Business Case Template

State of Minnesota Information Technology Business Case Integrate Core Business Management Systems (MAPS Replacement Project) September 2007 State of Minnesota Information Technology Business Case Table of Contents I. Project Identification .........................................................................................................1 II. Project Definition .............................................................................................................3 III. Proposed Solution and Desirability.................................................................................5 IV. Return on Investment...................................................................................................12 V. Project Funding .............................................................................................................17 VI. Architecture Fit .............................................................................................................19 VII. Project Characteristics ................................................................................................20 Appendix A ........................................................................................................................22 Appendix B ........................................................................................................................29 Appendix C ........................................................................................................................34 Page i Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case I. Project Identification 1. Agency 2. Project Name 3. Submittal Date Name Phone # E-mail Address 4. Project Sponsor (optional) 5. Project Manager (optional) 6. Business Need or Opportunity to be addressed by the project The State of Minnesota has a significant opportunity to improve the effectiveness of government operations by changing its business processes and replacing its existing accounting and procurement system (MAPS) with a state-of-the-art, integrated system. The outcome of this effort will be streamlined processes that leverage the capabilities of newer technology and the result will be a net savings to the State. More than 130 State employees, with the assistance of a consulting firm, have assessed the way the State currently does its accounting and procurement work and have created a vision of improved processes and increased efficiency. In addition, data was collected to identify agency systems that provide parallel functionality to, or supplement the functionality of, the existing system. This process revealed important agency needs that are not being met by the existing system. The outcome of this analysis was a list of opportunities to improve current business processes and a list of system requirements for additional functionality that are estimated to provide a cumulative net savings to the State of more than $28 million over the next 10 years. These savings will result from productivity improvements, reduction in the cost of goods and services procured, and by reducing inventory balances and carrying costs. Additional functionality built into the new system will reduce the need for “shadow systems” that State agencies have implemented, or are planning to implement, due to deficiencies in the current system. Examples of this new functionality include inventory and asset management, electronic approvals, on-line bid solicitation and response, and the ability to make payments on the Web. In addition to evaluating and changing business processes, the State also has an opportunity to implement new technology to ensure the long-term stability of its accounting and procurement applications. Maintenance and periodic upgrades of the administrative infrastructure are indicators of wise stewardship of the State’s resources. Although it may be perceived as simply part of a “backoffice” function, the system does affect almost every business function in state government and touches the life of almost every Minnesotan. It is an essential tool for managing the State's $55 billion biennial budget and processes 350,000 purchases and 1.3 million payments each year. The time to replace the current system is now. It was designed over fifteen (15) years ago and has grown increasingly incompatible with the State’s newer systems and with best practices in information management. This incompatibility increases the risk of system failure. As a result, it is prudent to address this issue before it becomes a crisis. MAPS is a legacy mainframe-based application that has been heavily customized and is approaching technical obsolescence. The last vendor upgrade installed for both the accounting application (CGI-AMS) and the procurement application (INFORMS) was in 1998 to handle Y2K. INFORMS does not have an upgrade product for the procurement application. While CGIAMS offers an upgrade (Advantage 3), the State cannot install this upgrade without significant modifications to the software to reapply the customizations and replacing the procurement component because it would no longer function with Advantage 3. Page 1 Department of Finance MAPS Replacement Business Case Departments of Finance and Administration Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case I. Project Identification These applications are showing their age. For example, based on the findings of the MAPS Upgrade/Replacement Risk Assessment, it is becoming increasingly difficult to deal with conflicts occurring with each upgrade of the State’s mainframe system. The mainframe supports many applications in addition to MAPS. While there have yet to be any major failures in the system, previous upgrades to the mainframe operating system have required adjustments to the standard configuration so that MAPS could function. Changes to the standard configuration expose MAPS, the mainframe, and other applications using the mainframe to a wide variety of technical risks. Incompatibility with agency end-user workstations is currently an issue and one that has become more problematic with each new release of desktop operating systems. Agencies are currently experiencing desktop problems with the outdated MAPS client software that causes lost productivity. The most recent release of Microsoft’s desktop operating system no longer supports our MAPS client. A workaround, such as having two workstations at each user’s desk, would be extremely expensive and cumbersome to maintain, and would leave us vulnerable to emerging security threats due to lack of support for older products. A web-based system would provide industry level security and eliminate desktop (or “client”) hardware/software compatibility issues, thus reducing the burden on technical support staff at the agencies. The technical risks could lead to a system failure. The failure could impact a single user in one agency or it could affect the work of up to 2,500 MAPS users from 130 agencies. The business processes that rely on the financial management system touch the lives of virtually every Minnesota citizen. A failure puts at risk the 1.3 million payments that are issued each year to schools, local governments, retirees, vendors, and individuals receiving assistance. Should there be a delay in payment the State could incur severe penalties. For example, if the Police and Fire State Aid Payment were delayed by just one day, the State would incur $2.6 million in interest charges. Similarly, the State is required to pay vendors 18 percent interest on all invoices that become past due. The transactions that flow through the system annually are numerous and complex. For example, the processing of 350,000 purchase orders; the management of over 5,000 separate accounts; 4.5 million expenditure transactions; and 1.3 million cash deposits. While procedures have been created for emergency situations, major system failure would quickly overwhelm the capacity to perform these critical functions in a manual environment. In the event of a system failure, a replacement would be found; but, decisions made in a crisis rarely if ever result in the best choice. The replacement of this system demands a thoughtful, responsible approach because of its critical role in support of state government operations. Page 2 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case II. Project Definition 1a. Business Objectives The project’s purpose; expected end results; in business terms, independent of solution The accounting and procurement functions that MAPS provides are fundamental to the operation of state government. The desired outcome is a modern system that will give State agencies tools for more effective and efficient management of State resources (e.g., eliminating duplicate data entry and reducing the number of modifications [program changes] that drive up maintenance and upgrade costs). 1b. Agency: Intentions, Values, or Services Impacted by this Project From the agency’s business strategy (optional) Source: 2006 Strategic Information Management Master Plan prepared by the Office of Enterprise Technology 1. An enterprise view. A “enterprise view” connotes a broad-based environment of public service functions, crossing organizational boundaries, hierarchies and jurisdictions to address the common needs of those entities that exist to serve the public 2. Future orientation. It is essential to define a vision of the end state – the convergence point for technology and business process, where business needs and information solutions are aligned for efficiency and impact. 3. A commitment to customer service. The range and variety of needs, services delivered and programs in state government clearly indicate that there must be a continuum of service venues and delivery mechanisms to meet citizen needs, abilities and preferences. As society places a greater premium on self service, location – and time-independence, customized, multi-channel service vehicles and other highly sophisticated modes of operation, responsive government entities must reflect demographic changes and challenges. 4. Learning from others. Experience in the private and public sectors has been that technology operates in a similar manner for both domains. Project leadership is committed to applying the “best practices” existing in the private sector to achieve similar levels of efficiency and effectiveness. Similarly, oversight functions must integrate with planning, budgeting and implementation to add value and ensure compliance with the architecture, with best practices and with effective stewardship of public resources. 2. Project Values Beliefs, guidelines, and anticipated tradeoffs for the project Communication – Timely and frequent communication with all stakeholders will be a critical success factor. This is a large, complex, expensive effort with many stakeholder groups, each with different perspectives. It will be important to create and execute a comprehensive strategy to ensure stakeholders’ communication requirements are met. Integrity – This means following through on commitments and delivering honest messages to the project leadership and other stakeholders. Honest communications requires giving the bad news, as well as the good news. 3. Focus Boundaries of the project This project involves the selection, design, and implementation of a new accounting and procurement system. The system will have 2,500 users and is Breadth: an important tool for managing the State’s $55 billion biennial budget. It is used by 130 State organizations and processes 350,000 purchases and 1.3 million payments each year. Page 3 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case II. Project Definition This project will require the State’s accounting and procurement processes, Depth: procedures, policies, and technical infrastructure (e.g., subsystems and interfaces) to be understood at a level of detail sufficient to design, configure, implement, and train staff. Other: 4. Context Other factors that may affect project success ♦ The implementation period is assumed to be eighteen months and the system will go live at the beginning of a fiscal year. ♦ The project timeline assumes a planning time period of six months to procure software and associated implementation services (e.g., issue an Assumptions: RFP, develop vendor demonstration scripts, conduct a vendor evaluation process, select software and implementation vendors, execute contracts, etc.) ♦ State staff will be made available to participate in the system selection, design, configuration, implementation, training and documentation review. ♦ Project budget – The project budget will be sufficient to implement the functionality needed to achieve the efficiencies estimated in this business case. Constraints: ♦ Schedule - The implementation schedule will be coordinated so that the system go-live date coincides with the start of the State’s 2011 fiscal year. Note: A formal risk assessment is required for an effort of this scale and will be performed as part of the project. What follows are key known risks. ♦ Scope - This is a large project with complex requirements and will require over 130,000 person hours to complete. ♦ Schedule – Project duration is greater than 12 months which will require aggressive project tracking and monitoring to keep the project on track. Risks: Team building exercises will be required to maintain cohesion and reduce friction among team members. An aggressive communication plan will be required to maintain a high degree of stakeholder commitment. ♦ Organizational Impact – This project will require a moderate amount of process change and will directly affect 130 State organizations. An aggressive communication plan will be required that includes explaining precisely how the new processes differ from the old ones and communicating potential changes as far in advance as possible. Other: 5. Partners Other agencies participating in this project The Department of Administration will play a key role in the implementation of procurement functionality. Likewise, all State agencies will be affected by and participate in the implementation project. Page 4 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability 1. General Description of Proposed Solution The proposed solution is to acquire and implement commercially-available, broadly supported software to replace the existing components of the current statewide accounting and procurement systems, collectively referred to as MAPS. The State has decided to retain its Oracle/PeopleSoft-based HR/Payroll/Benefits system (SEMA4). The software package(s) that replace MAPS will need the ability to be integrated with SEMA4. The decision to pursue this proposed solution is based on a number of considerations, the most significant of which are summarized as follows: ♦ The major commercially-available software packages offer an extensive breadth and depth of functionality. These packages should meet a high percentage of the State’s business requirements as delivered. ♦ Selecting a software package with a high degree of fit should: • Encourage implementation of “best practices” inherent in the software design; • Realize significant process improvements in terms of increased efficiency and effectiveness without the need to extensively modify the system. • Reduce the cost of implementation due to excessive modifications or workarounds; and • Maintain an upgrade path to keep the application current for newly available functionality or evolving technical requirements. ♦ Replacing the MAPS components would address the technical-obsolescence risk associated with the State’s procurement systems (Advanced Government Purchasing System and Contract Financial Management System) and provide a means to move the accounting system to a current technological platform with the additional functionality to meet the changing business needs of the State. Functional Scope The functional scope of the solution will include the general functionality of MAPS, which contains the following three (3) primary components: (1) CGI-AMS Advantage 2.0 accounting software – replace or upgrade; (2) Advanced Government Purchasing System (AGPS) – must replace in the relatively near term given the technology-obsolescence risk associated with AGPS and the lack of an upgrade option. Please refer to Appendix B for further discussion of the risks associate with maintaining the ‘status quo;’ and (3) Contract Financial Management System (CFMS) – replace as CFMS is subject to the same obsolescence risk as AGPS and the CFMS functionality would likely be included in the AGPS replacement software. Additionally, the functionality of the proposed solution will include: • • eProcurement Fixed Assets • • Vendor Payment Setoffs Inventory Management Although the proposed solution is unlikely to replace all functions of the State’s current Budget Information System (BIS), increased functionality and flexibility should offer users the opportunity to perform a number of budget-related functions within the new system that are presently being perform in BIS or offline (e.g., Excel or Access). Page 5 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability Agency-specific systems that support specialized programs, such as the systems listed below, are not candidates for being replaced by a statewide system: • • • • Medicaid System Child Support System Retirement Systems Permit & Licensing Systems • • • • Workers’ Compensation System Unemployment Compensation System MnSCU Systems HR/Payroll/Benefits (SEMA4) Technical Scope The proposed solution will offer technological enhancements and benefits not available in the current MAPS environment. The technical scope of the solution will include: . • Web-based Application • Improved Security • Automated Workflow • Current operating system versions Organizational Scope The proposed solution will be a statewide system; therefore, agency-relevant system functionality will be deployed to each State agency. Implementation Team The proposed solution will be implemented by a team composed of implementation contractors and State personnel, and the team will be made up of approximately two (2.0) State personnel for each (1.0) contractor, on average, during the implementation period. Funding for the implementation contractors and State staff is included in the costs presented in this document. Project Timeframe Project Components Software and Implementation Services Acquisition Phase Implementation Phase Post-Implementation Support Phase Target Months from Inception 0-6 7 - 24 25 - 31 The current plan is for the proposed system to go live at the beginning of a fiscal year on July 1, 2010. The planned implementation period of 18 to 24 months may be adjusted once a feasible implementation start date is determined. 2. Benefits How the solution will improve the business The potential benefits that are listed in this section of the document are general in nature and apply to a variety of the State’s business process. Refer to Appendix A of this document for descriptions of anticipated benefits that are Improved process-specific. Service: Improved Service: ♦ Improve the level of service provided to many of the State’s internal customers and external customers (i.e., citizens and stakeholders) through Page 6 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability Web-based functionality of the proposed system, which would make certain information readily available to the customers via the Inter/Intranet and would reduce process cycle times— reducing the amount of time customers would have to wait to receive products/services. Examples of this type of functionality include the following: • Vendor Self-Service • Customer Self-Service • Automated Workflow ♦ Improve information (i.e., information would be more accurate, timely, and useful/meaningful) for management decision-making and will aid system users in maximizing the return on citizens’ investments. This improvement in information would result from the availability of software tools for decision support, such as ad hoc reporting, that would provide more ready access to data by a greater number of users. Reduced Cost: ♦ The lack of comprehensive integration between all components of the MAPS system (the proposed system would have real-time integration among the system’s functional modules that would be built and maintained by the vendor of the software) causes a significant amount of time to be spent on the following tasks: • Researching, troubleshooting, and reconciling transactions and account balances across multiple systems (i.e., between user agency administrative systems, between user agency and statewide administrative systems, and between statewide administrative systems). This reconciling effort involves: - Investigating failed interface transactions; - Reconciling balance discrepancies between systems; and - Making adjustments in the appropriate system(s). • Tracking the status of transactions spread across multiple systems on Reduced an ongoing basis using spreadsheets, paper logs, etc. Cost: • Manually entering the same data into multiple systems. • Generating ad hoc and standard management reports that require retrieving data from multiple systems. This reporting effort involves: - Extracting data from multiple sources; - Compiling and reviewing data; - Formatting data into the reports; and - Distributing the reports. This cost reduction opportunity would apply to end users of the system, as well as technical/programming personnel. ♦ Reduce effort and process cycle times due to more efficient processing and control of documents through enterprise-wide use of automated workflow technology, which would provide for electronic document routing, review and approval, online inquiry into document status, and more efficient document filing and retrieval. Page 7 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability ♦ Reduce effort in a number of functional/process areas due to the adoption of “best practice” processes, as well as the standardization of business process and supporting technology across agencies. ♦ Avoid the cost of agencies implementing, operating, and enhancing new “shadow” system, as well and operating and enhancing existing shadow systems Examples of these systems include agency-specific inventory management systems and accounts receivable systems. A number of shadow systems would be replaced by the proposed system, as the agencies would use the proposed system instead. The initial cash outlays for these shadow systems would be eliminated, as would the cost of providing ongoing functional and technical support for the systems. Costs were collected for twenty-two (22) existing and planned shadow systems from six (6) State agencies. Based on the data collected, it appears that approximately $1 million of annual cost of these shadow systems could potentially be avoided if the proposed system is implemented. Note that this $1 million estimate only includes costs relating to shadow systems and does not include MAPS-related costs. ♦ Reduce support costs by implementing a technologically current web-based solution that provides better delivery of information to all system users. This solution would eliminate a cumbersome process for implementing system changes and resolve desktop (client) hardware/software compatibility issues. 3. Feasibility Positive or negative factors that could affect the project’s success, from project start until the solution is in place Explanation: A number of factors could negatively influence the implementation project’s success. Some of the most critical of these factors are listed below: ♦ Project Management – Project management is responsible for overseeing delivery of the software and implementation services to meet the defined goals of the new system. Common issues in project management that often hinder achievement of those goals include the following: • Inexperienced project management skills and experience • Project scope not closely controlled—“scope creep” • Lack of clear accountability for performing tasks and producing deliverables • Inadequate monitoring of deliverable quality • Inadequate risk management—failure to implement a disciplined, ongoing riskmanagement process in which major risk are identified, owners are assigned, and steps are taken to manage the risks • Failure to monitor project budget adequately • Poor project scheduling—unrealistic estimates. For example, data conversion effort is often underestimated and turns out to be far more difficult and time-consuming to perform than expected • Inadequate vendor management—insufficient contract monitoring and failing to hold vendors accountable ♦ Personnel – Commitment of adequate, qualified resources from the State and the implementation services vendor is probably the single-most important factor in the overall success of the implementation project. Common issues include: Page 8 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability State fails to dedicate proper level and number of full-time employees to the project team • Project team turnover, both in State and implementation consultants • Unqualified implementation consultants – consultants not experienced in public sector operations and/or the software being implemented ♦ Organizational Change Management – The importance of change management is often overlooked in major system projects, which may lead to unnecessary resistance or disillusionment with the new system. Common issues include the following: • Failure to communicate appropriate information about the project to the appropriate parties, at the appropriate time, via an appropriate method • User resistance to the change is not properly managed: - Need for change not effectively communicated - Strong executive sponsorship not clear or widely demonstrated—strong executive sponsorship may not exist or may not be communicated/demonstrated effectively - Users unclear about how their jobs will be impacted • Inadequate training provided to State project team members Decisions made and issues resolved too slowly ♦ Software Implementation – The software selected is only as good as its implementation. Common implementation issues include the following: • Failure to change existing business processes and, instead, extensively modify the software Critical business needs are unmet by the system as implemented • Inadequate testing of software, interfaces, or conversion data ♦ Litigation – Due to the large, complex nature of a statewide system and the potentially large contracts resulting from such a project, a greater chance of litigation exists. Common reasons for litigation include: protests over the initial award, disputes over project scope, disagreement on contract terms, and acceptance/rejection of deliverables. The feasibility of the project is favorably influenced by the following factors: ♦ The project receives strong support from the Departments of Finance, Administration, and Employee Relations, and the Office of Enterprise Technology. ♦ The State has prior history of successfully deploying a statewide system. ♦ Many business processes are already centralized in the MAPS system. The anticipated degree of change from MAPS to a commercially-available, integrated software package should be less disruptive than changing from many decentralized systems. ♦ Agency personnel involved in focus group meetings appear excited about the possibility for change and open to altering business processes to take advantage of “best practices” inherent in new systems. ♦ The State initiated the project using a proven approach to understand business processes, gather business requirements, develop a comprehensive procurement and evaluation process, and build organizational support for the project. Rating: 1[x] High Risk • • • 2 [ ] 3 [ ] 4 [ ] 5 [ ] Low Risk Page 9 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability 4. Sustainability Positive or negative factors that could affect the project’s success once the solution is in place; achieving the business benefits of the solution over time Explanation: Even after a “successful” implementation, a number of additional factors may influence the perceived success of and long-term satisfaction with (i.e., sustainability) the new system. Factors affecting sustainability include the following: Short-term: ♦ Poor planning, preparation, and execution for post-implementation operations and support may contribute to a lack of confidence from the user community that may take years to overcome ♦ Inadequate knowledge transfer to State staff may result in continued reliance on implementation consultants well beyond the planned project completion date ♦ Inadequate training provided to State end users of the system may result in an unnecessarily steep learning curve and short-term dissatisfaction with the new system. Inadequate training may also lead to the belief that the system is somehow “flawed” and lead to knee-jerk reactions (e.g., instituting workarounds or abandoning functionality) that may inhibit the ability to achieve long-term goals. ♦ Users may not perceive that the new system is helping them do their jobs, and may consider it a hindrance—worse than the old system. This could be caused by a lack of understanding of the planned scope of the system, key business requirements that were unmet, insufficient testing, or other areas where user expectations and the realities of the implementation were not consistent Long-term: ♦ Modifications to the system limit upgrade options and the ability to remain on current versions of the software ♦ The State may find it difficult to retain qualified staff to support the functional and technical operations of the system, as those skills are often in high demand in the marketplace ♦ Modules or functionality (e.g., workflow) deferred during the implementation project may never be implemented due to the demands of supporting the production system, thereby reducing the overall benefits achieved from the new system The sustainability of the project is favorably influenced by the following factors: ♦ The State has an existing support organization with experience supporting a statewide application. ♦ Current intentions are to select and implement a commercially-available software package with broad support in the marketplace. ♦ The system is expected to operate on a current technological platform (e.g., Web-based application) that should not face functional obsolescence in the foreseeable future. ♦ Major systems vendors continually expand functionality to meet changing business needs of clients. With a viable upgrade path in place, the State may benefit from system enhancements without the need to acquire and implement additional software. Rating: 1 [ ] High Risk 2 [x] 3 [ ] 4 [ ] 5 [ ] Low Risk Page 10 Department of Finance MAPS Replacement Business Case State of Minnesota Information Technology Business Case III. Proposed Solution and Desirability 5. Alternate solutions considered, with assessment Other solutions to be considered or already ruled out. Including why solutions ruled out were eliminated. Explanation: Prior to initiating the MAPS Replacement Project, a preliminary study team considered other potential alternatives to the solution being proposed. Those alternatives are described below. ALTERNATIVE SOLUTIONS THAT WERE CONSIDERED AND RULED OUT The preliminary study team considered the following alternative solutions: 1. Enhance Existing Systems and Processes – enhance the existing statewide legacy systems through development of additional functionality or additional integration of systems. Given that this alternative does not address the technical-obsolescence risk associated with MAPS, this alternative is considered feasible only as a stopgap measure until a more viable option can be implemented. 2. Custom Development – develop a new, fully-integrated, Web-centric application in-house that would meet the State’s functional and technical system requirements. Due to the degree of risk associated with a project of this magnitude and the ongoing costs associated with maintaining and enhancing the system for future use, custom development of a new fullyintegrated system is not considered a feasible alternative. 3. Vendor Hosting – contract with an independent supplier(s) that would provide and operate a solution meeting the State’s systems needs for a subscription fee. This is not considered to be an acceptable alternative for the following reasons: ♦ No other state has enjoyed long-term success in pursuing a “Vendor Hosting” strategy for statewide systems of this magnitude. ♦ This alternative would cause excessive dependence on the hosting vendor and the potential for an extremely difficult transition to bring the solution in-house, if the State so desired. ♦ Dependence on the hosting vendor would also subject the State to unacceptable pricing risk, as vendors tend to increase the overall cost of service over time. 4. Status Quo – keep the existing statewide legacy systems in place, while making no significant enhancements in functionality, or new integration among those systems or between the statewide systems and agency systems. Given that this alternative does not address the technical-obsolescence risk associated with MAPS, this alternative is considered feasible only as a stopgap measure until a more viable option can be implemented. Please refer to Appendix B of this document for additional information on each of the alternative solutions considered. Page 11 Department of Finance MAPS Replacement Business Case Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case IV. Return on Investment ($000) 1. Expenditures* Implementation Services State Staff Implementations Team Cost Software License Software Maintenance Implementation Project Facilities Ongoing System Infrastructure Acquisition and Support Ongoing Software Support (functional and technical) Services for Technical Upgrade (no significant functionality enhancement) State Staff Project Team for Technical Upgrade 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2017 12,866 18,627 580 2014-15 Biennium FY 2014 FY 2015 2016-17 Biennium FY 2016 FY 2017 2018-19 Biennium FY 2018 FY 2019 4,550 4,000 300 1,600 4,550 800 300 2,200 1,505 1,200 3,010 1,200 3,010 1,200 3,010 1,200 3,010 1,200 3,010 1,200 3,010 1,200 3,010 1,200 3,010 800 800 800 800 800 800 800 800 4,816 500 500 1,365 Total: 2. Cost Savings* Avoided System Costs 23,316 27,982 5,590 5,010 5,010 11,191 5,010 5,010 5,010 5,010 2018-19 Biennium FY 2018 FY 2019 5,100 5,100 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 2,650 2,650 5,600 5,600 5,600 5,600 5,100 5,100 2014-15 Biennium FY 2014 FY 2015 5,100 5,100 5,100 5,100 2016-17 Biennium FY 2016 FY 2017 5,100 5,100 5,100 5,100 Total: $363,000 was spend in FY 07 for planning and development of the business case and RFP Page 12 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case 3. Other Tangible Benefits* State Staff Productivity Savings Reduction in Cost of Goods/Services Procured Reduction in Inventory Balances and Carrying Costs 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2018 2,500 4,000 5,000 8,000 2014-15 Biennium FY 2019 FY 2015 5,000 8,000 5,000 8,000 2016-17 Biennium FY 2016 FY 2017 5,000 8,000 5,000 8,000 2018-19 Biennium FY 2018 FY 2019 5,000 8,000 1,378 7,878 1,444 14,444 131 13,131 131 13,131 131 13,131 131 13,131 131 13,100 Total: 4. Net Financial Impact Total: Cumulative Total (863) 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 (23,316) (24,179) (27,982) (52,161) (2,940) (55,101) 8,468 (46,633) 15,034 (31,599) 2014-15 Biennium FY 2014 FY 2015 7,040 (24,559) 13,221 (11,338) 2016-17 Biennium FY 2016 FY 2017 13,221 1,883 13,221 15,104 2018-19 Biennium FY 2018 FY 2019 13,221 28,325 5. Intangible Benefits Description ♦ Improve the level of service provided to many of the State’s internal customers and external customers (i.e., citizens and stakeholders) through Web-based functionality of the proposed system, which would make certain information readily available to the customers via the Inter/Intranet and would reduce process cycle times—reducing the amount of time customers would have to wait to receive products/services. ♦ Improve information (i.e., information that would be more accurate, timely, and useful/meaningful) for management decision-making that will aid system users in maximizing the return on citizens’ investments. This improvement in information would result from the availability of software tools for decision support, such as ad hoc reporting, that would be available in the proposed system. ♦ Reduce effort and process cycle times due to more efficient processing and control of documents through enterprisewide use of automated workflow technology, which would provide for electronic document routing, review and approval, online inquiry into document status, and more efficient document filing and retrieval. Page 13 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ Eliminate the technical-obsolescence risk associated with MAPS. No upgrade path is available for AGPS and CFMS. Additionally, as future releases occur in the desktop operating system (e.g., Microsoft Windows Vista and Vista 64), the MAPS client software is at increasing risk of compatibility problems that would require agencies to maintain extra, older workstations on users’ desks. *ROI Elements Description of Expenditures, Cost Savings and Intangible Benefits 1. Expenditures 1. Expenditures The amounts in this category represent the estimated costs that would be required to acquire, implement, maintain, and operate the proposed system. Key assumptions regarding these estimates are contained in Appendix C of this document. 2. Cost Savings The dollar amounts in this category are estimated system costs (i.e., software, hardware, and support-personnel costs) that the State would potentially avoid incurring if the proposed system were implemented. Through interviews with State personnel and via a survey sent to seventeen (17) of the State’s largest agencies in terms of annual budget, costs were collected that would likely be incurred to (1) operate, maintain, and enhance/upgrade certain existing systems, as well as (2) implement, operate, maintain, and enhance/upgrade planned/anticipated systems during the next ten (10) years, assuming a new statewide system is not implemented. 2. Cost Savings Fifteen (15) agencies provided input to this analysis, but seven (7) of those agencies did not provide cost data that could be quantified for this study. Eight (8) agencies provided quantifiable savings information and two (2) agencies provided additional estimates of planned/anticipated system costs. Please note that the cost estimates in this category should be considered conservative. It is possible that other savings exist in agencies not included in the scope of the study. Furthermore, this analysis assumes that these saving are phased-in over the first year of production. Assuming a go-live date of July 1, 2010, approximately 50% of the estimated annual benefits for this category have been included for FY 2011, with 100% of the estimated benefits included for subsequent years. 3. Other Tangible Benefits 3. Other Tangible Benefits State Staff Productivity Savings The dollar amounts in this category include the estimated savings from reduced process-execution costs (i.e., compensation for State personnel and contractor time) that the State would potentially reduce if the proposed system were implemented. The data used to quantify/estimate these benefits was obtained through interviews with State personnel and via a survey sent to seventeen (17) of the State’s largest agencies in terms of annual budget. Page 14 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Estimates for this category were collected from twelve (12) agencies. Also, note that no cost savings were included for the first year of production (FY 2011). Thereafter, 50% of the estimated annual cost savings was included for FY 2012 and 100% was included for FY 2013 and following years. The assumptions regarding the timing of the realization of the benefits in this category were made in order to take into consideration that the State will need ample time to redirect the efforts of State personnel and to achieve reductions in staff, in part, through attrition. Reduction in the Cost of Goods/Services Procured The dollar amounts in this category are the estimated savings from the reduction in the cost of goods and services procured by the State that could be realized from the implementation of the catalog/contract eProcurement functionality of the new system. This functionality would enable State employees to shop via a Web browser for goods/services maintained in catalogs that contain items the State has on contract, and these catalogs would have the State's negotiated prices, terms, etc., as well as United Nations Standard Products and Services Code (UNSPSC) commodity-level data in them. These catalogs could be inside the State's firewall and/or at vendors' sites, in which case, the State employee would “punch-out” to shop the external catalogs. A Requisition would automatically be created for the items the State employee selects when he/she checks out, and the Requisition would have commodity-level data in it from the catalog. The system would electronically route the Requisition via workflow technology for approval, and if approved, the Requisition could generate a purchase order (PO) for the items, and the PO could then be sent electronically to the vendor. Purchases could also be made via State purchasing-cards using the new system. The reduction in the cost of goods and services would come from the following two (2) sources: (1) Reduced “Maverick” Spend (i.e., in general, purchases made that are not in compliance with State policy, and in particular, not utilizing contracts the State has negotiated with vendors). The new system’s ease of use, along with State mandated and enforced use of the system, would result in State agencies procuring more goods and services through contractual agreements the State has negotiated with vendors. (2) Improved Spend Intelligence The enhanced spend intelligence that would be gained by capturing more commodity-level data on items that are procured would put the State in a significantly stronger negotiating position with vendors. It is estimated that approximately $320 million of State annual spend could be positively impacted by the use of the new eProcurement functionality. This estimate is based on Purchase Order data from the State’s Advanced Government Purchasing System (AGPS) and Contract Financial Management System (CFMS) systems, and data on the State’s Procurement Card (P-card) transactions. Further assuming this $320 million in spend could be reduced by 2.5%, the State could potentially realize an annual savings of Page 15 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case approximately $8 million. Also, note that no cost savings were included for the first year of production (FY 2011). Thereafter, 50% of the estimated annual cost savings was included for FY 2012 and 100% was included for FY 2013 and following years. Reduction in Inventory Balances and Carrying Costs The tangible benefits in this category include the estimated savings from the reduction in statewide inventory levels, as well as the associated inventory carrying cost, that could potentially be realized from the implementation of the proposed system. The statewide implementation of a modern, full-featured inventory system, including bar-code and RFID technologies, could help improve inventory accuracy and visibility, which in turn could help reduce the aggregate balance of inventory maintained (e.g., less safety stock would be required) and lower the interest cost of carrying inventory. It is assumed that the State’s approximate average inventory balance of $17.5 million could be reduced over time by approximately 15% as a result of the implementation of the proposed system. The reduced carrying cost of inventory would likewise result in an interest savings of 5% (estimated State cost of funds) of the reduced amount beginning in FY 2013 and thereafter. Please note no savings are estimated during the first year of production (FY 2011) and the subsequent reduction of inventory balances is phased-in over two fiscal years (FY 2012 and 2013) assuming that 50% of the potential reduction in inventory balances will occur in each of those years. Net Present Value (NPV) and Payback ♦ 10-year NPV at 5% per annum = $8.3 million ♦ Payback = 7.8 years Page 16 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case V. Project Funding 1. Funding Distribution ($000) 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY FY FY 2010 FY 2011 FY 2012 FY 2013 2008 2009 Facilities Grants Hardware (acquisition & operation) 2014-15 Biennium FY 2014 FY 2015 2016-17 Biennium FY 2016 FY 2017 2018-19 Biennium FY 2018 FY 2019 Comments 300 300 1,600 4,287 500 11,159 4,000 2,200 5,244 17,004 800 1,200 2,310 580 800 1,200 2,310 1,200 2,310 1,200 3,675 4,816 1,200 2,310 1,200 2,310 1,200 2,310 1,200 2,310 Personnel Services (excl. Training) Software (incl. maint.) 800 800 800 800 800 800 800 Supplies Training 1,970 500 23,316 2,434 27,982 700 5,590 700 5,010 700 5,010 700 11,191 700 5,010 700 5,010 700 5,010 700 5,010 Total 2. Confidence Comments on costs; factors that would indicate cost estimates are stable, or could change. Estimates are accurate within: Explanation: 10% [ x ] 25% [ ] 50% [ ] 75% [ ] 100% [ ] 3. Other costs Comments on other costs, e.g. staff time, or costs incurred by other organizations The estimates of cost provided above include State staff time for those individuals dedicated to the project on a statewide basis. State agencies may incur additional costs that are related to the MAPS Replacement Project for activities such as data conversion and modification of existing interfaces to support the new system. Due to the wide variation between agencies in the need for and complexity of such activities, quantification of these costs was not attempted. It is assumed that the work effort and associated personnel costs to perform these agency-specific activities will be absorbed within the capacity of the agencies’ existing IT organizations. * $363,000 was spend in FY 07 for planning and development of the business case and RFP Page 17 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case 4. Funding Source ($000) 2008-09 Biennium 2010-11 Biennium 2012-13 Biennium FY FY FY 2010 FY 2011 FY 2012 FY 2013 2008 2009 General Special Rev. Federal Trunk Hwy. TEF Internal Other 500 23,316 27,982 5,590 5,010 5,010 2014-15 Biennium FY 2014 11,191 FY 2015 5,010 2016-17 Biennium FY 2016 5,010 FY 2017 5,010 2018-19 Biennium FY 2018 5010 FY 2019 Comments Total 500 23,316 27,982 5,590 5,010 5,010 11,191 5,010 5,010 5,010 5,010 * $363,000 was spend in FY 07 for planning and development of the business case and RFP Page 18 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case VI. Architecture Fit Architecture fit How this solution is consistent or not consistent with the State technical architecture () Aligned a. Network b. Platform and Storage c. Data & Records Management d. Data Interchange e. Application f. Middleware g. Presentation & Accessibility h. Collaboration & Workflow i. Security & Authentication j. System Management & Reliability Not aligned Not applicable x x x x x x x x x x Explanation: The system platform and application will be determined through competitive procurement. The system selection criteria will include requirements for architectural fit with the State’s standards. Technology Use Major technology planned for this project [ x ] Web [ x ] Database [ ] GIS [ ] Imaging [ ] [ ] [ ] [ x ] Workflow [ ] Other Page 19 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case VII. Project Characteristics 1a. Project Categories Enter an X for all that apply. [ ] EGS: Static information [ ] EGS: Interactive response [ ] EGS: Financial transactions [ x ] Business reengineering [ ] Agency collaboration [ ] Mandate [ ] Small agency initiative [ ] CriMNet [ ] Other: specify { ] 1b. Business Functions Addressed [ ] License, permit, certify [ ] Collect revenue and fees [ ] Provide services [ x ] Provide information [ ] Inspect [ ] Enforce [ x ] Provide oversight [ ] Research, plan [ x ] Other: specify [Accounting and Procurement] 1c. Government Intentions Addressed [ ] Public safety [ ] Public health [ ] Education [ ] Economic well-being [ ] Natural resources [ ] Environment [ ] Transportation [ ] Law and justice [ ] Community [ ] Security [ x ] Drive to Excellence [ x ] Other: specify [Operations] 2. Type of Development [ ] New [ ] Other: specify [ ] [ x ] Enhancement [ x ] Maintenance/Continuation 3. Breadth of Business Reengineering Who is affected by business process changes [ ] No change to business processes [ ] Single department within an agency [ ] Multiple departments within an agency [ x ] Across multiple governmental organizations The proposed system will be deployed by each State agency, including configuration of certain system operating parameters that are unique to each agency. 4. Depth of Business Reengineering How much business processes will change [ ] No change to business processes [ ] Includes some changes to business processes [ x ] Includes major restructuring of business processes 5. Description of Business Reengineering Adopting the best-practice processes embedded in the new system is the most likely means for the State to maximize the return on its investment in the new system. Therefore, in order to realize significant value from the implementation, the implementation will require some degree of reengineering of all processes that will be supported by the new system. The State should view the implementation as an opportunity to reassess, improve, and standardize its processes across the enterprise and, thereby, greatly improve the way it does business. If the State implements the new system and does not adopt the embedded best-practice processes, but instead, modifies the system in order to continue to performing processes as Page 20 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case VII. Project Characteristics they are performed today, the following will result: ♦ Many of the process-improvement benefits that could be realized from the implementation will not be fully realized ♦ The State will spend a great deal of time and money modifying the system and will receive little to no return on that expenditure/investment in the way of process-improvement benefits ♦ The State will be required to spend a significant amount on system upgrades in order to accommodate the low-value, and in some cases unnecessary, modifications Some notable points regarding the reengineering effort that would be required in order to successfully implement the proposed system follow: ♦ A number of process-improvement opportunities have already been identified during the tobe visioning sessions that have been conducted as part of the MAPS replacement evaluation process. Refer to Section III.2. and Appendix A of this document for processimprovement benefits that are expected to be realized from the implementation of the proposed system. ♦ Changes in laws, rules, regulations, and/or policies may be required in order for some process-improvement benefits to be realized from the implementation of the proposed system. ♦ Involved in the reengineering effort will be the approximate 2,500 current MAPS users, as well as additional State staff that will be users of the new system’s functionality that will be expanded beyond that of MAPS (i.e., eProcurement, Inventory Management, Fixed Assets, etc.). ♦ The State currently has centralized systems for some of its key business processes (i.e., MAPS for accounting and procurement), which should make moving to a new centralized system less of a challenge than if its current environment were more decentralized. Page 21 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Appendix A Process-Specific Process Improvement Benefits Process-improvement benefits include (1) the reduction of process execution costs (efficiencies), and (2) improvement in process service level/results (effectiveness). These benefits would be realized primarily from the proposed system’s improved integration and stateof-the-art functionality the system would provide (e.g., vendor self-service, catalog/contract eProcurement, and automated workflow). The main process-improvement benefits that are likely to be realized from the implementation of the planned system, and that are specific to processes in functional areas that will likely be within the scope of the planned system implementation, have been categorized and described below. General Ledger ♦ Reduce the amount of time spent preparing the Comprehensive Annual Financial Report (CAFR). This is the amount of time agency personnel and contractors spend performing system-related tasks pertaining to the preparation of the CAFR report, such as distributing data, compiling data, etc. Since data will be in the integrated system's single database, users will no longer be required to pull data from several sources in order to generate standard reports such as CAFR. ♦ Facilitate more consistent statewide reporting through the use of standardized Chart of Account elements. One account structure will be shared by all agencies using the same integrated system. ♦ Reduce the amount of time and effort required to approve Journal Entries. Currently, the JE approval process is largely a manual one. The electronic workflow function of the planned system will enable users to route and approve Journal Entries online. ♦ Reduce the amount of time required to correct various accounting errors (e.g., reinstate cancelled encumbrances, closed or cancelled POs, etc.) from prior periods without having to reopen periods, reinstate appropriations, etc. as is required with the current system. Alternatively, some errors might be corrected in the current period but flagged as a prior period adjustment. ♦ Reduce the amount of time required for agencies to perform the year-end accounting close process. During the year-end close process, the planned system's integrated accounting and electronic workflow functionality will provide agencies with system access that will enable users to record adjustments, subject to necessary approvals, instead of having to submit adjustments for review and data entry. ♦ Reduce the amount of time required to process inter/intra-agency fund transactions (e.g. fund transfers, expenditures corrections, fund transfers, interagency payments, etc.). The planned system will provide the ability to flag inter/intra-agency/fund transaction that will make it more efficient to identify the reciprocating fund or agency. ♦ Improve the accuracy and timeliness, as well as reduce the amount of time required to produce, monthly and quarterly forecasts. The new system will provide the ability to maintain forecasts in the system to aid in budgetary reporting. Agencies will be able to enter forecast data directly into the budget ledger. Page 22 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Budget Development ♦ Reduce the amount of time required to develop the biennial budget and record the enacted budget in the system. Currently, the biennial budget is developed by the Department of Finance using the State’s internally developed biennial budget system, which is sourced through data exports from the data warehouse. The proposed system would enable all State entities to develop their budgets in a single system with a single database which would eliminate the need to enter the data into both the biennial budget and accounting systems. ♦ Reduce the amount of time required to develop budgets at the appropriation and subappropriation levels. Currently, allotments, instead of sub-appropriations, are used to control expenditures below the appropriation level. The current process requires a load of detailed historical expenditure information from the accounting system. However, budgets are approved at the appropriation level. The current allotment process is facilitated by a significant modification to MAPS. The planned system would enable the use of parent-child relationships within an appropriation (i.e. sub-appropriation level) that would streamline the budget preparation process by enabling agencies to prepare the budget at the level of approval rather than at a more detailed level. ♦ Reduce the amount of time required to develop and maintain agency operating budgets. This is the amount of time agency personnel and contractors spend in developing and maintaining the agency's operating budget -- preparing and distributing historical data; collecting and compiling data; entering data into MAPS and other systems; and managing the operating budget during the fiscal year. The planned system will allow users to develop budgets, monitor and control budgets, and record budget adjustments in a single system. ♦ Improve the accuracy and timeliness of, as well as reduce the amount of time required to maintain and report on, monthly and quarterly revenue budgets. Currently, budgets are not maintained in monthly or quarterly increments; however, the planned system will provide the ability to maintain these increments. The planned system will also provide the ability to maintain legal citations for revenue budgets, which are not presently maintained in MAPS ♦ Improve the accuracy and timeliness of, as well as reduce the amount of time required to monitor, anticipated transfers. Currently, anticipated transfers have no direct link to actual transfers. The planned system will provide this linkage capability. ♦ Reduce the amount of time required to track budgetary changes from the original budget through adjustments, transfers, etc. to arrive at the current budget amount. The current system lacks the ability to readily track these budgetary changes. The planned system will provide this ability. Accounts Payable ♦ Reduce the amount of time required to respond to vendor inquiries and to maintain certain vendor data. Vendor self-service functionality will allow vendors to update their information and view relevant events on the system. These events include determining whether an invoice has been entered into the system and paid. Currently, MAPS lacks this Vendor SelfService functionality. ♦ Reduce the amount of time required to process standard Accounts Payable transactions. Currently, MAPS provides very limited functionality compared to what will be available in the planned system. For example, the planned system will provide functionality lacking in the current system, such as the ability to: Page 23 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case • Enter recurring payments. Agencies will no longer be required to enter recurring payments from scratch each time a payment is to be made, and instead, will be able to use system functionality to automatically generate recurrent payments Substitute accounting at the time of payment (change any Chart of Account element) Add accounting lines to a transaction for additional cost if the transaction is a purchase order invoice Reference/pay multiple invoices on one voucher (for same vendor), multiple vendors on one voucher, and multiple POs on one voucher (for same vendor) Receive and process electronic invoices from vendors Finalize purchase order invoice transactions at the line level Track retainage (at the expense budget level) Associate credit memos with the original transaction and realize the debt appropriately Allocate payment at the distribution level at the time of payment Link expenditure transfers to original POs or payment Correct various errors (e.g., reinstate cancelled encumbrances, closed or cancelled POs, etc.) with expenditure corrections process one-time non-vendor payments, where no vendor setup is needed (e.g. fees/refunds) Provide scheduled pay dates at the invoice line-item level • • • • • • • • • • • ♦ Reduce the amount of time required to process batches of certain Accounts Payable transactions by uploading data from spreadsheets. Currently, MAPS does not provide this upload functionality, and as a result, users must enter manually a significant amount of transaction data that could be easily uploaded. ♦ Reduce the amount of time required to process EFT files. Currently, EFT files must be formatted manually. The planned system will eliminate the need to perform this manual formatting. ♦ Reduce the amount of time required to identify and account for set-offs (i.e., matching amounts due to a customer that is also a vendor with amounts due from that vendor for outstanding liabilities to the State, due to unresolved contractual problems, failure to pay taxes, court-ordered garnishments, or for other reasons as dictated by State law). With all agencies using the planned system that will have integrated Accounts Payable and Accounts Receivable/Billing functionality, as well as set-off functionality, the process of identifying and accounting for set-offs would be much more efficient. Furthermore, this setoff functionality will help reduce the amount paid to vendors that should be set-off. Accounts Receivable/Billing ♦ Reduce Accounts Receivable balances and associated carrying costs. The integrated workflow-enabled functionality of the planned system will help improve data accuracy, visibility, and related communication, which in turn could help reduce the aggregate AR balance, thereby lowering the interest cost of carrying AR. Page 24 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ Reduction of bad debts. The integration and workflow functionality of the planned system will enable the State to manage collection efforts more effectively, and thereby reduce the amount of AR charge-offs. ♦ Improve the ability to secure personal data (e.g., Social Security Number, Date of Birth, etc.) as required by law. The planned system will provide functionality that will help the State maintain tighter security over sensitive data. ♦ Improve the ability to identify and report consolidated customer debt. Currently, agencies use a variety of Accounts Receivable/Billing systems. The planned new system will be used by virtually all agencies that need standard AR/Billing functionality (i.e., not highlyspecialized functionality required to provide program-specific support) and will facilitate the identification and reporting of consolidated customer debt. ♦ Improve customer service and reduce the cost of providing certain services to customer. The planned system will have Customer Self-Service functionality that will enable customers to inquire online regarding the status of transactions (e.g., order/service status). Furthermore, the overall level of customer service is bound by a number of limitations in the current systems, and the planned system will address many of these limitations. Inventory Management ♦ Reduce inventory levels and associated carrying costs. The functionality of the planned system, including bar-code and RFID technology, could help improve inventory accuracy and visibility, which in turn could help reduce the aggregate balance of inventory maintained, thereby lowering the ongoing investment in inventory and the interest cost of carrying inventory (e.g., less safety stock required, etc.). ♦ Reduce the amount of time spent on inventory reorders. The planned system's integrated functionality will enable users to set reorder points in the system that would trigger the generation of requisitions for the items to be reordered; currently, some agencies do not use Inventory systems that have this reorder functionality and must process reorders manually. The requisitions could then be manually assigned to Buyers (within the system) or be assigned by the system based on commodity code, Buyer workload, and other factors. ♦ Reduce the amount of time required to perform physical-inventory and cycle-count processes. Currently, there is not a statewide Inventory Management system in place. Some agencies have Inventory systems, and some may use bar-coding and RFID technologies, but those that perform physical-inventory and cycle-count processes without technologies could reduce the amount of time required to perform those processes once the planned system, which will support those technologies, is implemented. Procurement ♦ Reduce the cost of goods and services procured. Using a single, integrated system with eProcurement functionality for virtually all State purchases, including enforced policies regarding the mandated use of the system, will help bring more of the State's spend under management and will improve the availability of commodity-level information which will help the State obtain more favorable pricing on certain goods/services through strategic sourcing (i.e., volume discounts from consolidation of spend). Refer to Section IV. (Return on Investment; ROI Elements; Other Tangible Benefits) of this document for additional information regarding this benefit. Page 25 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ Reduce the amount of time spent processing purchase requests outside of MAPS. Currently, purchase requests are processed by agencies manually or on agency-specific systems, and once approved, the information is entered into MAPS. The planned system would enable State employees to submit an online requisition, obtain approval via electronic workflow technology, and pre-encumber the funds in the State's accounting system. ♦ Reduce the amount of time spent processing formal (i.e., published) solicitations in MAPS (process: after approved request through award). The integrated eProcurement functionality of the planned system Web-enables the solicitation process and can help reduce the cost of processing solicitations. The system will provide the ability to create solicitations from Requisition information entered into the system, post the solicitation to the Web from the eProcurement application, automatically notify vendors of solicitations via e-mail, receive the vendors' responses electronically, feed the vendors' responses into the system's tabulation functionality, notify the selected vendor via e-mail, and post the award information to the Web for the eProcurement application. ♦ Reduce the amount of time spent processing formal (i.e., published) solicitations produced outside MAPS (process: after approved request through award). Currently, commodity and service contracts, professional technical service contracts, building construction contracts, and some larger orders are procured via solicitations produced outside MAPS. Processing these solicitations in a statewide integrated system would result in fewer keystrokes, more standardization, as well as better reporting and an improved audit trail. The eProcurement functionality of the planned integrated systems would Web-enable the solicitation process which would help reduce the cost of processing solicitations. The system will provide the ability to create solicitations from Requisition information entered into the system, post the solicitation to the Web from the eProcurement application, automatically notify vendors of solicitations via e-mail, receive the vendors' responses electronically, feed the vendors' responses into the system's tabulation functionality, notify the selected vendor via e-mail, and post the award information to the Web for the eProcurement application. ♦ Reduce the amount of time spent processing informal solicitations (i.e., solicitations not published but performed via phone call, e-mail, etc.) (Process: after approved request through award). The eProcurement functionality of the planned integrated system would Web-enable the solicitation process and help reduce the cost of processing solicitations. The functionality allows buyers to select appropriate registered vendors, generate solicitations from Requisition information entered into the system, and then receive the vendors' bids via e-mail. ♦ Reduce the amount of time required to (1) perform budget validation and verification of account distribution for Procurement transactions (e.g., requisition, purchase order), and (2) post appropriate financial impact in the General Ledger to support Procurement activities (e.g., post pre-encumbrance for an approved purchase requisition, post encumbrance and liquidate pre-encumbrance for a purchase order). Currently, these accounting processes are largely manual; however, the planned system will be fully integrated with the system's General Ledger functionality which will automate a significant portion of these accounting processes. ♦ Reduce the amount of time spent printing, and then faxing and mailing Purchase Orders, as well as reduce the postage required to mail the POs. Currently, all POs are printed and then either faxed or mailed to vendors. The eProcurement functionality of the planned integrated system would enable to State to auto-fax POs and attach POs to e-mail messages, neither of which can be done in MAPS today. Not only will this new functionality reduce the time/effort spent printing, and then faxing or mailing POs, mailing costs will also be reduced. Page 26 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ Reduce the amount of time spent entering information into MAPS on Web purchases made for "discount off catalog" contracts. Currently, purchases from these contracts are made via the Web, and then the information about the purchase is entered into MAPS. A modern integrated Web-based system would provide functionality that would enable the State employees to create a requisition for these items, electronically route the requisition via workflow technology for approval, and the system would generate a PO for the item(s) that would be tied to the requisition and that could be sent electronically to the vendor. Additional functionality would allow authorized employees to “punch out” to designated vendor web sites to place complex orders. The need for entering procurement information into the vendor's systems and then again into MAPS would be eliminated. ♦ Reduce the amount of time required to receive procured inventory items in agency inventory systems, as well as in MAPS Procurement and/or agency Procurement systems. Some agencies have Inventory systems and receive procured Inventory items into the Inventory system and MAPS, and some have to receive the procured item(s) in a Procurement system the agency has. ♦ Reduce the amount of time required to receive procured assets in agency Fixed Asset systems, as well as in MAPS Procurement and/or agency Procurement systems. The planned integrated system will establish asset receiving record information when the assets are sourced, and information about the assets is carried forward in the system. Also, procuring and receiving the assets in a single, statewide system, would reduce the effort now required to receive the assets in two systems. ♦ Reduce the amount of time required to receive procured consumables (i.e., non-asset and non-inventory items) in MAPS Procurement and/or agency Procurement systems. The planned integrated system will establish asset receiving record information when the assets are sourced, and information about the assets is carried forward in the system. Also, procuring and receiving the assets in a single, statewide system, would reduce the effort now required to receive the assets in two systems. ♦ Reduce the amount of time spent processing vendor records, including registering vendors and updating vendor information. The Vendor Self-Service functionality of the planned system will allow vendors to update their own information. This information includes address, phone number and commodity codes. ♦ Reduce Procurement cycle time significantly (expect at least a 50% reduction, on average, for commodity purchases). The current Procurement process has a number of manual steps that will be eliminated through the use of the planned integrated, Web-based, electronic-workflow-enabled system, thereby reducing the cycle time of the existing Procurement process. Asset Management ♦ Reduce the amount of time required to capture assets and asset-related information. Currently, the State does not maintain a statewide fixed asset system, so agencies use a variety of systems and processes to maintain fixed asset data. The planned system will be available to all agencies and will provide the ability to establish asset-receiving-record information when the assets are sourced, and information about the assets will be carried forward in the system and serve as a jumpstart for recording asset data when it is received. Page 27 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ The new system's Asset Management functionality will be fully integrated with the system's Financial Management module to support the recording of capitalized assets related to specific proprietary funds and trust funds and to the General Fixed Asset Account Group. Also, procuring and receiving the assets in a single, statewide system would reduce the effort now required to receive the assets in multiple systems. Furthermore, the new system will also support automated methods of collecting asset data through the use of bar-coding or RFID technologies. ♦ Improve the accuracy and timeliness, as well as reduce the amount of time required to maintain and report on, asset information. By having all agencies on the same statewide system, the planned system will provide improved reporting and report compliance on items such as: • Assets that meet the State's capitalization threshold for financial reporting purposes. • "Controlled" assets as required by State policy. Controlled assets are property items that are not to be capitalized per State financial reporting policy but are secured and/or tracked by State or user agency policy (e.g., handguns, computers). "Controlled" assets as required by agency policy • ♦ Reduce the amount of time spent (1) calculating and maintaining asset depreciation, and (2) manually entering the resulting accounting entries into accounting and tracking systems. Some agencies calculate depreciation manually. The planned system will provide depreciation functionality that will be accessible to all agencies. Project/Grant Accounting ♦ Improve the accuracy and timeliness, as well as reduce the amount of time required to maintain, budget information for grants. The new system will provide the ability to maintain budget data that will span more than one State fiscal year and/or biennia. This periodspanning functionality is missing from the current system. ♦ Improve the accuracy and timeliness of project and job accounting. The new system will allow projects to be budgeted and controlled over the entire life of the project. Projects can also be divided into phases and/or jobs that can be managed at a detail or summary level. Page 28 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Appendix B Analysis of Alternative Solutions That Were Considered and Ruled Out The following alternative solutions were considered by the preliminary study team: 1. Enhance Existing Systems and Processes 2. Custom Development 3. Vendor Hosting 4. Status Quo ENHANCE EXISTING SYSTEMS AND PROCESSES Description of Solution Under this solution, enhancements would be made to the existing statewide legacy systems. Potential enhancements would include: ♦ Deploying sophisticated ad hoc reporting tools that would allow end users to create many of their own reports; ♦ Modifying existing systems and/or acquiring third party “add-on” software to enhance functionality and/or address process improvement opportunities; and ♦ Improving user interface for selected applications. This option has the potential to produce a greatly improved reporting capability, but would provide only a marginal increase in productivity due to limited opportunities to improve integration and system functionality, and the lack of use of best business practices and automated workflow capabilities that are available in the type of system being proposed. Pros ♦ Would not disrupt normal business operations as much as a system-replacement project. ♦ Not necessary to train users on an entirely new system, only certain features. ♦ Leverages the skills of existing State IT personnel. ♦ Costs considerably less than a replacement solution. Cons ♦ High risk associated with modifying the existing legacy systems. ♦ Fails to provide the efficiencies and process improvements that other options would provide. ♦ Considered only a “stopgap” option. ♦ Would not address the technical-obsolescence risk associated with MAPS. Page 29 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Constraints and Risks Making any significant modifications to the State’s dated administrative systems would subject the State to high risk. Also, the State would still require a strategy to mitigate the technicalobsolescence risk associated with MAPS in the near term. Feasibility of Solution Given the high degree of risk associated with this option, this alternative is considered feasible only as a stopgap measure until a more viable option can be implemented. CUSTOM DEVELOPMENT Description of Solution The “Custom Development” (Custom) option would involve the in-house development of a new fully integrated, Web-centric application that would meet the State’s functional and technical system requirements. System programs would be developed using state-of-the-art technologies (i.e., programming languages, development tools, and development environment). All data would be maintained in a single, uniform database. By adapting to an open system architecture, modern tools and design techniques would assist the State in achieving a flexible, interoperable, and modular system, which could meet the future needs of the State. Pros ♦ This option could meet nearly 100% of the State’s functional requirements. ♦ System would be designed to provide full integration among the core areas of functionality. ♦ Would be built in compliance with the State’s strategic technology direction. ♦ Would address the technical-obsolescence risk associated with MAPS. Cons ♦ Would take significantly more time to design, develop, properly test, and deploy than would implementing a modern commercially-available integrated Web-based system such as the one being proposed. ♦ Would require extensive training of existing personnel and/or outside support assistance in the latest system development tools and methodologies. ♦ The State would solely fund all initial development costs, as well as future ongoing software upgrades and maintenance costs. ♦ The State would solely bear the high risk of project failure associated with this alternative, given the size and complexity of the effort. Constraints and Risks Only organizations with considerable funding can support the high cost of ownership and complexity associated with developing and maintaining custom-developed applications of the size and complexity needed to meet the State’s business needs. Organizations pursuing a custom-solution strategy tend to have higher rates of project failure. Due to the size, complexity, likely project duration, and funding requirements associated with such a project, the Custom option was considered to represent an unacceptable risk for the State. Feasibility of Solution Due to the degree of risk associated with a project of this magnitude and the ongoing costs associated with maintaining and enhancing the system for future use, custom development of a new fully-integrated system is not considered a feasible alternative. Page 30 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case VENDOR HOSTING Description of Solution “Vendor Hosting” means contracting with independent suppliers to meet an organization’s system needs. Numerous hosting models exist today, but the most common model involves the client paying a subscription fee for use of specified software that is maintained and operated by the application service provider (ASP). The ASP provides the technical infrastructure, as well as implementation and support services, to the client organization. Pros ♦ Could be a lower-cost alternative, at least initially, than the statewide system being proposed (history has shown varied actual results). ♦ Reduced need to hire and retain highly skilled (and expensive) technical resources. ♦ Very high levels of “uptime” and maintenance that is seamless to users. ♦ Improved levels of customer service (history has shown varied actual results). ♦ Reduced need to purchase new, rapidly depreciating hardware and software. ♦ Reduced initial investment and “pay-as-you-go” financing. ♦ Operating expense versus capital expense. ♦ Predictability of cash flow. ♦ Would address the technical-obsolescence risk associated with MAPS. Cons ♦ Negotiations typically involve multi-year “lock-in” contracts, which raise concerns of vendor stability and quality of service. ♦ On multi-year contracts, vendor profits are often “backend loaded” into the later years of the contract, so that attractive first year pricing may be misleading. ♦ As needs and business grow, organizations see their use of ASP services increase over the years, and ASP billings increase accordingly; however, additional work typically is priced higher than the initial services, so the anticipated overall cost savings may not materialize. ♦ Political risk (a significant number of State jobs could be eliminated). ♦ Offers limited flexibility – hosted solutions work well in a standardized environment but tend to break down when an organization has unique business needs. Constraints and Risks The potential for contract disagreement over what activities and services are included in the price that the State would be charged is very high, particularly in later years of the contract when vendors expect their profits to increase. Where hosting has failed to be cost-effective or does not yield satisfactory service delivery, the organizations involved have struggled to reinitiate in-house functions without negatively impacting services. Feasibility of Solution This is not considered an acceptable alternative for the following reasons: ♦ No other state has enjoyed long-term success in pursuing a vendor-hosting strategy for statewide systems of this magnitude. Page 31 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case ♦ This alternative would cause excessive dependence on the hosting vendor and the potential for an extremely difficult transition to bring the solution in-house, if the State so desired. ♦ Dependence on the hosting vendor would also subject the State to unacceptable pricing risk, as vendors tend to increase the overall cost of service over time. STATUS QUO Description of Solution The “Status Quo” alternative is presented as a baseline for comparison with other solutions. This solution provides for keeping the existing statewide legacy systems in place, while making no significant enhancements in functionality to the current statewide systems or new integration among those systems. Under this alternative, however, it is assumed that agencies will continue to implement new systems and enhance their existing administrative systems in order to meet their ever-changing business requirements. The State’s current administrative business processes are conducted through the use of several legacy applications, as well as user agency applications that are used to meet specific agency needs (e.g., grant accounting, project accounting, inventory management, and fixed asset management). Integration has been built between a number of agency systems and the State’s statewide systems via a number of standard interfaces (e.g., IWP [Interface Warrant Print] and CITA [Common Inbound Transaction Architecture]); additionally, interfaces are in place for interfacing across statewide administrative systems and across user agency administrative systems. Pros ♦ No disruption of current business processes. ♦ Limits inherent risks associated with changing current systems (assumes ongoing maintenance will still occur where applicable). Cons ♦ Current administrative systems are bound by aging technological platforms that inhibit upgrade or enhancement to meet changing business needs. ♦ Continued heavy reliance on paper documents and the inefficient workflow associated with processing them. ♦ Fails to take advantage of best business practices inherent in modern integrated systems. ♦ Lack of real-time integration within and among the statewide and agency systems. This lack of integration results in a significant amount of time being spent on the following tasks: • Researching, troubleshooting, and reconciling transactions and account balances across multiple systems (i.e., between user agency administrative systems, between user agency and statewide administrative systems, and between statewide administrative systems). This reconciling effort involves: - Investigating failed interface transactions; - Reconciling balance discrepancies between systems; and - Making adjustments in the appropriate system(s). • Tracking the status of transactions spread across multiple systems on an ongoing basis using spreadsheets, paper logs, etc. • Manually entering the same data into multiple systems. Page 32 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Generating ad hoc and standard management reports that require retrieving data from multiple systems. This reporting effort involves: - Extracting data from multiple sources; - Compiling and reviewing data; - Formatting data into the reports; and - Distributing the reports. ♦ Facilitates user agencies continuing to fund new systems projects in order to meet agency business needs not being met by existing systems. ♦ Would not address the technical-obsolescence risk associated with MAPS. ♦ Would not address the need to maintain current operating system software on the State’s mainframe computer, increasing the risk that the State would need to maintain an additional mainframe (to support MAPS on an older operating system) at substantial cost to the State. Constraints and Risks One notable risk associated with the “Status Quo” solution is that it provides no additional functionality or technological improvements. Therefore, current systems may not meet future statewide and user-agency needs. Specifically, the existing systems lack real-time integration with one another and do not include an adequate end-user reporting facility. Additionally, the State’s legacy financial and procurement systems are not positioned to rapidly respond to changes in business processes or technology. Another significant risk associated with this alternative is the risk of technical obsolescence. No upgrade path is available for the State’s procurement system (i.e., AGPS and CFMS). For example, as the existing procurement application ages, the potential for problems increase with each update to the mainframe operating system. Each time a new operating system upgrade becomes available, consideration must be given to its compatibility with the procurement application. Over time, this increasing potential for incompatibility limits the State's ability to keep the mainframe system up-to-date. Additionally, upgrades to the mainframe Customer Information Control System (CICS) or COBOL programming language may also present similar limitations due to compatibility issues with MAPS applications. Because the procurement system shares the State’s mainframe with many other missioncritical functions, the impact of this limitation goes far beyond the MAPS system. Feasibility of Solution This alternative is feasible in the near term only as a stopgap measure. The Status Quo places the State at ever-increasing risk by failing to address technical-obsolescence issues associated with MAPS. Additionally, it places the State’s accounting and procurement strategic direction on hold and delays the realization of anticipated benefits of a new statewide system. This alternative is not considered feasible for the long term. • Page 33 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Appendix C Key Assumptions for the Estimate of Cost to Implement and Maintain a Replacement for the MAPS System This appendix contains the primary assumptions used in estimating the cost to implement and maintain the proposed statewide system. General ♦ The implementation period is assumed to be eighteen (18) months and the system will go-live at the beginning of a fiscal year. ♦ The implementation contractor will stay on to provide post-implementation support for four (4) months following go-live (i.e., after the 18-month implementation period). In addition, the implementation contractor will provide three (3) months of support for the first fiscal year-end accounting close. ♦ Prior to Year 1 of the actual implementation, the planning schedule contains a Year 0 (fiscal year ending in 2008). During this time period, it is assumed that the State will move forward with procuring software and associated implementation services (e.g., issue an RFP, select a short list of vendors, develop vendor demonstration scripts, conduct a vendor evaluation process, select software and implementation vendors, negotiate contracts, etc.), and will perform certain activities that will help the State prepare for implementing the new system, should the State decide to move forward. ♦ An average hourly, expense-loaded rate of $230 is assumed for all contractors, except for the work performed by contractors during Year 0, and for the Independent Project Oversight activities, which will be performed at an average hourly, expense-loaded rate of $180. ♦ All amounts are in current dollars (i.e., no adjustments have been made for inflation). ♦ It is assumed that a full-time equivalent number of hours per year is 1,950 for State workers. ♦ A technical upgrade (i.e., no significant additional functionality will be implemented) will occur during Year 6 of the project. ♦ The hours for State employees are treated as a separate category below (i.e., the assumptions below only apply to contractors, unless otherwise indicated). Page 34 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Project Team Composition The staffing model for the project is based on the functional scope of the project, as depicted in the table below. Not all of the team members will be applied throughout every aspect of the initiative; therefore, for information on the total assumed number of hours each resource will work on the project, please refer to the appropriate assumptions below. POST GOLIVE (State only) 2 0 2 2 0 2 PROJECT TEAM MEMBERS PROJECT MANAGEMENT Project Manager Independent Project Oversight TOTAL PROJECT MANAGEMENT FUNCTIONAL TEAM Finance Lead Budget Development General Ledger/Budget Control Accounts Receivable Projects/Grants Procurement (including eProcurement) Accounts Payable Asset Management Inventory Cost Allocation/Accounting TOTAL FUNCTIONAL TEAM DEPLOYMENT TEAM Change Management Training TOTAL DEPLOYMENT TEAM TECHNICAL TEAM Workflow Reports Interfaces Conversion Enhancements (Baseline Modifications) Operations Infrastructure TOTAL TECHNICAL TEAM GRAND TOTAL CONTRACTOR 2 2 4 STATE 1 1 1 1 1 3 1 1 1 1 12 1 3 3 2 4 6 3 2 2 2 28 1 2 2 2 2 2 2 2 1 1 17 2 5.5 7.5 2 10 12 5 5 10 0.5 1.5 1.5 1.5 1 0 5 11 34.5 2 4 4 4 4 0 5 23 65 1 2 2 0 3 3 3 14 43 Page 35 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Project Management It is assumed that 2.0 FTEs will be required for the duration of the 18-month implementation period, plus the 7-month post-implementation support period. Independent Project Oversight Year 0 As indicated above, during this time period, it is assumed that the State will move forward with procuring software and associated implementation services (e.g., develop a vendor evaluation process, develop vendor demonstration scripts, etc.), and will perform certain activities that will help the State prepare for implementing a new system, should the State decide to move forward. It is assumed that two (2) FTEs will be required for six (6) months to assist in completing the tasks for this category. Years 1 – 2 It is assumed that two (2) FTEs will perform the oversight role throughout the 18-month implementation period and for the first three (3) months of the assumed 4-month postimplementation support period that will immediately follow the 18-month implementation period. Software Configuration and Process Reengineering This category represents the major contractor work effort involved with implementing the new system. This category of work represents a majority of the efforts of the contractor functional team described in the table above. It is estimated that this activity would require approximately 36,000 hours based on the functional scope and assumed implementation duration. The highlevel activities in this category can be described as follows: ♦ Developing “To Be” processes consistent with the “best practices” processes embedded in the selected software ♦ Configuring the software in accordance with the defined “To Be” processes ♦ Performing configuration unit testing and assisting in integration, system, and stress testing Workflow Configuration This category includes defining the State’s workflow business rules and configuring the system’s workflow functionality in accordance with those rules. Included are the hours necessary for analysis, design, construction, testing, and moving the technology into the production environment. It is assumed that this activity would require approximately 2,000 hours to provide the baseline workflow functionality necessary to support key processes (e.g., Procurement). Custom Development – Interface Development This category includes the entire effort required to develop an interfaced/integrated environment which would include the new system, the State’s legacy systems that remain, and the systems of entities external to the State. This effort includes analysis, design, construction, testing, and moving the interfaces into the production environment. Page 36 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case The estimates for this analysis are based on the implementation contractor providing standard inbound and outbound interface file formats which would require approximately 6,000 hrs of effort. Custom Development – Software Modification This category includes all the effort necessary to develop modifications/enhancements to the new system in order for the system to meet the State’s business requirements (i.e., analysis, design, construction, testing, and moving the modifications/enhancements into the production environment). It is assumed that the State will attempt to limit the number of modifications/customizations as much as possible. It is also assumed that the State will need to modify the system to satisfy Budget, sales tax withholding, and MnDOT requirements. These assumptions pertain to the following preliminary estimates: ♦ Baseline Modifications (6,000 hours for a total cost of $1.4 million) – This estimate relates to an assumed level of miscellaneous modifications that typically occur during major system implementations. ♦ Budget Modifications (6,500 hours for a total cost of $1.5 million) – Modifications relating to functions of the current Budget Information System (BIS) will likely be needed to meet the State’s needs in the new system. If modification of the new system does not appear technically or economically feasible, the funds could be used to reprogram BIS to function with the new system. ♦ Sales Tax Withholding Modifications (4,400 hours for a total cost of $1.0 million) – During the MAPS implementation, extensive modifications to AGPS and other portions of MAPS were required to accommodate the State’s current process of calculating and withholding local sales tax on State purchases. Although the new system may more readily facilitate some portions of this process, it is assumed that substantial modifications will be required to continue the calculation and withholding processes presently used by the State. The eventual cost of this modification will be significantly influenced by the sales tax capabilities existing in the newly selected system and the State’s willingness to alter existing business processes to reduce the cost of potential modifications. ♦ MnDOT Modifications (13,000 hours for a total cost of $3.0 million) – In the current MAPS system, significant modifications were made to components of the system (e.g., Project Accounting) to accommodate the needs of MnDOT. During the MAPS implementation, MnDOT contributed approximately $3.0 million to fund some portion of their related modifications. Review of the MnDOT modifications indicates that significant modifications will also be required for the new system. As a detailed fit/gap analysis of MnDOT requirements vs. the new system is not possible, it is assumed that $3.0 million will be required to perform similar modifications in the new system. Custom Development – Report Development This category includes all the effort required to develop the reports necessary for the new system to meet the State’s business requirements that are not met by the reports readily available from the proposed systems (i.e., analysis, design, construction, testing, and moving the reports into the production environment). Page 37 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case It is assumed that 6,000 contractor hours will be required for this activity. Custom Development – Data Conversion / Loading This category includes all the effort necessary to convert/load data into the system (i.e., analysis, design, and construction of the conversion/loading programs, testing, and getting the necessary data loaded into the production system). The manual data loading effort is also included in this category. It is assumed that the implementation vendor will provide standard conversion programs to assist with conversion activities. The State will be responsible for extracting the appropriate data from existing administrative systems. It is assumed that the implementation contractor will provide 4,000 hours of assistance. Organizational Change Management This category includes the effort required to work to build executive sponsorship, mentor the State’s change management activities and create and manage communication regarding the initiative. It is assumed that 2.0 FTEs will be assigned to provide Change Management assistance throughout the 18-month implementation period. Training and Documentation – Project Team Training This category includes the expenditures necessary to train the project team. It is assumed that the State will pay for the project team to attend classes given by the software vendor rather than having the training delivered on a per-hour basis. It is estimated that project team training costs will be approximately $756,000, assuming each of the sixty-five (65) team members attends three (3) classes at an average cost of $4,000 per class. Training and Documentation – End User Training and Documentation This category contains the effort for contractors to assist in (1) developing end-user training materials based on the “To Be” process designs, (2) training the State trainers, and (3) delivering the training. It is assumed that this activity will require approximately 11,100 hours of effort. Page 38 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Infrastructure Development and Project Support This category includes the cost of resources to: ♦ Assist in installing the hardware to support the new software ♦ Apply updates/patches to the software during the implementation period ♦ Install the software ♦ Control the movement of software configuration changes through the development environment and into the production environment ♦ Direct system stress testing (i.e., volume testing) ♦ Tune system performance ♦ Assist in developing procedures for ongoing system operations It is assumed that an average of 3.0 FTEs will be required for the entire 18-month implementation. Post-Implementation Support It is assumed that five (5) of the implementation consultants will stay on to provide postimplementation support for four (4) months following go-live. In addition, three (3) implementation consultants will provide three (3) months of support for the first fiscal year-end close. State Employee Implementation Cost It is assumed that the State will provide resources to participate in performing the activities relating to all of the cost categories presented above, including deployment. It is also assumed that 100% of State project positions would be backfilled at an average hourly rate of $35.90 ($50,000 salary; 40% benefits; 1,950 hours per year). Application Software License and Software Maintenance Fee It is estimated that the software license fee for the new system would be approximately $4.0 million. Also, it is assumed that the annual software maintenance fee will equal approximately 20% of the software license fee. All Other It is assumed that $300,000 will be required per annum for project facilities and other miscellaneous costs. Annual Operating Costs (data center) It is assumed that $1.0 million in hardware will be acquired in Year 1 of the project for the sandbox, development, and test environments, and another $1 million in hardware will be acquired in Year 2 of the project for the production environment. It is also assumed that the operating costs for the infrastructure will ramp up in Year 1 and will be approximately $1.2 million for Years 2 of the project and beyond. Page 39 Business Case Template Feb 2006 Office of Enterprise Technology Department of Finance Integrate Core Business Management Systems (MAPS Replacement) State of Minnesota Information Technology Business Case Ongoing Support/Operations – Management It is assumed that only State resources will fill the positions included in the Ongoing Support/Operations categories. It is also assumed that two (2) FTEs will be assigned to the management of the ongoing support and operation of the proposed system. Ongoing Support / Operations – Functional Support It is assumed that seventeen (17) FTEs will be required to provide the appropriate level of support for the functional areas (e.g., help desk) within the scope of the implementation. Ongoing Support / Operations – Technical Operations and Support This category includes all activities to support the technical environment (e.g., software operation and maintenance, the application of software patches/fixes, moving development items into the production environment, etc.) The category also includes resources necessary to support the system interfaces and modifications/enhancements. It is assumed that fourteen (14) State FTEs will be required to provide ongoing technical operations and support. Ongoing Support / Operations – Ongoing Training It is assumed that ten (10) full-time trainers will be required to handle the ongoing system training, including delivering classes and maintaining documentation. The training team will be supplemented at times by the personnel staffing the ongoing functional and technical support efforts. Upgrade in Year 6 It is assumed that the number of contractor hours that will be required for the upgrade will be 15% of the total contractor hours estimated for the initial implementation, and that State personnel will contribute approximately twice as many hours to the upgrade effort as the contractor. Page 40 Business Case Template Feb 2006 Office of Enterprise Technology