State of Michigan’sProject SIGMA

Presented to State Association of Accountants, Auditors and Business Administrators (SAAABA)

Ruth Schwartz, CPA, Project Director

April 21, 2015

Topics for Today

• Project Overview, Targeted Improvements, and Functionality

• Schedule, Team, and Accomplishments

• Phase 1, Budget Development

• Phase 2, Core Financials, Procurement, Employee Time & Expense, and Labor Distribution

• End User Benefits

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Project SIGMA

Statewide Integrated Governmental Management Applications (SIGMA) is the State of Michigan’s Enterprise Resource Planning (ERP) business process and software implementation.

SIGMA will integrate systems and provide end-to-end support in one system for statewide administrative functions including financial management, procurement, asset management, performance budgeting, time and expenses.

It will ultimately be used by all 50,000 state employees, external vendors, local units of government, and colleges & universities.

 

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Project SIGMA Overview

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Eliminates operational risk related to critical financial systems that have outlived their usefulness including MAIN and DCDS

Provides built-in best practices and business rules for government accounting that expands the tools for existing staff, protects us with retiring staff, and attracts new talent

Provides sophisticated statewide controls while providing the flexibility Departments need to operate efficiently

Provides timely management information that supports operational improvements and performance reporting

Fiscally conservative business case

Key Rationale for SIGMA

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Targeted Improvements

• Increase Accounting Detail Posted from Agency Systems

• Support Treasury Functions:

• Debt Reporting

• Support for Investment Accounting

• Bank Reconciliation

• Warrant Writing

• Automate Interfaces with Banks

• Implementation of Positive Pay Banking (if feasible)

• Automate Vendor File Synchronization

• Reduce the Number of Applications Supported and Interfaced

• Integrated Procurement

• Automate and Streamline Budget Preparation

• Reform Chart of Accounts /Uniform Coding Block Usage

• Enhance Transparency & Accountability Portal

• MIDB Currency and Reporting

• Move to Vendor Supported, Upgradeable COTS Solution

• Automate and Streamline CAFR Production

• Project & Grant Reporting, Budgeting, and Processing

• Cost Allocation5

SIGMA’s Integrated System

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MIDB

Time, Expense Reimbursement,

and Labor

Budget Development

Self ServiceFor

Employees

Management Self Service

Fixed Assets

Accounts Payable

Inventory

Purchasing

Financial Management

VendorSelf Service

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Today

From…. !

Tomorrow

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..to this…. !

Tomorrow, Continued

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..and this! ! Forecasting

Project Schedule

Budget Preparation

8/2015

Core Financials

10/2016

2014 2015 2016 2017

Phase 1: Budget Development

Phase 2: Core Financials for All Agencies

Budget Dev Implemented

8/2015

Load Budget for FY17

Core Financials

Implemented10/2016

(13 months)

(27 months)

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2013

Ongoing Support

Project start 7/2014

• > 8000 Requirements• Business Case• RFP for software,

implementation services, hosting and managed services

Procurement Added to Scope

12/2014

Phase Functionality

Phase 1 Budget Preparation

• Statewide Budget Development

• Legislative Tracking

• Salary Benefit Forecasting System

• Budget Bill and Budget Book Publication

Phase “1.5” Budget Preparation

• Agency cost accounting structures added to budget development

• Foundation for performance based budgeting (objectives, measures, and metrics)

• Solution upgrade

• Integration with financials

• Budget Control

Phase 2 Core Financials

• General Ledger and Financial Reporting

• Accounts Payable and Disbursements including Vendor Self Service

• Vendor Tax Reporting and Backup Withholding

• Accounts Receivable

• Asset Management, Inventory Management

• Budget Control

• Cash Reconciliation

• Cost Allocation

• Grant and Project Accounting

• Employee Time and Attendance, Expense Reimbursement, and Labor Distribution

• FHWA Billing

• Grants Management (Grantee and Grantor)

• Positive Pay Banking

• Procurement

• Data Warehouse

• Transparency and Accountability Portal11

Roadmap

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Strong Project Team

Staffed by

~ 200 Members

Agency Implementation Leads & Teams

Consisting of:

SOM employees from 11 Agencies

3 Contract Partners: • CGI – System, Integrators, Managed

Services• ISG – Quality Assurance• Advocate - PMO

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Co-located in the Victor Center

• Validated all in scope requirements

• Managed environments available and in use

• Phase 1 design complete with no modifications

• Phase 1 system test and mock conversions over 50% complete, preparing for User Acceptance Testing

• Phase 2 business process designs well underway

• Key design decisions:

• SIGMA budget structures

• Chart of Accounts (COA)

• Budget Bill Publishing approach

• Budget Fiscal Year

• Point of Sales and Cashiering

• Grants

• Project history conversion

Key Accomplishments To Date

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• Engaged stakeholders

• Collaborated with Office of Internal Audit and IT Investment Fund Project Assurance

• Multiple Agencies in 100+ validation, Core Design, and Business Process sessions

• Delivered 24 system overview sessions in open forums and received good feedback

• Agency Implementation Guide rolled out to Agencies week of 4/13

• Training for Phase 1 User Acceptance Testing this week

Key Accomplishments To Date

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Budget Development Phase 1, 1.5, and 2

Key gains upon full project implementation

• Automate and streamline budget development processes• Single data repository • Automated workflow • Integration with financials• Projections, what-if capabilities, modeling, trend analysis • Improved baseline economic processes • Eliminate duplicate data entry

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Michigan’s Budget Process

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Michigan’s Budget Process is made up of 5 major processes

• Budget Development• Executive Budget Book• Budget Bills• Legislative Tracking• Budget Administration

Budget process begins with the Budget Instructions and ends with the loading of the budgets to Financial

SIGMA Budget will be utilized to complete all 5 of the major processes

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Phase 1 

Current Services Baseline

Proposals for Change Capital Outlay Salary and Benefits

Forecasting Publication of

Executive Budget Book and Budget Bills

Tracking of Legislative Changes

Phase 1 

Current Services Baseline

Proposals for Change Capital Outlay Salary and Benefits

Forecasting Publication of

Executive Budget Book and Budget Bills

Tracking of Legislative Changes

Phase 1.5

Load enacted budget to SIGMA Financial

Statewide Spending Plans

Work Projects Foundation for

performance-based budgeting

 

Phase 1.5

Load enacted budget to SIGMA Financial

Statewide Spending Plans

Work Projects Foundation for

performance-based budgeting

 

Phase 2 and Beyond 

Post enactment budget changes

The ability to develop budgets at lower chart of account elements

Integration with actual revenue and expenditure data

Trend analysis, projections, and “What-If” scenarios

Performance-based budgeting capabilities

 

Phase 2 and Beyond 

Post enactment budget changes

The ability to develop budgets at lower chart of account elements

Integration with actual revenue and expenditure data

Trend analysis, projections, and “What-If” scenarios

Performance-based budgeting capabilities

 

Budget DevelopmentPhase 1, 1.5, 2, and Beyond

Salary and Benefit Forecast (SBFS)

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The Salary and Benefit

Forecasting (SBFS) tool

within SIGMA Budget is

designed to use position and

employee data to develop highly

accurate estimates of

personnel related budget costs. The following Query is an

example of data available as an output from the SBFS process.

Current Services Baseline (CSB)

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A CSB adjustment is a level of funding appropriated and/or the caseload or

workload actually funded in the current fiscal year

appropriations. Adjustments remove one-time items and

reflect non-discretionary budget costs across the

budgeting horizon.

Proposal for Change (PFC)

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A PFC adjustment is a discretionary initiative,

including a fee proposal, which reduce or enhance a

department's enacted budget. These adjustments are ongoing, one-time, or both upon submission and

are tracked through the process by the type of

funding.

Form created at the department level.

Upcoming Activities For Phase 1 Go Live

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Phase 1 Go Live Activities

Version Date: 4/15/2015

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Phase 2 Core Financials

Looking forward to:

• Standardized use of coding block/COA

• Data coding reduction options

• Automated Cost Allocation

• Elimination of Administrative Revolving Funds (ARFs)

• Integrated Time & Expense, Procurement, Fixed Asset and Inventory

modules

• Integrated Procurement functionality

• Improved Project and Grant budgeting, accounting, billing and reporting

• Increased Reporting and Workflow functionality

• Online queries

• Parallel and sequential

Design Approach

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Standardized use of

coding block/COA

• Increased accuracy and effectiveness of the COA

• Improved Transparency Portal reporting

• Flexibility, as agencies can use detailed elements and still maintain centralized data integrity

• Improved access to summary level data while still providing drill down capability to detail level data

• Increased accuracy and efficiency by the use of additional detail COA elements that are standardized across agencies

• Increased flexibility, as agency ledgers and the central ledgers are based on single transaction processing that updates affected ledgers and balances

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COA Mapping R*STARS to SIGMASample

COA elements to be used in Phase 1:

• Department

• Fund

• Appropriation

• Object

• Revenue

• BFY (= AY)

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SIGMA Chart of Accounts

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Budget Fiscal Year (BFY)

• Work projects and capital outlay appropriations will remain available to spend for the statutorily authorized length of time by using a unique multi-year BFY code.

• Rolling this budget authority forward for qualifying encumbrances is a recognized best practice in accounting, and provides greater online transparency of total budget dollars spent. 

• Unspent budget authority that is not a qualifying encumbrance, capital outlay appropriation, or work project appropriation will continue to lapse and not roll forward.

 

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Budget Control

A multi-level budget structure will track budget amounts for both spending and revenues. COA Combination Validation pages are being developed to supplement Michigan’s Budget Control needs.

• ‘Management budgets’ allow agencies more granularity than the state-wide appropriation budget. Management Budgets…

• Allow monitoring expenditures and revenues with budget versus actuals.

• Allow agency variation, but at a minimum, will include ‘Event Types’ to record the initial budget amount and any adjustments for comparison to the Spending Plan in SIGMA Budget.

Appropriated in Budget Bills

Tracking and Establishing Control of work projects

Performance Budgeting

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Budget Control Planned Defaults

Formula Default Severity

Budget Line / Allotment

Line

Unobligated >= $0 Warning Budget

Current Budget - Cash Expenditures - Accrued Expenditures >= $0 Override Budget & Allotment

Total Revenue - Cash Expenditures - Accrued Expenditures - Encumbrances >= $0 No Action Budget

Total Revenue - Cash Expenditures - Accrued Expenditures >= $0 No Action Budget & Allotment

• Severity Levels can be set as a default on most budget lines. • Exceptions are made in SIGMA Financial by users with appropriate security. Example of a potential Budget Control list is shown below:

Integrated Procurement functionality: Req to Check

•Vendor Creation•Vendor Modification•Prevent duplicate vendors

•Accounting quick codes•Real-time budget validations/posting

•Create award documents right from requisitions•Minimized data entry from requisition•Reusable Templates

•Powerful search on Award # and other identifiable fields•Partial receipt and invoice•Reoccurring payments

Receive/Invoice

•3-way matching•P-Card reconciliation•Travel Reimbursement

Payment Request &

Disbursement

Procurement Accounts Payable

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Vendor File

Purchase Requisition

Award

Workflow• Workflow any

document, any field, any value

Real-time Validations and GL Posting• Validations against budgets in real-time• Transactional documents post to GLs at

the time of entry

Reporting• Delivered Reports• Ad-Hoc Inquiry Reporting

from Advantage BI

Procurement Functionality

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Integrated Procurement

Procurement• Workload management• Information governance• Solicitation management• Bid evaluation and

award• Contract management• Full lifecycle for

requisition to disbursements

Vendor Self-Service• Vendor web registration• E-mail bid notifications• Vendor bulletin board• Electronic response• Financial transaction

inquiry• Invoice submission

Financials• Encumbrances• 2 or 3 way match• Automated Payment• Disbursements• Single vendor/customer file• Automated updates to

Inventory and Fixed Assets• TBD- pre-encumbrances

Business Intelligence

Vendor Self Service Invoice – PO Flip

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Invoice – Coming from Vendor to Accounts Payable

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Three Way Match

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SIGMA for End Users

• Less manual, paper-intensive work

• Greatly improved reporting and data analysis

• Less redundant data entry

• Less reconciliation across systems

• Easier, more automated tracking and approvals

• Streamlined business processes that work similarly across departments

• Export/Import capabilities, powerful inquiries, improved data warehouse functionality

• One system for budgeting, procurement, and accounting, with expanded capabilities

• Ease in moving from one agency to another and one job to another

• Reduced training time for new hires

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Project Communications

• Website - https://stateofmichigan.sharepoint.com/teams/SBO/project_sigma Newsletter Frequently asked questions Presentations Project announcements Training Agency Implementation Guide Contact Us

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Newsletter

Image from Website

Questions?

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Upcoming Town Hall Meeting

Thursday, April 30, 8:30-10:30Capitol Commons Center - Conference Rooms A/B/C/D (Basement)