continuous roi in procurement and payables

8/14/2019 Continuous ROI in Procurement and Payables

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Presenter: David Downey

Director Enterprise Services

CherryRoad Technologies Inc.

Continuous Improvement Means

Continuous ROI in Procurement and Payables

Session #33460


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1. Overview

2. Managements challenge3. Technology is a tool

4. Breaking down silos

5. Continuous improvement6. Goals of measurement

7. Designing meaningful measures

8. The value of measurement9. ROI

Todays Agenda


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Overview

One of the largest transportation networks in the world.

In 3 days, it moves more people than Amtrak does in onefull year.

In 11 weeks, it moves more people than fly with ournations airlines in one year.

Subways, buses, and railroads provide more than twobillion trips each year.

Bridges and tunnels carry more than 300 million vehicleseach year.

Serves a population of more than 14 million people in a5,000 square mile area.


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Public Perception

"Out of Control" Cooked Books, Hid $500 Million

Riders want "Heads on Sticks. Comptrollers and Advocates callfor May 4th fare hike to be delayed

(Agency) hid half a billion dollars in 2002 budget, Fare

increase based on Misleading Information Two Financial Plans: One Public, One Secret

State Comptroller

Finances and operations are not available for publicinspection

An accounting degree is required to analyze their annual

financial statement


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Revenues vs. Ridership


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Expenses vs. Ridership


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Board Policy

In July of 2003, the Board mandated the identification andimplementation of an integrated budget and financial system thatprovides accurate, reliable and timely information for financialdecision-making and enhanced public understandingof the Authorities finances.


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Headquarters Overview

Headquarters is chartered to provide consolidated financial

management and reporting for the operating agencies. $28 billion dollar in investment and debt obligations

management.

$8 billion dollar operations expense budget.


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Management Goals

Improve the business processes and technical ability to

support consolidated financial reporting of all businessentities.

Improve the business processes and technical ability to

support financial and human resource management functions.

Standardize and integrate the information systems used to

support financial and human resource management businessprocesses.

Create a standard information system platform and architectureto support integrated financial management of all agencies.


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Oracle/PeopleSoft Enterprise Solution

FMS

General Ledger

Commitment Control Combo Edits

Allocations

Project Costing

Cash/Deal Management eProcurement

Workflow

Accounts Payable

EPM

Budgeting

Global Consolidations Financial Plan

HCM

Administer Workforce

Position Management Labor Relations

Recruit Workforce eRecruit

Pension Administration Benefits

Benefit Accruals

Payroll

Time & Labor Police & Union

IT

Enterprise Portal Disaster Recovery Plan


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Jan

04

Apr

04

Jul

04

Oct

04

Jan

05

Apr

05

Jul

05

Oct

05

Jan

05

Apr

05

Jul

05

Oct

05

Pension Administration

HRMS, Recruiting, Position

Management, Benefits

Payroll and Time & Labor

HRMS Initiatives

Global Financial Consolidations and Financial Plan

Infrastructure Configuration &

Support

Infrastructure & Enterprise Portal Initiatives

Budgeting

General Ledger, Treasury,

Accounts Payable,

Procurement

& Project Costing

Financial & EPM Initiatives

Go-Live 1/3/06

Go-Live 1/3/05

Go-Live 1/3/05

Go-Live 10/1/05

Go-Live 12/21/04

2004/2005 and 2006/2007 Deliverables

Jan

06

Apr

06

Jul

06

Oct

06

Jan

06

Apr

06

Jul

06

Oct

06

Jan

08

Go-Live 3/16/07

We are hereWe are here

Jan

07

Apr

07

Jul

07

Oct

07

Jan

07

Apr

07

Jul

07

Oct

07

Continuous Improvement

Initial BPO

Recommendations

Organizational

Assessment

Procure to Pay Analytics

and Process Improvements

Agency Shared Service Initiative

Formation of MTA managed

Continuous Improvement Team

Continuous Improvement TeamWed @ 2pm - Board 40 identified

Enterprise-wide Analytics

and Dashboard

Civil Rights& Compliance

Procurement Integration

EPM Upgrade

Training Administration

Project Overview


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Technology versus BPO

CoordinatedStrategy

100%

Non-Coordinated

Strategy

70%

TechnologyOnly

22%

Simultaneously addresses people,process improvements and technology

People, process improvements andtechnology addressed independently

Total ROI

Source: The Hackett Group 2002

CoordinatedStrategy

CoordinatedStrategy

100%

Non-Coordinated

Strategy

Non-Coordinated

Strategy

70%

TechnologyOnly

22%

TechnologyOnly

22%

Simultaneously addresses people,process improvements and technology

People, process improvements andtechnology addressed independently

Total ROI

Source: The Hackett Group 2002

Implementing technology alone results in an ROI of only 22%

of potential. This figure improves to 70% when people, processes, and

technology are addressed independent of each other.

ROI can reach 100% when projects address people, process, andtechnology at the same time.


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Process Initiatives

Initial Business Process Analysis Feb. April 2004

Formation of Cross Functional team April 2004 Business Process Optimization April Dec. 2004

Organizational Assessment Oct. Dec. 2004

Formation of Continuous Improvement Team Jan. 2005 Present

SOP Initiatives begin Jan. 2005

Board 40 Process improvements identified July 2006

Shared Service Assessment Oct. 2006

Procure to Pay Measurements and BPO Jan. Dec. 2006

Shared Services Phase 1 Oct. 06 - July 2007

Enterprise Analytics & Dashboard TBD


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is NOT fighting fires!

When we take a problem solving approach, we often neverget to the root causes because our main goal is to put outthe fire.

Its goal is NOT to blame people for problems or failures!

When we engage in process improvement, we seek to learn

what causes things to happen and then use this knowledgeto remove activities that have no value to the organization.



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Continuous Process Improvement

Quality is a never ending quest

Continuous Process Improvement (CPI) is a never endingeffort to discover and eliminate the root causes of problems.

CPI accomplishes this by using small-step improvements,as opposed to implementing one huge improvement


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Continuous Improvement Team

Procurement

EITG

AccountsPayable

Treasury GeneralAccounting

MTAHQBudgeting

FinancialManagementAdministration

CFT CFT CFT CFT CFT

CFT

HumanResources

Police Time &Labor HRIS Payroll

BenefitsAdministration

CFT CFT CFT CFT

FIN CFT

HR CFT

Police


Gl obal Consol.

Budgets

CFT

New Tasks toExisting Role

New Role

Legend

Direct ReportingRelationship

Matrix ReportingRelationship

HROrganization

Other Orgs

FIN & HR FunctionalAreas In Scope for

PS Initiative


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Axioms of Performance Measurement

1. The goal of measurement is not to measure, but to improve

business performance.

2. You must know what you want to measure and why beforeyou worry about how.

3. Strategic clarity must precede measurement.

4. Processes are the key inflection point of an organization.


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A measurement has value only when it is

5. Harmless

Does not induce inappropriate behavior

1. Accurate

Reliably expresses phenomenon being measured

4. Timely

Readily available data source

3. Easy Inexpensive and convenient to compute

2. Objective

Not subject to interpretation and/or dispute


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Requisition Cycle Time: All Requisitions 39% of all requisitions in 2005 took more than 12 days to go through

approval workflow

46% of all requisitions in 2005 took more than 12 days to have the POdispatched

Need to drill down on the requisition type in order to better understand the

data (seen on following pages)

Requisition Cycle Time# Days from Req Approval Date to PO Dispatch Date

for ALL Requisitions

6%

16%

8%

5%

10%

4% 5%

46%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0 1 2 3 4-6 7-9 10-12 >12

Days

Requisition Cycle Time# Days from Req Date to Req Approval Date

for ALL Requisitions

1%

5% 5%3%

20% 20%

8%

39%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0 1 2 3 4-6 7-9 10-12 >12

Days


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Requisition Submitted to Approval Cycle Time(Operating ) & Number of Requisitions Approved

B

E

98

11850

140

12488

148

146

19

100

97

82

70

0.0

5.0

10.0

15.0

20.0

25.0

30.0

J F M A M J J A S O N D J

#ofDa

ys


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Requisition Approval to PO Entry & PO Entry toPO Dispatch Cycle Times & Number of PurchaseOrders Dispatched

B

272

63

103 62

84

101 39 79 5552

70176

122

0.0

10.020.0

30.0

40.0

50.0

60.0

70.0

80.0


#ofDays


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#3 - Strategic clarity must precede measurement.


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Invoice Receipt to Payment Date Cycle Time (Operating )& Number of Vouchers Paid

B

E

2,2651,351

1,586

2,535

1,743

2,385

2,4892,378

2,053

2,340

1,584

2,126

1,366

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0


#ofDa

ys


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Invoice Receipt to Payment Date Cycle Time (Capital )& Number of Vouchers Paid

B

E

1,915

1,653

1,605

1,960

1,813

1,825

2,039

1,734

2,182

1,757

1,943

1,915

1,466

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0


#ofDa

ys


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#4 - Processes are the key inflection point of an organization.


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9. Requisition to Payment Date Cycle Time (Roll-up CT for PO

Vouchers Chart 1 + 2 + 8 "Operating Only " )

& Number of PO Vouchers Paid

B

E

2,265

1,351

2,535

1,743

1,984

2,489

2,378

2,053

2,340

1,584

2,126

1,586

1,366

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0


#ofDays

Requisition to Payment Cycle Time (Operating )&Number of PO Vouchers Paid


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Return on Investment

Significant drop in AP Interest liability and increased yield on

cash via just in time prompt payment.

Consolidate $21 Billion Debt and Investment Portfolioenhancing control and eliminated multiple manual activities,

improved efficiency and cash flow management.

Pension calculation refinements resulting in less potential forincorrect Plan Valuation feed to the Actuary.

Significant intangible returns enabling more accurate, reliableand timely information for financial decision-making andenhanced public understanding of the Authorities finances.


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CIT Accomplishments

Streamlined operations. Eliminated non-value activities.Improved cycle time.

Identified metrics to measure process improvements.

Allowed for a process to base strategic decisions on real-timeinformation.

Enhanced the bank account reconciliation process byAutomating Bank Reconciliation Reporting for a majority of

bank accounts.

Reduced journal entry preparation on a monthly basis throughautomated standard journal creation in the General Ledger for

every month/quarter in respect of recurring transactions.


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System and process design to enhance reporting ability acrossall modules based on custom reporting tree hierarchies.

Improved cash management process and control byimplementing the ability for dependant agencies torequest/initiate wires to headquarters directly from PeopleSoft

Cash Management system.

Increased customer satisfaction regarding requisition process.

Reduced Interest Liability by implementing metrics andprocess controls regarding the payment of invoices to ensurecompliance with prompt payment laws.

CIT Accomplishments (contd.)


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Improved the business processes and technical ability tosupport consolidated financial reporting of all business

entities.

Improved the business processes and technical ability tosupport financial and human resource management functions.

Standardized and integrated the information systems used tosupport financial and human resource management businessprocesses.

Create a standard information system platform and architectureto support integrated financial management of all agencies.

CIT Accomplishments (contd.)


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Questions?

continuous roi in procurement and payables

Documents