Oklahoma Hyperion Business Processes

Oklahoma Hyperion Business Processes

A Report to the
Oklahoma Office of Management and Enterprise Services
on Current and Future Processes
for the Hyperion Software Deployment

Presented by:

Information Services Group, Inc.
Public Sector

May 13, 2013

Copyright © 2013, Information Services Group, Inc. All Rights Reserved.
No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.

Copyright © 2013 Information Services Group, Inc. All Rights Reserved

Oklahoma Hyperion Business Processes

Oklahoma OMES

May 13, 2013

Table of Contents

Introduction

Background

Current Strategy Management and Budgeting Overview

Current Tools

Current Budgetary Chart of Accounts

Requirements Not Supported in Current System

CurrentStrategy Management and Budgeting Process Overview

Current Strategy Management & Budgeting Challenges

Current CAFR Process Overview

Current CAFR Tools

Current Process Overview

Current CAFR Challenges

Future Process: Integrated Planning, Budgeting, and Managing for Results

Future Integrated Planning, Budgeting, Managing for Results Tools

Future Integrated Planning, Budgeting, and Managing for Results Chart of accounts

Future Integrated Planning, Budgeting, Managing for Results Process Overview

Benefits to Integrated Planning, Budgeting, and Managing for Results

Future Process: CAFR Production

Future CAFR for Results Tools

Future CAFR for Results Process Overview

Benefits to CAFR for Results

Copyright © 2013 Information Services Group, Inc. All Rights Reserved

Page 1

Oklahoma Hyperion Business Processes

Oklahoma OMES

May 13, 2013

Introduction

In February 2013, the State of Oklahoma (State) Office of Management and Enterprise Services (OMES) engaged ISG Public Sector to provide business and technical consulting services for the assessment of implementing Oracle Hyperion Public Sector Planning and Budgeting. This report describes the State’s current processes for budget development and CAFR production, and then sets forth a proposed new business process using the Hyperion toolset.

Background

The State of Oklahoma acquired the Oracle Hyperion software in May 2012 to replace PeopleSoft EPM and other tools, and to provide a modern more comprehensive toolset for strategy management, budget development and adjustment, and the Comprehensive Annual Financial Report (CAFR). For enterprise financial, human resources and budgeting administration, the State currently uses PeopleSoft Financials and Supply Chain Management (FSCM) version 8.9, PeopleSoft Human Capital Management (HCM) version 9.0 and PeopleSoft Enterprise Performance Management (EPM) version 8.8, in addition to a number of internally-developed tools. When the Hyperion tool is fully implemented, the State plans to retire PeopleSoft EPM.

The State has licensed the following Hyperion modules in preparation for this deployment:

• Hyperion Planning Plus
• Hyperion Public Sector Planning and Budgeting
• Hyperion Financial Management Plus
• Hyperion Financial Data Quality Management
• Hyperion Financial Data Quality Management Adapter Suite
• Hyperion Financial Data Quality Management Adapter for Financial Management
• Oracle Essbase Plus
• Oracle Scorecard and Strategy Management

Current Strategy Management andBudgeting Overview

The State of Oklahoma’s annual budget process, like most state governments, can be characterized as traditional incremental budgeting. Under this process, budgets are developed and reviewed in the context of the previous year’s budget with funding decision-making primarily focusing on the incremental change to the budget.

Also similar to most other states, this process has bottom-up and top-down characteristics. It is bottom-up within the Executive branch beginning with agency submissions to the OMES and culminating in the development of the Executive Budget, which serves as the initiation point for the Legislative appropriation process. From a legislative perspective, budgeting is more top-down with appropriation decisions being made at an aggregatelevel. Once budgets are adopted and signed into law by the Governor, the process continues with the development of Budget Work Programs, which is a bottom-up budgeting process. Finally, budget adjustments subsequent to budget adoptions are also made from a bottom-up perspective.

Though strategic planand limited performance data is incorporated into agency budget request submissions every other year, this information does not align to a comprehensive statewide strategic plan and typically serves as contextual or reference information rather than as a driver for the allocation of budget resources. Further, the state capital budget does not directly integrate to the operating budget. Hence, decisions regarding capital investment are often made without direct access to information regarding the impact on long-term operating expenditures.

The State of Oklahoma currently develops its annual budget using a disparate collection of software tools throughout the budget development and execution lifecycle. Accordingly, the State’s budget process has been aligned around these different tools and can be characterized as having many discrete sub-processes with limited integration. The lack of an integrated, end-to-end budgeting application drives many inefficiencies, puts constraints on budgetary analysis, and lacks a platform for effective implementation or integration of current or future policy initiatives to the budget process such as strategy management to support Budgeting for Results or linking capital and operating budgeting. The current budget process is described in further detail below.

Current Strategy Management and Budgeting Tools

Currently the State of Oklahoma has a myriad of software applications used for budgeting throughout the budgeting lifecycle. These tools include:

• Budget Request System – This application was built and is maintained by the State for agency budget development and initial submission of agency budgets requests, performance measures, strategic plans and capital outlay requests.
• PeopleSoft EPM – Used by agencies and OMES to enter program work sheets (expenditure plans), after the budget is finalized, for load into PeopleSoft commitment control. Additionally, EPM is used for making all budget adjustments after the budget is loaded to PeopleSoft.
• Agency Internally Developed Tools – Agencies have a myriad of internally-developed budgeting tools. These tools are used to support internal development of the agency budget, budgeting and performance management.
• Microsoft Office – Oklahoma’s budgeting process is substantially dependent on Microsoft Office applications (e.g., Excel, Word) throughout the budget lifecycle. Excel, it can be argued, is the most widely used budgeting tool.
• Statistical Application – Used by the Oklahoma Tax Commission (and Oklahoma State University) to providethe statistical/ econometric modeling tools for statewide revenue forecasts used by the Board of Equalization.

Current Budgetary Chart of Accounts

The state currently utilizes the following PeopleSoft ERP dimensions for appropriated funds budgeting and for tracking actual expenditures with budget availability control.

• Account - Object of expense or revenue source
• Division - Organizational entity with budgetary responsibility
• Department - Organizational child of division
• Class - Fund grouping
• Sub-Account – Expenditure and revenue details

Note: There is a need for a service/activity view of budgets (cross-organizational program view), which will need to be implemented as a new dimension in ERP and budgeting. Additionally, a new capital budgeting process is being developed by the Department of Capital Asset Management (DCAM) which will require the addition of a dimension to track capital projects and related work break downs in budgeting and PeopleSoft ERP.

Requirements Not Supported in Current System

Multiple budgeting applications/tools are currently required due to limitations in the PeopleSoft EPM application. These limitations have relegated this solution to use after the budget is actually developed in other tools. Instead, the state has developed a custom application for budget development. This necessitates significant data reentry, manipulation, and reconciliation and significantly impairs the state’s analytical capabilities.

Oklahoma’s current budgeting tools provide minimal support for strategic planning and performance management to support Budgeting for Results and for integrating operating and capital budgeting to improve decision support for capital investment. Where supported, these processes are supported inconsistently, provide limited reporting and analysis, and do not align to leading practices.

Current Strategy Management and Budgeting Process Overview

The following table provides an end-to-end overview of the current budgeting process, including integrated strategic planning, at the State of Oklahoma illustrating which of the previously identified software tools are utilized throughout the budget process.

Table 1: Current Budgeting Process

Budget Stage / Dates / Input / Tool / Output / Owner
Agency Capital Budget Request / May - July / Guidance from Long-Range Capital Planning Commission / Budget Request System (internal system) / Agency Capital Plan / Agencies, Long-Range Capital Planning Commission
Long-Range Capital Planning Commission Review / May – July / Agency Input, Executive Policy Guidance, Available Funding / No standard tool (spreadsheets, etc.) / Capital plan / Long-Range Capital Planning Commission
Agency Internal Budget Request & Strategic Planning (Strategic Plan every other year) / July - October / OMES guidance / Agency internal built systems, spreadsheets, etc. No standard tool. / Data for input into Budget Request System / Agencies (Divisions & Departments)
Agency Budget Request Submissions & Strategy Plan (Strategic Plan every other year) / September – October / Agency internal budgets / Budget Request System (Custom State System) / Agency Electronic Submission to OMES, Submissions to House and Senate (reports, not in system) / Agencies
Multi-Year Trend Analysis / October – November / Historical data and policy / Excel / Statutory multi-year revenue and expenditure reporting / OMES
OMES Review & Hearings with Agencies – Legislature Also Conducts Hearings / October – December / Agency Submissions, Governor’s Policy Guidance, Statutory Compliance / Budget Request System (Custom State System) / Summary Sheets for Hearings,
Executive Budget Book Content / OMES
Equalization Board Produces Revenue Estimate / December / Economic data / Econometric modeling tools / Approved basis for Executive Budget (statutory limits based on this estimate) / Oklahoma Tax Commission, OMES, Equalization Board
Submission of Executive Budget to Legislature / January to February / Agency Submissions, Revenue Estimate, Agency Hearings / The Executive budget and associated Historical budget are developed using Microsoft Office. / Executive Budget, Historical Budget / Governor/OMES
Agencies Resubmit Agency Revenue Estimates / February to March / Agency Input / No standard tool. Agencies submit via emails, etc. / Guidance to OMES / Agencies/OMES
Equalization Board Revised Estimate / February to March / Economic data / The equalization board receives input from OSU economists and develops estimates internally using Forecast Pro, Excel and other tools. / Revised approved basis for Legislative Appropriations & Governor’s Action / Oklahoma Tax Commission, OMES, Equalization Board
Legislative Reviews and Appropriation Recommendations (Including Veto Override) / February to May / Legislative Authority, Statutes, Equalization Board Guidance / Microsoft Office is used to manage appropriation bills, language, etc. / Appropriations Bills / Legislature
Governor’s Action on Appropriation Bills (Including Veto) / February to May / Governor’s Authority, Statutes, Equalization Board Guidance / Microsoft Office is used to manage appropriation bills, language, etc. / Signed Appropriations Bills / Governor/OMES
Equalization Board Meeting – Revenue & Expenditure Authority Adjusted to Incorporate Statute Changes / June – July / Statute Changes, Legislative and OMES analysis / The equalization board certifies law changes that affect revenue. / Certification of Balanced Budget / Equalization Board
By Line Developed / May – July / Signed Appropriation Bills / OMES develops by line based on appropriations using Excel / Guidance an Reconciliation for Agency Budget Work Programs / OMES
Agencies Submit Budget Work Programs / May – July / OMES guidance, Agency Authority / PeopleSoft EPM is used to create budget work program. Additional documentation from agencies received outside EPM. / Electronic Submission to OMES / Agencies
OMES review and approval of Agency Budget Work Programs / May – July / Appropriations, Equalization Board Guidance, Statutes, Governor’s Authority / PeopleSoft EPM is used to review and approved agency work programs. / Feed to PeopleSoft Budget Control / OMES
Input/Upload of “Limits” / June / Statutes and policy guidance on ceiling spending thresholds for specific purposes / Limits are developed in Excel and uploaded to PeopleSoft EPM / Compliance reporting for agency budget work program / OMES
Budget Adjustments / July – June / State policies, carryover requirements, operational needs. / PeopleSoft EPM is used to make budget adjustments which adjust PeopleSoft budget control levels / Approved budget adjustments affected in PeopleSoft budget control. / Agencies, OMES

Currently Oklahoma does not have a comprehensive strategy management (strategic planning and performance management) process or tools. It is envisioned this will be addressed as part of this project. As previously noted, currently strategy management is limited to collecting agency goals, measures, etc. as part of the budget process. Additionally, some agencies have their own internal strategic planning and performance management processes and tools.

Current Strategy Management and Budgeting Challenges

Oklahoma’s current budgeting tools and processes produce many challenges as Oklahoma endeavors to improve its budgeting process and align toward a Budgeting for Results approach. These challenges include:

• Disparate Budgeting Applications – The state’s current collection of disparate budgeting tools produces rampant inefficiencies with substantial and repeated data re-entry, manipulation, and reconciliation. Beyond inefficiencies, analysis capability is impaired and confidence in the data is undermined.
• Budgeting Dimensions/Chart of Accounts – The state’s current chart of accounts dimensions do not provide for budgeting of and monitoring expenditures by cross-organizational and cross-funding programs (grouping internal/external services or activities). Additionally, the state’s chart of accounts does not, as currently configured, provide a standardized foundation for implementation of capital budgeting. Without adding dimensions to the State’s current ERP solution, effectively integrating operating and capital budgeting and budgeting to strategic planning and performance management, this capability will be substantially constrained. This will substantially impair the State’s efforts to more robustly support these processes.
• Limited Functionality – The state’s current landscape of budgeting tools does not provide a foundation for integrating and optimizing processes. There is substantially limited functionality to support:

Capital budgeting;

Strategic planning and performance management;

Budgeting decision packages;

Budget book publication automation; and,

End-to-end process integration.

Current CAFR Process Overview

The State’s current Comprehensive Annual Financial Report (CAFR) process, similar to many states, can be described as very manual and very labor intensive, requiring large amounts of financial, statistical, and narrative information to be rekeyed into various applications such as PeopleSoft, Excel spreadsheets, and Word documents that are ultimately compiled into a single book for publishing by the December 31st deadline.

At a summary level, the CAFR process can be described as follows:

• A cash basis Combining Trial Balance (CTB) is prepared using the “Actuals” ledger data in PeopleSoft, which is authenticated by the Office of the State Auditor and Inspector;
• GAAP Packages are prepared by state agencies and submitted to the State Comptroller, where GAAP conversion forms are recorded using the “Adjusted” ledger in PeopleSoft, spreadsheets, or Word documents, depending on the type of data collected;
• Using the “Actuals” and “Mod Accrue” ledgers in PeopleSoft, General Fund and Fiduciary Fund financial reports are prepared on a modified accrual basis using PeopleSoft’s delivered nVision reporting tool;
• Audited agency reports, primarily from component units such as the Turnpike Authority, are provided by agency’s auditor to the State Comptroller, where the data is manually entered into spreadsheets;
• Entity-Wide Statements are prepared beginning with Fund statements created in nVision, adding Agency/Component Unit data manually aggregated in spreadsheets. Various statement presentations are then preparedusing Excel;
• Budget to Actuals Statements are prepared in Excel, using budget data provided by the Budget Section;
• Statistical data (trend data and non-financial data useful in interpreting basic financial statements) is collected using Excel; and
• The CAFR book is compiled, manually consolidating all the various Excel spreadsheets and Word documents into a single book for publishing.

The Office of the State Auditor and Inspector performs various audits throughout the CAFR life-cycle process and then performs one final audit before the report is published.

Current CAFR Tools

• PeopleSoft Financial
• MS Excel
• MS Word
• nVision

Current Process Overview

The following table provides an end-to-end overview of the current CAFR process at the State illustrating which of the previously identified software tools are utilized throughout the CAFR process.

Table 2: Current CAFR Process

Stage / Dates / Input / Tool / Output / Owner
Combining Trial Balance / Fiscal year-end / PeopleSoft accounting data / PeopleSoft Financials / Cash basis Combining Trial Balance statements / Comptroller
Agency GAAP Conversion / Starting end of June (fiscal year-end) / PeopleSoft accounting data and cash basis CTB / Excel packet on Comptroller web site (“Blue sheets”) / Completed Excel worksheets / Agencies
CAFR GAAP Conversion / July – cash
August – AP
Sept–Litigation
Oct–Medicaid / Completed agency Excel workbooks / Excel / PeopleSoft journal entries in separate ledger (“Mod Accrual”) for modified accrual basis / Comptroller
CAFR Compilation / September – October (Higher ed comes in Oct. 31) / Mod Accrual ledger / nVision, Excel, Word / Reports for CAFR, narrative and text for CAFR / Comptroller
Preliminary Auditor Review / October – November / CAFR reports and narrative / Excel, Word / Audited reports and text / State Auditor
CAFR Book Assembly / December (complete book by Dec. 20) / Audited reports and text / Word / CAFR Report Book / Comptroller
Final Auditor Review / December / CAFR Report Book / Word / Final CAFR Report Book, GFOA Packet / State Auditor

Current CAFR Challenges

Oklahoma’s current CAFR processand reporting toolset provide many challenges as the State attempts to improve a manual and labor intensive process with an efficient process that leads to a shorter production lead time and drastic reduction in man-hours. Some of these challenges include: