1. Overview and Introduction - Broward County, Florida · 2012-06-04 · Claims Defense and...

Broward County Activity‐Based AnalysisRisk Management

Analysis Completed on April 13, 2009

April 2009 © Copyright 2009, EquaTerra, All Rights Reserved of 23

1. Overview and Introduction EquaTerra completed an Activity‐Based Analysis of the Broward County Risk Management Agency on April 13, 2009. In an effort to comprehensively assess the business processes within the agency (used to indicate this particular department, division, agency, or section) along with the potential value associated with an ERP implementation, the following methodology was followed:

• Analysis of all relevant departmental information • Analysis of department activities and documenting costs • Surveyed all division employees, detailing their time allocations and perceived issues • Discussed and documented key issues with department leaders and employees • Developed a Return on Investment (ROI) model that demonstrates the department cost

drivers that can be removed. The analysis and data presented in this report, was specific to Risk Management. Any other common support functions (i.e., HR and Payroll) will be included in other reports. These reports will represent combined data for common processes across the county. Agency Mission Statements and Overview (By Section) Risk Management Administration The purpose of the Administration Section is to provide and effectively manage in accordance with State Statutes, the County's Self Insurance Program at the lowest possible cost and in the best interests of the citizens and employees of Broward County and to ensure the safety and well‐being of all County employees and the citizenry visiting County property. The Administration Section is responsible for managing and administering the County’s self‐insurance program equitably and in the most cost effective manner available. The Safety & Occupational Health Section ensures the safety and health of County employees and the public by identifying and evaluating occupational and safety hazards and developing appropriate control programs. In addition, the section investigates and processes from start to finish workers’ compensation and general liability claims through its self‐insurance fund, at a cost less than that available in the commercial marketplace. The Division is also responsible for procuring various types of purchased insurance policies through the competitive bid process for those liabilities not covered under the self insurance program. Finally, the Division is responsible for establishing all insurance requirements on County procurements and managing the certificate of insurance program.




Insurance The purpose of the Insurance Section is to provide the required reserves for workers’ compensation, general liability, medical malpractice, mass transit fleet liability, and auto liability and provides the funds for purchasing commercial insurance.

2. 2009 Operating Budget The Office of Management & Budget (OMB) supplied the current operating budget for the Risk Management Agency. The current operating budget consists of the funds required for day to day operations, including salaries, benefits, supplies, and common or expected expenses. EquaTerra analyzed the operating budget because this budget funds the activities that produce repeatable services to Broward County employees and constituents. This analysis utilized the best of breed tools to identify the cost distribution of all activities conducted by the Agency. The following Chart A represents a list of Budget Line Items that constitute the sum of the current operating budget:

Chart A ‐ Dollars by Category for the Current Operating Budget

$2,996,166.00

$848,190.00

$269,730.00

$265,000.00

Salaries & WagesCounty Attorney ChargesH & S Contract ServicesMalpracticeH & S Other DivisionsInsurance CommissionsH & S ProgramsWorkers CompensationSoftware SupportAuditing FeesContract Services ‐ ITIT Project CostsContract ServicesMiscellaneous ExpensesPostage ‐ OITUnemployment CompensationOffice SuppliesOperating SupportProfessional ServicesMedical CostsAuto AllowanceRent EquipmentTelephone Allocation ChargesDues & MembershipsOffice Equipment <$1,000CommunicationsSubscriptionsEducationInternal PrintingTravel / Per Diem




The total current operating budget, as depicted in Chart A above, was distributed to the activities and/or processes performed by the Agency. The budget allocations were spread as follows:

• Salary Trace – For all personnel expenses, this method of allocation was used to trace the percentage of time spent on an activity by a given employee to the budget costs associated with that employee’s personnel costs.

• Direct Trace – For all expenses that can be directly traced to an activity from a budget line item.

• Headcount – For all expenses that remain and must be spread evenly across all activities, based on total headcount.

Using these allocation methods and an analysis of the agency budget, each budgeted position and all operational budget accounts were spread to key Risk Management Agency activities (see below).

3. Department Processes The assistance provided to Broward County employees and constituents is driven by public expectations and taxes. Typically these services are directed by public need and demand, which is in turn determined by the Broward County Board of Commissioners. The services are provided based on repetitive activities or processes that are performed by the Broward County Divisions and Agencies. The activities, sometimes enabled by technology, are funded by multiple line items in the operating budget. The sum of these component line items determines the cost of the activity. The importance of understanding activity costs is critical because:

• It provides a means of evaluating annual budget requests from Divisions and Agencies. • It provides a means of comparison with peer organizations. • It highlights opportunities to gain efficiencies.

During the initial facilitated sessions, the representatives of the Risk Management Agency identified the following list of key activities performed by the Agency:

Chart B ‐ Process and Sub Processes Processes and Sub Processes

General Administration Claims System Support

Claims System Support Claims Systems Help Desk Data and Physical Security / Integrity Insurance Allocations Processing Claims Payments




Processes and Sub Processes Support For Loss Runs & Claim Reports System Monitoring and Control Claims Systems User Training

Insurance Risks & Contracts Insurance Contract Negotiations Insurance Procurement Insurance Requirements Insurance Research & Development Mitigation Planning

Liability & Worker’s Compensation Administrating / Coordinating A Return To Work Program Claims Defense and Litigation Claims Management Developing Specific Job Analyses For County Positions Liability / Workers Comp Compliance & Reporting Selecting Medical Providers To Treat Injured Workers Settlements Training Supervisors On Injury Reporting / Modified Duty Administrating / Coordinating A Return To Work Program Claims Defense and Litigation

Project Management Maintaining A Live Project Risk Database Planning For Risk In Particular Projects Preparing Mitigation Plans For Chosen Risks Summarizing Risk, Mitigation Effectiveness, Risk Efforts

Risk Policies & Procedures Coordinating Insurance Investigations / Services Developing / Tracking Insured Property Values Developing Proactive Risk / Loss Programs Developing Risk Control Programs, Monitoring Premiums Developing Risk Exposure Strategy, Risk Analysis Monitoring / Negotiating County Insurance Claims Negotiating Insurance Coverage / Reviewing Contracts Preparing Loss Provisions Processing Insurance Certificates Providing Counsel on Insurance Implications Providing Risk Assessment To Support Business Continuity Providing Risk Assessment To Support Change Initiatives Coordinating Insurance Investigations / Services Developing / Tracking Insured Property Values Developing Proactive Risk / Loss Programs




Processes and Sub Processes Safety & Occupational Health

Definition / Update of County Policies & Procedures Employee Training Implementing and Executing Policy Elements Injury Investigation and Trend Analysis Inspections and Auditing Medical Monitoring Program Monitoring and Enforcement of Policies Safety & Occupational Health Reporting

The following charts, Chart C (Detailed Process Cost Allocations), Chart D (Percentage Dollars Allocation By Process) and Chart E (FTE Allocation By Process), demonstrate how the operating budget and FTEs were distributed to activities. This distribution is pulled from the Employee Surveys, which all agency employees completed, and agency budgets provided by the Office of Management and Budgets. The employees documented the percentage of their time spent on each activity. These documented percentages were applied, along with the corresponding number of dedicated FTEs and associated costs of each activity. These cost allocations was confined to this specific agency. There will be other reports that present combined data for common processes across the country. Chart C‐ Detailed Process Cost Allocations

Activity Total Costs FTE

General Administrative Activities $920,073.72 8.094

General Administrative Activities $920,073.72 8.094

Agency Accounts Payable $43,500.36 0.350

Agency Accounts Payable $43,500.36 0.350

Agency Accounts Receivable $22,173.99 0.167

Agency Accounts Receivable $22,173.99 0.167

Agency Facilities Management $1,862.88 0.010




Agency Facilities Management $1,862.88 0.010

Agency Fixed Assets & Property Accounting $10,915.74 0.078

Agency Fixed Assets & Property Accounting $10,915.74 0.078

Agency General Accounting $24,797.09 0.180

Agency General Accounting $24,797.09 0.180

Agency Payroll $12,164.45 0.080

Agency Payroll $12,164.45 0.080

Agency Purchasing $73,369.47 0.600

Agency Purchasing $73,369.47 0.600

Claims System Support $152,210.75 1.110

Claims Systems Help Desk $36,311.70 0.270

Data and Physical Security / Integrity $42,118.47 0.300

Insurance Allocations $60,898.85 0.380

Processing Claims Payments $348,237.10 3.170

Support For Loss Runs & Claim Reports $147,763.45 1.050

System Monitoring and Control $68,708.61 0.490

Claims Systems User Training $40,258.83 0.330

Claims System Support $896,507.77 7.100

Insurance Contract Negotiations $40,634.91 0.278

Insurance Procurement $78,844.86 0.510

Insurance Requirements $59,675.25 0.480

Insurance Research & Development $31,250.39 0.200




Mitigation Planning $51,400.28 0.323

Insurance Risks & Contracts $261,805.68 1.790

Administrating / Coordinating A Return To Work Program $79,124.24 0.600

Claims Defense and Litigation $247,579.38 1.910

Claims Management $647,288.83 5.125

Developing Specific Job Analyses For County Positions $21,448.29 0.160

Liability / Workers Comp Compliance & Reporting $224,413.98 1.775

Selecting Medical Providers To Treat Injured Workers $68,400.22 0.535

Settlements $178,828.82 1.355

Training Supervisors On Injury Reporting / Modified Duty $32,227.59 0.230

Liability & Workers Compensation $1,499,311.35 11.690

Maintaining A Live Project Risk Database $4,453.08 0.030

Planning For Risk In Particular Projects $77,926.32 0.540

Preparing Mitigation Plans For Chosen Risks $21,909.50 0.140

Summarizing Risk, Mitigation Effectiveness, Risk Efforts $43,987.66 0.305

Project Management $148,276.57 1.015

Coordinating Insurance Investigations / Services $204,307.50 1.830

Developing / Tracking Insured Property Values $37,668.09 0.280

Developing Proactive Risk / Loss Programs $31,420.60 0.180

Developing Risk Control Programs, Monitoring Premiums $32,364.51 0.190

Developing Risk Exposure Strategy, Risk Analysis $54,792.16 0.310

Monitoring / Negotiating County Insurance Claims $47,514.10 0.308

Negotiating Insurance Coverage / Reviewing Contracts $16,858.44 0.083

Preparing Loss Provisions $2,865.41 0.020

Processing Insurance Certificates $40,838.51 0.320




Providing Counsel on Insurance Implications $26,913.96 0.170

Providing Risk Assessment To Support Business Continuity $30,255.62 0.170

Providing Risk Assessment To Support Change Initiatives $25,903.02 0.130

Risk Policies & Procedures $551,701.93 3.990

Definition / Update of County Policies & Procedures $67,194.57 0.505

Employee Training $262,474.05 2.015

Implementing and Executing Policy Elements $75,722.88 0.570

Injury Investigation and Trend Analysis $120,660.67 0.895

Inspections and Auditing $257,960.82 1.938

Medical Monitoring Program $55,831.76 0.525

Monitoring and Enforcement of Policies $88,568.89 0.720

Safety & Occupational Health Reporting $89,851.38 0.690

Safety & Occupational Health $1,018,265.00 7.858

Totals $5,484,726.00 43.00




Chart D ‐ Percentage Dollars Allocation By Process

Chart E ‐ FTE Allocation By Process

$920,074

$896,508

$1,499,311

$551,702

$1,018,265

General Administrative

Agency Accounts Payable

Agency Accounts Receivable

Agency Facilities Management

Agency Fixed Assets & Property AccountingAgency General Accounting

Agency Payroll

Agency Purchasing

Claims System Support

Insurance Risks & Contracts

Liability & Workers Compensation

Project Management

8.09

7.10

1.7911.69

3.99

7.86

General Administrative

Agency Accounts Payable

Agency Accounts Receivable

Agency Facilities Management

Agency Fixed Assets & Property AccountingAgency General Accounting

Agency Payroll

Agency Purchasing

Claims System Support

Insurance Risks & Contracts

Liability & Workers Compensation

Project Management




4. Process Cost Drivers During facilitated sessions, EquaTerra asked participating employees to identify barriers to success in performing their various activities. These barriers to success, or cost drivers, are typically the issues that prevent maximum efficiency and often cause rework to occur or errors and inaccuracies. The inefficiency measured in this section represents potential waste in work processes, and as such, provide opportunities to improve the value provided to Broward County constituents. It is important to note that inefficiency is not necessarily all easily‐addressable waste. Rather, it represents the maximum that could be addressed in time. The investment in an ERP system will be weighed against these inefficiencies by comparing ERP requirements that may remove the inefficiency. The following table provides the cost driver categories considered and reviewed by Agency employees:

Cost Driver Description Lack of . . . (typically drives a need for growth of additional capability)

Funding Need more budget money to perform activity correctly

Resources Need more FTE to perform activity correctly

Training Need more training to perform activity correctly

Evaluation Criteria Need the ability to incent employees to perform activity

Progression Opportunity Need to know activities performed correctly will lead to better opportunity

Technology Need to improve or add new software to perform activity

Standard Policies and Procedures

Need standards to ensure the activity is performed consistently

Leadership Need improved and more timely leadership to perform activity correctly

Accountability Need to ensure accountability of the activity performed

Impacted by . . . (Typically demonstrates an inefficiency that can be addressed)

Fear of Change Fear change or improvement will negatively impact my department

Strategic Direction The future is uncertain or unclear and requires more detailed definition

Decision Making Authority Politicians and/or staff leaders impact process through use of key decisions

Micro Management Leadership is concurrently performing activities, thereby impacted productivity

Manual Intensity (paperwork) The activity is manually intense and requires a long duration to complete




Agency personnel in the facilitated sessions identified barriers to process efficiency, and then established a relative impact for each of these cost drivers (minimal, moderate, large, huge). The cost drivers in Chart F (Total Inefficiency Target Dollars compared to Total Budget Dollars), Chart G (Total Inefficiency Target Dollars by Cost Driver) and Chart H (Total Inefficiency Target Dollars by Major Process) were documented during facilitated sessions. Employees provided feedback on the impact of cost drivers in relation to activities. This feedback and process costing led to an estimate of total work process inefficiency for the Agency. It should be noted that these cost driver results are driven by perceived work process inefficiencies, and are not an indication of efficiency for a particular Agency.

Chart F ‐ Total Potential Inefficiency Target Dollars compared to Total Budget Dollars

89%

11%

Efficient Budgets

Inefficient Budgets




Chart F‐Total Inefficiency Dollars by Cost Driver

Chart H ‐ Total Potential Inefficiency Target Dollars by Major Process

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

$100,000

$0 $20,000 $40,000 $60,000 $80,000

$100,000 $120,000 $140,000 $160,000 $180,000 $200,000




NOTE: The cost driver analysis focused on perceived work process inefficiencies and used allocated process costs to establish total potential cost opportunities. It should be noted that the scale on these graphs, and the total potential cost opportunities, could be influenced by the total allocated cost for that process or agency, and also by non‐personnel costs that increase these allocated costs.

Using the facilitated session cost driver discussions in conjunction with FTE and activity allocations, these distributions was derived using averaging within categories and cost drivers to identify the areas where inefficiency targets exist to support potential FTE and financial savings when these inefficiencies can be addressed. This analysis provides a target range which can then be compared with other agency data and process analysis.

Some of the factors that result in these cost drivers being identified by Risk Management personnel are listed below under the discussion of work process limitations after Chart J, Benchmark Analysis, and prior to Section 6, Aligning ERP Requirements to Inefficiencies.

5. Benchmark Analysis There was no industry standard benchmark data available where similar processes could be validated and similar data collection processes were utilized (i.e., activity based costing). As a result, benchmark data could not be used to support the cost driver analysis for these specific Risk Management activities although an enterprise wide assessment was performed for all business support activities.

Chart I – Metric Analysis Organizational Metric Broward

Labor to Budget Ratio 57.18% General and Administrative Ratio 16.78%

Operating Metric Broward Operating Cost per FTE $127,552 Labor Cost per FTE $72,935

A desired labor‐to‐budget ratio will typically fall in the 75% ‐ 85% range indicating a balance between budgeted employee costs and budgeted operational costs. When that is higher, budgeted operational costs may not be sufficient to effectively sustain employees. The second ration, general and administrative ratio, will fall between 12% and 15% indicating the ability of management to devote time to planning and program management. Being too lean in this metric many indicate insufficient management, while dedicating more than 15% of the operational budget to this metric may indicate too many layer of management.




The data in the tables below were comprised from county level accounting data for all accounts payable, accounts receivable and purchasing transactions. For comparison purposes this data represents the normalized performance metrics categorized as Top Performer, Median and Bottom Quartile, as described above. This preliminary benchmark analysis will be followed up with a post implementation analysis to compare actual implementation results to the targets set during the analysis for the Business Case. And there will be an enterprise wide assessment of all common benchmarks after all activity based costing work has been completed.

Chart J – Benchmark Analysis (FASD Accounting / Purchasing)

There may be some geographic differences based on local costs, however these benchmarks can simply be compared with other benchmarks or other work process information from facilitated sessions that would not influenced by these factors. For example, a labor cost per FTE benchmark could possibly be influenced by prevailing local employee costs while a comparison with benchmarks would most often validate that status. There will be other reports that present combined data for common metrics and processes across the county based on all resources used to support these work processes. There are business support positions in Risk Management beyond the primary accounting staff that these benchmarks were derived from, although they are minimal. Given that situation, there are Risk Management resources that perform these functions and should be considered an overlap:

• Accounts Payable 0.35 FTE • Accounts Receivable 0.17 FTE • Purchasing 0.60 FTE • Payroll 0.08 FTE • General Accounting 0.18 FTE • Fixed Assets & Property Accounting 0.08 FTE • Agency Facilities Management 0.01 FTE

The total overlap in these business support functions is 1.46 FTE (summary of all seven categories). However, some of these business support processes are specific to Risk Management operations (i.e., accounts receivable, facilities management) and as such the core

Benchmarks Status Broward County (FASD Only)

Top Performer Median Bottom Quartile

Cost per invoice processed $ 10.43 $ 3.02 $ 5.65 $ 10.23 Invoices Processed Per A/P Position (FTE) 5,348 17,295 11,470 6,650 Accounts Receivable Cost per $1,000 of Revenue $ 20.81 $ 0.90 $ 2.40 $ 3.89 Purchase orders processed per FTE (Full‐Time Equivalent)

300 11,121 4,830 1,249

Human Resources Staff To Employee Ratio (%) 0.86% 0.3% 0.6% 0.8%




business support overlap is 1.21 FTE for the Accounts Payable, Purchasing, Payroll and General Accounting functions. Review of Risk Management business processes disclosed no additional business tasks performed beyond the enterprise business processes. Analysis of these FASD benchmarks in relation to the business support processes in Risk Management disclosed the following:

• When considering the total number of enterprise wide invoices, purchase orders, and revenues that were used in the benchmarks above, they reflect as either below median or the bottom quartile. So, there is certainly an opportunity to streamline county resources with better technology tools and transformed business processes.

• The overlap in business resources listed above is based on functional responses to the time allocation surveys and do not correspond to specific positions.

As we transition to aligning future process and ERP requirements with these expressed inefficiencies, the cost driver analysis results can be examined in conjunction with the benchmark analysis. The cost driver analysis identified a total maximum potential to remove as much as $205,564 of Risk Management costs, which correlates to ~1.58 FTE (see Section 4, Process Cost Drivers). However, this maximum potential is based on all cost driver factors being successfully addressed and any ERP implementation that includes a related business process transformation can only mitigate some of these factors. Therefore, this total potential needs to be further examined by type and function. The cost driver data came from facilitated sessions where Broward County personnel focused on the perceived inefficiencies that impacted the Risk Management work processes (see Section 4, Process Cost Drivers). As illustrated in these cost driver graphs, the primary areas of perceived inefficiency were as follows:

• Purchasing • Payroll

These functions were impacted by some common cost drivers that included technology and manual intensity, however they were also impacted by a lesser degree by resources /FTE (refer to cost driver definitions above). Neither of these analyses, either the cost driver or the benchmark analysis, provides a scientific measurement of savings that can be provided through an ERP implementation. However, they can provide target ranges that be compared with other data and an experienced assessment of ERP functionality as it relates to these specific business processes. This methodology has proved itself to be reliable in previous public sector engagements, and can certainly set return on investment (ROI) expectations. However, again these reviews will just provide a good target when similar processes can be compared. This preliminary target data will be followed up with a post implementation analysis to confirm these target ranges.




These analyses are further validated by Risk Management work process limitations identified during facilitated sessions. A summary of the more significant process limitations include:

• The county’s Risk Management division claims processing component is the Division’s largest function and as its name implies, processes claims filed for Workers’ Compensation payment. The claims processing function of this process contains a myriad of state and federal laws by which the county must abide in order to maintain its compliance. The claims processing component of a claim is currently supported by the STARS system, which supports claims management. The current system has the benefits of significant automation, but could productivity could be increased with a system that automates the remaining portions of the manual processes.

• An additional barrier to increased efficiency in Risk Management is the decentralization of the background and physicals task for new hires. The limited automation and the excess of manual efforts required in the new hire background and physical checks increases the cycle time of a new hire process. However, Risk Management responsibilities are secondary in the standard business process, which as a result add to the process inefficiencies.

• There are numerous application systems used to support Risk Management activities and management reporting. None of which provide the integration necessary to support work process efficiency. As a result, there are numerous electronic and manual interfaces required to move necessary data between these systems and also to extract data necessary for accurate and timely reporting.

• Shadow application systems (i.e., Microsoft Excel, Microsoft Access, and Microsoft Project) are used for some management tracking and reporting. Although these tools work well as an intermediate solution, they are not intended for use in complex reporting as required by the Risk Management organization. Using these tools for complex reporting actually contributes to and creates manual work, because most often than not, these applications contain data that must be either uploaded or retyped into a central system of record. The most challenging barrier created for upper management is the ability to access and report real‐time accurate data.

These work process limitations create manual work and require duplicate data entry. In addition, the inability to effectively access source data for management reporting impacts the reliability of this information.

6. Aligning ERP Requirements to Inefficiencies Once the inefficiencies were documented, the current state process flows were redesigned to become the future state or desired process flows that will be enabled by an ERP solution. A key differentiator for EquaTerra is that we capture the variance between what is possible (100% of all ERP Requirements implemented/100% of all inefficiencies removed) and what is realistic from a change and training perspective.




The realism is related to combination of current systems and employee skill sets (employee ability to change) and employee perceptions and politics related to change (employee willingness to change). The measure of employee ability to change and employee willingness to change formulate the view of employee adoption. If the employees don’t adopt the new system, then more resources and money will be needed to operate the system and inherently, savings will be lost and the investment may be perceived as a poor one. Once the ERP Requirements are selected that best fit what employees will adopt, then the plan to implement the solution is formulated, which is called a deployment strategy. The Deployment Strategy provides a means by which to implement the change without requiring all change be adopted at once. These two steps are depicted in the picture below:

Risk Management has provided requirements based on the current technology utilized by the division. After careful review and research, it has been determined that an ERP solution does not provide the minimum functionality as a central system of record to perform these functions with maximum efficiency. EquaTerra has retained the functional requirements provided the Risk Management team to further assess in a more robust analysis the need for an upgraded solution if necessary. Based on these recommendations there are three implementation and related savings scenarios presented below, depicting the range of costs and savings related to each scenario.




7. Projected Implementation and Related Savings Scenarios There are five possible savings drivers for Broward County related to implementing a new ERP system and reengineering current business processes. The following graphic depicts these savings drivers in relation to a standard business process:

These savings drivers have been evaluated based on the feedback by each department to provide a means to define scenarios ranging from aggressive to conservative, in terms of savings targets. Each scenario consists of the following information:

• Systems‐ Current Systems Costs • Processes‐Current Process Costs (survey information and process statistics) • Outputs Improvements / Savings • Policy, Procedure and Controls Improvements / Savings • Target FTE and Savings Projections • Summary Scenario Comparisons

These savings drivers have been evaluated based on the feedback by each department to provide a means to define scenarios ranging from aggressive to conservative, in terms of savings targets. Each scenario takes Current Process Costs, Current Systems Costs, Cost Driver Feedback, Benchmark Comparisons, and the ERP Requirements into account to determine the savings that can result. The savings are based on improvements in automation, throughput and a reduction in the costs associated to manually intensive processes and systems that will be retired upon implementation of the ERP system. Each scenario is described below, providing a




range of savings from which to determine the exact savings targets for Broward County. The Aggressive Scenario combines Cost Driver Feedback, Top Performer Benchmark Comparison and ERP Requirements in comparison with the current costs of business processes and to costs to subsequently produce outputs associated to business processes. The Aggressive Scenario maximizes the potential savings associated with implementing the ERP system. The savings are based on the five savings drivers and collected based on the deployment plan. The EquaTerra Scenario uses the same scenario approach; however there may be some differences with the Aggressive Scenario based on the specific areas and functions reviewed as part of these analyses. The Conservative Scenario (if presented) identifies any differences with the Aggressive and/or EquaTerra Scenarios based on the expectation that these recommendations can be attained. Systems For the purposes of these scenario presentations, all application systems used by Risk Management are listed. However if this system is owned (or primary application) by another agency, any proposed retirements and cost savings will be reflected in those reports. Application costs in the scenario tables reflect operating expense only (i.e., annual maintenance costs, upgrade costs, license fees) and not any personnel resources (i.e., dedicated county technology support). They are presented for this agency regardless of where the operating expenses are actually paid (agency or ETS).

Aggressive Scenario

As there are no systems recommended for retirement, there are no other scenarios presented.

Application Systems FY2009 Cost Retire System Proposed Retirement TimingAMS Advantage / Financial System $0 N/A >> Accounting <<AMS infoAdvantage Report Writer $0 N/A >> Accounting <<Cyborg $0 N/A >> Human Resources <<Cognos (Cyborg Reporting Tool) $0 N/A >> Human Resources <<STARS & STARS Web $140,000 No N/AShield $0 Yes Phase 2

Total Potential Application Savings: $140,000 ** Application costs could not be determined, Shield is internally developed application

Total Scenario Savings For Risk: $0




Processes For the purposes of these scenario presentations, the following process definitions were used:

• Report writers and printing applications are not counted as a system. These costs would however be captured upon retirement.

• Any process that requires human intervention outside of the system to complete a process is considered manual. For example, if there is a portal that is created to support on‐line entry, but does not support workflow and on‐line approval of the transaction, this task or process is considered manual. Another example of a manual task or process would be an in‐house developed interface that automates a portion of the process; however most of the process remains manually drive outside the system. Automation is at its best when the process is system driven from start to finish, and that is the automation highlighted in this potential ERP implementation as the future state.

The detailed processes for Risk Management along with the manual references are reflected in Risk Management “as is” and “to be” process flows. Total Statistics For Application Systems & Work Process Tasks

# of Business Tasks

% Tasks CurrentlyManual

% Tasks FutureManual

# of Current Systems

# of Future Systems

27* 77% 56% 2 1

Impact of ERP Automation (%): 44% System Impact (%): 100%

* Does not include STARS process tasks Although total statistics are provided, the timing of these targeted automation and system retirement savings would depend on the ERP implementation phase. As an example, the primary financial application could be retired after completion of the first phase since core financial functionality must be included in this phase. If human resource and payroll functionality is not implemented until the second phase, then those application systems could not be retired until after that phase. Outputs Improvements / Savings For the purposes of these scenario presentations, targeted improvements in work process outputs have been identified in Risk Management “as is” and “to be” process flows.

Impacted Output Type of Impact Recommended Result Impact OccursNone Identified




Policy, Procedure and Controls Improvements / Savings The implementation of an ERP solution most often address business process improvements that may have direct impacts on current policies, procedures, and controls in an organization. These controls which are often established and executed to ensure certain audit capabilities where a system lacks the automation and internal system controls. An ERP solution could alleviate the need for these types of manual controls by having the system controls built‐in, resulting in changes to organization policies and procedures.

Aggressive Scenario Impacted Policy, Procedure, Control Type of Impact Recommended Result Impact OccursOutsourcing of System Support for Claims Management System **

Cost Savings Additional Research Needed After Any

Outsourcing Outsourcing of Safety and Occupational Health **

Cost Savings Additional Research Needed After Any

Outsourcing **Recommendations based on a more robust analysis of systems and business functions

EquaTerra Scenario EquaTerra makes the recommendation for outsourcing only if there is a more robust analysis and assessment of the current system and business processes. This is done by analyzing what Risk Management is currently supporting and how the technology is being supported compared to what other organizations have experienced. At which point, if this research gives a convincing argument that outsourcing may be beneficial and yield savings, then usually a feasibility study is undertaken. A feasibility study is a relatively high‐level exercise, which enables the organization to understand the options, and the likely "order of magnitude" costs, benefits and business case. It will usually focus more on the strategic drivers and options, rather than on the detail of the shared services solution. Assuming that the feasibility study is positive, and the organization wants to proceed, then a more detailed strategy will be developed. Target FTE Savings For the purposes of these scenario presentations, targeted FTE savings from cost driver and benchmark analyses based on a review as to whether these target savings could be addressed by ERP functionality were used. It is very important to recognize that any FTE savings can only be secured after ERP functionality and business process modifications have been made. So for business processes modified during the first phases, FTE reductions could be made in the second phase after confirmation that these changes effected staffing as targeted.




Aggressive Scenario

# of Work Process FTE

# of System Support FTE

Phase 1 Reductions

Phase 2 Reductions

Phase 3 Reductions

Phase 4 Reductions

Total Reductions

40 3 0/0 1/0 0 0 1#/# indicates first the number of business process FTE, then System Support FTE (i.e., X/Y indicates X number of business support positions, while Y indicates the number of system support (technology) positions The Aggressive Scenario is based on the number of core business support overlap FTE that support common business county processes, which would be addressed specifically by an ERP implementation, as identified in Section 5, Benchmark Analysis, above. EquaTerra Scenario

# of Work Process FTE

# of System Support FTE

Phase 1 Reductions

Phase 2 Reductions

Phase 3 Reductions

Phase 4 Reductions

Total Reductions

40 3 0/0 0/0 0 0 0#/# indicates first the number of business process FTE, then System Support FTE (i.e., X/Y indicates X number of business support positions, while Y indicates the number of system support (technology) positions There has been singular business processes identified that can be used throughout the County, and has established the resources to support these processes based on current transaction volumes. Given that there are overlapping resources in agencies external to FASD where these processes are completed, there should be FTE reductions that will be needed throughout the County to support these future processes. The exact number of resources and where those future resources might reside will not be determined until the system can be designed and process, internal control and policy/procedure issues addressed. EquaTerra believes that the core business process overlap in Risk Management could be identified in this manner, however these resources are not significant enough to identify as target FTE overlap. Savings Projections

Aggressive Scenario

Department Budget

Savings Phase

Systems Retirement

Process Improvement

Output Improvement

Policy, Procedure, Controls

FTE Savings

$5,484,726 Phase 1 $0 $0 $0 $0 $0$5,484,726 Phase 2 $0 $0 $0 $0 $0$5,484,726 Phase 3 $0 $0 $0 $0 $0$5,484,726 Phase 4 $0 $0 $0 $0 $0 Total Savings by Area: $0 $0 $0 $0 $0




As there are no targeted costs identified, there are no other scenarios presented.

Scenario Comparisons

AREA AGGRESSIVE EQUATERRA Systems Retirement $0 $0 Process Improvement $0 $0 Output Improvement $0 $0 Policy, Procedure, Controls $0 $0 FTE Savings $0 $0

TOTALS $0 $0

1. Overview and Introduction - Broward County, Florida · 2012-06-04 · Claims Defense and...

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Transcript of 1. Overview and Introduction - Broward County, Florida · 2012-06-04 · Claims Defense and...