Federal Financial Management Conference Shared Services: Progress through Partnerships

1. Federal Financial Management ConferenceShared Services: Progress through Partnerships Larry Neff Deputy Chief Financial Officer U.S. Department of Transportation March 11, 2008

2. Background on DOT and ourEnterprise Services Center (ESC) • DOT has 55,000 employees & a $66 billion annual budget • Highly decentralized organization (Operating Administrations) • OST, WCF, OIG, FAA, FHWA, FTA, FRA, FMCSA, NHTSA, MARAD, PHMSA, RITA/BTS/Volpe, STB, SLSDC • ESC has 1,000 employees & is in a Franchise Fund • IT Services/Data Center, Applications Support, Accounting Services, Customer Services/Help Desk • Located at the Mike Monroney Aeronautical Center in beautiful Oklahoma City • 1,100 acre secure campus • 5,500 total employees • Professional, knowledgeable, dedicated career staff

3. DOT & ESC Accomplishments • 2000-2003: DOT implemented all 14 bureaus on a COTS-based, FSIO-certified financial system with no customizations running on a cost-effective single production instance • Produce financial statements overnight from the core accounting system • DOT has consolidated all accounting operations to ESC • Saving $5+ million per year • Bureaus more willing to streamline & standardize processes • Clean financial audit opinions 6 of last 7 years • DOT raised to “yellow” on PMA goal for Financial Management

4. Enterprise Services Center (ESC) • Feb. 2005: OMB designated DOT/ESC 1 of 4 Federal Shared Service Providers (FSSPs) • ESC currently cross-services • Government Accountability Office (GAO) • Commodity Futures Trading Commission (CFTC) • Institute of Museum and Library Services (IMLS) • National Endowment for the Arts (NEA) • ESC using Service Oriented Architecture (SOA) technology to integrate PRISM with Oracle Financials • Eliminates duplicate manual data entry & reconciliation • Supports commitment accounting

6. Partnerships for Shared Services • ESC recognized the need for an on-going private sector partner for help marketing to & implementing new external customers • Implementation workload goes up & down • Continuity to ensure expert & experienced staff • Competed a Task Order on NIH’s CIO-SP2i contract • Won by SRA with IBM • Mutually beneficial relationship • Gained new customers • Marketing expertise • Implementation resources

7. Partnerships for Shared Services • ESC also has a contract with L-3 for on-going operational support • Data Center support • Application support • Operational accounting support • Exploring a Blanket Purchase Agreement • Consolidate support • Compete Task Orders among vendors

8. Partnerships for Shared Services • Initially, some agencies thought the FM LoB was focused on shared hosting of financial systems • This view-point was too narrow • No economy of scale realized just by moving from 1 large data center to another • Hosting costs are a small part of any IT system’s costs • The biggest potential economy of scale is in shared application support • Professional staff with expertise in running the system • Biggest cost of system operations • Only way to drive down cost of application support is by using standard systems • FSIO standards make this even easier

9. Partnerships for Shared Services • Alternatives for ensuring high quality services through competition • 4 Federal SSPs & __# Private SSPs all competing against each other vs. • Teams of Private & Federal staff working together as SSPs competing against other Private-Federal SSP Teams

10. Benefits of Shared Services Low Cost • Customers get all the advantages of DOT’s financial system & accounting services without contributing to DOT’s $125 million capital investment • ESC already provides 90% or more of most required solutions; most additional needs can be met through configuration & set-up and interfaces • Customers only pay 1-time implementation costs and their fair share of annual operating & maintenance costs, plus future upgrade costs Low Risk • Much lower risk to migrate to a system that’s stable and has been in production for 8 years than to migrate to a new custom-developed system • Delphi has 4,000 users and been successfully upgraded 7 times • Delphi has passed multiple CFO and SAS-70 audits

11. Benefits of Shared Services Experienced Team • DOT has successfully implemented Oracle Financials for 20 customers • We know how to do this • SRA/IBM business partner also has extensive experience • Helped with GAO’s successful implementation • DOT follows Oracle’s Application Implementation Methodology (AIM) Change Management & User Support • Effective support for Change Management • Provide 4 to 6 weeks of “desk-side” user support after go-live, including the 1st month-end close • Experienced Accounting & Help Desk staff know the Oracle application & Federal accounting inside & out • All system & user documentation available on-line

12. Benefits of Shared Services We Handle the IT Requirements • Professionally run data center • Meet all IT planning, IT security, Disaster Recovery,SPII & Privacy Act requirements DOT Strategy • Don’t customize the COTS software • Modify business processes to take advantages of best business practices inherent in the Oracle software • Don’t recreate the legacy accounting system • Consolidate & standardize accounting operations

13. Lessons Learned • Executive support is essential • Clean up your data! • Streamline business processes • Clean up your data! • Consolidate accounting operations • Clean up your data! • Talk to your customer’s customers • Clean up your data! • Change management is critical • Communicate, communicate, communicate • Train, train, train • Support, support, support • Clean up your data at the detail level!

14. Looking to the Future Long-term Business Transformation effort • Business drivers • Plan for Oracle release 12i.FSIO – complete system re-architecting • Plan for Common Government-wide Accounting Code (CGAC) • Better link costs to program mission performance metrics • Automate Dept.-wide roll-up of performance data • Support cost accounting & Earned Value Management (EVM) • Started summer 2007 • Workgroups & governance structure established • Integrated procurement solution • Automate commitment accounting • Eliminate duplicate manual data entry & reconciliation • Provide more useful information to program managers • Eliminate the need for “cuff records” systems

15. For more information: www.esc.gov Larry Neff Marshal Gimpel Deputy Chief Financial Officer Director U.S. Department of Transportation Enterprise Services Center (202) 366-2335 (405) 954-8980 Larry.Neff@dot.govMarshal.Gimpel@faa.gov Mike Upton Bob Stevens Deputy Director Manager, Customer Service Enterprise Services Center Enterprise Services Center (405) 954-8980 (405) 954-7143 Mike.Upton@faa.govRobert.Stevens@faa.gov