P-Card acceptance and level 3 reporting on large volume procurements expected to exceed $1 million  Since only 1000 vendors provide level three information this information will not be available from most vendors. To capture some purchasing detail SBOP should: – Use ProCard (reporting software) to develop a report that will cross reference level 2MCCs to commodity codes by department – Report information monthly to agencies  It is noted that some level 2 MCC information will not correspond to an individual commodity code group  MCC Code 5200 Home Supply Warehouse as an example is used for companies like Home Depot and Menards that supply a wide variety of items – Given the variety of items sold by these companies level three reporting is not likely to yield the required detail – Spend data from these vendors should be given a special category. – Items bought here cannot be captured for inclusion in aggregated spend data – Dollars in this category should be used to negotiate discounts at Home Supply Warehouse stores such as Menards and Home Depot PURCHASING CARD REPORTING AND MANAGEMENT … IMPERATIVES
  • 36. © 2000 Advanced Data Concepts, LLC State of Wisconsin 36 PURCHASING AS A STRATEGIC ASSET Desired Future State  Purchasing is a strategic asset to the State of Wisconsin and an integral part of the strategic planning process Business Case for Action  SBOP is statutorily charged with reporting the state purchasing activities  Accurate spend data enhances the ability of SBOP to develop commodity management strategies, leverage purchasing volumes and improve sourcing  Strategic sourcing and E- Procurement could save the State $90 million dollars (10% of $900 million) over the first two years based on research conducted by research organizations such as the Gartner Group  Strategic sourcing and E- Procurement can improve the quality of goods and services IMPERATIVES
  • 37. © 2000 Advanced Data Concepts, LLC State of Wisconsin 37 PURCHASING AS A STRATEGIC ASSET … Recommendation(s)  Identify a commodity for immediate strategic sourcing initiative, such as telecommunications including cell telephones and pagers  Conduct a pilot E-Procurement initiative  Identify a commodity such as food and food service and identify contracting improvement opportunities  Utilize cross-functional teams comprised of end-users, buyers, SBOP staff and management for: – continuous improvement in commodity and supplier strategies and relationships – E-Procurement opportunities – strategic sourcing – standardization's and consolidations analysis of services across agencies  Develop on-going training for SBOP and agency procurement staff Approach  Purchasing can be established as a Strategic Asset through a set of specific pathways designed to achieve incremental and significant cost savings by improving procurement - Buy for Less, Buy Better and Consume Better – Buy for Less where savings are 5 to 15%: • Volume consolidation • Supply base optimization • Enhanced negotiation and contracting skills • Leverage State clout – Buy Better typically results in savings of 5-15%: • Improved coordination/forecasting accuracy • Streamlined bidding processes • Longer-term commitments to suppliers – Consume Better savings are expected to exceed 5%: • Optimize lifecycle costs • Outsource non-core activities • Increase use of cross-functional teams • Reduce complexity/simplified specifications • Increase standardization • Rationalize requirements  Identify staff in agencies to participate in cross- functional teams  Implement a data warehouse  Benchmark current pricing  Develop an effective communication program – workshops – email – intranet IMPERATIVES
  • 38. © 2000 Advanced Data Concepts, LLC State of Wisconsin 38 PURCHASING AS A STRATEGIC ASSET … Management's View of Purchasing: A Historical Perspective View Organizational Position Performance Measures 1970s & earlier Clerical Function Low on org. chart, often a subset of accounting or operations Focused on the past, quantitative efficiency and control of expenditures 1980s Commercial Activity Reports to Management Focused on present, qualitative effectiveness, measures such as cost savings/cost reduction 1990s & beyond Strategic Business Function Integral part of the strategic planning process Focused on proficiency, gaining present and future competitive advantage through integrated resource management & reduction of purchase and ownership costs © 1994 Solutions Consulting Group IMPERATIVES
  • 39. © 2000 Advanced Data Concepts, LLC State of Wisconsin 39 EXPAND TRAINING PROGRAM Desired Future State  State provides a continuous improvement program for procurement staff providing 40-80 hours of training for SBOP staff and 20-40 hours of training for agency staff on an annual basis Business Case for Action  Best-in-Breed organizations provide continuous improvement training for its procurement staff  SBOP conducts in-house training directed primarily at agency procurement personal  New SBOP procurement staff receive entry-level training  Staff not required to attend refresher courses  Long term staff may not have received any training within the last ten years IMPERATIVES
  • 40. © 2000 Advanced Data Concepts, LLC State of Wisconsin 40 EXPAND TRAINING PROGRAM … Recommendation(s)  SBOP should continue with its in-house training of new staff for entry level knowledge  Develop “brown bag lunches” once a month at various agencies  Develop web-based training for self-paced learning of all State staff involved in Purchasing  SBOP should provide outside training – National Association of Purchasing Managers (NAPM) – National Institute of Governmental Purchasers (NIGP) – Pool of training consultants  SBOP should encourage its staff to become certified as a C.P.M., or a CPPO, or CPPB Approach  SBOP should update training to include initiatives implemented by this assessment, develop and disseminate a schedule to all agencies  Develop the “brown bag lunches” series given once a month at various agencies. Recruit agency staff to lead the discussion on trends and best practices in the purchasing field as it relates to their agency  Identify resources to develop web-based training, such as: – University – NAPM – Outside Consultants  SBOP should identify classes given either by NAPM or NIGP for: – Mid-Level Purchasing and Supply Training – Senior-Level Purchasing and Strategic Supply Training.  These classes can be taught off or on-site.  SBOP should develop a RFP for procurement training services and identify a pool of consultants that can provide purchasing training IMPERATIVES
  • 41. © 2000 Advanced Data Concepts, LLC State of Wisconsin 41 STANDARDIZATION AND CONSOLIDATION Desired Future State  Institute a standardization program (tool to achieve cost savings) Business Case for Action  Neither state nor agencies limit the type of items purchased to increase the volume of a selected item or commodity  Examples of state contracts providing too much variety: – copier contract 15 types of copiers , 6 to 8 brands per type – printer contracts 25 types of printers, 4 to 12 brands per type – hand & electric tool contract offers access to all items on eight vendor catalogs  Standards committees have no cost savings goals and are encouraged to develop requirements for many of items rather than consolidation to as few different types as possible  Agencies provide no guidelines for staff regarding types of supplies which they are allowed to purchase therefore staff may use several varieties of the same item. IMPERATIVES
  • 42. © 2000 Advanced Data Concepts, LLC State of Wisconsin 42 STANDARDIZATION AND CONSOLIDATION … Recommendation(s)  Set cost saving goals for specific commodities  Develop multi-agency standards committee with goals of reducing number of items in commodity  Rebid expiring contracts within targeted commodities using reduced items listing and include requirements for analyzing cost savings. Approach  SBOP should work with agencies to develop statewide, internal support for cost reduction/cost savings programs.  SBOP should obtain baseline spend data on statewide purchases – Until this data can be obtained from internal reporting vendors should be asked to provide usage – Evaluate commodities to determine where standardization is warranted – Develop cross function, multi-agency team to work on standardizing designated statewide contracts  Agencies should also develop agency wide teams to target standardization and consolidation opportunities within the agency IMPERATIVES
  • 43. © 2000 Advanced Data Concepts, LLC State of Wisconsin 43 VENDORNET STATE BIDDERS LIST Desired Future State  VendorNet the only State Bidders List Business Case for Action  PRO C 35 has established VendorNet as the State’s bidders list  VendorNet is a real-time, interactive, bid posting Internet application  VendorNet is a precursor of E- Procurement initiatives  Currently, VendorNet has a base of 1,600+ vendors  Many of the State agencies continue to maintain their own bidder lists  It is a common practice for agencies to send copies of bids and RFPs to non- VendorNet vendors IMPERATIVES
  • 44. © 2000 Advanced Data Concepts, LLC State of Wisconsin 44 VENDORNET STATE BIDDERS LIST … Recommendation(s)  Allow all vendors to register on-line with VendorNet  Registration required for bid to be responsive  All vendors that have a current contract must be on VendorNet  Do not charge vendors to register with VendorNet  Charge fee for automated services, such as receiving bid notification electronically or downloading bid documents  Fee structure is based on: – number of commodity classes – in-state vs. out-of-state vendor  Change legal notice requirement from newspaper advertisement to electronic notification  Enhance VendorNet ability to accept online payment  Enhance VendorNet to calculate bid tabulation  Enhance search engine capabilities Approach  Change Wis.Stats. 16.004; 16.701>Wis.Adm.Code Chapter Adm 9 to indicate that vendors must register with VendorNet to bid with the State and/or receive contracts. Vendors must pay a fee to be notified automatically of all agency requests for bids/proposals over $25,000.  SBOP should work with agencies to ensure all current agency vendors are on VendorNet  SBOP should develop a two-year strategic plan to ready all its vendors for E- Procurement – At the end of 2-years, change Wis. Stats. 16.75 to identify legal notice as electronic notification  SBOP should implement enhancements to VendorNet application/environment to include: – on-line payment – calculate bid tabulation – increased search engine capabilities IMPERATIVES
  • 45. © 2000 Advanced Data Concepts, LLC State of Wisconsin 45 VENDOR DATA RATIONALIZATION … Desired Future State  WISMART the only vendor table for State  Vendor List cleansed and rationalized within WISMART. Recommendation(s)  Standardize Vendor Information. Business Case For Action  Multiple Vendor lists, files and databases across the State inhibits the State’s ability to effectively manage Vendors and monitor their performance.  No coding standards for Vendor Information (e.g., identification, address standardization, multiple locations, etc.) Approach  Define rules and standards for Vendor identification and coding.  Combine, cleanse, and rationalize multiple Vendor lists in use across State. IMPERATIVES
  • 46. © 2000 Advanced Data Concepts, LLC State of Wisconsin 46 KEY PERFORMANCE INDICATORS - VENDORS Desired Future State  RFPs and contracts resulting from RFPs should contain clear vendor performance standards  SBOP should monitor vendor performance on statewide contracts  Central purchasing staff within agencies should monitor performance on agency initiated contracts Business Case for Action  Failure of vendors to meet performance criteria means – agency is paying for a quality level that will not be achieved – terms and conditions which are key to cost savings may not be honored  Customer (end-user) satisfaction will be low  Performance criteria that is not quantifiable or unclear leads to differences in the expectations of the vendor and the end user and results in disputes IMPERATIVES
  • 47. © 2000 Advanced Data Concepts, LLC State of Wisconsin 47 KEY PERFORMANCE INDICATORS – VENDORS … Recommendation(s)  All RFPs and contracts resulting from them should contain measurable performance standards  Performance standards at a minimum should identify: – the specific service (s) that must be performed – expected outcomes or deliverables – provide quantifiable test methods by which outcomes or deliverables will be judged – quality measures that must be met – time frame of delivery requirements – any performance/cost reduction relationships – minimum vendor capabilities Approach  Contract value and complexity should dictate the contract monitoring frequency for SBOP and agency staff  On Statewide contracts SBOP should work in tandem with lead agencies to identify vendor performance standards  At contract start up, purchasing staff and vendor should review performance requirements included in contract  Procurement staff should be assigned specific contract administration duties that include: – determining vendor compliance with contract terms and conditions – determining the level of customer satisfaction with vendor services – working with Accounts Payable to insure that invoices reflect contract terms and conditions IMPERATIVES
  • 48. © 2000 Advanced Data Concepts, LLC State of Wisconsin 48 KEY PERFORMANCE INDICATORS - STAFF Desired Future State  SBOP and Agency purchasing staff will have clear goals and objectives for performance  Goals, objectives and performance standards will reflect purchasing as a strategic asset  Staff goals and objectives will be tied to the overall goals and objectives of the their department  Staff will be given performance standards that identify a satisfactory level of performance that are specific and measurable Business Case for Action  Currently criteria for doing a good job is defined by evaluating transaction data (how many bids or RFPs handled, timely renewal of expiring contracts, attendance, on time arrival, etc.)  To achieve an overall goal of purchasing as a strategic asset, goals, objectives and performance standards must be based on activities that add value to the procurement process – Samples of typical performance appraisal questions for transactional purchasing and performance indicators of purchasing as a strategic asset are listed on the next slide IMPERATIVES
  • 49. © 2000 Advanced Data Concepts, LLC State of Wisconsin 49 Recommendation(s)  SBOP and agencies should identify goals and objectives that enhance the purchasing performance as a strategic asset ( goals related to cost savings require accurate baseline spend data)  Staff should be apprised of organizational goals and objectives and (in tandem with supervisors) set goals for performance that support agency goals.  Specific and measurable performance standards should be gleaned from goals and objectives that clearly identify satisfactory performance  Incentives should be developed that will reward successful completion of employee goals and objectives Approach  SBOP Management and Human Resources department must identify incentives (over and above standard increases) that can be offered to employees that successfully complete goals and objectives.  SBOP and agency management must develop a strategic plan for department procurement that identifies departmental goals and objectives  Supervisors, in tandem with employees, must set goals and objectives that support agency goals.  Supervisors must develop employee performance standards and measures.  Goals and objectives must support purchasing as a strategic asset as opposed to a transactional activity. KEY PERFORMANCE INDICATORS – STAFF … IMPERATIVES
  • 50. © 2000 Advanced Data Concepts, LLC State of Wisconsin 50 Comparison of Performance Indicators for Transactional vs. Strategic Procurement Performance Indicators must be specific, measurable and time limited. Listed below are sample questions that are used to determine performance in a transactional purchasing environment and measurable performance indicators that are used when purchasing is a strategic asset KEY PERFORMANCE INDICATORS – STAFF … Typical performance appraisal questions in a Transactional Purchasing Environment For the current evaluation period what activities did the employee perform? – Sourcing • How many bids and Requests for Proposals were completed? • Were the bids or requests for proposal completed within department time frames? • How many standards committees did employee chair? • Was an RFP developed as a result of the Standards committee? – Purchasing Process • How many purchase requisitions and purchase orders did the employee process? • Customer Services • How did the end user rate the employee? – helpful – courteous – Contract Administration • Did the employee assist in the resolution of vendor/ end-user disputes? Performance Indicators for Activities where Purchasing is a Strategic Asset Within the upcoming fiscal year employee will meet the following performance standards – Sourcing • Cross functional teams chaired by employee will meet a minimum of 85% of the cost saving goals for target commodity • The aggregate of purchases managed by employee will result in 1% cost savings over the aggregate of those same commodities in the previous fiscal year. • Employee will have 0% of re-bids due to unclear specifications, terms or conditions – Purchasing Processes • Employee will evaluate the processes of 3 agencies to determine if there are opportunities for streamlining – Customer Services • Purchasing staff will collect and deploy to a minimum of 3 end users market intelligence that will result in improved end user buying decision – Contract Administration • Employee will audit vendor reports and invoices quarterly to determine if contract terms and conditions are being met IMPERATIVES
  • 51. © 2000 Advanced Data Concepts, LLC State of Wisconsin 51 Desired Future State  SBOP mission statement incorporates its customer service initiatives Business Case for Action  SBOP currently receives customer feedback from interagency meetings and surveys to agency purchasing staff and vendors  monthly meetings of Purchasing personnel – too large for meaningful customer feedback and dialogue – does not include agency end users  Current surveys are information gathering tools not specifically targeted to determine customer satisfaction  SBOP is considering charging agencies for value added services – internal customer’s perceptions of SBOP’s service overall service and value will have a great impact on their acceptance of this funding philosophy KEY PERFORMANCE INDICATORS - CUSTOMER SATISFACTION IMPERATIVES
  • 52. © 2000 Advanced Data Concepts, LLC State of Wisconsin 52 KEY PERFORMANCE INDICATORS - CUSTOMER SATISFACTION … Recommendation(s)  SBOP should develop a mission statement that includes its customer service goals. Mission statement should be incorporated into policies and procedures  SBOP should conduct easy to answer “pulse” surveys, assessments of specific purchasing initiatives, for both vendor and internal customers  Implement Customer Advisory Boards much like users groups that exist in the software industry. They provide feed back on both SBOP and agency practices.  Utilize feedback from surveys and Customer Advisory Boards to develop performance standards for SBOP staff Approach  Develop mission statement and internal communication plan for incorporating customer service principles of mission statement into SBOP culture.  Determine areas requiring feed back and develop survey schedule and topic. Staff should be assigned to this initiative.  Purchasing advisory teams, comprised of like size agency end-users, procurement staff and vendors should be developed to provide SBOP feedback on its polices, procedures and services.  Incorporate customer service performance standards as evaluation criteria in employee performance appraisals IMPERATIVES
  • 53. © 2000 Advanced Data Concepts, LLC State of Wisconsin RECOMMENDATIONS SYSTEM SOLUTIONS
  • 54. © 2000 Advanced Data Concepts, LLC State of Wisconsin 54 MIGRATE FROM MANUAL FRAGMENTED SYSTEMS TO AUTOMATED INTERGRATED SOLUTIONS  Current Situation – Highly manual; many hand-offs – High “touch”; labor intensive – Significant non-value- added activities – Multiple systems; heterogeneous environment  Desired Future Situation – Fully automated, end- to-end – Low “touch”; exception-based processing – Integrated workflow – Leverage N-Tier Systems Architecture SYSTEM SOLUTIONS
  • 55. © 2000 Advanced Data Concepts, LLC State of Wisconsin 55 DESIRED SYSTEM MUST CONTAIN FEATURES CONSISTENT WITH INDUSTRY BEST PRACTICES ACROSS THE PROCURMENT CYCLE Process System Characteristics Process System Characteristics Create Requisition Requisitions created on-line (no paper). Commodity Codes and Item Descriptions required for each line item on Requisition. System provides Commodity and Vendor search capabilities. Integration with Vendor e-catalogs where applicable. System automatically validates accounting strings and funding sources, and pre-encumbers funds. Create Purchase Order Once Vendor is selected, Purchase Order can be created automatically from Requisition. Route Requisition for Approval Based on Requestors profile, Requisition is automatically routed to Supervisor for approval, if necessary. Approve Purchase Order If necessary, PO is routed to Purchasing Manager for approval. Once approved, Purchase Order is ready for distribution. Approve Requisition “In-Box” functionality used to notify Approvers of Requisitions awaiting approval. Once approved, Requestor is notified of authority to proceed. Distribute Purchase Order Once approved, Purchase Order is automatically distributed to Vendor via fax, e-mail, etc. Develop Requirements (Formal & Informal) System allows for the development of specifications that accompany the requisition. System calculates the lowest bidder by line item, by group or by entire bid from manually entered quotations. Record Receipt of Goods As goods are received, they are recorded in the system and matched against the Purchase Order line items. Create Formal Bid Formal Bids are developed on-line. System assists in Bid creation by automatically generating standard language, terms and conditions. Record Receipt of Invoice As Invoices are received, they are recorded in the system. Post Formal Bid Once completed, Bids are posted automatically to VendorNet. Perform 3-Way Match System automatically performs 3-way match between Purchase Order, Delivery Receipt and Invoice. Receive and Record Bid Quotations As Quotations are received, they are entered into the system. Authorize Payment Upon successful 3-way match, payments are automatically authorized and an EFT to Vendor initiated. Select Vendor Once all quotations are entered into the system, the system can analyze the quotations and recommend the most appropriate Vendor. Requestor can approve selection or override selection and choose an alternate Vendor. SYSTEM SOLUTIONS
  • 56. © 2000 Advanced Data Concepts, LLC State of Wisconsin 56 DESIRED SYSTEM FLOW MUST MINIMIZE MANUAL PROCESSESS, MAXIMIZE AUTOMATION AND MANAGE BY EXCEPTION Create Requisition Approve Requistion Develop Requirements (Formal & Informal) Create Formal Bid Post Formal Bid Receive and Record Quotations Select Vendors Create Purchase Order Approve Purchase Order Requestor Supervisor Purchasing Manager Vendor Purchasing System Route Requisition for Approval Quote Generate Purchase Order Bid (VendorNet) Distribute Purchase Order Purchase Order Deliver Goods Record Receipt of Goods Invoice Record Receipt of Invoice Perform 3-Way Match Authorize Payment EFT Legend On-Line Process System Process Electronic Document Paper Document Manual Process Accounts Payable SYSTEM SOLUTIONS
  • 57. © 2000 Advanced Data Concepts, LLC State of Wisconsin 57 MAJOR SYSTEM RECOMMENDATIONS  SYSTEMS SOLUTIONS – Near-Term, Immediate:  Begin development of Data Warehouse to capture data for the analysis of statewide purchasing activity and spend data [Also listed as an Imperative]  Conduct detailed feasibility study to determine best approach for dedicated statewide procurement solution that automates the requisition to payment process  Enhance in-house purchasing system (e.g., PurchasePlus)  Purchase procurement software package (e.g. PurchasingNet, Compusearch Software – Prism, Dynamic Software, MRO Software, …) – Medium-Term:  Utilize E-Procurement – use reverse auctions and/or strategic sourcing for new purchases where feasible  Chief Information Officer – centralize technology initiatives under leadership statewide executive – Long-Term:  Adopt the implementation of an Enterprise Application System (EAS); also referred to as an Enterprise Resource Planning (ERP) System  Includes consideration of upgrading WisMART (AMS Advantage 3.0 Software) and migrating all agencies to WisMART in conjunction with retaining newly deployed statewide procurement system SYSTEM SOLUTIONS
  • 58. © 2000 Advanced Data Concepts, LLC State of Wisconsin 58 SEVERAL SYSTEM SOLUTION OPTIONS EXIST Option Degree of Change Complexity Timeframe Cost Benefits 1. a) Maintain Existing Environment b) Deploy Data Warehouse Low Low 1Q00 Low Accurate reporting of Spend data 2. a) Deploy a Purchasing Software (WISMART Agencies) b) Deploy Data Warehouse Medium Low 1Q00 Low Accurate reporting of Spend data Automated purchasing 3. a) Upgrade WISMART (v3.0) b) Migrate DHFS/DOC and DWD to WISMART c) Deploy Purchasing Software (WISMART Agencies) High Medium 2002 Medium Accurate reporting of Spend data Automated purchasing Eliminate FMS and associated costs 4. a) Upgrade WISMART (v3.0) b) Migrate all Agencies to WISMART c) Deploy Purchasing Software (all Agencies) High High 2002 High Accurate reporting of Spend data Automated purchasing Single Accounting System 5. Deploy EAS Solution Very High Very High 1Q00 Very High Fully integrated purchasing, accounting and financial management SYSTEM SOLUTIONS
  • 59. © 2000 Advanced Data Concepts, LLC State of Wisconsin 59 RECOMMENDED NEAR TERM SOLUTION Option 2. State should pursue this option as the near-term solution: – Data Warehouse enables State to capture, report and analyze spend data. – Deploying Purchasing Software into the WISMART agencies automates the majority of manual purchasing functions within the State Agencies. SYSTEM SOLUTIONS
  • 60. © 2000 Advanced Data Concepts, LLC State of Wisconsin 60 INVESTMENT REQUIREMENTS OFFER ANOTHER PERSPECTIVE FOR EVALUTING SYSTEM OPTIONS 3 5 20 50 0 50 Implementation Costs (Millions) Rengineer Current Environment, Maintain Existing Systems and Develop Data Warehouse Enterprise Procurement System (In-House or Purchase Software Package) Upgrade WisMART (AMS Advantage Software), Adding Procurement Functionality As It Becomes Available (e.g., E-Procurement) Migrate to EAS/ERP for Purchasing, GL, AP, AM SYSTEM SOLUTIONS
  • 61. © 2000 Advanced Data Concepts, LLC State of Wisconsin 61 TWO KEY DIMENSIONS THAT DIFFERENTIATE ALTERNATIVE SOLUTIONS ARE IMPLEMENTATION TIME (SPEED) AND DEGREE OF CHANGE (FOCUS) Maintain Existing System and Deploy Enterprise Procurement Software To Agencies No Feasible Alternatives Maintain/Upgrade AMS Advantage Software and Deploy Enterprise Procurement Software Deploy EAS/ERP Solution FOCUS Procurement Integrated Financial Mngt. SPEED FastSlow SYSTEM SOLUTIONS
  • 62. © 2000 Advanced Data Concepts, LLC State of Wisconsin 62 DEPLOYING A DATA WAREHOUSE IS AN IMPERATIVE FOR A COMPREHENSIVE ANALYIS OF STATEWIDE PURCHASING ACTIVITY  What’s a Data Warehouse? – An information source containing data from multiple, heterogeneous, independent and possibly non-synchronous systems, which is stored to optimize retrieval and reporting of data across the enterprise. – Typically subject-oriented allowing users access to operational data to track and respond to business trends and facilitate forecasting and planning efforts. SYSTEM SOLUTIONS
  • 63. © 2000 Advanced Data Concepts, LLC State of Wisconsin 63 HOW DO DATA WAREHOUSES DIFFER FROM OPERATIONAL SYSTEMS?  Typically operational and transaction processing systems store data in its most atomic (non-redundant) format to alleviate performance issues and ease database maintenance. – Data stored in such a state is referred to as Normalized.  Normalized data can be difficult to extract and analyze when large amounts of data are required across a broad range of information types. – This difficultly is compounded when multiple systems and/or databases need to be accessed. – Large data extracts also degrade performance, which is not advisable in on- line, operational environments.  Data Warehousing addresses theses issues by focusing on structuring information into specific subject areas of interest (e.g., Purchasing). – Data is the restructured into relevant Facts (e.g., Spend Data) and Measures (e.g., Total Spend Amount) that can be accessed by various Dimensions (e.g., Agency, Time [Month/Year], Vendor, Commodity, etc.) for analysis. SYSTEM SOLUTIONS
  • 64. © 2000 Advanced Data Concepts, LLC State of Wisconsin 64 DATA WAREHOUSE ARCHITECTURE  Each “interfaced” agency would be responsible for generating an extract for the Data Warehouse.  Remaining agencies purchasing activity would be captured via an extract from Purchase Software / WISMART.  A “DW Load” process would then consolidate, cleanse and load the combined purchasing data to the Data Warehouse.  Various Data Marts could then be generated to support the required reporting and analytical needs.  Desktop and Browser-based query, reporting and OLAP tools (e.g., Business Objects) would provide access to the Data Marts. SYSTEM SOLUTIONS
  • 65. © 2000 Advanced Data Concepts, LLC State of Wisconsin 65 DATA WAREHOUSING ARCHITECTURE FMS TIPS FMS / Proteus PeopleSoftUW/System Financial Data Warehouse RAPIDSDWD FARS ETL EAPS ETL DOT DHFS FMS ETL FMS ETL DOC P/S ETL Purchasing Software/ WISMART DOA, et.al. WISM ART ETL DW Load Spend Data Strategic Sourcing Vendor Performance Data Marts Note: An automated extract of Detailed Purchasing Activity from DHFS and DOC may not be available until Purchasing function is automated. SYSTEM SOLUTIONS
  • 66. © 2000 Advanced Data Concepts, LLC State of Wisconsin 66 AN ENTERPRISE APPLICATION SYSTEM IS THE LONG-TERM RECOMMENDED SOLUTION Enterprise Application System (EAS) is: “An integrated technology bundle (some combination of software, hardware, and services) designed to integrate multiple facets of a business through the interchange of information from various vertical business process areas and related databases. These solutions effectively enable agencies to retrieve and disseminate mission critical data from throughout their organizations, providing managers with real-time operating information.” Source: “Enterprise Application Solutions in the Public Sector”, Dataquest Perspective, VMPS-WW-DP-9903, Garter Group, April 1999. SYSTEM SOLUTIONS
  • 67. © 2000 Advanced Data Concepts, LLC State of Wisconsin 67 BASED ON DISCUSSIONS WITH GARTNER GROUP …  One-third of State Governments have or are moving towards EAS solutions – Within 2 years, remaining States will enter RFP process for EAS solutions  Governor Councils mandating EAS solutions – Most will pursue single-vendor solutions – Fluidity in E-Commerce market space will likely drive “best-of- breed” solutions  70% of existing State legacy environments are American Management Systems sites  Public Sector EAS providers: – Leaders: Oracle, PeopleSoft, SAP – Others: JD Edwards, Lawson, Baan SYSTEM SOLUTIONS
  • 68. © 2000 Advanced Data Concepts, LLC State of Wisconsin 68 PROCUREMENT IS ONE COMPONENT OF AN OVERALL EAS SOLUTION 1. Core Business (ERP) • Finance and Accounting • Controlling • Human Resources • Asset Management • Materials Management • Maintenance Management • Treasury 2. Extended • Case Management • Fleet Management • Claims Processing and Settlement • Procurement • Licensing • Logistics • Customer Interaction Systems • Real Estate • E-Business / EDI • Tax and Revenue • Reporting / Decision Making • Project Management • Sales and Distribution 3. Business Line-Specific • Administration and Finance • Social Services • Criminal Justice • Public Safety • Transport • Health • Public Works Source: G2R/Dataquest (April 1999) SYSTEM SOLUTIONS
  • 69. © 2000 Advanced Data Concepts, LLC State of Wisconsin 69 RISING EAS SPENDING UNDERSCORES THE GROWTH OF THIS APPROACH IN THE PUBLIC SECTOR ENVIRONMENT 871 1,071 1,318 1,627 2,011 2,492 0 500 1000 1500 2000 2500 1999 2000 2001 2002 2003 2004 Total U.S. Public Sector EAS Spending Forecasts, 1999-2004 (in Millions) Source: G2R/Dataquest (April 1999) Avg. Annual Growth Rate: 23.4% SYSTEM SOLUTIONS
  • 70. © 2000 Advanced Data Concepts, LLC State of Wisconsin 70 AN EAS/ERP IS THE RIGHT LONG-TERM SOLUTION AND MUST EXTEND BENEFITS BEYOND PROCUREMENT TO JUSTIFY BUSINESS CASE FOR INVESTMENT  Pursuant to Executive Order No. 408 and specifically Section 14.019 of the Wisconsin Statutes, the Secretary of the Department of Administration is to create an internet-based “service center” giving citizens access to core state government services which includes portals, e-procurement, e-records and e-signatures.  Electronic Government requires a well designed front-end web portal, tight integration with back-office administrative systems (finance, purchasing, human resources, etc.), and reengineered business processes to successfully manage the new business model.  Enterprise Application Systems or ERP serve as the most comprehensive foundation for the successful implementation of electronic government initiatives. Such systems not only provide the technical capability to make this happen, but also force the necessary degree of organizational change required.
  • 71. © 2000 Advanced Data Concepts, LLC State of Wisconsin 71 AN EAS/ERP IS THE RIGHT LONG-TERM SOLUTION AND MUST EXTEND BENEFITS BEYOND PROCUREMENT TO JUSTIFY BUSINESS CASE FOR INVESTMENT  Software consolidation – State will minimize costs associated with maintaining a large number of disparate systems (e.g., over 12 different financial and purchasing systems currently in use)  Real Time update  Better management through seamless integration with finance, human resources, payroll, manufacturing (Badger Industries), and other functions. Examples include: – Cut financial period closing times – Capability to properly link cross-functional business process and adapt to organizational changes  Leverage EAS/ERP built-in “best business practices”, research and development, best-of-breed pre-configured solutions (e.g., E- procurement, Citizen Relationship Management) and industry groups
  • 72. © 2000 Advanced Data Concepts, LLC State of Wisconsin 72 THE STATE CAN REALIZE THE FOLLOWING BENEFITS FROM AN INTEGRATED E-PROCUREMENT & PURCHASING SOLUTION  Reduce transactions to lower procurement costs  Faster cycle times  Reduced maverick or unauthorized buying  Increased control over the supply chain  Improved integration of the procurement function with back-office systems  Proactive management of key procurement data  Higher quality purchasing decisions  Elevation of procurement to a position of strategic importance SYSTEM SOLUTIONS
  • 73. © 2000 Advanced Data Concepts, LLC State of Wisconsin 73 Procurement Today: Managed per transaction Hands-Free Procurement: Managed by exception. Online product selection Search large catalogs Personalized views; named shopping carts Requisition approval One to multiple levels of management approval Transactions automatically approved based on rules PO transmission Fax, e-mail, EDI direct to suppliers; supplier retypes the order Order is sent through a supplier clearinghouse Payment authorization Dependent on three-way match of PO with invoice and receipt Immediate; based on shipment notice Analysis Sporadic; not linked to supplier performance Continuous; integrated in real time; drives optimization of process. Forrester Research, Inc - Jan. 2000 E-PROCUREMENT HAS THE POTENTIAL TO CREATE NEW EFFICIENCIES BY PROVIDING IMPROVED QUALITY, LOWERING COSTS, REDUCING CYCLE TIME AND TRANSACTION COSTS SYSTEM SOLUTIONS
  • 74. © 2000 Advanced Data Concepts, LLC State of Wisconsin 74 CENTRALIZED MANAGEMENT ENHANCES OPPORTUNITIES FOR SUCCESS IN STATEWIDE ENTERPRISE TECHNOLOGY INITIATIVES  Gartner Group indicates majority of States currently have or are in process of recruiting a Chief Information Officer.  Given Wisconsin’s push toward E-Government and E- Procurement, a Statewide CIO will be crucial to achieving the State’s vision.  IT Organization and System changes necessary to support the vision require CIO-level authority to direct and coordinate their implementation. SYSTEM SOLUTIONS
  • 75. © 2000 Advanced Data Concepts, LLC State of Wisconsin ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 76. © 2000 Advanced Data Concepts, LLC State of Wisconsin 76 BUY-IN MUST BE DEVELOPED EARLY AND REAFFIRMED OFTEN; UNDERSTANDING AND MANAGING CHANGE IS CRITICAL TO ORGANIZATIONAL SUCCESS  Major organizational change for State of Wisconsin implies significant potential disruption to existing ways of doing business  Willingness to accept change cannot be assumed  A success implementation must have sponsorship at the highest levels of the organization  Middle management and staff must also internalize and buy into the vision  The buy-in process must start before the project begins – Agency staff must be deeply involved in implementing the new business imperatives and systems solution – An effective communications process is a necessary vehicle to obtain staff input and share information ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 77. © 2000 Advanced Data Concepts, LLC State of Wisconsin 77 TRADITIONAL INTERNAL BARRIERS TO CHANGE BARRIERS TO IMPLEMENTATION COMMON SYMPTOMS  Inadequate definition of change  Implementation breaks down at lower levels  Organization questions management’s knowledge of “the details”  No architecture to manage change  Vague directives from senior management  No follow-up  Unclear role definition  Not aligned with the culture  Organization ignores directions as being inconsistent  Change viewed as temporary or reversible  No understanding or management of resistance  Employees exhibit dysfunctional behavior  Line management frustration  Inadequate sponsorship  Middle managers kill initiatives  Management loses credibility  Poor execution of roles  Partial implementation or implementation breaks down completely  Successes are not repeatable  Too much change already on the plate  Organization grinds to a halt  Activities fall through the cracks  Complaints of overload and burnout  Strategy de jour syndrome ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 78. © 2000 Advanced Data Concepts, LLC State of Wisconsin 78 BARRIERS TO CHANGE EXIST AMONG THE AGENCIES  De-centralization has created information silos – Agency vision instead of State vision – Lack of structured interagency communication  Independent spirit of agencies – Agencies are operating with a variety of processes and procedures within the framework of the statutes and procedures set forth by DOA  Agency staff highly invested in maintaining solutions developed by them for their particular agency  Lack of centralized leadership in Information Technology – No comprehensive IT strategy to support business goals  Limited financial resources ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 79. © 2000 Advanced Data Concepts, LLC State of Wisconsin 79 THE CHALLENGE GOING FORWARD IS TO IMPLEMENT THE RECOMMENDATIONS TO REALIZE THE GREATEST BENEFIT AND AVOID “ORGANIZATIONAL STONEWALLING” Characteristics of Effective Implementation Planning  Focused and manageable implementation projects  Fast-paced planning with deliverables and due dates  Top management team leadership  Target improvements by implementation project ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 80. © 2000 Advanced Data Concepts, LLC State of Wisconsin 80 FIRST STEP... ESTABLISH STRONG EXECUTIVE SPONSORSHIP  The extensive nature of the business change, broad number of agencies and stakeholders impacted, and the balance between central coordination and local control requires strong executive sponsorship – Create common agreement around a common enterprise view that transcends interagency conflict and “stonewalling” – Continuously communicate the value and importance of the initiatives ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 81. © 2000 Advanced Data Concepts, LLC State of Wisconsin 81 SECOND STEP... CREATE FIVE TASK FORCES, WITH CROSS-FUNCTIONAL REPRESENTATION FROM THE AGENCIES, FINANCE, AND IT STANDARDS (PROCESSES, COMMODITIES, …) VENDOR DATA MANAGEMENT (RATIONALIZATION OF VENDOR DATA) DATA WAREHOUSE (DESIGN & IMPLEMENTATION) ENTERPRISE PROCUREMENT SYSTEM (EVALUATION & SELECTION) ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 82. © 2000 Advanced Data Concepts, LLC State of Wisconsin 82  Change Wis.Stats. 16.004;16.701>Wis.Adm.Code Chapter Adm 9 to indicate that vendors must register with VendorNet to bid with the State and/or receive contracts  Change Wis.Stats. 16.75 to identify legal notice as electronic notification  The State should establish a centralized CIO position to provide consistent direction to the agencies – Centralized leadership in Information Technology would support the States business strategies and goals while insuring that technology decisions remain aligned with IT strategies  Develop incentives (financial or others) to reward agencies and staff for participating in new statewide procurement initiatives THIRD STEP… ADDRESS POLITICAL CONSIDERATIONS ORGANIZATIONAL & POLITICAL CONSIDERATIONS
  • 83. © 2000 Advanced Data Concepts, LLC State of Wisconsin IMPLEMENTATION GAME PLAN
  • 84. © 2000 Advanced Data Concepts, LLC State of Wisconsin 84 Implementation Timeline and Preliminary Cost Estimates IMPLEMENTATION GAME PLAN MAJOR INITIATIVE Q1-2001 Q2-2001 Q3-2001 Q4-2001 I Data Warehouse: - Design - $250 - 300K - Development $100 - 150K - Implementation $75 - 100K - Training $50 - 75K - Hardware: Servers - $75K - Software: DB License $100K, DB Tools $125K - Software: Query Tools $250-$400K II Procurement System Evaluation & Selection - In-house Solution vs. Package Software - Consider AMS Advantage Upgrade III Reengineering Procurement Processes - Imperative Implementation - Process Gap closure IV Vendor Data Rationalization - Reconcile and Cleanse Vendor Data - Migrate to Single Master Vendor File V Implement UN/SPSC Commodity Code System - Implementation Assistant to SBOP VI Strategic Sourcing - Phase I - Commodity/Service Selection $50-$75K - Market Analysis $30-$60K - Specification Development $100-$150K - Agreement Management $25-$50K VII E-Procurement (Pilot) VIII Establish Implementation Committee(s) & Communications Program $300,000 Design, Development, & Implementation $500,000 - 625,000 $80,000 - $100,000 Hardware & Software $550,000 - $700,000 DOA $200,000 DOA $50,000 To Be Determined - based on number of agencies and scope of services
  • 85. © 2000 Advanced Data Concepts, LLC State of Wisconsin BEST PRACTICES PROCESS MAPS
  • 86. © 2000 Advanced Data Concepts, LLC State of Wisconsin 86 BEST PRACTICES PROCESS MAPS FOR THE DESIRED FUTURE STATE HAVE BEEN DEVELOPED  Process Maps illustrating “Best Practices” in procurement have been developed in the following areas: – Direct Charge Process – Purchase Card Process – Simplified Bid Process – Statewide Contract – Sealed Bid – RFP Services – Quarterly Procurement Plan – Accounts Payable – Statewide Contract RFB / RFP – VendorNet Registration – Special Services Process Maps are presented on the following pages of this section of the report. BEST PRACTICES PROCESS MAPS
  • 87. State of Wisconsin Procurement Analysis Project APPENDICES
  • 88. © 2000 Advanced Data Concepts, LLC State of Wisconsin 88 GLOSSARY OF TERMS  AM - Account Management  AP - Accounts Payable  Baseline Spend Data - Spend information for a commodity for a designated time period to base future cost savings  Bidders List - A listing of all vendors who wish to do business with the State of Wisconsin.  Browser - A software application used to locate and display Web pages.  Browser-based Query - The ability to request information from Web databases.  Data Marts - A database, or collection of databases, designed to help managers make strategic decisions about their business.  Data Warehouse - A collection of integrated subject-oriented databases designed to support the decision-support-system function.  “DW Load” - Data Warehouse Load  EAPS - Encumbrance Accounting and Payment System  EFT - Electronic Fund Transfer  FARS - Financial Accounting Reporting System  FMS/Proteus - Financial Management System/ Purchasing and Cost Accounting System
  • 89. © 2000 Advanced Data Concepts, LLC State of Wisconsin 89 GLOSSARY OF TERMS  GL - General Ledger  OLAP - Online Analytical Processing, a category of software tools that provides analysis of data stored in a database.  Process Maps - a graphic description of a process showing the sequence of process tasks, for a specific purpose from a selected viewpoint.  N-Tier - A special type of client/server architecture consisting of well-defined and separate processes, each running on a different platform.  Client/Server Architecture - A network architecture in which each computer or process on the network is either a client or a server. Servers are powerful computers or processes dedicated to managing disk drives, printers, or network traffic. Clients are PCs or workstations on which users run applications.  RAPIDS - Purchasing System for DWD  RFB/RFP - Request for Bid / Request for Proposal  TIPS - Transportation Interactive Procurement System  UN/SPSC - United Nations Standard Products and Services Codes system is an open, global standard that provides a logical framework for classifying products and services of all kinds throughout the world. It is structured as a five-level hierarchy. At each level, a two-character numerical value classifies each item more specifically.
  • 90. © 2000 Advanced Data Concepts, LLC State of Wisconsin 90 GLOSSARY OF TERMS  Vendor Table - A list of all vendors who have done or are currently doing business with the State of Wisconsin.  WisMART – Wisconsin State Management Accounting and Reporting Tool WISCONSIN STATE DEPARTMENTS DHFS - Department of Health and Family Services DOA - Department of Administration DOC - Department of Corrections DOT - Department of Transportation DWD - Department of Workforce Development SBOP - State Bureau of Procurement UW/System - University of Wisconsin
  • 91. © 2000 Advanced Data Concepts, LLC State of Wisconsin 91  State of Georgia  State of Washington  State of Pennsylvania / State of Ohio  Dell Computer SELECTED CASE STUDIES CASE STUDIES
  • 92. © 2000 Advanced Data Concepts, LLC State of Wisconsin 92 STATE OF GEORGIA  Georgia’s Department of Administrative Services (DOAS) implemented PeopleSoft Inc. ERP software, on time, 18 months, and on budget, at $52 million 1999  “Big bang” approach – went live with ERP system throughout the entire organization at once – Modules include financials, purchasing and human resources – Provides better compliance with Generally Accepted Accounting Principles (reduce audit time by 50%) – Enabled the consolidation of old, non-integrated mainframe applications  Success factors: – Strong support from Governor’s Office – Extensive planning – Effective communications through project Web page, e-mail, instant messaging, and face-to-face meetings – Needed to add temporary employees to help oversee the project – Extensive training of existing staff – Effectively managed regulations, boards, commissions and agencies to minimize turf wars and maximize cooperation CASE STUDIES
  • 93. © 2000 Advanced Data Concepts, LLC State of Wisconsin 93 STATE OF WASHINGTON  Selected AMS’ E-Procurement solution, called Buysense, which allows the state to purchase goods and services online. (July 2000)  AMS’s Buysense is powered by software from Ariba, Inc. and can be implemented in three to four months.  In pilot study, a transaction made through Buysense reduced transaction cycle time by over 60%.  State officials intend to leverage embedded tracking technology to increase the number of purchases at government discount rates.  When fully implemented, the state expects to have 10,000 users making more than 500,000 transactions annually totaling approx. $150 million in expenditures  Deal is structured such that AMS’ revenue will come from transaction feeds charged to both the State and vendors. Supplier will pay a percentage of the value of the transaction, <1%, and the state will incur a purchase order fee of $3.30, but will drop to as $2.50 as transaction volumes increase toward target of 500,000 by the fourth year. CASE STUDIES
  • 94. © 2000 Advanced Data Concepts, LLC State of Wisconsin 94 PENNSYLVANIA & OHIO  Have successfully utilized “Reverse Auctions” to realize cost savings.  Pennsylvania has claimed savings of $11 million in 2000.  Ohio is the first state in the U.S. to conduct competitive, Internet auction of $250 million in interim Treasury funds. – Using new competitive live auction system, BidOhio, has generated tax savings of over $3 million with the last 12 auctions. CASE STUDIES
  • 95. © 2000 Advanced Data Concepts, LLC State of Wisconsin 95 DELL COMPUTER  Implemented packaged E-procurement suite from Ariba  Established electronic catalogs for suppliers  Routing about $10 million per month worth of requisitions, representing a broad range of non-production commodities CASE STUDIES
  • 96. © 2000 Advanced Data Concepts, LLC State of Wisconsin 96 E-PROCUREMENT VENDOR LISTING Source: Forrester Research, Inc Ariba Commerce One Oracle SAP Comments Clarus Sun-Netscape Intellisys PeopleSoft Concur Rightworks Vendors Market leader known for usability; trailing Commerce One with supplier links Leads with supplier links; backing away from pushing own requisitioning tool Good workflow; good potential base with direct materials, will play to installed base Less aggressive than Oracle but same key characteristics; will play to installed base Build-in analysis tool; direct buyer-to-supplier links Good support for exchanging trading info; no supplier clearinghouse connections SupplyNet hosted catalog service acts as a clearinghouse for suppliers Links to Commerce One’s MarketSite; similar direct material potential to Oracle, SAP Partnered with Nortel to deliver worldwide as British Telecom did with Commerce One Fewer than 10 customers; built-in analysis tool; links to Commerce One’s MarketSite WillSurviveMaySurvive Full Capabilities Some Capabilities No Capabilities E-PROCUREMENT VENDORS
  • 97. © 2000 Advanced Data Concepts, LLC State of Wisconsin 97 E-PROCUREMENT DEPLOYMENT STRATEGIES 0 10 20 30 40 50 60 70 80 ERP Browser Human Resources Financial Other No Integration % of Respondents Home Built-System 65% Commercial Product 22% Commercial Service 10% Supplier Solution 3% What is your Internet procurement system? With which applications is your procurement system integrated? Data Source: Forrester Research, Survey of 40 Companies SYSTEM SOLUTIONS
  • 98. © 2000 Advanced Data Concepts, LLC State of Wisconsin 98 E-Government (G2C) Services E-Commerce (G2B/Trade Exchanges) Enterprise Resource Planning N-Tier Architecture/Internet Enabled Government Finance Officers Association, October 2000 Building Blocks ERP Systems and N-Tier Architectures form the foundation of E-Government and E-Procurement offerings. SYSTEM SOLUTIONS
  • 99. © 2000 Advanced Data Concepts, LLC State of Wisconsin 99 N-TIER SYSTEMS ARCHITECTURE IS REQUIRED TO SUPPORT THE STATE’S DIGITAL GOVERNMENT INITIATIVES  EAS solution providers have, or are in the process of migrating their product offerings to n-tier architectures.  E-Procurement (G2B) and E-Government (G2C) solutions leverage n-tier architectures.  Tiered architectures provide increased performance, flexibility, maintainability, reusability and scalability, while hiding the complexity of distributed processing from the user.  Classical distributed, client/server architectures typically consist of three (3) tiers: Presentation, Application, and Data (see appendix x). – Internet adds variations on the Presentation and Application tiers to support web browsers (i.e., thin clients) and web servers, resulting in the “n-tier” characterization. SYSTEM SOLUTIONS
  • 100. © 2000 Advanced Data Concepts, LLC State of Wisconsin 100 N-Tier Systems Architecture Tier 3 - Database Servers State Agencies Tier 2i - Web Servers Vendors Accounting WI WAN Internet Purchasing Financial Data Warehouse Supplier Systems Spend Data Mart Strategic Sourcing Data Mart Vendor Data Mart eCatalogs Invoices EFTs Local Government Agencies Remote State Agency Users Tier 1i - Presentation (Thin Client / Browser) Internet Tier 2 - Application Servers WI Intranet State Agencies Tier 1 - Presentation (Fat Client / WinTel) SYSTEM SOLUTIONS
  • 101. Advanced Data Concepts, LLC State of Wisconsin Procurement Analysis Project Purchasing Data Warehouse Project Development & Implementation January 2001
  • 102. © 2000 Advanced Data Concepts, LLC State of Wisconsin 102 IMPLEMENTATION GAME PLAN DATA WAREHOUSE IMPLEMENTATION METHODOLOGY PROJECT ORGANIZATION DATA MODEL ANALYSIS SUBJECT AREA SOURCE SYSTEM ANALYSIS SPECS PROGRAMMING BREADBOX ANALYSIS DATA WAREHOUSE DATABASE DESIGN TECHNICAL ASSESSMENT TECHNICAL ENVIRONMENT PREPARATION POPULATION Adapted from Building the Data Warehouse by W. H. Inmon
  • 103. © 2000 Advanced Data Concepts, LLC State of Wisconsin 103 DATA WAREHOUSE IMPLEMENTATION TASKS  PROJECT ORGANIZATION – Establish Purchasing Data Warehouse project steering committee • Responsible for managing project priorities • Manage expectations of agencies as to benefits they will derive from the data warehouse • Expedite resolution of major issues – Establish project office – Organize project team and define key roles • Project Manager, Architect, Senior Business Analysts • Database Administrator(s) • IS Manager(s) responsible for supporting the project and development – Determine enterprise communications strategy IMPLEMENTATION GAME PLAN
  • 104. © 2000 Advanced Data Concepts, LLC State of Wisconsin 104 DATA WAREHOUSE IMPLEMENTATION TASKS …  DATA MODEL ANALYSIS – Identify major subject areas (e.g., strategic sourcing, vendor analysis, commodity spend, etc.) • keys, attributes, relationships among data attributes, etc. – Separate primitive from derived data – Entity Relationship Diagram (ERD) – Midlevel Data Model (data item set) – Physical Data Model  BREADBOX ANALYSIS – Sizing (gross estimates) of the purchasing decision support environment; projecting how data the data warehouse will hold – Develop projections for one-year and three-year horizon for the purchasing data warehouse environment – Determine levels of granularity - the level of detail held in the units of data in the data warehouse IMPLEMENTATION GAME PLAN
  • 105. © 2000 Advanced Data Concepts, LLC State of Wisconsin 105 DATA WAREHOUSE IMPLEMENTATION TASKS …  TECHNICAL ASSESSMENT & PREPARATION – Review both the methods for loading the data warehouse and its access within acceptable performance requirements • ability to manage large amounts of data • ability to organize data according to data model • ability to both receive and send data to a wide variety of technologies supported in the various agencies • ability to allow data to be accessed flexibly – Determine timing requirements for data loads – Determine security requirements – Define amount of disk space storage needed – Estimate volume of processing anticipated – Profile nature of traffic – short or long bursts – coming out of the technology that controls the data warehouse – Identify required network links – Define technical and online analytical processing (OLAP) tools • Business Objects, Crystal Reports, Cognos PowerPlay • DBMS technology and operating system • Performance monitors – Ensure that facilities are available when needed IMPLEMENTATION GAME PLAN
  • 106. © 2000 Advanced Data Concepts, LLC State of Wisconsin 106 DATA WAREHOUSE IMPLEMENTATION TASKS …  SUBJECT AREA ANALYSIS – Reconfirmation of the scope based on the data to be included – Definition of what data is to be populated – Evaluate the business questions: • What business questions need to be answered by the data warehouse • Which business questions will not be answered by the data warehouse  SOURCE SYSTEM ANALYSIS – Identify the source data for purchasing data mart – Data integration – key structure/key resolution as data passes from the operational environment to the DSS environment – Mapping of data from the operational environment to the decision support environment – Develop meta data (data dictionary for all data elements) – Determine how time variancy will be created from current value data IMPLEMENTATION GAME PLAN
  • 107. © 2000 Advanced Data Concepts, LLC State of Wisconsin 107 DATA WAREHOUSE IMPLEMENTATION TASKS …  DATA WAREHOUSE DESIGN – Develop data schema (star schema and facts tables) based on previously defined data model and source system analysis – Physical denormalization of data where applicable (e.g., where performance improvements are desired) – Creation of data artifacts to ensure that relationships are preserved (even if source system no longer retains the needed data) – Define performance improvement opportunities through the use of derived, summarized, and aggregated data – If the volume of warehouse warrants, consideration should be given to partitioning the data and distributing portions of it to remote sites – Identify indexes IMPLEMENTATION GAME PLAN
  • 108. © 2000 Advanced Data Concepts, LLC State of Wisconsin 108 DATA WAREHOUSE IMPLEMENTATION TASKS …  PROGRAMMING SPECIFICATIONS – Some of the major issues associated with developing the formalized interfaces include: • Determining if two sets of programming specifications may be needed – one for the initial load and one for the ongoing operation • Time stamping of operational data • How updates are made to the data warehouse  POPULATION – Execution of the programs – Frequency of population – Purging of data IMPLEMENTATION GAME PLAN
  • 109. © 2000 Advanced Data Concepts, LLC State of Wisconsin 109 DATA WAREHOUSE IMPLEMENTATION - TIMING IMPLEMENTATION GAME PLAN Activities Est. Costs January February March April May June July I Project Organization $3,600 II Data Model Analysis $48,000 III BreadBox Analysis $12,000 IV Technical Assessment $33,000 & Preparation V Subject Area Analysis $9,000 VI Source Systems Analysis $12,000 VII Data Warehouse Design $48,000 VIII Program Specifications $125,000 IX Programming (Code & Test) $125,000 X Rollout and Training $75,000 1 Week 4 Weeks 2 Weeks 4 Weeks 1 Week 1 Week 4 Weeks 4 Weeks 8 Weeks 2 Days / Agency
  • 110. © 2000 Advanced Data Concepts, LLC State of Wisconsin 110 DATA WAREHOUSE IMPLEMENTATION - INVESTMENT  Cost Considerations  Hardware and Software – data storage, OLAP tools, hardware, and related licensing fees  Development costs are variable and depend heavily on the state of existing operational purchasing systems  Development may require the acquisition of new hardware and/or software environment  Ongoing maintenance will require process IMPLEMENTATION GAME PLAN
  • 111. © 2000 Advanced Data Concepts, LLC State of Wisconsin 111 DATA WAREHOUSE IMPLEMENTATION – RISK MANAGEMENT Risk Area Techniques to Mitigate Risk TECHNICAL New client/server platform Trained, dedicated technical support Vendor partnership to share risk New extract and query tools Tool training Vendor consulting Proof-of-concept project Lack of experience with data warehousing database design Warehouse design training Use consultants Unknown data volumes/capacity Proof-of-concept project (start with one agency and rollout to others) SCOPING Undocumented source system data, poor quality of source data Structure analysis tool, data pre- verification Legacy application system specialist Initiate metadata repository and data rationalization Data quality program and data stewardship Data subject scope unclear Facilitated work sessions with user sponsors to agree on subjects, priorities Track scope change requests Stovepipe perspective Global enterprise data model Identify related information needs Mixed operational and data warehousing requirements Establish operational database and data warehouse IMPLEMENTATION GAME PLAN
  • 112. © 2000 Advanced Data Concepts, LLC State of Wisconsin 112 DATA WAREHOUSE IMPLEMENTATION – RISK MANAGEMENT … Risk Area Techniques to Mitigate Risk ORGANIZATIONAL Multiple uncoordinated data efforts Common architectural framework Assign single accountability Limited experience of data warehousing team with business Increase analysis and design time estimates No user participation on project Stop project until users assigned IS-initiated project Obtain business sponsor/support MANAGEMENT/ADMINISTRATIVE Delivery dates determined before scooping Negotiate reasonable subject scope Identify incremental deliverables IMPLEMENTATION GAME PLAN

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