What Does It Take for State Government to Consistently Deliver High Performance? October 23, 2013

1. Kinney Poynter, NASACT Keith Johnson, Oracle Michelle Strauss, State of Delaware PN Narayanan, Pennsylvania Treasury What Does It Take for State Government to Consistently Deliver High Performance?October 23, 2013

2. Opening Remarks ModeratorR. Kinney Poynter Executive Director NASACT SpeakerMichelle StraussAssistantDirector of Financial Systems Department of Finance Division of Accounting Delaware SpeakerKeith JohnsonDirectorState and Local GovernmentPublic Sector Industry Business UnitOracle SpeakerPN NarayananChief Information OfficerPennsylvania Treasury

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4. Reaching New Heights: Providing Consistent and Sustainable High Performance at the State LevelReport Summary by Oracle and the National Association of State Auditors, Comptrollers and Treasurers (NASACT)Keith JohnsonOracle Public Sector IBU

5. Introduction • It’s no secret these are challenging fiscal times – state governments face deep budget cuts, eroding tax bases and declining property values • It is more important than ever for state governments to create a high-performing system that consistentlymaximizes public value • So what does it take for state government to consistently deliver high performance?

6. Why Look at High Performance Government? • Improving Performance not new – took on new urgency during fiscal crisis • Performance Stat, CopStat became popular in 90’s. Focused on operational efficiency • Performance Based Budgeting, Benchmarking, Lean, Six Sigma and other techniques • Wide variety of tools, techniques used. Limited “COTS” capabilities

7. “High Performance” includes many areas • Operational efficiency such as scorecards, process improvement, quality • Community Conditions – Becoming more widely used measure of how to gauge citizen perception and view of service quality/deficiencies. • Efficient deployment of technology resources. Cloud computing, Infrastructure as a service, Shared Services. • Guarding against Fraud, waste and abuse. • Transparency – providing data to citizens and getting feedback.

8. Survey Results:Talent ManagementCloud Computing ComplianceTransparency

9. Survey Results 18 States, 2 US Territories Responded Before states can take steps to improve systems and more efficiently deliver services, they need to evaluate how programs perform today. 33% track performance in spreadsheets 29% track with legacy, homegrown analytical tools 8% use COTS analytical tools 17% do not measure program performance + Puerto Rico & Guam

10. 1. Aiming High - Talent Management States rank recruiting, training, retraining talent as the most important thing to support High Performance Can you attract and retain younger employees to meet your workforce needs? What % of your departments workforce will retire in the next 5 years? Does your department have adequate staff to perform its job? Yes – 46% No – 38% ? – 16% Less Than 10% 28% 37% 10% to 20% 30% to 50% 9% 52% No 48% Yes 50%+ 2% eRebublic Survey June 2013

11. Aiming High - Talent Management Some Talent Management Best Practices • Develop a Social Recruiting Strategy • Engage Your Line Managers • Prepare Now for Upcoming Talent Shortage • Take Stock of Internal Talent • Line Up Future Leaders • Automate Talent Management • Manage Talent Anytime, Anywhere

12. 2. Aiming High - Cloud for High Performance States are split on the use of cloud-based solutions. Of those using cloud: 17% for technical applications i.e. email, SharePoint in the cloud 13% for business applications i.e. finance, HCM 25% using for a variety of purposes applications

13. Overcoming Cloud Hurdles Despite challenges, many states have plans to adopt cloud solutions in the next five years. What cloud solutions are they considering? 42% email 38% document management 25% human capital management 17% financial management Take Away: Cost savings and efficiency as the primary reason for adopting cloud services

14. 3. Keeping Score – Tracking Compliance States must comply with legislation and mandates, but a majority of states are not leveraging automated tracking. Internal Controls 50% tracking is not automated0% full automation Improper Payments Act 42% don’t automate tracking Segregation of Duties 25% tracking is partially automated 58% no automation Take Away: Automating administrative processes saves time and budget, and provides real-time information on compliance status

15. Foul Ball – Identifying Fraud, Waste and Abuse Fraud, waste and abuse lead to inefficient spending, misuse of tax dollars and public distrust. Unfortunately, many states fall victim to fraud, waste and abuse each year. What type of fraud are organizations experiencing? 71% say employee fraud 67% indicate recipient fraud 63% site expense related fraud 50% say provider fraud What are organizations doing about fraud? 33% are using or implementing systems to detect fraud 29% are using fraud detection software 25% are enhancing reporting systems 25% are requiring recipients to take action when fraud occurs Take Away: States should consider technology tools to help establish better tracking systems to detect fraud and identify the sources of waste

16. 4. Visualizing a Win – Government Transparency Transparency is critical to ensuring tax dollars are spent appropriately, establishing public participation and collaboration Take Away: A comprehensive government transparency website is important for states

17. Charting a Path • Evaluate current programs • Examine technology options • Educate and share best • Automate • Eliminate fraud and abuse

18. Reaching New Heights: Providing Consistent and Sustainable High Performance at the State Level • PN Narayanan, Chief Information Officer, Pennsylvania Treasury • Michelle Strauss, Assistant Director of Financial Systems, Department of Finance, Division of Accounting, State of Delaware • Bob Sabo, Executive Director Oracle Public Sector Industry Business Unit

19. State of Delaware

20. Delaware’s Financial SystemFirst State Financials (FSF) • Legacy System • DFMS – State System for 20+ years • PeopleSoft • Implemented 8.9 in July 2010 with Integration to HCMS • Upgraded to 9.1 in October 2012 • Project and Executive Sponsor Support • Working with the State Technical and Change Management team

21. Delaware’s Background • State of Delaware • 77 Organizations • 33 State Agencies • 19 School Districts • 23 Charter Schools • 2 Higher Education Institutes

22. Modules Implemented Financials • GL & KK • AP, PO & ePro • Billing & Accounts Rec • Asset Management • Project Costing • Grants • Contracts • Cash Management • Bolt-on

23. Transparencyhttp://www.delaware.gov/topics/transparency

24. Transparencyhttp://www.delaware.gov/topics/transparency State Employee Credit Card Transactions Web Checkbook

25. Improving Processes • Hackett Benchmarking • 2006 in old system • 2013 after upgrade • Communication with Organizations • Financials Advisory Committee (FAC) • Presence at School Business Manager (BM) Meetings • Notifications and Alerts • Interfaces • Reporting • Contact with Oracle & other State’s

26. Hackett Benchmarking • Improvement seen from 2006 to 2013 • Looking at other areas for improvement • Reviewing organization’s workflow • Expense Module • Scanning • Ghost Card

27. Communications • FAC • Meet bi-monthly • Controllers from all organizations invited • Discuss any upcoming items & any issues • School BM Meeting • K12 Group • Charter School Meeting & Local School District Meeting

28. Communications Continued • Service Desk • Notifications • Alerts • Available for end users to report issues and receive assistance Communicate! Communicate! Communicate!

29. Interfaces • Standard Interfaces • Time saved from dual data entry • Interface file formats posted on the extranet • Work with the organizations on testing • Insert job into our cybermation schedule

30. Reporting • Current reporting • Mobius/Document Direct • Other reporting tools • Query • nVision • RFP Issued • Expectations

31. Know Your Resources • Oracle • Other States • Alliance Conference • HEUG/PSUG Calls

32. Interactions • End Users • Key User Groups • Hackett • Oracle • Other States

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34. GRC Advance Controls Project at PA Treasury PN NarayananChief Information Officer

35. Organization Overview • Processed about 35 million payments worth more than $75 billion last fiscal year. • IT systems manage about $15 billion in State assets. • Unclaimed Property program collected $300 million and returned over $100 million, generating nearly $200 million for the General Fund in FY 12-13. • PA 529 College Savings Program is setting new records: nearly $3 billion in assets, serving 177,000 accounts as of June 30, 2013. • Prevents an average of $100 million in erroneous payments annually through pre-transactional audits. Rob McCordState Treasurer GRC Advanced Controls

36. Fiscal Review • All payments by the Commonwealth of PA reviewed by Fiscal Review • 35 million transactions per year; $75 Billion in spend per year • Detect duplicate and incorrect payments • Maintain audit checklists • Collect metrics

37. Adv Controls – Project Objectives • All payments by the Commonwealth of Pennsylvania to be reviewed by GRC Advanced Controls • Detect Duplicate and Incorrect Payments • Two phase implementation – • Phase 1: 5 Controls with current legacy system • Phase 2: ERP+GRC Go live July 2014 (70 analytics - 25 controls) • Deploy additional controls planned for CY14

38. Two Phase Strategy Phase 2 PeopleSoft Go-Live Phase 1 GRC- 5 controls Phase 1 GRC Project kick off Jan 2013 July 2013 Jan 2014 July 2014 July 2012

39. Before GRC Advanced Controls Agencies Payment Requests Current Payment System Fiscal Review Team Payment Requests E-Business Custom built SQL system • Sampling • 100% over threshold SQL /Legacy

40. Phase 1 – GRC Advanced Controls Agencies Payment Requests Current Payment System Fiscal Review Team GRC Payment Requests GRC Advanced Controls E-Business • Risk Graph • Map Reduce Enabled –4 dedicated machines • Control Analysis 15-20mins • Linux • Oracle DB Daily Graph Update Job ~20 mins Custom Business Objects to payment tables using GRC Extensibility Framework SQL/Legacy

41. Phase 2 – GRC + PeopleSoft Agencies Payment Requests PeopleSoft Financials (New Payment System) Fiscal Review Team Daily Graph Update Job GRC PeopleSoft GRC Advanced Controls E-Business • Risk Graph-updates • Map Reduce Enabled –4+ dedicated machines • Control Analysis • Linux • Oracle DB Payment Requests Standard GRC Connector for PeopleSoft Auto Payments on Hold Release Payments on Hold not selected for audit SQL/Legacy

42. Key Controls - Examples 1. Phase 1 Pilot Project • Split Payments • Using Vendor payments – PA 0006 • Using Advance accounts – PA 0007 • Payment over a threshold value. PA 0008 • Payment with missing TIN PA 0009 • First Payment – PA 0011 2. Phase 2 ERP Integration 70 analytics – 25 Controls

43. Partial Definition Split Payments • 4 Business Objects • 10 filters • 2 Functions • 9 Attributes

44. Project Results/Benefits Week 1 - Total Payments1 : 92,613 = $1.85 billion Week 2 - Total Payments1 : 91,068 = $580 million 1 Sample weekly data, 2 Ready for Fiscal Review – not actual savings 1 Sample weekly data, 2 Ready for Fiscal Review – not actual savings

45. Future Expansion Plans • Complete the Integration with PeopleSoft • Build Analytics out of GRC Results • Help Agencies to identify the problems at source • Refine controls to meet changing needs of government regulations and code. • Develop a dashboard for executive overview

46. Summary Treasurer Rob McCord: “We are a fiscal watchdog that ensures tens of billions of dollars in payments are lawful and correct.” • Fiscal review is ‘Mission Critical’ business process for Treasury • $75 billion spend & 35 million transactions mandated to be reviewed • Enable continuous improvements for upstream Agency processes • Realized value before ERP go-live with GRC Advanced Controls

47. The Path to a High Performing Government Keith JohnsonOracle Public Sector IBU October 24, 2013

48. Questions • How closely aligned is the budgeting and performance management process at your organization? How closely aligned should it be? • What process improvement methodologies turn ideas into implemented savings in a culture resistant to change? • How do you overcome resistance / lack of acceptance? • How can you manage performance improvement programs that cross departmental lines? • What tools should you invest in to support high performance?

49. Things are changing! • Economic/budget crisis • Fewer resources – greater demand for efficiency • Internet savvy citizens demand more • Demand “commercial” like access to government • Demands for transparency • What is my government doing? • Demands for accountability • How is my government doing? • New technology options • Cloud – Advanced Web – Social Networking • Private Sector Techniques • Six Sigma, Lean, TQM etc.

50. Why can it be difficult? • Resistance to change • Different way to make decisions • Agency resistance • Political Agendas • Methodology paralysis • (So many choices, where do we start?) • Change costs money (at least up front) • Who has time to do this! • “Why is performance information often least used in the worst fiscal times?” Scott Pattison – Executive Director, National Association of State Budget Officers – March 2012