ucsb financial system implementation project financial system report startup...sandra featherson...

UCSB Financial System Implementation Project

Start-up Phase II Status Report (4/1/11 – 11/30/11)

Draft Issued: December 13, 2011 Final Issued: December 15, 2011

Issued by:

The Office of the Associate Vice Chancellor, Administrative Services Ron Cortez, Executive Sponsor and Associate Vice Chancellor,

Administrative Services Sandra Featherson, Project Manager

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TABLE OF CONTENTS

Page STEERING COMMITTEE MEMBERSHIP 1 EXECUTIVE SUMMARY 3 Section I: Background 3

Section II: Due Diligence and Basis for Recommendation 5

Section III: Results 6

Section IV: Final Steering Committee Recommendations 7

Section V: Next Steps 8 APPENDICES APPENDIX A – Gartner, Inc., Report:: Financial System Assessment

APPENDIX B - rSmart Report: Kuali Financial System

APPENDIX C – IBM Report: Oracle/Peoplesoft Financials

APPENDIX D – Gartner, Inc., Report: Administrative Enterprise Projects Assessment

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STEERING COMMITTEE MEMBERSHIP

Name Role Title Unit Ron Cortez Committee Co-Chair Associate Vice Chancellor Administrative Services

Donna Carpenter Committee Co-Chair Administrative Services

Sandra Featherson Project Manager Associate Director of Controls

Accounting Services & Controls

Doug Drury Technical Lead Director, Administrative Services Information Technology

Administrative Services

Lubo Bojilov Member Director, Student Affairs Information Systems

Student Affairs

Jim Corkill Member Controller Accounting Services & Controls

Lisa Daniels Member Assistant Dean, Division of Humanities and Fine Arts

College of Letters & Sciences

Karen Hanson Member Assistant Vice Chancellor for Research

Office of Research

Karl Heins Member Chief Information Security Officer

Office of Information Systems and Technology

Tricia Hiemstra Member Interim Director Human Resources

Jody Kaufman Member Executive Director Academic Affairs

Steve Kriz Member Assistant Director Accounting Services & Controls

Pam Lombardo Member Director Environmental Health & Safety

Mo Lovegreen Member Executive Officer Geography

Bill McTague Member Director, Resource Planning Student Affairs

Mary Nisbet Member Associate Dean College of Letters & Science – Undergraduate Education

Dale Pearson Member Assistant Director, Business & Financial Planning

Housing & Residential Services

Juli Pippin Member Assistant Dean for Budget and Administration

College of Engineering

Tom Putnam Member Associate Vice Chancellor for IT and CIO

Information Systems & Technology

Kathy Scheidemen Member Management Services Officer

Earth Research Institute

Tim Schmidt Member Management Services Officer

Marine Science Institute

Arliene Shelor Member Assistant Director Budget and Planning

Bob Silsbee Member Planning and Resources Manager

Administrative Services

Robert Tarsia Member Acting Director Audit and Advisory Services

Donna Trimble Member MSO Co-Chair

Chemistry Academic Business Officers Group

Christian Villasenor Member Assistant Dean Graduate Division

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EXECUTIVE SUMMARY The current UCSB financial system is a legacy system approximately 40 years old. The system runs in a software environment on a mainframe hosted at the UC Office of the President (UCOP). While the system does allow the University to meet its financial and reporting obligations, over the past 25 years several campus committees have reviewed the financial systems that support the operations of the campus and each committee has recognized the need to replace our systems, primarily due to functional requirements of the users. The campus finds itself in a situation where a new financial system is needed due to a combination of technical and resource issues that are placing the ongoing operation of the campus financial system in severe jeopardy. The UCSB financial system, in addition to many of the other programs on the mainframe, is written in older programming languages, and is coexisting with very outdated versions of the supporting vendor software. Our goal is to modernize our system while at the same time moving systems off of the mainframe. The Steering Committee unanimously recommends the Campus move forward with implementing the Oracle/Peoplesoft Financial System. Section I: Background An evaluation was performed of the UCLA financial system (see Startup Phase Report, dated 5/25/11) and the consensus of the Financial System Steering Committee was to not move forward with the UCLA financial system. Instead, the recommendations were as follows: 1) Do not move forward with implementing the UCLA Financial System. 2) The campus should reevaluate the Kuali Financial System as a possible solution. 3) Explore possible solutions for extending the life of the mainframe, in order to provide

more time to move to a new financial solution. 4) Evaluate a “code translation” approach to migrate the financial system off of the

mainframe, similar to the Student Affairs approach with their system. 5) Explore risk mitigation strategies for the mainframe, such as securing contracts with

companies for “on call” programming support in the event of a failure. 6) Develop a funding strategy and share with the campus what that strategy will be for

moving to a new financial system. Begin the planning/budgeting/saving process as soon as possible.

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7) Evaluate the decision making process for the mainframe and its applications so the campus will be better positioned in the future for a long term strategy.

8) Allocate funding for enhancements to the current financial system to improve

functionality for the users, should the campus not move forward with a new system. 9) Depending on the direction of the project with the mainframe, the committee

recommends increasing the IT support staff to levels commensurate with the amount needed to prevent similar underinvestment in IT in the future.

Upon the recommendations of the Executive Leadership & Steering Committee (above), we have taken the following actions:

1) Engaged Gartner, Inc. for an assessment of financial system options for UCSB. 2) Based on the Gartner assessment, requested and received funding for additional

IT staff to support the current IT needs. 3) Engaged rSmart to provide an assessment of the risk and cost of implementing the

Kuali Financial System 4) Engaged IBM to provide an assessment of the risk and cost of implementing

Oracle/Peoplesoft Financials. 5) Participated in demonstrations of both the Kuali and Oracle/Peoplesoft Financial

Systems 6) Engaged Gartner, Inc. for an assessment of Administrative Enterprise System

Projects – e-procurement, the financial system, and the UC HR/PPS implementation.

The campus obtained the services of Gartner, Inc., a technology consulting firm, to conduct an assessment and identify possible solutions for a UCSB financial system. Gartner, Inc. concluded the best option for UCSB was to purchase and implement a commercial ERP system. In addition, Gartner recommended steps to be taken immediately to reduce overall risk to the campus (see Appendix A). In response to the Gartner recommendation to purchase a commercial ERP system, the campus chose to look at Oracle/Peoplesoft Financials for several reasons. First, the UC Office of the President has chosen Oracle on Demand as its new Human Resources and Payroll system, to be implemented at all campuses. By implementing Oracle/Peoplesoft Financials, there would be an ability to leverage synergies between the existing products. In addition, Oracle/Peoplesoft Financials is installed at three UC campuses: San Francisco, Riverside, and Berkeley. Implementing a system already installed within the UC System, meets the spirit of the University of California Regent’s Resolution Regarding Administrative Efficiencies. In addition, given the campus’ previous investment and evaluation of Kuali (from 2004-2008 in conjunction with UC Irvine and UC Davis), the Steering Committee recommended including the Kuali Financial System as an option for review.

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To assist the campus with evaluating both Kuali and Oracle/Peoplesoft Financials, the campus engaged rSmart and IBM. Each vendor was provided with a similar scope of work, requesting an evaluation of the risks of implementation for two scenarios:

1) a phased approach, implementing the minimum functionality needed to reduce risk to the campus

2) a full system implementation, incorporating all of the modules needed to remove the risk of the mainframe applications

Both firms were asked to develop a cost proposal for each scenario for implementation, as well as provide a total cost of ownership over 10 years (See Appendix C, D). Section II: Due Diligence and Basis for Recommendation As part of the due diligence of the Steering Committee, in addition to the preceding actions, the following efforts were made in evaluating the possible financial system options:

1) Held several discussions with UC Davis, including senior management regarding their ability to provide hosting and other services to UCSB. UCSB staff visited the Davis campus to understand their project/implementation status and availability for assistance to UCSB.

2) Participated in demonstrations and webinars of the Kuali Financial System led by UC Davis staff, to members of the Steering Committee and central offices such as Accounting, Budget and the Office of Research.

3) Attended Kuali Days, to hear other implementation experiences by members of the Kuali Community.

4) Participated in demonstrations and webinars of the Oracle/Peoplesoft Financial System, led by Peoplesoft, to members of the Steering Committee and central offices such as Accounting, Budget and the Office of Research.

5) Surveyed several AAU institutions regarding their financial system and implementation.

6) Participated in meetings and discussions with the UC Chief Financial Officer and the UC Executive Vice President for Business Operations, about the direction of UC Office of the President, and the efforts to move towards a common financial system.

The Steering Committee recommendation was based on the due diligence completed by the Steering Committee and others, in addition to the following:

x Timeframe for implementation, given the additional campus projects (HR/Payroll System and e-Procurement) the campus is undertaking

x Risks associated with implementation, including change management x Current IT staffing levels x Gartner, Inc. recommendation x Strategic alignment with UC Office of the President, who is implementing Oracle

on Demand for the new UC HR/Payroll System.

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Section III: Results Both rSmart and IBM recommend utilizing a phased approach for implementation to minimize the implementation risks to the campus. Modules Phased�Approach Kuali Oracle/PeoplesoftPhase�1 General�Ledger General�Ledger

Chart�of�Accounts Chart�of�AccountsFinancial�Transactions PurchasingPortions�of�Purchasing�and�Accounts�Payable Accounts�Payable

Budget�LedgerAsset�Management

Phase�2 Accounts�Receivable Accounts�ReceivableTravel GrantsContracts�&�Grants ContractsBilling BillingBudget ProjectsCapital�Assets

Costs

Kuali

Implementation�Labor,�Travel,�and�

Administrative�Costs MaintenanceProduction�Support

Total�Costs�Identified�by�

rSmart 30%�ContingencyTotal�Project�

CostsPhase�1 �$��7,500,000� 600,000$�� 120,000$�� 8,220,000$�� 2,466,000$�� 10,686,000$��Phase�2 �$��2,750,000� �$��500,000� $��120,000� $��3,370,000� 1,011,000$�� 4,381,000$��

Total�Costs 10,250,000$�� 1,100,000$�� 240,000$�� 11,590,000$�� 3,477,000$�� 15,067,000$��

Oracle/Peoplesoft

Implementation�Labor,�Travel,�and�

Administrative�CostsSoftware�Licensing�&�

Maintenance

Hosting�&�Application�Management�

FeesTotal�Costs�

Identified�by�IBM 30%�ContingencyTotal�Project�

CostsPhase�1 4,891,900$�� 1,017,000$�� 1,390,000$�� 7,298,900$�� 2,189,670$�� 9,488,570$��Phase�2 6,331,100$�� 265,500$�� 135,000$�� 6,731,600$�� 2,019,480$�� 8,751,080$��

Total�Costs 11,223,000$�� 1,282,500$�� 1,525,000$�� 14,030,500$�� 4,209,150$�� 18,239,650$�� The total funding request for the project would be approximately $18.24M, which would include additional costs incurred by the campus, such as administrative, communications/change management and training, in addition to any contingencies.

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Timeline

Kuali Oracle/PeoplesoftPhase�1�Timeframe 18�months 14�monthsPhase�2�Timeframe 12�months 12�monthsTotal�Time�for�Project 30�months 26�months

Internal Resources

Kuali Oracle/PeoplesoftPhase�1 ��13.50� 6.00��Phase�2 6.75�� 8.00��

*Approximate number of FTE based on data provided in reports. Section IV: Final Steering Committee Recommendations

1) The Steering Committee unanimously recommends the Campus move forward with implementing the Oracle/Peoplesoft Financial System, using a phased approach as described in the IBM report. A detailed functional evaluation was not performed of either system, given the significant risks of staying on our current system as described by Gartner in their assessment as “stay and pray.”

2) The Steering Committee recommends this report be forwarded to the Chancellor for his approval of both Phase 1 and Phase 2 of the project.

3) The Steering Committee greatly supports this effort and emphasizes the need for the same level of commitment and enthusiasm from the Executive Leadership Committee to ensure the success of the project.

4) The Steering Committee recommends utilizing the UC Loan Program for project funding and requests authorization for the project in the amount of $18.24M.

5) The Steering Committee recommends campus funds repay the loan, rather than assessing campus departments at the transaction level, via a transaction fee, or other similar approach.

6) The Steering Committee recommends requesting UCOP fund the incremental cost of implementing Oracle/Peoplesoft Financials over the Kuali Financial System, and the additional costs that may be incurred during the process of upgrading to new versions during the life of the system.

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Section V: Next Steps

1) Request a decision by the Executive Leadership Committee and Chancellor on the recommendation.

2) Discuss with UC Office of the President the campus recommendation and funding.

3) Initiate steps to hire an implementation partner for the financial system project. 4) Finalize project team and governance model, based on the Gartner

recommendation (See Appendix D). 5) Identify logistics of the implementation.

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