The Business Case for IT

1. The Business Case for IT Beverly Wheeler Industry Principal SAP Public Services

2. QUESTIONS TO ANSWER • How can organizations analyze and justify a project in these difficult times? • How can you win support and influence stakeholders? • Is it possible to accurately measure and assess ROI (return on investment)?

3. JUSTIFICATION • Increase Efficiency • Increase revenues through better compliance • Decrease costs of serving constituents • Reduce headcount on non-value add tasks (attrition or RIF) • Increase Productivity • Automate processes • Mitigate Risk • Minimize reliance on critical skills • Adopt open standards • Minimize exposure to risky vendors • Minimize exposure to a single vendor • Reduce Complexity • Training, adopt common tools, standards • Provide better flexibility with respect to deploying resources • Improve Flexibility • Better respond to changing process demands

4. QUESTIONS TO ASK YOURSELF • Can you baseline your performance today? • Are the strategic and tactical clear and agreed upon? • What limitations do you face? • Unions • Existing skills • Demographics of existing workforce • Political climate and timing • Can the project be implemented in phases?

5. QUESTIONS TO ANSWER • How can organizations analyze and justify a project in these difficult times? • How can you win support and influence stakeholders? • Is it possible to accurately measure and assess ROI (return on investment)?

6. WINNING SUPPORT • Have a business reason for change • Align the strategy and tactics with the objective • Get stakeholder input early • Secure executive sponsorship THROUGHOUT the project • Calculate the NPV/ROI and have a solid business case • Be realistic about assumptions • Under promise and over-deliver • Think Big/Start Small

7. QUESTIONS TO ANSWER • How can organizations analyze and justify a project in these difficult times? • How can you win support and influence stakeholders? • Is it possible to accurately measure and assess ROI (return on investment)?

8. CALCULATING ROI • ROI is an art, not a strict science • Do you know your current costs? • Do you have industry benchmarks? • What is the cost of doing nothing? • What are the assumptions? • What costs should be considered? • Software, Hardware, Consulting, internal resources, travel • What is the timeline? • What is your organization’s track record in similar projects? • Where is this technology or system in it’s adoption lifecycle? • ROI or NPV?

9. ROI Value Assessment Methodology Value Assessment helps you to align business, value and IT topics • Two main goals of a • Value Assessment • Value Impact Estimation Strategic value impact (SVI) and strategic process impact Determine what business value the project brings which leads to a better stakeholder value • Net Present Value Calculation 2. Net Present Value (High Level NPV) The NPV of an investment is the total of all payments caused by the customer investment. Short, middle and long-term roadmap about the investment related to the Solution

10. Business Challenges

11. Opportunity Analysis Key Value Drivers • Integrated HR and Payroll systems • Employee and Manager Self-Service • Improved recruiting processes • Improved analytics capabilities • HR • Automated time reporting • Decreased errors and manual adjustments • Automatic garnishments • Online pay stubs 2. Payroll 3. Finance • Fewer reconciliations required • Improved budgeting process • Faster time to close • Grants management KEY OPPORTUNITIES 4. Procurement • Self service purchase requisition and approval • Reduction in maverick spend through compliance to contracts • Periodic re-negotiation of contracts through bidding • Rationalization of suppliers 5. Facilities, Maintenance & Operations • Integration of Maximo, P3, and other systems to core enterprise systems • Ability to report and analyze data to make management decisions • Improved procurement efficiency 6. Transportation • Integration of Transportation’s systems to core enterprise systems • Improved data accuracy and availability • Ability to report and analyze data to make management decisions

12. Key Opportunities Analyzed • HR 2. Payroll 3. Finance KEY OPPORTUNITIES 4. Procurement 5. Facilities, Maintenance & Operations 6. Transportation

13. 1. HR Pain Points Solution Enablers Limited access to information • Because information is stored in multiple systems and is difficult to access, HR employees spend much of their time processing transactions vs. more strategic activities • Schools have limited access to HR data and need to call whenever they need information • The school board has limited visibility into HR information to help in making key decisions • Multiple systems and processes result in data integrity issues; no “single version of the truth” • Only a few employees understand how to find the correct information for reporting purposes, and many of them are retiring Manual processes • Multiple systems require duplicate data entry (e.g., TAS, HRS, etc) • HR transactions are time consuming; even within HRS, employees need to go through multiple screens to do one transaction • For recruiting, each area has its own method for tracking and following up with prospects; most are manual. • There is minimal sharing of information across District HR units regarding existing job openings and efforts to fill those openings • Reporting processes are manual; employees need to look through multiple systems to find information Lifecycle Management • Integrate employee processes with business processes to achieve optimal business results • Enable workforce cost planning & simulation • Conduct career succession planning • Enable shift planning with multiple workforce calendars Transaction Management • Conduct HR Administration • Manage payroll, benefits, time management Position Budgeting & Control • Determine financing requirements of vacant positions on the basis of Personnel Cost Planning. Relationship Management • Enable Manager Self-Service • Enable Employee Self-Service Recruiting • Enhance recruiting process and enable full visibility • Streamline and work flow enabled on-boarding process • Improve processes for job bidding tracking Performance Management • Enable employees to enter and review performance appraisals and display employee data, e.g. benefits enrollment, profiles, salary history, etc. • Quickly create training that aligns with performance needs • Align individual activities and tasks with the corporate vision to increase contributions from human capital

14. 1. HR  Benefits • Tangible Benefits Notes: 1. Based on 75,000 HRS transactions per year that could be moved to ESS and 100,000 duplicate transactions entered into TAS. Per Hackett Group, the average cost per transaction is $17. 2.Based on 9260 total managers (2510 certificated managers + 6750 Classified managers; assume they spend 10% of their time on administrative issues related to managing employees; 3. Based on 101,147 applicants processed per year. Assumes 10% are hired at a cost per hire of $500. 4. Based on 503 total employees in HR. Assumes each spends 10% of their time finding information for reporting purposes. • Strategic Benefits • Integrated analytics providing better access to information to make business decisions • Consistent execution of corporate strategy through better visibility and accountability • Ability to attract, develop, and retain talented people • Ability to manage changing organizational culture and employee attitudes • Fewer interfaces, skill sets, and software packages • Delivery of integrated business processes driving efficiency and productivity

15. Key Opportunities Analyzed • HR 2. Payroll 3. Finance KEY OPPORTUNITIES 4. Procurement 5. Facilities, Maintenance & Operations 6. Transportation

16. 2. Payroll Pain Points Solution Enablers Current system presents high risk • Current 30 year old payroll system does not adequately meet the needs of employees, within and outside of schools • Significant ITD and Payroll Unit resources are used to keep the payroll system running, vs. providing service to schools through more strategic activities • Only a few ITD employees have in-depth knowledge of how the Payroll system functions. Most of this knowledge is not documented • Turnover rate is high in Payroll; many employees leave before they are fully trained on the system • Payroll and HR systems are not integrated • Reporting capabilities are limited Manual processes and high error rate • Multiple payroll runs are required (9 per cycle), with a high volume of adjustments (24,000/pay cycle) requiring significant manual effort • Resolving errors requires significant resources; employees in Payroll incur 16 to 20 hours per employee per week in overtime to resolve errors • Time reporting process is manual, requiring significant data entry and increasing the likelihood of errors • Employees entering time are not held accountable for the accuracy of their information • Deduction process is manual, such that a great deal of labor cost is incurred by the District to process relatively simple transactions mySAP HR Payroll • Includes core payroll activities and workflow processing to streamline and automate activities, including: • Essential core payroll functions • Direct deposit off-cycle payrolls • Off-cycle payrolls • Retroactive adjustments • Calculation of averages • Assessment of time data • Loans • Garnishments • Year-end processing • Includes Payroll Accounting, Tax, Social Insurance, Travel Expenses Administration, Incentive Wages, Posting to Accounting, and Forms • Provides organizations with options to establish a service delivery model to suit their specific requirements • SAP Employee Self-Service functionality for payroll enables employees to easily change their address, add to or change their banking information, display and print payslip information, or change their withholding amounts.

17. 2. Payroll  Benefits • Tangible Benefits Notes: 1. Based on 309,333 payroll adjustments in FY 2004 and 20 minutes per adjustment. Improvement estimate of 90 – 95% is the estimate of employees in Payroll. 2.Based on 2.68M time sheets per year and 10 minutes for the timekeeper to analyze each time sheet; 3.Based on 80,000 employees who are paid via ADP direct deposit. Assumes it costs $2 to print and mail each pay stub; 4.Based on 136 hours per week for manual computation and re-work of garnishment (85% of the time of four employees). 5. Per a study done by Anderson, is losing $18.7M in overpaid wages each year because employees “over-report” the amount of time they work. We have not included this amount, as it was not discussed in interviews. • Strategic Benefits • Less risk than with current 30+ year old system • Improved data accuracy • Improved reporting capabilities • Improved ability to meet employee needs • Faster response times to employee inquiries and changes

18. Total* Variance Costs **** BestCase RealisticCase WorstCase 60% +/-11% $ 449,805 $ 299,570 $ 269,883 $ 240,195 66% +/-11% $ 6,047,280 $ 4,430,237 $ 3,991,204 $ 3,552,172 54% +/-4% $ 0.72 $ 121,305 $ 116,640 $ 111,974 part of the ROI analysis 33% +/-11% $ 20.83 $ 267,051 $ 240,586 $ 214,121 35% +/-4% $ 1,093,750 $ 398,125 $ 382,812 $ 367,500 21% +/-12% $ 175,308 $ 41,232 $ 36,814 $ 32,396 22% +/-14% $ 51,412 $ 12,894 $ 11,310 $ 9,727 $ 5,570,415 $ 5,049,252 $ 4,528,088 Customer Example: Value Assessment Quantitative assessment of benefits: process efficiency (in $) KF Subprocesses Basic criterion** Duration Basic values*** Org. Mgmt/HR Funds & Position Mgmt: central Number of workdays 1302 Org. Mgmt/HR Funds & Position Mgmt: Decentralized Number of workdays 18,400 Administration Number of notifications 10 mins + 300,000 Expense reports Number of travel expenses 37 mins + 35,000 Process efficiency Recruitment Number of advertisements 9 days 250 Training & Event Mgmt: Central Number of business events 6 hours 650 Training & Event Mgmt: IT Number of business events 45 mins 1525 Total for process efficiency * Total estimated potential improvements ** Basic criterion = for example, number of Leave Requests *** Basic values **** Average costs = employee costs per minute * process duration per minute + incl. duration employee, for example

19. RECOMMENDATIONS • Remember that process improvement is a process, not an endpoint. • Remember that technology is only an enabler of change. • Be realistic about your organization, the expectations, and the climate for change. • Build the business case, based on the probability of your assumptions to support the value.