Travel

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• Travel Expense Best Practice Study
• FOA Presentation
• - - DRAFT - -
• November 28, 2007

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Agenda

• Project Background and Study Objectives
• Best Practice Approach and Findings
• Key Observations
• Key Performance Metrics
• Current State Processes
• Major Improvement Opportunities
• Quick Wins
• Best Practice Recommendations
• CSUs Potential Future State to Achieve Best
  Practice
• World-Class Profile
• PeopleSoft Best Practice Fit-Gap
• Future State Process Flows
• Next Steps

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• Project Background and Study Objectives

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The Reason for the Common Management Systems
Project The Target Administrative Environment
Endorsed in 1998

• Within 5-7 years after the beginning of the CMS
  Project the CSU will
• Manage its affairs using a common set of
  administrative best practices,
• Support those administrative best practices with
  a single integrated suite of administrative
  software (initially including human resources,
  financials, and student administration,)
• Operate that administrative software in a shared
  data center environment
• Endorsed by CSU Executive Council
• June 1998

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(No Transcript)
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The Way Forward To Maximize the Benefits

• Objective
• Enabling a Common Set of Administrative Best
  Practices
• Defining Best Practices
• Initial CABO discussions
• The CGEY benefits study
• The challenge of best practice identification,
  selection and adoption
• How To Begin
• Get Expert Assistance to Move From Our
  Practices to Best Practices
• Benchmarking and Research
• Need a Proven Methodology to Move From Concepts
  to Outcomes
• Building Best Practices
• First Steps - Travel Procedures
• Next Steps - Other Operational Areas

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Study Objectives

• Understand the best practices being employed at
  World Class Organizations to improve efficiency
  and effectiveness
• Identify, Analyze and Prioritize those practices
  that are suitable for consideration at CSU
• Finalize and Present CSU-specific Recommendations

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We see a growing trend in the public sector and
higher education institutions to improve both
efficiency and effectiveness

• Public Sector
• National Association of State Auditors
  Comptrollers and Treasurers
• In June 2005 The Hackett-Accenture team was
  formally selected via an RFP process to support
  the NASACT benchmarking program in Finance,
  HR/Payroll, Procurement, and IT
• States that have completed or undergoing
  benchmarks include
• Tennessee, Arizona, Colorado, Delaware,
  Massachusetts, Mississippi, Alaska, Georgia
• States that are next in line include
• New York, Florida, Oklahoma, Virginia, North
  Carolina, Utah
• Higher Education
• University of North Carolina
• University of Virginia
• University of Massachusetts
• University of Missouri
• California State University

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How do we quantify organization efficiency and
effectiveness?Hackett Benchmarking

• Hackett Benchmarking
• Structured Process and Taxonomy
• Benchmarks offered in all SGA functions
• Finance
• Human Resources
• Information Technology
• Procurement
• Sales Marketing
• Peer comparisons reflect size and complexity
  factors
• Pilot program about to begin for Higher Ed
  organizations
• An apples to apples comparison ensures successful
  benchmarking

Effectiveness
Efficiency

• Technology leverage
• Sourcing
• Decision-making
• Supplier Partnering

• Cost
• Cycle times
• Quality
• Productivity
• Standards

• Top-decile efficiency
• Top-decile value
• Leverages proven Best Practices Technology
• Improves speed, quality and cost

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Benchmarking produces insight to the Best
Practices and Processes utilized by World Class
Organizations!
Best Practices Defined

• Aligns with strategy
• Reduces costs
• Improves productivity
• Promotes timely execution
• Enables better decision making
• Leverages existing and exploits emerging
  technologies
• Ensures acceptable levels of control and risk
  management
• Optimizes skills/capabilities of the organization
• Promotes collaboration across the extended
  enterprise

Hacketts Best Practices are Certified when there
is a statistical correlation with world-class
performance metrics vs. Proven, Observed, or
Emerging Practices
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• Best Practice Approach and Findings

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CSU Hackett Best Practice Review Approach

• Trial Run Interviews were held to discuss
  current state and challenges
• San Marcos and Long Beach Campus
• A Trial Run Best Practice Workshop was
  conducted to gain CSU high level understanding
• Long Beach Campus and the Chancellors Office
• Current State Questionnaires were sent out to 23
  CSU campuses and the Chancellors Office
• Questionnaires comprised of process / policy /
  system / metric / organization type questions
• Responses were consolidated, analyzed and
  evaluated for potential business process / system
  improvement opportunities
• Consolidated results were populated in to a Best
  Practice Scorecard and made available to all
  participants at the Best Practice Workshops
• A Best Practice Workshop was held for all
  campuses on November 8th and 9th
• Attendees included 44 employees from 22 campuses
  and the CO. Representation also included
  System-wide HR (Policy) and CMS

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Best Practice Workshop Overview

• Hackett Process Leads and Process Subject Matter
  Experts
• Reviewed CSU Current State against Best Practices
• Evaluated Applicability, Efficiency and
  Effectiveness Factors
• Evaluated Work Effort and Implementation
  Considerations
• Identified Recommended Improvements

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TE Best Practice Review Overall Results
There is an opportunity to improve performance
in 22 Best Practice areas
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Below is the definition / legend that pertains to
the Best Practices Scorecard
A
C
D
B
Current State
A
ACHIEVABILITY (Can it be done?) High Very
Achievable. Existing infrastructure/support to
be leveraged. Rapid implementation. Medium Achiev
able. While not a cakewalk, implementing this
practice would be possible with time and
effort. Low Not achievable. Significant
political/organizational/financial obstacles
exist that would make implementing this practice
impractical.
B
EFFICIENCY (What is the Benefit
Opportunity?) High Considerable efficiency.
Implementing this practice will produce
considerable financial gain for the organization,
better than cost-neutral and producing
significant financial gain for the
organization. Medium Moderate efficiency.
Implementing this practice would be cost-neutral
to the organization, in that benefits derived
offset the cost of implementing this
practice. Low No efficiency. Implementing this
practice will produce little to no financial gain
for the organization.
C
EFFECTIVENESS (What is the value and service
improvement opportunity?) High Considerable.
Will produce significant gains. Medium Moderate
effectiveness. Implementing this practice would
be neutral-value and service improvement to the
organization, in that benefits derived offset
the cost of implementing this practice. Low No
effectiveness. Implementing this practice will
produce little to no value and service
improvement to the organization.
D
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Travel Expense Best Practice Scorecard FIT GAP
Assessment
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Travel Expense Best Practice Scorecard FIT GAP
Assessment (Continued)
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• Travel Expense Key Observations

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CSUs Travel Expense Reporting metrics vary
across campuses and indicate room for improvement
in both productivity and cost
1st Quartile Median 3rd / 4th
Quartile
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CSUs Travel Expense Reporting metrics vary
across campuses and indicate room for improvement
in both productivity and cost
1st Quartile Median 3rd / 4th
Quartile
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Current State Noteworthy Practices

• Unified preferred service agreements negotiated
  across campuses / departments with airlines,
  hotels, and car rental companies
• Travel and Expense processing performed in a
  central processing area
• Within each campus
• Integrated card termination process with HR
  employee termination process
• Minimal to no cash advances across some campuses
• Some campuses have tried to streamline their
  expense report processing by creating online
  forms however, no campus utilizes a true expense
  reporting system

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Current State Challenges Feedback from the
Field

• Travel Expense policies are too vague. They
  need to be more black and white
• Gray policies lead to open interpretation and
  require additional examination
• Chancellors office is called upon often to
  assist in interpreting policy
• Processing inconsistencies exist across campuses
• Purchase order processing (Encumbering Funds)
• Travel advance processing
• Pre-trip approval Travel Authorization
• Conference Registrations, Meetings, Expense
  Report Processing, P-Card
• Travel Service Provider booking
• Web based
• Telephone
• Do it on our own
• Campuses are requesting ACH as a quick win the
  payment process is too tedious
• Would like to automate expense reporting process
• Not sure if it is feasible due to resource
  constraints
• Chancellor Office resources require system
  configuration

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Major Improvement Opportunities

• Simplify and Automate
• Minimize receipt submission for items under 25
• Blanket policy
• Implement an online automated travel and expense
  reporting system
• Automated management approvals
• Credit Card pre-population in to expense report
• Payment to credit card directly for approved
  expenses
• ACH reimbursement to employees
• Receipt imaging
• Automated audits / reports distributed to gain
  awareness of spend
• Increase Efficiency
• Eliminate the creation of a Purchase Order to
  manage TE budgets
• Consider utilizing project management module in
  PeopleSoft to track funds / projects
• Utilize travel agency reporting to track travel
  compliance

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Major Improvement Opportunities

• Increase Effectiveness
• Policy and procedures for employees and students
• Develop clear, consistent Travel and Expense
  policies to ensure processing is efficient
• Include TE policies and procedures, operational
  policies for accounting and reporting, training
  documentation for end-users
• Institute regular review and update process
• Leverage enterprise-wide procedural documentation
  
• Implement detailed TE trend/spend management
  reporting
• Improve alignment of budget
• Develops insight on TE spend by department
• By project / by funds
• By employee
• May eliminate the need for pre-trip
  authorizations

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Quick Wins

• Develop and expedite ACH implementation across
  campuses
• Assess upgrade timing and individual current
  implementations
• Minimize management sign-off for expense reports
  under a certain threshold
• Implement small policy changes that may not
  require large change management effort / Meet
  and Confer requirements
• Encourage use of the credit card
• Incent employees with Rewards program
• Minimize cash advance
• Minimize / eliminate direct billings or use of
  BTA cards for airfare and hotels for conferences
  and meeting registrations charge to employee
  card instead
• Current per diem policy is not aligned with IRS
  regulations
• Revision is needed

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Quick Wins (Continued)

• Minimize auditing of 100 of expense reports
  adopt statistical sampling methods
• Develop reports to help identify audit needs
• Enforce accountability at the approval level
• Develop Procurement / Disbursement matrix to
  promote standardization of procurement of goods
  and services. When to use
• Procurement Card
• Travel Expense Report
• Invoice
• Direct Bills, etc.

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Travel Expense Best Practice Recommendations
Business case must be developed to ascertain and
quantify benefit
DURATION Short 3-6 months
Intermediate 6-12 months
Long 12 months INVESTMENT Limited
x1,000,000
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Travel Expense Best Practice Recommendations
(continued)
DURATION Short 3-6 months
Intermediate 6-12 months
Long 12 months INVESTMENT Limited
x1,000,000
Business case must be developed to ascertain and
quantify benefit
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• CSUs Potential Future State to Achieve Best
  Practice

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Profile Characteristics of World Class
Effectively Leverage Technology
Standardize Enterprise-wide Processes

• Standardize core business processes across
  enterprise
• Simplify business processes
• Eliminate low-value added work
• Minimize errors and rework
• Eliminate and automate transactions
• Establish process performance goals and monitor
  performance

• Deploy common data and infrastructure standards
• Establish common data repositories
• Integrate the application portfolio
• Extend functionality via self service, web
  portals, and other tools
• Utilize ERP as a foundation application footprint
  for the enterprise

Develop a Culture of Ongoing Excellence
Establish Scalable Processes / Technology

• Organize to facilitate leverage and competency
  development
• Shared Service Centers
• Competency Centers of Excellence
• Establish efficient end-to-end process
  performance
• Define process ownership - responsibilities
  accountabilities
• Establish service level targets and monitor
  performance

• Constantly pursue improvement and operational
  excellence
• Continuously measure and manage internal
  performance
• Leverage best practices
• Establish stretch goals and objectives
• Incent and reward individual and team based
  performance

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Best Practice Expense Reporting Process Flow
Example
Expenses are paid to credit card vendor
Expense reports approved electronically
Approved expense reports electronically
transmitted to Shared Services
Credit card transactions imported in to TE System
Employee creates and submits expense report in
system
Employee is reimbursed through payroll system for
out of pocket expenses
Employee
Employee faxes receipts to Shared Services and
attaches imaged receipts to expense report
Employee prints receipt report and attaches
original receipts
Original receipts are sent to local finance for
storage
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PeopleSoft Best Practice Fit-Gap Configuration
Currently, CSU does not utilize the PeopleSoft
module Current state analysis is not applicable
however, the configuration and business
decisions noted in this matrix will allow CSU to
understand next steps
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PeopleSoft Best Practice Fit-Gap Configuration
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PeopleSoft Best Practice Fit-Gap Configuration
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PeopleSoft Best Practice Fit-Gap Configuration
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PeopleSoft Best Practice Fit-Gap Configuration
CSU should look towards the standard PeopleSoft
features to achieve the major improvement
opportunities
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Travel and Expense Process Future State Process
Flows Level I
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Travel and Expense Process Future State Process
Flows Level II
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What next steps do we take to keep the momentum?

• Questions?