F–7 STANDING COMMITTEES Finance and Asset Management Committee

F–7/202-19 2/14/19

Finance Transformation Update and Introduction of New Leadership: Assistant Vice President for Finance Transformation INFORMATION This item is for information only. Brian McCartan, Vice President, Finance, will introduce the new Assistant Vice President for Finance Transformation and offer a project update of the UW Finance Transformation (UWFT) program, currently in its Readiness Phase. UWFT’s multi-year mission is to transform the University’s aging legacy financial systems, policies and processes and to deliver a modern, cloud-based system (Workday) that will improve how the UW tracks, spends, collects, manages and reports financial information. This transformation is a necessary step in ensuring strong financial management and responsible stewardship of the University’s finances. BACKGROUND The University of Washington’s current financial systems are based on a forty-five-year-old COBOL based mainframe system. The lack of capacity of this system has resulted in the development of over 800 side financial systems through campus including UWM. The resulting University financial environment was characterized as “the most fragmented and decentralized” ever analyzed by the Gartner Group. A benchmark study, conducted with the Hackett Group, confirmed Gartner’s assessment and identified resulting cost inefficiencies as a result of this fragmented financial system.

In the summer of 2017, the University of Washington engaged Deloitte Consulting to partner in a six-month Enterprise Resource Planning (ERP) sourcing strategy to identify the scope, software, estimated program timeline, costs and schedule for a transition to a modern financial system. This work provided the University with a roadmap for this transformation, and the confidence to move forward with Workday Financials as the software. (This included a fit-gap analysis that concluded that Workday has a 97-percent fit with UW Academy requirements and 94-percent fit with UW Medicine high-level requirements.)

The UWFT program is currently in the Readiness Phase of the Financial Transformation Project – an eighteen-month period of time that relies on broad stakeholder input to inform and more specifically define the scope, schedule, budget and funding plan for this transformation. As the project approaches design

STANDING COMMITTEES Finance and Asset Management Committee Finance Transformation Update and Introduction of New Leadership: Assistant Vice President for Finance Transformation (continued p. 2)

F–7/202-19 2/14/19

and implementation, the program will present the Board of Regents with a detailed scope, schedule and budget for the full implementation.

The challenges experienced with the 2017 completion of the HR/Payroll Modernization (HRPM) program and the stabilization of the newly formed Integrated Service Center (ISC) remain fresh in the minds of the majority of UWFT Stakeholders. The UWFT program team is incorporating these lessons learned to help inform the structure of the program and ensure it operates differently from what the UW and other institutions have experienced with large-scale implementations. Top among these lessons learned were to:

• Focus on business transformation, not simply technology; • Engage the right people at the right time; • Focus on end-to-end processes; • Value voice, collaboration and the courage to course-correct; • Maintain UW commitment and momentum when turnover occurs; • Focus on reporting early; and • Focus on the operating model early.

The program is actively engaging with stakeholders across the institution throughout this multi-year effort and adhering to the Readiness Timeline and budget. Attachments

1. Building Towards Financial Transformation 2. Biographical Sketch: Edward J. (Ed) Lofthus

BUILDING TOWARDS FINANCIAL TRANSFORMATIONSince the Roadmap for Administrative Systems Modernization in 2008, UW has been on a path towards Financial Transformation, which each stepping stone building on the last

Roadmap for Administrative

System Modernization

Finance Systems Needs Assessment

Finance Systems Strategy and

Readiness

Finance Transformation

Readiness

Finance Transformation

Implementation & “Go Live”

2008

2010-2013

Present

2014-2017

ARIBA Extension

HRP Modernization

Initial Hackett Benchmarking (Procurement)

Visioning Workshop

ERP Sourcing Strategy – Maturity Model Workshops

Gartner Assessment

HCM Workday Go-Live

Workday Selected for Finance

Deloitte TCO

Benchmarking and Data Gathering

Operating Model Design

Foundation Data Model and Prototyping

IT System design

System Configuration

Data Conversion

Integration and Reports Development

Business Processes and Roles

Operating Model deployed

Unit Readiness confirmed

IT support model

Training & Testing

ATTACHMENT 1F-7.1/202-19 2/14/19 Page 1 of 6

THREE KEY STAGES FOR UWFT PROGRAM

ReadinessDesign/

Implementation

Stabilization/

Operation

We are here

F-7.1/202-19 2/14/19 Page 2 of 6

ScheduleGiven other initiatives –

what is optimal schedule?

What is the trade off between big bang and

phasing?

Budget/FundingWhat are the final costs? How do we allocate these? How can we reduce

annual operating costs to pay for the program?

Scope

How to organize UW financial work to maximize efficiency and drive down annual cost?How to integrate Workdayinto UW technology Environment?

2017 Conceptual Estimate

Schedule3 year “Big

Bang”

$200M, Funding

TBD

ScopePhase 1:

Financials, Procurement

Phase 2: Budget/ Planning

Baseline Project

Schedule Set

Cost Set Funding Set

Scope Set

FT Governance Structure

University wide engagement

CURRENT WORK FOCUSED ON VALIDATING/STRENGTHENING PRIOR PLANNING

3

F-7.1/202-19 2/14/19 Page 3 of 6

PROGRAM TARGETING HIGH DEGREE OF TRANSFORMATION

Incre

asi

ng

Va

lue

to

Org

an

iza

tio

n

Risk Mitigation

Technology Enabled

Improvements

Business Transformation

ERP System Replacement

Automation and Complete

Consolidation of Services

Low degree on transformation

Increasing Focus on Transformation and Innovation

Medium degree of transformation

Medium – High degree of transformation

High degree of transformation

Digital Technology Enabler

ERP & All Process

Redesign

ERP & Select Process Redesign1

2

3

4

F-7.1/202-19 2/14/19 Page 4 of 6

> Benchmarking study and data gathering activities completed

> Senior leadership alignment

> Robust project governance structure up and running

> Core program team in place

> Building project management structure

> Determined initial direction on operating model (how finance work will be organized)

> Launched working groups on new data structure, business process design and IT systems environment

> Strong UW stakeholder engagement

> Monthly program newsletter distributed to over 3,000 stakeholders

PROGRESS TO DATE

F-7.1/202-19 2/14/19 Page 5 of 6

Project Organization Detailed benchmark of

current state Business Processes Operating Model Data structure (FDM) Readiness phase trending

under budget

UWFT PROGRAM STATUS

OVERALL PROGRAM STATUS: YELLOW

Complex current IT environment

Staff hiring

F-7.1/202-19 2/14/19 Page 6 of 6

BIOGRAPHICAL SKETCH

Edward J. (Ed) Loftus is the new Assistant Vice President for UW Finance Transformation,

effective Monday, January 7, 2019. Loftus was formerly Executive Director of Business

Planning, Systems and Budgets at Bucknell University, where he was responsible for leading an

organization of approximately 300 FTEs in planning, budgeting, auxiliary operations and

administrative systems. In this role, Loftus led Bucknell University through a successful and

fully integrated, single deployment implementation of Workday for HR/benefits/payroll and

finance. This implementation replaced a twenty-year-old system and involved extensive change

management, hundreds of integrations and a well-resourced stabilization effort. In addition to the

Workday launch, this position also acted as an internal consultant and advisor regarding

implementation of the University’s strategic plan and its various corollary efforts, and involved

working closely with both academic and administrative leaders across campus in designing and

leading cross-functional organizational initiatives. Throughout his eleven-year tenure at

Bucknell, Loftus leveraged his expertise in finance and budgeting, including leading the creation

and implementation of an integrated model for campus healthcare, developing and reporting to

the Board and University governance committees on multiple financial models in support of the

University’s strategic aspirations, and playing a key role in defining and designing long-range

budget planning for the University.

ATTACHMENT 2F-7.2/202-19 2/14/19

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