State of Texas
Briefing on Value Pocket Survey Survey
September 2 & 3, 2008
Agenda • • • • •
Introductions Overview of Business Case Methodology
Value Pocket Concepts Value Pocket Data Collection Questions
Page 1
Overview of Business Case Methodology Primary Components of STA’s Business Case Analysis Methodology
– – – – – –
ERP Costs Software 1 Hardware Implementation Upgrades Ongoing Maint. & Mgmt. Training
ERP Benefits/Avoided Costs Avoided Systems Costs
vs.
2 – Replacing current systems – Not implementing planned systems – Not performing planned/anticipated enhancements/upgrades to existing and planned/anticipated systems once implemented
Process Improvement Benefits – Value Pocket benefits Page 2
3
Value Pocket Concepts What are Value Pockets©
• Value Pockets (VPs) are the most likely sources of significant value (i.e., cost savings and other process-improvement benefits) to be found in each process/functional area within the scope of the ERP implementation • VPs must result from the ERP implementation – not able to realize without implementing ERP • STA’s proprietary formulas and calculations are used to quantify process improvement benefits obtained through the implementation of a statewide ERP System
Page 3
Value Pocket Concepts Primary Sources of ERP VPs
• VPs primarily come from two (2) sources: 1. Having “true” system-wide integration that is built and maintained by the ERP vendor 2. Introducing new technology/functionality available in a new ERP system
• VPs can be: – Dollar-Quantifiable (tangible items) • Reduce the amount of time required to perform a process (and associated comp.) • Non-FTE-related benefits – Non-Dollar-Quantifiable (intangible items) • Reduced cycle times • In support of strategic initiative(s) • Increased accuracy • Improved usefulness of information
Page 4
Value Pocket Concepts Two Basic Types of VPs
• Reduced Cost of Process Execution (efficiency). For example, reassign/reduce headcount (FTEs) by: – Reduce the time required to enter data into systems: • Avoid entering the same data/transactions into multiple systems • Avoid entering data on a form that is then entered into a system (instead of entering into system directly)
– Reduce the amount of time required to generate needed information by no longer being required to obtain and consolidate data from multiple sources (also results in faster and better decision making) – Reduce the amount of time required to reconcile data among multiple systems – Reduce the amount of time required to track transactions spread over multiple systems (e.g., avoid keeping tracking data in spreadsheets, using paper logs, etc.)
• Improved Process Outcomes/Results (effectiveness), for example: – Decreased cost of goods and services – Decreased inventory carrying costs
Page 5
Value Pocket Concepts VP Examples
PROCUREMENT HR / PAYROLL • • • • • • • • • • •
• • • •
Solicitations (RFx) Catalog Procurement Reverse Auctions Warehousing & Inventory Management • Commodity Management • Vendor Management
Position Control Basic Employee Data Personnel Management Training Payroll Employee Relations & Performance Appraisal Recruitment and PROCUREMENT VALUE POCKETS Applicant Tracking • Reduce cost of goods Common and services Benefits Administration Compensation Database • Reduce cost of conducting solicitations Time Reporting • Reduce cost to maintain vendor file Leave Accounting
• Reduce inventory carrying costs • Reduce inventoryBUDGET reorder cost DEVELOPMENT • Appropriation Budget • Operating Budget • Performance Based Budget Page 6
CORE FINANCIAL • General Ledger • Budgetary Control • Accounts Payable / Travel • Accounts Receivable & Cash Receipts • Cash Management • Cost Accounting • Grant Accounting • Project Accounting • Cost Allocation • Asset Management
Value Pocket Concepts
VPs Commonly Related to Lack of Integration Look for the following process inefficiencies when
“true” integration does not exist between systems:
1. Researching, troubleshooting, and reconciling transactions across multiple systems. These processing tasks include: – – – –
Investigating failed interface transactions Reconciling balance discrepancies between systems Making adjustments in the appropriate system(s) etc.
2. Generating ad hoc and standard management reports that require retrieving data from multiple sources, including tracking procedures using spreadsheets, paper logs, etc. These processing tasks include: – – – – –
Extracting data from multiple sources Compiling and reviewing data Formatting data into the reports Distributing the reports etc. Page 7
Value Pocket Concepts
VPs Commonly Related to Lack of Integration (cont.) Look for the following process inefficiencies when “true” integration does not exist between systems: (cont.) 3. Tracking the status of transactions outside the system on an ongoing basis using spreadsheets, paper logs, etc. 4. Manually entering data into multiple systems
Page 8
Value Pocket Data Collection VP Survey – Worksheet/Tabs
• The survey is in a Microsoft Excel spreadsheet that has a number of worksheets/tabs as depicted to the right • Data entry is only required in the “Metric Data” and “Effort-Related Data” response worksheets/tabs • You can enter hours directly into the EffortRelated Data response worksheet/tab, or use Calc Sheets, and the Calc Sheet values will be “fed” into the Effort-Related Response Data worksheet/tab • You can access the Calc Sheet that corresponds to a Value Pocket by: – Clicking on the appropriate tab at the bottom of the spreadsheet; OR – Clicking on a hyperlink that is on the Value Pocket’s row. Clicking on a hyperlink on the Calc Sheet will return you to the EffortRelated Data worksheet/tab Page 9
Introduction
Metric Data
Effort-Related Response Data VP 1 VP 2 VP 3
Calc Sheet Example
Calc Sheet 1 Calc Sheet 2 Calc Sheet 3
Value Pocket Data Collection VP Survey – Calc Sheets
• Calc Sheets are set up to apply either the Percent-of-Time Method (PoT) or the Units-of-Work Method (UoW) of calculating the total est. annual hrs. (and comp.) spent each year performing a VP activity – In the PoT method, you provide the % of time spent performing a VP activity ([4]) and the total hrs. worked on a VP activity will be calculated ([6]) – In the UoW method, you provide total hrs. worked on a VP activity ([6]) and the % of time spent performing a VP activity ([4]) will be calculated. For example, if 1,000 units are processed each year and it takes approximately 20 minutes to process each unit, enter 333 in column [6] (333.33 = 1,000 units x 20 minutes / 60 minutes per hour) Calc Sheet [1]
Individual or Group
[2]
# of Peopl e
[3]
Select Calc Method (P or U)
[4]
[5]
[6]
[ 7]
Approx. T otal Approx. % Approx. Avg. # of H rs. Each of Tim e T otal Hours Annual Total Person Works Spent Worked on This Com pensation for the State Working on Activity Each for Each of the Each Yr. (use This Year Individuals on 1800 for State Acti vity Each Row Employees)
[ 8]
[ 9]
[10]
[11]
T otal Annual Com p. for All Those on Each Row
Add 30% for Benefits for State Employees, but Add 0% for Contractors
T otal C om p. Plus Benefits
R elevant Total Com p. Plus Benefits
Supervisor
1
P
25%
1, 800
450
60,000
60,000
30%
78,000
19,500
D ata Ent ry Clerks
3
U
74%
1, 800
4, 000
30,000
90,000
30%
117,000
86,667
C ontractors
1
U
78%
1, 536
1, 200
92,160
92,160
92,160
72,000
Analysts
2
P
50%
1, 800
1, 800
40,000
80,000
104,000
52,000
30%
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
Totals pulled into the “Effort-Related Data” response worksheet/tab
7, 450
Page 10
[7] provide input
[9] provide input
[8] = [7] x [2]
[10] = [8] x ([1+[9])
0 $
230, 167
[11] = [10] x [4]
Value Pocket Data Collection VP Survey – PoT Calc Sheet Example
• To calculate total hours using the PoT Method for a Calc Sheets row: – – – –
Enter values for columns [1] and [2] Enter “P” in column [3] Enter % of time the group/individual works on the VP activity in column [4] Enter in column [5], the approx. total # of hrs. each person in the group works for the State each year – Column [6] will be calculated for you. [6] = [2] x [4] x [5] [1]
[2]
[3]
[4]
Calc Sheet
[5]
[6]
[7]
Approx. T otal Approx. % Approx. Avg. # of H rs. Each of Tim e T otal Hours Annual Total Person Works Spent Worked on This Com pensation for the State Working on Activity Each for Each of the Each Yr. (use This Year Individuals on 1800 for State Activity Each Row Employees)
[8]
[9]
[10]
[11]
T otal Annual Com p. for All Those on Each Row
Add 30% for Benefits for State Employees, but Add 0% for Contractors
T otal C om p. Plus Benefits
R elevant Total Com p. Plus Benefits
# of People
Select Calc Method (P or U)
Supervisor
1
P
25%
1,800
450
60,000
60,000
30%
78,000
19,500
D ata Entry Clerks
3
U
74%
1,800
4,000
30,000
90,000
30%
117,000
86,667
C ontractors
1
U
78%
1,536
1,200
92,160
92,160
92,160
72,000
Analysts
2
P
50%
1,800
1,800
40,000
80,000
104,000
52,000
Individual or Group
30%
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
7,450
Page 11
[7] provide input
[9] provide input
[8] = [7] x [2]
[10] = [8] x ([1+[9])
0 $
230,167
[11] = [10] x [4]
Value Pocket Data Collection
VP Survey – PoT Calc Sheet Example (cont.) • Suggested ways to calculate % of time spent: – If spends about 2 hrs. each day, use 2 hours / 8 hours per day = 25% – If spends about 2 days each week, use 2 days / 5 days per week = 40% – If spends about 3 days each month, use 3 days / 21 business days = 14% – If spends about half of his/her time during only two months out of the year, use 50% x 2 months / 12 months = 8.3%
Page 12
Value Pocket Data Collection VP Survey – Calc Sheet Example (UoW)
• To calculate total hours using the UoW Method for a Calc Sheets row: – Enter values for columns [1] and [2] – Enter “U” in column [3] – Column [4] will be calculated for you after values have been entered for columns [2], [5] and [6]. [4] = [6] / ([2] x [5]) – Enter in column [5], the approx. total # of hrs. each person in the group works for the State each Year – Enter in column [6]: (# Units processed each year) x (# hrs. ea. Unit is processed). For example, if 1,000 units are processed each yr. by the group and it takes 20 min. to process each Unit, enter (excluding quotation marks) “=1000*20/60” Calc Sheet [1]
Individual or Group
[2]
# of Peopl e
[3]
Select Calc Method (P or U)
[4]
[5]
Approx. % of Tim e Spent Working on This Acti vity
[6]
[ 7]
Approx. T otal Approx. Avg. # of H rs. Each T otal Hours Annual Total Person Works Worked on This Com pensation for the State Activity Each for Each of the Each Yr. (use Year Individuals on 1800 for State Each Row Employees)
[ 8]
[ 9]
[10]
[11]
T otal Annual Com p. for All Those on Each Row
Add 30% for Benefits for State Employees, but Add 0% for Contractors
T otal C om p. Plus Benefits
R elevant Total Com p. Plus Benefits
Supervisor
1
P
25%
1, 800
450
60,000
60,000
30%
78,000
19,500
D ata Ent ry Clerks
3
U
74%
1, 800
4, 000
30,000
90,000
30%
117,000
86,667
C ontractors
1
U
78%
1, 536
1, 200
92,160
92,160
92,160
72,000
Analysts
2
P
50%
1, 800
1, 800
40,000
80,000
104,000
52,000
30%
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
0
0%
0
0
0
7, 450
Page 13
0 $
230, 167
Value Pocket Data Collection Things to keep in mind…
• Calc Sheets are essentially “scratchpads” that can be used to calculate hours for the “Effort-Related Data” response worksheet/tab using the PoT method OR the UoW method. Use whatever method you feel comfortable using just as long as you develop for each Value Pocket activity on the “Effort-Related Data” response worksheet/tab a reasonable estimate for: – Total number of hours spent annually performing the VP activity, and – Total amount of compensation paid for those hours
• You can enter hours and compensation amounts directly into the “Effort-Related Data” response worksheet/tab, instead of using Calc Sheets
And please keep in mind that what we need are reasonably good estimates, not exact numbers
Page 14
Let’s take a look at the
Value Pocket Survey
Page 15
Value Pocket Data Collection
VP Survey – Contact Information and Due Date Please complete and return the survey via e-mail attachment no later than the close of business on Friday September 12, 2008 to: • Chip Julian – Mobile: 281.794.1391 –
[email protected]
If you have any questions whatsoever regarding this survey, please do not hesitate to contact Chip
Page 16
Questions
Page 17