Analysis Report

APPO Project – Phase 1

Prepared and Submitted by:

Janet Larson, Hua Ramer and the APPO Team

August 20, 2003

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Table of Contents

Executive Summary 4

Methods and Procedures 5

Analysis of Recommendations 8

Appendix 1 – APPO Project Team Participants 11

Appendix 2 – APPO “As-Is” Process Maps 12

Appendix 2 A - Accounts Payable Processes 12

Appendix 2 B - Purchasing Processes 27

Appendix 3 – APPO Processes Baseline 32

Appendix 4 – 3270 Legacy System Inventory 36

Appendix 5 – APPO Requirements Listing 77

Appendix 6 – Gap Analysis 87

Appendix 7 - APPO Project Issues 106

Appendix 7 A - Payment Processing Issue Log 106

Appendix 7 B - PO Invoice Issue Log 115

Appendix 7 C - POs and Encumbrances Processing Issue Log 130

Executive Summary

This document summarizes the scope, processes and conclusions of Phase I of the APPO Project. The objective of this project is to explore system solutions to migrate accounts payable processes off the legacy mainframe system and to recommend a best accounts payable migration alternative that is technically attainable, financially cost-effective and functionally feasible and practical, as defined in the Project Charter.

The following major processes were included in the scope of APPO Phase I:

·  Encumbrances,

·  Direct Charges (Payments),

·  Purchase Order related invoice payment,

·  Accounts Payable Pre-audit,

·  Accounts Payable Post-audit,

·  Check writing and payment distribution, and

·  Payment document file maintenance and storage.

The Team analyzed the current processes, defined functional system requirements, performed a software gap analysis, explored different system implementation alternatives and analyzed each alternative.

Based on these analyses, the APPO Project Team recommends that we proceed with an implementation of PeopleSoft Accounts Payable for Direct Charges (Payments) only as an initial step towards a fully functional APPO system implementation.

Methods and Procedures

The first step in the analysis involved the identification and selection of a cross-functional team to be mindful of the entire APPO process. The APPO Team is comprised of representatives from Purchasing, Accounting Services, Business Services IT staff, and two representatives from campus divisional staff. Following is a list of APPO Team members:

Name / Title and Department
Hua Ramer / Project Manager, SFS, Accounting Services
Janet Larson / Project Leader, SFS, Accounting Services
Gareth Green / SFS Communication Specialist, Accounting Services
Mike Hardiman / Purchasing Services Director, Purchasing
Vera Laufenberg / Purchasing Agent, Purchasing
Terri Mills / Audit/Travel Manager, Accounting Services
Jeanne Schiro / Invoice Audit/Vendor Relations Mgr, Accounting Services
Steven Carrola / IS Application Development Supervisor, Business Services
Dave Allen / Purchasing Manager, Space, Science and Engineering Ctr.
Charlie Simonson / Purchasing Manager, Facilities Planning & Management
Cathy Holmes / Project Manager, DoIT (Until 6-10-03)

Commencing in August 2002, the Team met every two weeks. Several analytical processes were involved in this analysis. The Project Charter was prepared to specify the objectives and goals, scope, work plan, project management approach, project organization including roles and responsibilities of the project participants and assumptions concerning the project. The Project Charter was presented to and approved by the SFS Strategic Planning Committee (SPC) and the SFS Steering Committee.

A training plan was developed to educate the team in all aspects of the processes defined as “In-Scope” and to gain in-depth understanding of the current business model.

The Team gathered the information for the “As Is” process maps through team member presentations and interviews with Accounting Services staff, Purchasing staff, representatives from the Auxiliaries and other customers/users.

Development of “As Is” process maps of the procurement-to-payment cycle based on current business practices formed the foundation for team members to understand not only what these processes are but also why and how these processes are performed. After the current processes were documented, the process maps were shared with the SFS SPC for further comments and suggestions. See Appendix 2.

The APPO Baseline document matched statistical information to each step in the APPO process to serve as a historical reference point that can be measured against future business processes. See Appendix 3.

The APPO Project web page was established early in the project to keep the SPC and campus informed during the progression of the project. The current business process maps, meeting times, minutes and other documentation are posted on this site.

The 3270 System Inventory of legacy Accounts Payable related systems was prepared to document the functionality of these systems and to better understand the integration of the systems now in use. This report was compiled by interviewing Business Services staff on the use of each separate system. See Appendix 4.

After becoming familiar with all aspects of the procurement-to-payment process, the Team identified and developed a list of customers. Customers are defined as groups of people who are affected by these processes. They are functional users as well as people who are served by the functional users or systems. Customers and users included divisions, auxiliaries, various purchasing and accounting services departments, Research and Sponsored Programs (RSP), vendors and other external and internal users.

The Team documented the functional requirements and customer needs through brainstorming, group meetings and one-on-one interviews to define the functional as well as operational needs of the internal and external customers/users. The collected customer needs were reported to the SFS SPC and to RSP for additional input and approval and posted to the APPO Project web site. See Appendix 5.

The functional requirement listing became the basis for the gap rating analysis matrix. The Team analyzed the functional requirements listing and identified and prioritized major business system needs for use in the assessment of each requirement. To rate the customer needs and wishes, the Team utilized a Six Sigma Quality Functional Deployment (QFD) matrix. This matrix was used to measure not only the functional requirements for an APPO system but also the more intangible desirables that users would like to see that would contribute to user satisfaction and the success of the implementation.

Using the QFD matrix, the Team evaluated each requirement for significance in relation to the business system needs to arrive at an importance rating. The rated requirements were analyzed by the Team to identify and group key system components to be measured against the software functionality of PeopleSoft. The Team was then able to identify gaps that would not be satisfied totally by the software.

After identifying the gaps, the Team rated the gaps based on percentage of fit to PeopleSoft software, from zero to one hundred percent, with a complete fit being one hundred percent and no fit being zero percent. The percentage of fit was then multiplied by the importance rating to arrive at a total overall score based on functionality of the software compared to the magnitude of the importance of the requirement. This analysis required examination of each gap relative to both functional processes and software functionality in order to develop mitigation strategies to fill the gaps. See Appendix 6.

During the gap analysis, the Team became aware that there were significant gaps in Accounts Payable processes involving purchase orders and encumbrances. The Team discovered the gaps differentiated in the procurement-to-payment process into three distinctive areas. These categories are

  1. Payment Processing (non-PO related payments)
  2. PO Invoice Processing (payment of PO Invoices)
  3. Encumbrances and Purchase Order Processing.

The significant gaps were summarized into an Issue Log by these categories. Each of the defined issues has been analyzed by the process affected, failure effect and probable resolutions to the issues. See Appendix 7.

Major gaps in the Encumbrance and Purchase Order cycle complicate the invoice payment process. However, Direct Charges (Payments) are not dependent on the Purchasing/Encumbrance process. The relative simplicity of the Direct Charges (Payments) process presents a favorable opportunity to migrate to a PeopleSoft Accounts Payable process that does not have any significant gaps or barriers to implementation.

Therefore, based on the results of the analyses, the recommendation of the APPO team is to proceed with implementation of PeopleSoft Payables Module for Direct Charges (Payments) only.

The analysis has resulted in the following deliverables:

·  Process maps of the procurement-to-pay cycle based on current business practices,

·  3270 System Inventory of all Accounts Payable processes,

·  Baseline of current business practices with historical statistics,

·  Functional Requirements List from all users,

·  Matrix ranking the functional requirements against system objectives,

·  Gap rating analysis matrix of the ranked functional requirements,

·  Analysis Issue Log identifying gaps and resolutions, and

·  Analysis Report with Recommendation.

Analysis of Recommendations

The APPO Team has evaluated the results of the gap analysis process. The Team discovered that the procurement-to-payment process is a series of interdependent transactions that fall into three categories

  1. Accounts Payable Direct Charges (Payments)
  2. Payment of Purchase Order and Requisition invoices
  3. Encumbrances and Purchase Order Administration.

Good solutions for implementing a purchase order and purchase order invoice payment system require additional time and experience. The Team has concluded that it would be most beneficial and make most business sense to initially implement PeopleSoft Accounts Payable for Direct Payments.

In reaching these conclusions, the APPO Team also analyzed the advantages and disadvantages of this approach. Overall, the Direct Charge (Payment) process is the easiest to implement and does not depend on purchase orders or encumbrances in the payment process. We will be able to learn about PeopleSoft from this implementation and build the foundation for future accounts payable and purchasing system implementations.

Concentrating on Direct Charges (Payments), the Team concluded that there are additional advantages that will result in increased efficiency, business process improvements and better internal controls and quality assurance.

Increased efficiencies are the expected result of the elimination of redundant data entry. Current data entry processes involve keying in the entire vendor name and address for each voucher. Establishing a vendor file will eliminate the need to repeatedly key in name and address information and also eliminate the need to visually verify each voucher for name and address. Multiple vouchers for a vendor can be combined into one payment. We currently have a one-to-one relationship between a voucher and a check. After implementation of the new system, we can select invoices for payment based on due date and multiple vouchers to a vendor will be combined into one payment.

At present, all checks must be manually matched to a remittance advice for mailing and distribution. Using PeopleSoft will allow us to print the remittance advice attached to the check, eliminate the manual matching operation and reduce paper needs.

Implementation of the accounts payable system will allow us to improve automation and allow campus to have better on-line tracking of payments. We will have the capability to expand the Direct Payment process to include Confirmers under $5,000, replace Low Dollar Purchase Orders and a sizeable portion of Open Vendor Orders.

These business process improvements should eliminate campus use of requisitions for the sole purpose of tracking payments if we can develop and implement an auto-numbered tracking system to support the payables process. Also, through the recurring voucher process, we will have the capability to establish a procedure to handle payments without invoices, e.g., lease and rental recurring payments, and eliminate the use of requisitions and monthly submissions by campus for these types of payments.

Improved quality assurance and internal controls will result from the ability to set-up business rules that will eliminate duplicate payments for the same invoice number, to establish security and authorization for users based on a user profile, and the establishment of a standardized vendor file and vendor certification procedures.

Other positive effects include minimizing the number of times a document changes hands in Business Services through more automated processes and reducing calls to Accounting Services for payment related questions because better information will be available to campus and vendors.

The Team also recognizes that there will be some disadvantages to this approach. For one, the investment of staff resources required to maintain two different payment processing systems, managing two different document files and training employees in using both systems will be significant. We will have to distinguish Direct Payments separately from PO invoice payments for tracking and ad hoc reporting purposes. We realize that implementing any new system will require an initial learning curve and that we may experience a slow-down as we transition to the new system. However, we feel that the advantages outweigh the disadvantages.

We also have identified several issues through the Fit-Gap Analysis that will need to be resolved in order to have a successful implementation:

·  We will need to allocate resources for training of staff; this includes training for the implementation team and development of training materials for staff.

·  We will need to develop and replace Accounts Payable Direct Charge reports and train staff for ad hoc reporting.

·  We will need a compatible IT infrastructure if we are to use Workflow.

·  We will need to allocate resources for user support.

·  We will need to establish minimum vendor file standards for different areas, e.g., tax reporting and vendor reports, and determine how to differentiate vendors and non-vendors, i.e., employees.

·  We need to improve the Direct Payment form to capture special handling and mailing instructions, etc.

·  Develop capability for web forms to be systematically numbered.

·  Develop an interface to Lawson or share a database with Payroll to allow access to employee banking information for electronic deposit of travel reimbursements.

·  During implementation we will have to consider the means of assuring consistency between the Accounts Payable vendor file and the Purchasing vendor file for eventual consolidation.

After approval of this recommendation, the initial implementation of the PeopleSoft Accounts Payable module will proceed. In order to perform further analysis on purchase order related invoice payments and requisition/encumbrance processes, we will rely heavily on campus-wide cross-functional experts to investigate and explore system migration alternatives. The team has also realized that a strategic direction from campus management is needed in order to perform further analyses. Requisition, encumbrance and purchasinge order invoice payments are a series of inter-related processes that will require functional coordination and system integration from purchasing, budgeting, accounting and various levels of administration. The Team strongly feels that with current team structure and resources, we are not able to proceed with further analyses.