Procure-to-Pay Workflow Process Assessment Project

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Procure-to-Pay Workflow ProcessAssessment ProjectAction Plan ReportApril 4, 2016Prepared for:City of Fort Collins215 North Mason St., 2nd FloorFort Collins, CO 80522http://www.berrydunn.com

City of Fort CollinsProcure-to-Pay Workflow Process Assessment ProjectTable of ContentsSectionPageExecutive Summary. 11.0Introduction . 91.1.Project Background . 91.2.Report Format . 91.3.Work Performed . 101.4.Procure-to-Pay (P2P) Definition . 111.5.Common Terms and Abbreviations . 112.0Current Environment Needs Assessment Summary . 142.1.General Purchasing Overview . 142.2.Procure-to-Pay Technology and Trends . 182.3.Goals and Objectives from City Leadership. 192.4.Primary Challenges and Improvement Opportunities . 203.0Initiatives for Improvement, Analysis, and Prioritization . 243.1.Preliminary List of Initiatives for Improvement . 243.2.Request for Information Summary. 253.3.Prioritization Factors . 294.0Action Plan of Improvement Initiatives . 304.1.Prioritized List of Initiatives for Improvement . 304.2.Improvement Initiatives . 325.0Additional Implementation Considerations. 645.1.Change Management Considerations. 645.2.Subject Matter Ownership . 655.3.Implementation Resources. 665.4.Anticipated Benefits and Potential Savings . 665.5.Updating the Action Plan . 67Appendix A: Project Participants . 69Appendix B: Procure-to-Pay Application Inventory . 72Appendix C: Web-Survey Results . 73Appendix D: Request for Information (RFI) Package . 75Action Plan Report – Version 1Page iLast Updated: April 4, 2016

Table i: Version HistoryVersionDelivered DateDraft 1March 9, 2016Version 1April 4, 2016Action Plan Report – Version 1Update ReasonDraft 1 delivered to the City for reviewVersion 1, incorporating City feedback on Draft 1, delivered to the Cityfor reviewPage iiLast Updated: April 4, 2016

Executive SummaryThe City retained Berry Dunn McNeil & Parker (BerryDunn) to provide consulting services to evaluateits current Procure-to-Pay (P2P) environment, workflows, processes, and utilization of the JDEdwards system. The City is currently using the JD Edwards EnterpriseOne (JDE) software suite tosupport purchasing processes, including decentralized processes for purchases less than 5,000 andthe City Purchasing Department’s administration of purchases greater than 5,000. As manyapproved purchases are “one-offs” and procurement processes are inconsistent across departments,the City has recognized a need to review its P2P workflows with an emphasis on use of the J.D.Edwards system. The focus of this project is to identify recommendations for improvement, includingprocess changes, enhancements to the existing system, and the use of available third-party pointsolutions.Tasks involved with this project include overall project management and a current environmentassessment. These tasks include conducting on-site fact-finding activities, including meetings withCity staff, developing a current environment needs assessment, developing a future state planningmemo, conducting research and developing an action plan report, and preparing and delivering apresentation of the action plan report. This project concludes once the action plan report has beenpresented and finalized.In December 2015, BerryDunn facilitated a project kickoff meeting with the City Project Team anddepartment users. During the meeting, BerryDunn and the City Project Team members wereintroduced and a review of the approach and timeline for the project was provided. In addition, Citystaff had the opportunity to ask questions about the project and discuss the City’s goals andobjectives with the project sponsor.Following the project kickoff meeting, BerryDunn facilitated on-site fact-finding meetings withdepartment staff involved with P2P activities. The purpose of these meetings was to follow up oninformation previously provided, understand the current P2P business processes within eachdepartment, and identify challenges in the current environment. Immediately following the first on-sitework session trip, BerryDunn coordinated follow-up fact-finding activities in developing the CurrentEnvironment Needs Assessment Report.BerryDunn facilitated a work session with the City Project Team to confirm the findings in the CurrentEnvironment Needs Assessment Report and the detained Challenges and Areas for Improvement.Following this confirmation, the Report was updated and BerryDunn initiated the Future StatePlanning Phase.The Future State Planning Phase included developing a Memo that described the researchBerryDunn will complete with the vendor community to inform 26 Initiatives for Improvement thatwould address the current environment challenges and areas for improvement. Following acollaborative work session with the City Project Team to collect feedback on the Memo, BerryDunninitiated the research through a Request for Information (RFI) to the vendor community. RFIresponses were received and BerryDunn initiated the development of this Action Plan Report.Action Plan Report – Version 1Page 1Last Updated: April 4, 2016

There were many challenges related to the current environment at the City identified as a result of thefact-finding activities, many of which are documented in Section 2.0 of the Current EnvironmentNeeds Assessment Report. The following table contains the primary challenges and improvementopportunities identified and includes a column indicating whether the challenge is related to currentpolicy, technology, or processes adopted by the City.Table v.1: Primary Challenges and Improvement OpportunitiesTechnologyProcessPolicyPrimary Challenges and Improvement Opportunities1The City could implement vendor self-service functionality to include addresschanges and W9 receipt.XXX2The City could expand vendor record maintenance access to users outside ofFinance.XXX3It was reported that Accounts Payable occasionally holds payments to vendorsthat have not provided W9s, but do not take any action to notify the vendor ordepartments of the hold based on missing documentation.XX4JDE reportedly does not prevent duplicate vendor records from being created,leading to challenges maintaining the vendor database and searching forappropriate vendors. Explore duplicates—Tax ID is being enforced.X5It was reported that a new vendor is set up when a current vendor changes theirbusiness name.X6Inactivating vendors and precluding inactive vendors from displaying in searchesmay create efficiencies within departments.X7The City does not perform vendor performance tracking, which may lead torenewal of contracts with underperforming vendors and lost opportunity forvendor performance improvement.X8The City could adjust competitive purchasing thresholds to provide alternatepurchasing processes and gain efficiencies.9The City could utilize project, grant, and asset number on purchasing activity sothat related transactions roll-up to the project, grant, or asset.No.DescriptionXXXXXXXXX10The City could allow certain department users to assign accounts outside of theirdepartments for purchasing activity (e.g., IT and HR). Promote use of currentself-service role.XXX11Departments receive notifications when POs are issued to vendors, or invoicesare paid. This is leading to additional work and communications to ensure theactivities have occurred. BI Publisher is used to send POs to the departmentrepresentative.XX12There are variances in how supporting documentation is provided to AccountsAction Plan Report – Version 1Page 2XXLast Updated: April 4, 2016

ProcessPolicyTechnologyPrimary Challenges and Improvement Opportunities13The City could require requisitions to be entered earlier into the process so thatencumbrance functionality can be further leveraged.XX14The City could enforce standard processes for how P-Card purchases will bereconciled within departments and for which documentation must be retained.XX15The City could standardize the purchasing thresholds among P-Card users.16Implementing JDE improvements to manage recurring payments, if available,could decrease time spent by City staff manipulating these payments manually.X17Adjusting variance thresholds on unit prices of certain commodities may createefficiencies in some departments (e.g., Utilities with purchases of certain metals).X18Departments reported not being able to record credits on POs and instead entera negative PO amount.X19Evaluation and scoring processes for request for proposals is not alwaysconsistent or structured depending on the staff involved.20The City could explore potential integrations with the Rocky Mountain BidSystem to reduce the instances of manual data entry.X21The system requires in some instances that the “receiver” and “requisitioner” bethe same user which is causing challenges.XX22Staff reported a desire for increased flexibility in workflow approvals, includingbut not limited to designees during staff absences and approvals by commoditycode.XX23The lease purchase process relies on extensive manual processes.XX24The City reported that the process to manage and pay some of the utilitiesproviders is time intensive and relies on manual processes.XX25The City previously paid employee expense reimbursements via payroll, andrecently moved to payment on a separate check/payment with a separate directdeposit form.XXX26It was reported that projects may not be closed in JDE at the same time projectactivity stops. This allows staff to continue to enter purchases against theprojects.X27The City could implement a formalized receiving process where goods aremarked as received in JDE and packing slips are scanned and retained so that athree-way match process can be used.XXX28The City could standardize and communicate the approach to holding paymentsXXNo.DescriptionPayable and Purchasing for requisitions. Some departments attach within JDE,while others email buyers directly.Action Plan Report – Version 1Page 3XXXXXLast Updated: April 4, 2016

PolicyDescriptionProcessNo.TechnologyPrimary Challenges and Improvement Opportunitiesuntil payment timelines are met.29Adjusting the process whereby AP clerks are assigned vendor paymentresponsibilities by vendor name ranges may create efficiencies.30The City could standardize and communicate the approach to centralized ordecentralized invoice receiving.XXX31There are variances in how departments prefer invoices to be submitted to theCity. Some departments prefer them submitted directly to AP, others preferdirectly to their department.XXX32Invoices often sit on staff member’s desks or out in the field for a period of timebefore they are entered into Sire. This reduces the ability to track the progress ofinvoices, as well as paying vendors on time.XXX33The City could implement functionality to support decentralized invoice entry intoJDE.XX34Duplicate invoice checking in JDE will better manage City funding and reducemanual efforts within departments to track for these errors.X35The City could implement functionality to record notes on an invoice record inJDE as it is routed for approval.X36The City could require vendors to indicate the PO number on all invoicesreceived (where applicable) to simplify and improve the routing process.37The ability to print notes on checks may reduce questions to City staff,particularly in instances where the City is paying vendors on behalf of affiliatedagencies.X38Self-service access to see the status of a purchase by department staff will likelycreate efficiencies and reduce some manual tracking processes.X39The process of vouching for payments is time intensive and lacks automation.X40The portion of vendors paid via ACH could be increased.XX41Inter-department chargebacks are reportedly inefficient and rely heavily onjournal entries.XX42Departments do not currently scan supporting documentation into Sire.XXX43Staff reported a lack of dynamic search functionality available to them in Sire.X44The City reported a desire for increase contract management functionality in JDEto support the management of purchases from contracted suppliers and trackingof contract renewals and expiration dates.X45City staff reported that a mobile instance of JDE for entry and approval willXAction Plan Report – Version 1Page 4XXXXLast Updated: April 4, 2016

PolicyDescriptionProcessNo.TechnologyPrimary Challenges and Improvement Opportunitiesincrease efficiencies in processes and allow more information to be tracked inthe system as opposed to on paper.46The City could implement more robust interfaces to the work order and assetmanagement systems so that when inventory items are purchased thesesystems are updated.X47Some browser compatibility issues were reported when staff used Chromeinstead of Internet Explorer.XX48Some staff reported not having access to scanner hardware.XX49Some vendor contracts and the vendor file reportedly exist with payment termsmore expedited than Net 30.50Several employees involved with the P2P process are not aware of the City’spurchasing polices and may benefit from additional training.X51The P-Card training process is reportedly inadequate for training employees onthe appropriate use of purchasing cards.X52Communications regarding purchasing card reconciliation processes and bestpractices have reportedly not been adequate. Departments are using differingmethods to perform the same process.X53Some smaller departments, such as the Attorney’s Office, Municipal Court, andCity Clerk each have staff performing the same P2P processes. Thedepartments could benefit from utilizing one staff member amongst the threedepartments focused primarily on purchasing activities.X54It was reported that the current staffing levels in AP are not effective with thecurrent business processes and use of technology.55Multiple departments reported challenges with reporting, whether it be lack ofknowledge to generate reports, lack of security permissions to run reports, or notreaching out to Finance or IT for reporting assistance.56The City could communicate the process to request reporting assistance, as wellas general JDE assistance from Finance, Purchasing, and IT.XXXXXXXThe Future State Planning Memo presented the Preliminary List of Initiatives for Improvement,presented in the following table.Table 3.1: Preliminary Improvement InitiativesAction Plan Report – Version 1Page 5Last Updated: April 4, 2016

Preliminary Improvement InitiativesNoItem1Research and consider implementing available JDE features and functionality not currently in use.2Implement expanded use of JDE as an early step in all procurement methods.3Implement expanded workflow and notification features within JDE with each P2P process.4Implement expanded functionality related to tracking dynamic unit prices and acceptable variances,particularly for commodities.5Implement expanded project, grant, and asset tracking and management functionality in JDE withrespect to the P2P process.6Implement expanded functionality related to inter-department billings.7Implement expanded functionality related to managing the lease purchase process.8Implement expanded functionality related to managing payments to vendors with several amountsdue payable from several account numbers (i.e., utilities).9Implement expanded functionality available for use by City staff from mobile devices.10Implement expanded eGovernment functionality for use by vendors.11Implement an interface to the Rocky Mountain Bid system or other means to reduce manual dataentry during competitive solicitations.12Implement an expanded interface between JDE, Sire, and CityDocs to streamline current processesand increase the availability of real-time data accessible City-wide.13Implement expanded interfaces with the City’s work order and asset management systems.14Standardize, document, and communicate the process for new vendor registration, vendormaintenance, performance tracking, and inactivating vendors.15Standardize, document, and communicate the process for assigning account codes to purchases.16Standardize, document, and communicate the process for document retention related to allprocurement methods and put in place supporting technology and tools.17Standardize, document, and communicate the process for reconciling purchases made with PCards.18Standardize, document, and communicate the process and related policies for evaluating vendorproposals in response to RFPs.19Standardize, document, and communicate the process for invoice receiving City-wide.20Expand the practice of recording receiving information for goods received.21Standardize payment terms among all City vendors.22Adjust competitive purchasing thresholds in the Purchasing Policy.23Adjust the process for employee expense reimbursement.24Adjust the process whereby AP clerks are assigned vendor payment responsibilities by vendorname ranges and evaluation staffing levels for the role of AP clerk.Action Plan Report – Version 1Page 6Last Updated: April 4, 2016

Preliminary Improvement InitiativesNoItem25Consider opportunities to put in place a single shared financial liaison for smaller and similardepartments.26Administer City-wide training related to new P2P technologies, processes, policies, and availablesupport resources.In reviewing the preliminary improvement initiatives identified above, additional discussion was heldon Initiative number 11: Implement an interface to the Rocky Mountain Bid system or other means toreduce manual data entry during competitive solicitations. Further discussion with City staff revealedthat the amount of manual data entry that is made into the Rocky Mountain Bid system is not assubstantial as initially relayed, and that the work effort to transmit information to this bid clearinghouseis not so overly cumbersome as to necessitate exploring a potential interface between JDE and RockyMountain Bid systems. For this reason, this initiative has been removed from the prioritizationprocess.The following table contains the Prioritized Initiatives for Improvement. Additional information relatedto the prioritization indicators is in Section 4.1.IDBudget( LowHighTotalTable v.2: Prioritized Initiatives for ImprovementNProcesses for new vendor maintenance020401219SProcess for invoice receiving City-wide0601001218QProcess for reconciling purchases made withP-Cards02002403417ZCity-wide training related to P2P topics15,0001201403417AImplement functionality currently available inJDE236,380800120061816BUse of JDE as an early step in allprocurement methods0501001216OAssigning account codes to purchases040801215UStandardize payment terms among all Cityvendors02002402315JeGovernment functionality for use by vendors190,0001602001213WAdjust the process for employee expensereimbursement01601801213HVendor Performance Tracking01602002413IFunctionality available for use by City stafffrom mobile devices7,20040601212RProcess for evaluating vendor proposals inresponse to RFPs040801212Action Plan Report – Version 1Page 7Last Updated: April 4, 2016

InitiativeBudget( )Resources(hours)Timeline(months)TPractice of recording receiving information forgoods received01201401212XAP Clerk assignment and staffing levels01001201212YShared financial liaison for smaller and similardepartments0601002312PDocument retention standardization.01001402412LInterface between JDE, Sire, and CityDocs14,0001602001211VPurchasing thresholds in the PurchasingPolicy02002403411MInterfaces with work order/asset Totals**TotalIDSection 5.0 presents additional implementation considerations for the City related to implementingeach of the Initiatives. These considerations include change management, subject matter ownership,implementation resources, anticipated benefits and potential savings, and processes to update theAction Plan.City staff should be commended for their contributions to this P2P Study and the resulting Action Plan.Successfully implementing the initiatives will require the continued contributions of all involvedstakeholder groups.Action Plan Report – Version 1Page 8Last Updated: April 4, 2016

1.0IntroductionThis section of the report describes the background of the project, the format of the report, and thework performed in the project to date.1.1.Project BackgroundThe City retained Berry Dunn McNeil & Parker (BerryDunn) to provide consulting services to evaluateits current Procure-to-Pay (P2P) environment, workflows, processes, and utilization of the JDEdwards system. The City is currently using the JD Edwards EnterpriseOne (JDE) software suite tosupport purchasing processes, including decentralized processes for purchases less than 5,000 andthe City Purchasing Department’s administration of purchases greater than 5,000. As manyapproved purchases are “one-offs” and procurement processes are inconsistent across departments,the City has recognized a need to review its P2P workflows with an emphasis on use of the J.D.Edwards system. The focus of this project is to identify recommendations for improvement, includingprocess changes, enhancements to the existing system, and the use of available third-party pointsolutions.Tasks involved with this project include overall project management and a current environmentassessment. These tasks include conducting on-site fact-finding activities, including meetings withCity staff, developing a current environment needs assessment, developing a future state planningmemo, conducting research and developing an action plan report, and preparing and delivering apresentation of the action plan report. This project concludes once the action plan report has beenpresented and finalized.1.2.Report FormatThis report is comprised of five sections and an executive summary, as described below:1. Introduction. This section of the report describes the background of the project, the format ofthe report, the work performed in the project to date, and the definition of key terms andabbreviations.2. Current Environment Needs Assessment Summary. This section of the report summarizeskey themes from the Current Environment Needs Assessment Report including P2Pprocesses, the technologies used to support them, goals from City Leadership, andChallenges and Areas for Improvement.3. Initiatives for Improvement, Analysis, and Prioritization. This section of the report presentsthe Preliminary List of Initiatives for Improvement, the RFI summary, and the prioritizationfactors.4. Action Plan of Improvement Initiatives. This section of the report contains the PrioritizedList of Initiatives for Improvement as well as the specific detail of each.5. Additional Implementation Considerations. This section of the report describes additionalimplementation considerations including change management and updating the plan asneeded over time.Action Plan Report – Version 1Page 9Last Updated: April 4, 2016

1.3.Work PerformedIn November 2015, BerryDunn conducted an initial project planning meeting with the City ProjectTeam to clarify project goals and objectives, identify known project constraints, and refine datesand/or tasks as appropriate. Following the meeting, BerryDunn requested information from the City inorder to become more familiar with the current environment. A Web survey was provided to City staffto understand the issues and challenges with the current P2P system(s) and/or business processes.In December 2015, BerryDunn facilitated a project kickoff meeting with the City Project Team anddepartment users. During the meeting, BerryDunn and the City Project Team members wereintroduced and a review of the approach and timeline for the project was provided. In addition, Citystaff had the opportunity to ask questions about the project and discuss the City’s goals andobjectives with the project sponsor.Following the project kickoff meeting, BerryDunn facilitated on-site fact-finding meetings withdepartment staff involved with P2P activities. The purpose of these meetings was to follow up oninformation previously provided, understand the current P2P business processes within eachdepartment, and identify challenges in the current environment. The meetings were conducted basedon the following departments and subject areas:Table 1.1: Fact-Finding Departments and Subject AreasFact-Finding Departments and Subject AreaNo.Departments/Subject Area1Central Procurement Process Overview2Department Process Review: Community Services (Parks, Park Planning and Development, Recreation,Natural Areas, Cultural Services)3Department Process Review: Downtown Development Authority, Poudre Fire Authority, and PoudreLibrary District4Department Process Review: Finance Service Area5Department Process Review: Planning, Development, and Transportation: Streets, Traffic, andEngineering6Department Process Review: Utilities (including Warehouse)7City Leadership Work Session8Department Process Review: Police Services9Department Process Review: Planning, Development, and Transportation: Community Development andNeighborhood Services, Parking, and Transfort10Department Process Review: Human Resources and Information Technology11Technical Support Work Session12Department Process Review: Operation Services (Fleet and Facilities)13Department Process Review: Attorney’s Office, Municipal Court, and City Manager’s OfficeAction Plan Report – Version 1Page 10Last Updated: April 4, 2016

Immediately following the first on-site work session trip, BerryDunn coordinated follow-up fact-findingactivities in developing the Current Environment Needs Assessment Report.BerryDunn facilitated a work session with the City Project Team to confirm the findings in the CurrentEnvironment Needs Assessment Report and the detained Challenges and Areas for Improvement.Following this confirmation, the Report was updated and BerryDunn initiated the Future StatePlanning Phase.The Future State Planning Phase included developing a Memo that described the research BerrDunnwill complete with the vendor community to inform 26 Initiatives for Improvement that would addressthe current environment challenges and areas for improvement. Following a collaborative worksession with the City Project Team to collect feedback on the Memo, BerryDunn initiated the researchthrough a Request for Information (RFI) to the vendor community. RFI responses were received andBerryDunn initiated the development of this Action Plan Report.1.4.Procure-to-Pay (P2P) DefinitionP2P is the process that every local government organization performs in order to purchase goods orservices. P2P begins with the sourcing process and flows through the ordering and then analysissteps. The primary activities of the P2P process are Ordering and Sourcing, with RFQs/Quotationsand Invoice/Payment demanding the most resources. Depending on the organizations policies,procedures, and culture, organizations use different vehicles for purchasing activities, such asrequisitions and purchase orders, procurement cards (P-Cards), mini orders, payment authorizations,and more. The figure below provides a basic overview of the P2P process.Figure 1.1: Basic P2P Process1RFQs/ deringPurchase g1.5.1Invoice/PaymentCommon Terms and AbbreviationsAdapted from Oracle Procure-to-Pay Life Cycle: ecycle/Action Plan Report – Version 1Page 11Last Updated: April 4, 2016

The following table contains a selection of the common terms and abbreviations used throughout thisreport, a

Apr 04, 2016 · Staff reported a desire for increased flexibility in workflow approvals, including but not limited to designees during staff absences and approvals by commodity code. X . X . 23 . The lease purchase process relies on extensive manual processes. X : X . 24 . The City reported

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