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Public Sector Budget
Formulation and
Performance-Based
Budgeting • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Simon Langford - Financial Consultant
SAP Canada Public Services
GTEC 2011
October 18th-19th 2011
Budget Reforms and Mandates Are Pervasive
• The Government Performance and Results Act
(GPRA) makes this a requirement by
mandating that performance plans display,
generally by program activity, the funding level
being applied to achieve performance goals.
Performance budgeting shifts the focus of
attention from detailed items of expense - such
as salaries and travel - to the allocation of
resources based on program goals and
measured results.
Budget Formulation Business Processes
Decentralized
Budget Requests
Modeling &
Forecasting
Publishing &
Reporting
Historical Data
Personnel
Expense
Projections
Supplementals &
Decision Packages
Review &
Revise
Adopt & Load
to Control
Master Data
Integration with
ERP
Centralized
Target Setting
Government Budgeting Is Getting Tougher
Flat World dynamics create both challenges and opportunities
Diminishing Revenues
Increased Demands
Increased Accountability
Increased Transparency
More Stakeholders with Increasing Demands
vs. Diminishing Resources
Tax Revenue
Admin
Public
Administration
Justice
Public
Utilities
Economic Aid
& Development
Education
Constituent
Services
Retail Services Public Security
Defense Postal
Services
Health
Transportation
Banking
Services
Social
Services
Research
Energy
Public
Broadcasting Democracy
Transparency is Becoming More Mandated
EX-NFLD. CABINET MINISTER JAILED IN SPENDING SCANDAL
A former high-ranking Newfoundland and Labrador cabinet minister
has been sentenced to two years less a day in jail
for defrauding taxpayers of nearly $118,000.
Declining Revenues Amid Increasing Demands
Ottawa refuses to rescue AbitibiBowater 84
Thousands of jobs at risk as one of country's oldest companies
and world's biggest newsprint producer files for bankruptcy protection
TONY BOCK/TORONTO STAR
CROMBIE BEGS CITY TO RESCUE 39
POOLS
VANESSA LU
PAUL MOLONEY Apr. 17, 2009
The tiny perfect mayor came to Toronto
city hall to ask politicians to jump into the
water.
Dial 311 for Halton Government Services
Learn more about 311
Dial 211 for information on community,
health and social services or visit
© SAP 2008 / Page 8
PBF is Strategic in this Economy
Budgeting is at the Center of Everything
Insight: Fortifies decision-making and
improves allocation of scarce public
resources
Flexibility: Gives customers flexibility to
quickly adapt solution to meet evolving
requirements
Efficiency: Drives productivity and
reduces costs internally and externally
© SAP 2008 / Page 9
Evolution of Public Sector Budgeting and budget formulation technology
Enter and Calculate rows and columns of
numbers
Spreadsheets Display the numbers
Create simple charts
and graphs
Build simple
mathematical algorithms
Get behind the numbers with fully
integrated text
Link Budgets to
Strategic and
Performance Based Plans
Flexible and powerful Personnel Expenditure
Projections
Integration to existing
financial, hr, capital
project, grant, and performance systems
All centralized and decentralized budget
formulation processes
accommodated in a single web-based
system
1
Commercial
Planning
Tools
2
Public
Budget
Formulation
3
Business
Network
Older technologies
and “build-it-yourself”
toolkits have failed to
meet the unique
challenges of the
modern public sector
budgeting reality
Budget
Approaches
Incremental Budgeting
Zero-Based Budgeting
Initiative / Activity / Program Budgeting
Performance Based Budgeting
Agency/Department Budgeting (Requests)
Central Executive Budgeting (Reviews/Recommendations)
Legislative Budgeting (Adoption)
Budget Execution: Spending Plans Allotment/ Allocation, Budget/Position Control
PBF is Designed to Be Comprehensive
Enterprise Budgeting Solution Highly Flexible
Functional Configuration
To Support Different
Budget Approaches,
Processes, Types and
Outputs
Agency / Department Budgeting (Requests)
Central Executive Budgeting (Reviews/Recommendations)
Legislative Budgeting (Adoption)
Budget Execution: Spending Plans Allotment/ Allocation,
Budget/Position Control
Agency/Department Budgeting (Requests)
Central Executive Budgeting (Reviews/Recommendations)
Legislative Budgeting (Adoption)
Budget Execution: Spending Plans Allotment/ Allocation, Budget/Position Control
Operating Expenditure Budgets
Capital Budgets
Revenue Forecasting
Grant Budgets
Long Term Planning (6+ Years)
Agency/Department Budgeting (Requests)
Central Executive Budgeting (Reviews/Recommendations)
Legislative Budgeting (Adoption)
Budget Execution: Spending Plans Allotment/ Allocation, Budget/Position Control
Budget
Outputs
Financial Plan / Spending Plan
Adopted Budget (Control)
Reporting & Analytics
Published Budget Document
Budget
Processes
Budget
Types
Ease of Use & Configuration
Key Foundations of SAP Public Budget
Formulation Solution
Single point of entry
for budget data and
related text
Real-time reporting of
budgets including text
Customer
configurable Text
Fields
Text intensive
Reporting
Link performance to
Budget Requests
Automated budget
book publishing
Text Handling
and Publishing
Link budget/actual
dollars to text,
performance
measures, etc.
Budget stages and
controls
Security
Audit trails
Reorganizations
Decision cockpit for
package ranking and
decision support
Decision
Packages
Expenditure &
Revenue
Forecasting
Trend Analysis
Top-down
budgeting, metric-
driven budget
allocation
Allocation and
redistribution
Analytics and
Modeling
Integration: SAP and Non-SAP
HCM, G/L, Budget Control, Position Control, Performance Management
Single point of entry
Expenditures
Revenues
Justification
Performance
Positions
Map to your
different budget
processes
Base
Packages
Capital
Spending
Plans
Other
Configured by
budget people
Flexible Forms
& Process
Controls
Unlimited Scenarios
Date-effectiveness on all
compensation and
benefits
Table-Driven projections
Integrated to position
control / org
management
Position/employee, job
class, bargaining group
forecasting
Distribution to budget
Line Items, programs,
performance metrics,
etc.
Salary and
Benefits
Projection
Optimize Allocation of Public Resources
Provide policy-makers with the real-time fiscal
impact analysis to support decision-making
Rank and prioritize funding requests
More Efficient Budget Process
Reduce time-consuming data manipulation
and duplicate entry
Automate budget requests, reviews, adoption
and publishing in one comprehensive budget
formulation solution
Improve Organization Performance
Integrate funding requests with strategic
planning and performance management
Greater Control
Control access, data collection and process
flow with provide audit trails to all changes
throughout the budget process
Public Budget Formulation Foundations
Flexible Forms with decision
cockpit for package ranking and
approval of requests
Decision Packages
Analysis & Reporting
Personnel Expenditure Projection
Expenditure and revenue
forecasting and Modeling with
trend analysis
Single point-of-entry for Budgets,
Text Justification and Performance
with automated budget book
publishing
Text and
Publishing
Distributed Budgeting
Budget stages, audit trails and
budget state controls with user-
configurable budget form
templates
Highly configurable date-effective
personnel cost projection
supporting unlimited compensation
plans
Solution Integration
SAP Public
Budget
Formulation
Budget
Control
Accounting
(G/L)
Position
Control
Payroll /
Benefits
Capital
Projects /
Grants
Planning &
Performance
Management
Cost Management
Do our expenditures align with our
strategic vision?
SAP Public Budget Formulation SAP BPC
Are we doing the right things?
SAP Solutions:
Manage the Complete Performance Lifecycle
Strategy Management
Public Budget Formulation
Have we allocated adequate
resources?
Costs
Cost Objects
Activities
Analytics
Program
Execution
(ERP)
PBF Customers
City of San Diego
State of Louisiana
South Florida WMD
City of San Antonio
City of Toronto
University of Cincinnati
Texas State University
Los Angeles Community College
District
Marin Water District
Fairfax County, VA
Fairfax County Schools, VA
State of South Carolina
Texas State University
Chicago Metropolitan Water
Reclamation
Amtrak
United States Department of
Agriculture
http://www.fsa.usda.gov/FSA/midas?area=home&subject=landing&topic=landing
Financial System
HR/Payroll Public Budget Formulation
© SAP 2008 / Page 17
Complement Planning - HR/Payroll,
Financial System, and PBF
Employee
Master Data
Position
Master Data
Job, Pay Level
Special Pays
Benefit Plans
Benefit Rates
Budgets
Commitment
Item/CE
Employee
Master Data
Position
Master Data
Job, Pay Level
Special Pays
Benefit Plans
Benefit Rates
Future Orientation
Salary and Benefit
Projections
Salary and
Benefit
Budget
Integration
Integration
© SAP 2008 / Page 18
PBF Calculation Order
Employee
Position
Job
Employee data for salaries and benefits
Position data is used for salaries and benefits of Vacant positions
Job data is used to calculate salaries and benefits for business cases and is used if data is not entered on employees or positions (e.g. benefits)
PBF calculates such that if the most granular level of data exists (Employee), that data is used; otherwise PBF looks to the next level (Position) followed by Job.
PBF Standard Data Cubes
Projection Cube
• Salary projection scenario results
Budget Cube
• Historical actuals and budgets
• Budget form requests
– Amounts
– Positions
• Posted salary projection
Performance Measure Cube
• Performance measure
actuals/planned/budget
Budget and
Financial
Data
Position,
Employee
and Benefits
Performance
Measures,
Targets,
Actuals
Position
Service
© SAP 2008 / Page 20
Business User Provides a Fully
Integrated Strategy-to-Execution Offering
Strategy
Insight Decisions
Execution
across multiple
transaction systems
Aligned strategic
decision-making
across teams
Optimize operational
decisions inside and
outside the company
Manage compliance, risk and
optimize performance across the
business network
Generate insight from
structured/unstructured and
internal/external data
Insight
Enterprise Performance
Management
Strategy Management
Business Planning
Profitability and Cost Management
Consolidation
Spend Analytics
Data Integration
Data Quality Management
Master Data Management
Metadata Management
Information
Management
Business Intelligence
Reporting Query, Reporting, and Analysis
Dashboards and Visualization
Search and Navigation
Advanced Analytics
Governance, Risk,
and Compliance
Risk Management
Access Control
Process Control
Global Trade Services
Environment, Health and Safety
Unified
Information
Business Network Optimization
Collaborative
Decisions
© SAP 2008 / Page 21
Business Intelligence Platform
Business Intelligence Platform
Reporting via Web
Vis
ualizati
on
an
d R
ep
ort
ing
BI Widgets
BI Search
En
terp
rise Q
uery
Rep
ort
ing
&
An
aly
sis
BI Mobile
Crystal Reports Xcelsius
Seamless MS Office Integration
Best in Class Enterprise-Reporting and Direct
Access to Data within SAP and non-SAP
Applications
Ad-hoc Reporting
Search
BI Widgets
OLAP Analytics
Guided Querying
Mobile BI
Highly Interactive Visualization and
Dashboarding and Embedded within Microsoft
Office Environment
Formatted Reporting
Dashboard and Data Visualization
Live Office
Metadata Management
Entity Extraction
SAP BusinessObjects BI Platform
Reporting
– Crystal Reports
Query & Analysis
– SAP BusinessObjects Web Intelligence
– SAP BusinessObjects Desktop Intelligence
– SAP BusinessObjects Voyager
Dashboards & Visualization
– SAP BusinessObjects Dashboard Builder
– Xcelsius
Business Intelligence Platform
– SAP BusinessObjects Enterprise
– SAP BusinessObjects Builder
– SAP BusinessObjects Live Office
– SAP BusinessObjects Mobile
POLESTAR
• Familiar key-word search to
find business information
– Answers your specific
questions
• Search across all data
sources
– Any universe accessible
source
Directly on data
No previous reports or
metrics need exist
Pre-indexed data provides
fast search and exploration
© SAP 2008 / Page 25
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