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Taking a deeper diveDemystifying the Cloud

Thursday, October 3, 20192:00 – 3:15 p.m. Eastern TimeCPE: 1.5 credits available

2© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

With us today

Moderator: Kinney Poynte rExecutive Director, NASACT

Doug Cotnoir, CPA, CIAMaine State Controlle r

Geoff Plante , Partner State & Local Government Finance Leader

Ray Zaso, PrincipalState & Local Government Ente rprise Solutions Leader


Agenda

2:00 – 2:05 p.m. – Welcoming RemarksModerator: Kinney Poynter, Executive Director, NASACT

2:05 – 2:55 p.m. – Demystifying the CloudGeoff Plante , Partner, KPMGRay Zaso, Principal, Advisory, Enterprise Solutions , KPMGDoug Cotnoir, State Controlle r, State of Maine

2:55 – 3:10 p.m. – Q&A Sess ion

3:10 – 3:15 p.m. – Wrap-UpModerator: Kinney Poynter, Executive Director, NASACT

What’s driving organizations to the cloud?What is the cloud?Views concerning data & security in the cloudWhat is it like taking the journey?Where do you s tart?

What’s driving organizations to the cloud?


What we see is lot’s of dis ruption ahead

Disruption is changing everything!

State Government is tasked to do more , and to do it fas te r.

It’s a race to catch up. But throughout it all, we can’t jus t think about our current challenges .

We have to ge t ahead.

We have to keep an eye on what’s next.

Continued costpressures

Disruptivetechnology

War for talent

Regulatorychanges

— Declining revenues— Regulatory requirements— Citizen engagement— Technology advances

External pressures

— Skills shortage— Organizational complexity— Outdated IT sys tems— Budget reductions

Internal pressures

Is the enterprise of the past century still fit for purpose in this century?

What does it take to be a 21st Century Enterprise amidst these changes?

How will today’s leaders transform their business, operating and financial models for future growth & relevance?

Pivot or perish?

Enterprises around the world are facing a “perfect storm” of change.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.


Utilize cloud based sys tems with no cus tomizations

Require more analys ts and fewer cle rks

Own more s tructured data allowing for be tte r analys is and decis ion making

Focus more on the external cus tomer and less on inte rnal needs

Own and support the sys tems and require less IT support

Develop capabilities for real or near te rm decis ion making

Identify risks earlie r us ing data

Finance will…

Finance as we know it will be radically diffe rent in the future


Nearly half of government agencies are active ly us ing cloud services and the forecas t is that use will continue to rapidly grow. With “cloud firs t” policies , s tate and local governments are able to increase agility, reduce cos ts , support innovation and more rapidly deploy digital se rvices to citizens .

What is the “Clo


Cloud computing is a very clearly defined computing model

• Ubiquitous , convenient, on-demand, measured, pay-as-you-go ne twork access to a shared pool of configurable computing resources

• A game-changing technology model and paradigm

* Source: “The National Institute of Standards and Technology (NIST) Definition of Cloud Computing (NIST Special Publication 800-145), Sept. 2011

• Major technology and bus iness dis rupte r

• Driving new risks , security & privacy concerns , and opportunities that impacts all e lements of the bus iness ecosys tem

Essential Characteristics

Service Models

DeploymentModels

with essential characteris tics such as …


Respons ibilities change depending on the service model

User Access/ID

Data

Application

Guest OS

Virtualization

Network

Infrastructure

Physical

Man

aged

by

Clie

nt

Traditional IT[On Premise]

Man

aged

by

the

Vend

or

User Access/ID

Data

Application

Guest OS

Virtualization

Network

Infrastructure

Physical

Infrastructure as a Service[IaaS]

Man

aged

by

Clie

nt

User Access/ID

Data

Application

Guest OS

Virtualization

Network

Infrastructure

Physical

Platform as a Service[PaaS]

Man

aged

by

Clie

ntM

anag

ed b

yth

e Ve

ndor

User Access/ID

Data

Application

Guest OS

Virtualization

Network

Infrastructure

Physical

Software as a Service[SaaS]

Man

aged

by

the

Vend

orM

anag

ed b

yC

lient


The cloud ecosys tem is maturing and scaling rapidly to respond to the acce le rating digital economy— The market for cloud services has

matured, and it is be ing deployed well beyond serving as a utility for s torage and servers

— Many organizations are increas ingly leveraging cloud to transform the ir bus iness

— Cloud service provides continue to develop new security, risk and compliance software tools

— IaaS, PaaS, and SaaS solutions enable the bus iness to become more se lf-sufficient, reducing demand for traditional technology and free ing up resources to work on more complex and high value initiatives

Views concerni security in the cloud


What does the future look like?

47%53%

YesNo

32%

25%14%

29%

With in a Year

With in Tw oYears

More than Tw oYears

Unsure ofTim ing

Are you planning to move your financial or adminis trative sys tems to the cloud?

When do you anticipate moving to the cloud?

Source: NASACT KPMG 2019 Survey


Do you be lieve your data is more secure on premise (within your data center) or with a third party service provider?

40%

60%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

THIRD PARTY SERVICE PROVIDER

ON PREMISE



Am I more confident about increas ing our use of cloud technologies for financial sys tems today than I have been at any point in the las t 3 years .

12%

32%

38%

18%StronglyDisagreeDisagree

Neut ra l

Degree of confidence migrating to the cloud



What is the satis faction with the security of your financial sys tem today?

Satisfied / Very Satisfied60%

Neutral27%

Not Satisfied / Little Satisfied13%



What issues would prevent you from moving to a new sys tem?

12%

12%

17%

19%

20%

20%

Current capability of staff

Portability of data

Data ownership

Other

Security

Data privacy

• Budget cons iderations• Business needs• Changes to bus iness processes

to e liminate cus tomizations



Common misconception concerning data privacy

My cloud service provider can s tore our data anywhere in the world allowing access to our data outs ide the United States .

Contrary to popular belief, although cloud service providers have data centers around the world, your contract can specify where exactly your data will be stored. Most all government agencies prohibit storing data and having access outside US boarders.


Common misconception concerning cloud security

Access to my sys tem outs ide our organization can be obtained by anyone , anywhere and anytime.

Contrary to popular belief, cloud services are more secure than on-premise systems. Eighty-eight per cent of organizations feel more confident about their use of cloud technologies than at any point in the last three years. 1

1 Source: Harvey Nash | KPMG 2019 CIO Survey


Common misconception concerning data ownership

Once we populate our data into the sys tem we lose control of data ownership.

Contrary to popular belief, It’s your data! Unless contractually written otherwise, you retain all ownership and intellectual property rights in and to your data.

You also have the ability to port your data elsewhere in a format that will allow you to load into another solution.


CIOs report the ir Cloud confidence is building

Federal

State and Local

Respondents who are more confident about increasing use of cloud technologies today than had been at any point in the last 3 years.

Source: Harvey Nash | KPMG 2019 CIO Survey

What is it like ta journey?


Maine’s top challenges

Business process reengineering

Ongoing budget to stay current

IT staff skills to support on premise installation

Compensation for key resources (i.e ., DBA) not adequate for re tention

Modified our processes to keep implementation as “base line” as poss ible

Changes in workloads due to automation and workflow

Upgrades and hardware re freshes have a cos t

Risk of falling into “old” paradigm of budge t challenges prevent upgrades


Maine’s Finance journey to the cloud

on premise installation

of ERP

transition to full hosted managed services model

renewed contract 10 years

solidifying our “outsourcing” relationship

Grants Lifecycle

Management using Case

Management

Integrations with cloud -based Enterprise

Content Mgmt., Business Process

Mgmt., and Business

Intelligence applications

2007 2011 2016 2017 and Beyond


Maine’s ERP objectives and outcomesDeploy desired and necessary new functionality

for key business areaso Procurement – including vendor se lf-se rviceo Financial management – including general ledger,

rece ivables management, obligation and commitment control

o Fixed asse ts – tracking, management and reportingo Business process reengineering to s tandardize / optimize

process ing through automated workflow

Improve efficiency in data entry and retrieval

o Procurement management, contract s tagingo Vendor se lf-se rvice functionalityo Customer accounts rece ivable managemento Data warehouse

Improve technical processing time, security and stability

o Keep application current to maintain Tie r 1 support s tatus from vendor and re lated partners

o Timely response and problem resolution when technical issues are identified

o Ensure training for State technical s taff to provide ongoing application support

o Automated real-time notifications , security controls , configurable sys tem edits


Maine’s Data Warehouse journey to the cloud

2016Decision to replace on-premise data warehouse tools

2017

2018

2019

Contract with platform as a service provider for cloud instance“Lift and Shift” migration of databases to the cloud

Rreengineering project to replace database schemas

Implementation of cloud-based BI and Analytics tools and Integrations with other cloud -based data sources


Maine’s Data Warehouse objectives and outcomes

Modernize and simplify access to data assets

o Accounting, budge t, HR and payroll data asse ts

o Improved & s ingular access point to data

o Improved operational e fficiency for agencies

o Reliable , accurate and timely information available to program managers and department executives

o Increase end users – grow consumption of data

Improve enterprise scalability and supportability

o Reduced total cos t of ownership (TCO)

o Negotiated licenses based on data sources , not “named users”

o Confirmed Business Continuity / Disas te r Recovery capability

Improve security and controls on data governance

o Reduce redundant datao Standardize data sources to

improve usabilityo Improved data integrity

(accuracy, re liability)o Accurate , comple te and secure

data


Key cons iderations in cloud re lationships

• Allows the bus iness to focus on services provided; not the s taff• Service outcomes are eas ie r to define and measure than skillse ts

Service level agreements are critical

• Requires focus on the re lationship (vendor management)• Performance versus penalties

Longer term contracts

• Stakeholder involvement• Maine utilizes a comprehens ive Operational Framework

Governance models are crucial


Lessons learned along the way

Organizational change management should

be a major focus

• Don’t underes timate the quality of communications throughout

the project

Training• Multi-modal: class room, web, computer-based

• Train the trainer approach

• Documented re ference materials , quick guides , video modules

Lost opportunitiesdue to on premise

installation; managed services now provides

• Single point of accountability

• Comprehens ive service leve l commitments

• Risk mitigation and disas te r recovery

• Secure , predicable long-te rm cos t of ownership including

upgrades and hardware re freshes


What others would have done diffe rently during the ir trans ition to the cloud

55%

52%

43%

40%

38%

18%

11%

11%

7%

5%

4%

Im plem ented be t t e r / m ore technolog ies

Clarified ro les of o ther im pacted funct ions

Furthe r enhanced se lf-service capab ilit ies a t the…

Increased / Expanded change m anagem ent e ffort s

Focused m ore on governance

Im plem ented in s tages / phases ra the r than a ll a t…

Included m ore services during in it ia l…

Explored the op t ion to ou tsource som e se rvices

Explored the op t ion to conso lida te som e services

Included few er se rvices during in it ia l…

Other Source : KPMG Inte rnational Survey


What work preceded your cloud implementation?

44%

50%

63%

79%

94%

Did you change s t ructure or ro les?

Did you crea te a bus iness case?

Did you ident ify m easures of success?

Did you change your opera t ing m odel?

Did you change processes?

Source : KPMG Inte rnational Survey

Where do you s


The agenda for dis ruption

Insights and analysis

Organizational simplification

Skillsand talent

New insights through:Automated descriptive and diagnosticanalyticsNew predictive and prescriptive analyticsIntegrated bus iness planning

Changing work:Fewer peopleLess hie rarchy

Changing requirements:Both s trategy and finance skillsProcess and control leadersRelationship and collaboration

Extreme automationIntegrating new technologies: Cloud ERPsRoboticsArtificial inte lligenceBlockchainMobile

Leading finance organizations have developed an agenda to deal with disruption

Risk management

Response to dis ruption impacts how risks and controls are managed in an organization and the need to continuously evolve .


How ready is your organization?Organization’s Effectiveness for implementing bus iness processes changes

3%11%

35%34%

17% Not Effect ive At All

Som ew hat Not Effect ive

Neutra l

Som ew hat Effect ive

Very Effect ive

Staff Readiness to change the ir bus iness practices to adapt to new sys tems

Right Skill Se ts for the change?

52%

7%

41%YesNoNot Sure

52%

22%

26%YesNoNot Sure



To what extent do you agree the use of artificial inte lligence , chat bots and/or process automation would he lp finance /audit in the following categories?

7%

40%40%

13%Disagree

Neutra l

Agree

StronglyAgree

2%

33%

37%

28%

Disagree

Neutra l

Agree

StronglyAgree

Operational Efficiency

8%

48%30%

14%Disagree

Neutra l

Agree

StronglyAgree Employee SatisfactionCitizen Experience


What does it take for program success? Transformation success factors Healthy signs Unhealthy signs

—The right executive sponsors are engaged—Regular s teering committee meetings—Engaged operating committee to drive decis ions

—Crawl, walk, then run approach—Standardize wherever poss ible—Minimal SW extens ions & leverage configuration

—Value drives the sequencing—Quick wins while working on longer trans formation—Bus iness case that tracks benefits—Change activities are part of the program—Operating model change core to driving bus iness benefits—Unders tanding and cons idering employee impacts

—Executives’ support is not vis ible—Not able to find the right resources

with the right skills

—Automate AS-IS process vs . improve then automate” s trategy

—Not driving E2E thinking across process decis ions

—Lack of end-to-end comprehensive KPIs —“Why are we doing this?” mindse t—No bus iness case

—Change not cons idered in upfront planning—Minimized ROI due to poor adoption—Out of touch with employee population needs

and motivations

Unflinching executive commitment and

championing

Enabled-technology s trategy

Articulating and monitoring case for

change

Proven change transformation methodology

Effective governance and program control

—Rigorous change control policy—Purposeful, diges tible implementation plan—Effective risk mitigation to anticipate roadblocks /issues —Status reporting driven by data / facts

—Uncontrolled – poor plans , controls , tracking mechanisms

—Risk are not captured or mitigated—Status reporting not re flective of project reality


What should you be thinking about?

Business as usual is not an option. The biggest limitation is no longer the technology and what it can do, but the imagination of those who must deploy it. ?

What is our talent management strategy, critical roles, and risks?

What business questions and decisions should we anticipate to address these disruptors?

How much appetite do we have for extreme automation?

What are the impacts on our current workforce and do we have the right skills and competencies moving forward?

What business disruptors are impacting us most?

What is our data and analytics strategy?

How will our current delivery model and locations be impacted?

Where do we start?

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