Coordinated Autonomy: Centralized ERP in the Decentralized

Coordinated Autonomy: Centralized ERP in the Decentralized Institution EDUCAUSE Live! Webinar August 21, 2012 1:00 – 2:00 pm Coordinated Autonomy: Centralized ERP in the Decentralized Institution by Jason Shaffner & Geoffrey Corb is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Speakers Jason Shaffner @jasonshaffner jason [email protected] – Director of Financial Systems Solutions, Harvard University – Responsible for applications strategy, business analysis, and project management for Harvard’s centrally managed financial applications – 12 years leading transformative information technology programs in higher education, including ERP (Financials, HRMS, Procurement), Planning and Budgeting, and Student Information Systems – Harvard graduate Geof Corb @geofdotedu [email protected] – Senior Director, Enterprise Applications, Johns Hopkins University and Johns Hopkins Health System – Responsible for enterprise business systems, business intelligence, student information systems, academic & classroom technologies – 8 years leading transformative information technology programs in higher education , including ERP (Financials, HRMS, Procurement), Student Information Systems, Business Intelligence, and Academic Technologies – Hopkins graduate 2

Objectives Review Harvard and Johns Hopkins context – Organization Structure – Enterprise Systems Landscape and History – Key Challenges and Constraints Analyze recent enterprise projects at both institutions, including obstacles and solutions Discuss lessons learned at Harvard and Johns Hopkins NOTE: For the purposes of this presentation, “ERP” refers to all enterprise-scale applications 3

Coordinated Autonomy Attributed to UCLA’s Jim Davis in EDUCAUSE Review (Nov/Dec 2001): The term coordinated autonomy indicates, first, that IT should be deployed to actively preserve and support individual and institutional autonomy. We extend this definition to other intrainstitutional entities besides individuals: Respecting the unique business requirements of each organization, but encouraging alignment around shared principles and best practices. 4

ABOUT HARVARD 5

Harvard University at a Glance Research and Teaching Finances 12 primary academic units 21,000 degree candidates 2,100 faculty members and 10,000 academic appointments in affiliated teaching hospitals More than 70 libraries and 17 million volumes Employment Physical Plant FY11 Operating revenue: 3.8 billion FY11 Operating expenses: 3.9 billion 6/30/11 Endowment value: 32.0 billion FY11 Capital expenditures: 314 million More than 600 buildings 25.8 million gross square feet Over 5,000 acres Among the largest employers in Massachusetts with approximately 18,000 employees (15,000 full time equivalents) Harvard in Context Not-for-profit Decentralized organizational structure (“ETOB”) Intense public and community scrutiny Increasingly global AAA/Aaa credit ratings 6

Harvard Organization Chart - Academic Key Takeaway: By and large, each box on this chart functions as a semi-autonomous entity, responsible for its revenue and expenses, paying “taxes” to support central administration shared services and common activities (including ERP). Most schools have a local CIO and IT organization responsible for pedagogical, research, student, and faculty needs. 7

Core Business Model Variations Across Harvard Schools ( in millions) 3,099 23 30 1,017 38 6% 24% 9% 21% 18% 20% 171 88 11% 9% 144 37 22% 16% 2% 5% 9% 18% 60% 51% 27% 34% 39% 22% 76% 49% 32% 7% 9% 84% 10% 333 12% 6% 27% 496 26% 32% 3% 3% 91 5% 19% 3% 630 5% 73% 7% 15% 38% 32% 36% 19% 15% 5% 2% 51% 14% 35% 26% 3% 3% 22% 20% 20% 19% 12% All Schools RIAS HDS FAS Endowment Distribution GSD HLS Net Tuition SEAS Current Use Gifts HKS HMS HSDM Sponsored Revenue Note: Proportions may slightly differ from those reported in the University Financial Report (e.g., Financial Report does not adjust for tuition discount transfers, object 6432; SEAS’ proportions in the Financial Report exclude tuition discount). Percentages may not always add to 100% due to rounding. *Other Income includes publications, rental and parking fees, royalties, sales and services income. 8 GSE HBS Other Income * SPH

Harvard Central Administration ERP Apps Dev / DBA ERP Product Management Key Takeaway: Central Administration provides a host of administrative and shared services, including Enterprise IT and Administrative Systems. However, “CADM” is a large, complex, and decentralized organization (and larger than many of the schools!) 9

ERP Architecture at Harvard University Oracle E-Business Suite 11i Grants Management Application Suite (GMAS) – GL, AP, AR, CM, iProcurement – Implemented in 1999 (10.7); upgrade to 11i in 2003 – R12 Go-live: November 2012 PeopleSoft Enterprise 9.1 – HR, Benefits, Pension, Payroll, Time & Labor, Absence Mgmt Oracle Hyperion Planning 11.1.2 – Used primarily for annual budget process – Now expanding to focus on interim financial reporting, multiyear planning, tuition and enrollment planning, etc. 10 – Custom application suite; implemented 2004 – Includes comprehensive preand post-award functionality, integrated with other ERPs Harvard Data Warehouse – Custom data warehouse and web interface; Oracle Reports and Interactive Reporting for information delivery – Planning to implement Oracle Business Intelligence (OBIEE) in several phases over the next two years

Challenges of Harvard Enterprise Applications Environment Differentiated Requirements Schools and service units have vastly different business models, which are not easily satisfied by commercial off-the-shelf software packages or within a single install Rocky Implementation History ERP projects in 1990s were difficult and often divisive; several organizations built shadow systems to compensate for perceived or real gaps Local Autonomy and Resources Every Tub on its Own Bottom (ETOB) establishes schools and units as semi-autonomous entities Availability of local funds and resources can be a disincentive to accepting sub-optimal central ERP Consensus Decision-Making Limited ability for central administration to mandate conformance even when majority of schools agree; critical to obtain buy-in at all levels of the institution 11

HARVARD CASE STUDIES 12

Harvard University Case Studies - Background Harvard University Budgeting System (HUBS) Harvard Crimson Online Marketplace (HCOM) (Oracle Hyperion Planning) (Oracle iProcurement & SciQuest) Objective: Implement common University-wide system to replace Excel as primary method of budget development and analysis Objective: Achieve internal control, operational efficiency, and cost savings goals through online requisition and PO system. Key Challenges: Key Challenges: Critical Success Factors Critical Success Factors Multiple business process owners Resistance to pre-commitment controls 20 different approaches to budgeting Uneven benefits across business units Varying levels of end user sophistication Confusion about project objectives Multiple Deployment “Waves” Center / School Engagement Model Transparency of Decisions/Priorities Focus on Points of Agreement 13 Pilot Followed by Staged Deployment Center / School Engagement Model Robust governance model Build buy-in across all org levels

Harvard University Case Study – Budgeting System Harvard University Budgeting System (HUBS) (Oracle Hyperion Planning) Timeline: Project Start: April 2008 Wave 0 – Prototype Demo: July 2008 Wave 1 Go-Live (4 Schools): Oct 2008 Wave 2 Go-Live (Reporting for All Schools): June 2009 Wave 3 Go-Live (All Others): Oct 2009 Project Metrics: Delivered on-time and under-budget 18 Planning Applications 50 budget analysis reports 1,000 users; 600 active More Info (Membership Required) HEUG Alliance 2008, 2009, 2010, 2011 OAUG Collaborate 2011 14 We defined a pilot group that represented a crosssection of the University’s potential requirements – large school, small school, professional school. We also engaged the entire stakeholder community in monthly presentations from day one. Through this we were able to develop 90% “baseline” solution and limit customizations.

Harvard University Case Study - iProcurement Harvard Crimson Online Marketplace (HCOM) (Oracle iProcurement & SciQuest) Timeline: Pilot: Fall 2006 - Summer 2008 Extended Pilot (aka “Fiscal Crisis”): Aug 2008 - May 2010 Implementation Re-Launch: May 2010 First Wave Live: August 2010 E-Invoicing Go-Live: October 2010 Final Wave Live: December 2011 Project Metrics: Completed on-time and on-budget On-boarded 5,000 users in 12 mos 170 Hosted Catalogs; 20 Punchout From 1% to 25% invoices received electronically from suppliers More Info Oracle Open World 2011 15 Pilot group focused on sciences, but extended pilot allowed us to slowly develop full feature set while implementation on hold due to fiscal crisis. Implementation consisted of many discrete threemonth engagements, with departments going live on a rolling basis. Departments scheduled into “cohorts” based on similar business needs and resource availability.

16 Feb-12 Dec-11 Oct-11 Aug-11 Jun-11 Apr-11 Feb-11 Dec-10 Oct-10 Aug-10 Jun-10 Gradual Adoption / 2008 Fiscal Crisis Apr-10 Feb-10 Dec-09 Oct-09 Aug-09 Jun-09 Apr-09 Feb-09 Dec-08 4000 Oct-08 Aug-08 Jun-08 Apr-08 Feb-08 Dec-07 Oct-07 Aug-07 3000 Jun-07 The Harvard iProcurement “Hockey Stick” HCOM User Population Growth 7000 6000 5000 Deployment Take 2 Pilot Go-Live 2000 1000 0

Tools and Techniques Rather than dive into the details of these implementation projects, I will focus on just a few techniques we have used to build a successful implementation practice. – Local Implementation Managers – Business Relationship Management – Uniform Governance – Transparency and Engagement 17

The “Local Implementation Manager” Starting with the implementation of Oracle Financials in 1999, Harvard adopted a concept known as the “Local Implementation Manager” or LIM The LIM’s primary responsibilities included: – Provide local business and process expertise – Serve as the primary point of contact for their unit’s end users – Manage the Tub’s implementation project plan in conjunction with support from the central project team – Manage communications to/from the project team and execute local unit communications strategy – Coordinate the design of Tub-specific configuration, training, etc. The LIM model, for all its challenges (see next page), has proven the most effective mechanism for managing local complexities. 18

Failures of the LIM Model Central Project Team School X School Y School Z Service Unit A Allied Institution Unclear communication pathways Coordination by accident “Us vs. Them” Universal Frustration 19

Business Relationship Management Created a new role called “Design & Implementation Manager” (DIM) to act as the face of the project and serve as advocates for each of their assigned schools / units. DIM responsibilities included: – Serve as the primary point of contact for a portfolio of department(s) – Define the department implementation project plans and coordinate work efforts with the corresponding LIMs – Work with LIMs to develop school-specific procedures, configuration spreadsheets, communications, etc. – Coordinate training activities in support of end users – Capture requests for enhancements and document requirements as needed The “DIM” portfolio management model proved highly successful in both the budgeting and e-procurement projects. 20

Reinventing the LIM Model with “BRM” Portfolio Managers School X School Y School Z Service Unit A Allied Institution More 1:1 attention to local needs Deeper knowledge of school requirements Enhanced customer service Better performance against estimates 21

Governance Challenges “They wondered about what went on behind closed doors at that gathering. ‘They imagined we were dressing up in robes and chanting ’” Herminia Ibarra and Morten T. Hansen, “Are You a Collaborative Leader”, Harvard Business Review, July 2011 Some organizations felt excluded from the decisionmaking process, not only for strategic elements but for tactical issues such as prioritizing enhancements Due to very large number of stakeholders, universal representation is untenable, yet under-representation puts project success in grave danger Critical to ensure projects driven by broad institutional business needs rather than Central Admin or IT objectives as some had perceived in previous projects 22

Success Factor: Uniform Project Governance Model Priorities Executive Committee Steering Committee Requirements Solutions Local Implementation Manager (LIM) Working Group End Users Subject Matter Experts Peers Opportunities Guiding Principle: If you agree with the process, you cannot* challenge the outcome! *At least in theory 23

Success Factor: Engagement at All Levels Central Project Team Multiple target audiences School X – Grassroots – If the project has a real, positive impact on end-users, find ways to get them excited; peer relationships at this level a huge success factor – Executives – Generating excitement at the bottom is not an alternative to engaging senior leaders; you need support from both to succeed – Middle Management – Often forgotten, the critical membrane between strategy and execution Know the needs of your audience – Different messages resonate with each audience; e.g., tougher to sell controls than efficiency to end users – Consider tone, media, name on the “from” line – Know whether to count on messages passing up and down the hierarchy or if direct communication is required 24 Central Project Team School Y

ABOUT JOHNS HOPKINS 25

Johns Hopkins University Mr. Johns (his maternal great-grandmother’s last name) Hopkins endowed both a university and a hospital in 1873 The University was founded on the European model of research and scholarship Many undergraduate students, as well as graduate students, work with faculty in research Today there are seven campuses in Baltimore; three more in Maryland, one in the District of Columbia and one each in Bologna, Italy and Nanjing, China 26

Johns Hopkins University – By the Numbers 11 academic divisions 26,000 employees Together with the Johns Hopkins Health System, a separate legal entity, Johns Hopkins is the largest private employer in Maryland (50,000 ) 21,000 students, split nearly 1/3 UGrad, 1/3 FT Grad, 1/3 PT Grad 2,600 full-time professorial faculty 236 buildings totaling over 16M sq ft 2.6B endowment (ranked 25th in 2011) Ranks first among U.S. universities in receipt of federal research and development funds 27

Culture and Character of Johns Hopkins University Decentralized operations in eleven academic divisions Every Tub on its Own Bottom Revenues captured at the lower levels of the organization; funds coming to the President are less than ½ of 1% of total University revenues The budgetary allocation function does not reside with the President, the Provost, or Senior Vice President for Finance & Administration Financial management rests not only on central finance and human resources but also on divisional deans and directors and their financial officers A 20-year model of a rolling five-year financial plan provides the basis for monitoring and control Results High level of entrepreneurship and autonomy Attract and retain people who like personal challenges Able to try new ventures 28

JHU Budgeted Revenues by Division (FY12), M University Total 4.4 Billion Public Health; 467.8; 0 ACC; 230.39; 0 Arts & Sciences; 301.16; 0 SON; 39.25; Engineering; 0 172.75; 0 APL; 1114.93; 0 Other; 72.28; 0 Medicine/ Clinical; 1822.83; 0 29 Peabody; 28.99; 0 SAIS; 51.96; 0 Education; 30.52; 0 Business; 38.31; 0

Johns Hopkins Health System 3 academic hospitals Johns Hopkins Hospital (Baltimore) Johns Hopkins Bayview Medical Center (Baltimore) All Children’s Hospital (St. Petersburg, FL) 3 community hospitals Howard County General Hospital (Howard County, MD) Sibley Memorial Hospital (Northwest Washington D.C.) Suburban Hospital (Bethesda, MD) Johns Hopkins HealthCare managed care plans Johns Hopkins Community Physicians physician practices Johns Hopkins Home Care Group full-service home care provider 30

Johns Hopkins Medicine Non-legal entity comprised of The Johns Hopkins Health System and The Johns Hopkins University School of Medicine Together, Johns Hopkins is a 9.1B enterprise. 31

ERP Architecture at Johns Hopkins The last decade was one of near consolidation Student Information System Matrix Student Suite (Ellucian?) Admissions, Financial Aid, Student Billing, Records & Registration Phased go-lives starting in March 2003, running through July 2007 Subsequent implementations for other programs Now implementing a student data warehouse, loosely based on iStrategy (now Blackboard Analytics) product Enterprise Resource Planning SAP Financials, Human Resources, Supply Chain SAP Business Warehouse (BW) as data warehouse and reporting solution “Big bang” go-live for all of JHU and JHHS on January 1, 2007 32

Near Consolidation - Examples Matrix Student Suite SAP Financial Aid: all schools! Billing: all, except students and patients Student Billing: all schools, except for third-party sponsored billing All of the Johns Hopkins University, except the Applied Physics Lab (APL) Records & Registration: all schools, except the School of Medicine All of the Johns Hopkins Health System, except Howard County General Hospital and hospitals acquired since SAP implementation Admissions: all schools, except the School of Medicine and others slowly backed out over time 33

Johns Hopkins Challenges of Harvard Enterprise Applications Environment Differentiated Requirements Schools and service units have vastly different business models, which are not easily satisfied by commercial off-theshelf software packages or within a single install Rocky Implementation History ERP projects in 1990s were difficult and often divisive; several organizations built shadow systems to compensate for perceived or real gaps Local Autonomy and Resources Every Tub on its Own Bottom (ETOB) establishes schools and units as semi-autonomous entities Availability of local funds and resources can be a disincentive to accepting sub-optimal central ERP Consensus DecisionMaking Limited ability for central administration to mandate conformance even when majority of schools agree; critical to obtain buy-in at all levels of the institution 34

JOHNS HOPKINS CASE STUDIES 35

Origins Top-down mandate with top-down directives SAP Grassroots effort, with demand originating in the divisions and ultimately supported by central and divisional administration ISIS 36

At Both Ends of the Spectrum significant divisional latitude very little divisional latitude 37

Johns Hopkins Case Study – ISIS ISIS Integrated Student Information System The first university-wide, fully-integrated student information system Matrix was determined to be the ideal product for JHU Benefit of a single, centralized database of persons and the ability to dramatically differentiate configuration based on “zones” and “data domains” allowing for relative freedom in divisions Matrix was in development at the time we purchased it JHU was a development partner, along with U. Arizona and U. Chicago SunGard discontinued the Matrix product in 2006; support ends in 2014 JHU is well-positioned to support and maintain the system and has effectively been doing so since 2006 but we really don’t want to support financial aid on our own 38

ISIS: Nearly 30 Implementations 39

ISIS Lessons Learned It’s never too late to rethinking governance if it’s not working Executive Committee of enrollment management leaders merged with Finance Committee of divisional business officers more efficient decision making “Just enough” data governance Ground rules are an imperative Built an implementation and support model that mirrors our decentralized structure Divisions employ their own technical analysts who performed division-specific functions (e.g. configuration, reporting) and provided first line of support to their users Central IT manages the overall system and related technical processes and provided project management for the implementation Transparency and no surprises Extensive use of a wiki for all documentation and collaboration between all stakeholders 40

The Future of ISIS at Johns Hopkins ISIS is slowly becoming disintegrated Admissions offices have been working outside the system for years (e.g. ApplyYourself) and loading in applicant data Moving to College Board’s PowerFAIDS for financial aid this summer Migration to an Integrated Student Information Platform A collection of tightly integrated systems, with ISIS as the hub The [multi-] million dollar question: Would we ever implement another fully-integrated SIS? 41

Johns Hopkins Case Study – SAP Why? Antiquated, expensive systems Business process redesign Greater integration of services between JHU and JHHS Support Johns Hopkins Medicine Anticipated benefits: Integrate the business processes of an organization into a single informational platform Reduce the duplication of information (and errors) characteristic of standalone un-integrated systems Optimize the approach to completing work (through business process redesign) to achieve significant gains in operating performance and service quality 42

SAP Implementation Scope 43

Framework for ERP Benefits at JHU A fundamental requirement of the ERP initiative is that, overall, “changes” implemented must enhance management reporting capabilities, compliance, productivity and/or service delivery. Reduced duplication Reduced transaction input time Reduced cycle times Increased flexibility Ease of decision making Ease of navigation Interactive Stakeholder satisfaction Service Controls enhanced by automating manual processes Compliance risks reduced by incorporating workflows/ approvals Compliance ERP Productivity 44 Inventory management Increased leverage with vendors/contract management Improved billing and collecting processes Decreased payroll processing and recruiting costs

If You Could Do It Over 45

SAP Lessons Learned Never underestimate change management and the need for business process change Change is always greater than expected especially when implementing a tightly integrated (i.e. complex) system like an ERP Transparency is tricky Damned if you do, damned if you don’t You only have one chance to make a first impression Seriously think, and then seriously rethink, the security strategy Top-down mandate is counter-culture for JHU (as expected) Balance between the “Top 20” and the 80% 46

Q&A 47

Discussion and Q & A Jason Shaffner Director of Financial Systems Solutions, Harvard University @jasonshaffner jason [email protected] Geof Corb Senior Director, Enterprise Applications, Johns Hopkins University and Johns Hopkins Health System @geofdotedu [email protected] 48