Feasibility Study: Human Resource – Payroll Management ...

Feasibility Study: Human Resource – Payroll

Management Information System

July 10, 2012

RFP Coordinator: Raymond Hsu, C.P.M.

Assistant Director, Procurement Services

Feasibility Study: UW HR - Payroll Management Information System

July 9, 2012 P a g e | 2 Contents

Contents 1 Executive Summary .......................................................................................................................... 6

1.1 Background ......................................................................................................................... 7

1.2 Recommendation................................................................................................................ 8

2 Overview .......................................................................................................................................... 9

2.1 The Need for Integrated Business Processes and Systems................................................. 9

2.2 Business Capabilities ......................................................................................................... 10

2.3 Objectives ......................................................................................................................... 11

2.4 Structure and Governance ................................................................................................ 12

3 Approach ........................................................................................................................................ 13

3.1 Complete Requirements ................................................................................................... 14

3.2 Peer Research and Vendor Sessions ................................................................................. 14

3.2.1 Peer Institution Phone Interviews ....................................................................... 14

3.2.2 Vendor Session Plan ............................................................................................. 17

3.2.3 Cost Data .............................................................................................................. 18

3.3 Risk Assessment ................................................................................................................ 20

3.4 Policy Issues ...................................................................................................................... 21

3.4.1 Escalation ............................................................................................................. 22

3.4.2 Position Papers .................................................................................................... 22

3.5 Evaluate Solutions ............................................................................................................. 23

3.6 Assess Technical Foundation ............................................................................................ 24

3.6.1 Strategic Roadmap for Information Management and Administrative Systems 25

3.6.2 Enterprise Architecture Guiding Principles .......................................................... 25

4 Major Options Considered ............................................................................................................. 26

4.1 Business Model 1 – Custom-Developed Software ............................................................ 27

4.2 Business Model 2 – Consortium-Developed Software ..................................................... 27

4.3 Business Model 3 – Licensed Commercial Software Solutions ......................................... 27

4.4 Business Model 4 – Subscription-based Managed Solutions ........................................... 28

4.4.1 Commercial Software, Hosted and Managed by the Vendor or a Third Party .... 28

4.4.2 Software as a Service (SaaS) ................................................................................ 29

4.4.3 Outsourced Solution ............................................................................................ 29

4.4.4 Traditional Outsourced Solutions vs. SaaS .......................................................... 29



4.5 Business Model 5 – Business Process Outsourced Solution (BPO) ................................... 30

4.6 Strategic Elimination of Business and Deployment Models ............................................. 31

4.6.1 Business Models Eliminated from Consideration ................................................ 31

4.6.2 Partnership or Shared System Solution ............................................................... 34

5 Decision to Issue a Request for Proposal ....................................................................................... 35

6 Impacts ........................................................................................................................................... 37

7 Organizational Impacts .................................................................................................................. 41

7.1 Changes in Business Processes ......................................................................................... 41

7.1.1 Business Process Redesign Project ...................................................................... 41

7.2 Job Duties, Roles, and Responsibilities ............................................................................. 41

7.3 Anticipated Training Needs ............................................................................................... 42

7.4 Anticipated Change Management Needs ......................................................................... 42

7.5 Impact on Organizational Structure.................................................................................. 43

8 Recommended Next Steps ............................................................................................................. 44

8.1 Prepare and Issue RFP ...................................................................................................... 44

8.2 Gartner Readiness Assessment ......................................................................................... 46

8.3 Engage External Counsel ................................................................................................... 46

8.4 Business Process Redesign (BPR) Project ......................................................................... 47

Appendix A: Capabilities and Attributes ............................................................................................... 48

Appendix B: Glossary ............................................................................................................................. 54

Appendix C: High-level Time Frame ...................................................................................................... 56

Appendix D: Existing UW HR/Payroll Systems on-a-Page ..................................................................... 57

Appendix E: Gartner Readiness Assessment Report Findings .............................................................. 58

Appendix E.1: Overall Project Assessment ................................................................................. 58

Appendix E.2: Assessment Ratings ............................................................................................. 58

Appendix F: Participating Sponsors and Teams .................................................................................... 61

Appendix F.1: Executive Sponsors .............................................................................................. 61

Appendix F.2: Executive Advisors ............................................................................................... 62

Appendix F.3: Core Team ............................................................................................................ 63

Appendix F.4: Technical Team .................................................................................................... 64

Appendix F.5: Advisory Group .................................................................................................... 65

Appendix F.6: Project Team ........................................................................................................ 66



Appendix G: Educause Peer Institution Payroll Systems ....................................................................... 67

Appendix H: Phone Interview Questionnaire ........................................................................................ 71

Appendix I: Vendor Session Handouts ................................................................................................. 74

Appendix J: Cost Estimate Questionnaire ............................................................................................ 81

Figures Figure 1: High-level, Integrated Approach to HR/Payroll .......................................................................... 10

Figure 2: HR-Payroll Capability Decomposition ......................................................................................... 11

Figure 3: HR/Payroll Feasibility Study Timeline and Approach .................................................................. 13

Figure 4: Overview of Developing Requirements ...................................................................................... 14

Figure 5: Vendor Sessions .......................................................................................................................... 17

Figure 6: Cost Range by Model .................................................................................................................. 19

Figure 7: Estimated Ten Year Cumulative Expense by Model.................................................................... 20

Figure 8: Business Model Solutions and Solution Providers ...................................................................... 23

Figure 9: Technical Requirements Capabilities .......................................................................................... 24

Figure 10: Business Models and Vendors .................................................................................................. 26

Figure 11: Remaining Business Models and Deployment Options ............................................................ 36

Figure 12: Procurement Strategy ............................................................................................................... 45

Figure 13: High-level Timeframe for HR/Payroll System Replacement Project ......................................... 56

Figure 14: Existing HR/Payroll System on-a-Page ...................................................................................... 57

Figure 15: Gartner Rating Scale and Interpretation ................................................................................... 59

Figure 16: Gartner Cultural Readiness Rating ............................................................................................ 59

Figure 17: Gartner Resrouce & Effort Awareness Rating ........................................................................... 59

Figure 18: Gartner Project Readiness Rating ............................................................................................. 60

Tables Table 1: Comparison of Revenue Sources and Workforce 1982 and 2011 ................................................. 6

Table 2: Regulatory and Compliance Comparison - 1982 and 2011 ............................................................ 7

Table 3: Peer Research Interview List ........................................................................................................ 15

Table 4: Peer Interviews - Side-by-Side Comparison ................................................................................. 16

Table 5: Vendor Feedback Summary ......................................................................................................... 18

Table 6: Cost Questionnaire ....................................................................................................................... 19

Table 7: Enterprise Architecture Group Guiding Principles ....................................................................... 25



Table 8: Deployment Option Trade-off Matrix ........................................................................................... 32

Table 9: Change Drivers and Anticipated Impacts ..................................................................................... 37

Table 10: Capabilities and Business Processes........................................................................................... 48

Table 11: Educause Peer Payroll Systems .................................................................................................. 67


July 9, 2012 P a g e | 6 Executive Summary

1 Executive Summary The University of Washington needs to implement a modern HR/Payroll (HR/P) system.

UW’s existing payroll-based, workforce management systems are incomplete, inflexible, and not able to meet the current and future needs of the institution. Implementing a comprehensive, flexible HR/Payroll system will enable the University to move forward with business process improvement while creating an environment that supports consistency, compliance, efficiency, and effectiveness.

The UW currently processes its payroll using a customized mainframe payroll system, Higher Education Payroll Personnel System (HEPPS). HEPPS was implemented in May 1982 at a time when the size and nature of the University’s enterprise, workforce, operating environment, and business needs were very different. Table 1 illustrates the growth in size and complexity of the University.

Table 1: Comparison of Revenue Sources and Workforce 1982 and 2011

1982 2011

Annual Revenue $552 million $4.6 billion

Primary Revenue Sources

State appropriation 28% 6%

Tuition and fees 13% 13%

Research grants and contracts

27% 30%

Patient care 14% 29%

Workforce Number of employees 20,000 40,0001

Contract-classified staff 7,000 16,000

In addition to payroll processing, the UW currently uses HEPPS and related systems to collect and interact with available workforce data (e.g., dates of employment, time and leave information, salary and benefit information) for the University’s 40,000 employees. This highly customized package has assisted the University’s modernization and development for a generation. However, the University’s HEPPS implementation and its data design have limitations that have not allowed the University to keep up with changes in the business and regulatory environment.

Table 2 illustrates fundamental changes between 1982 and 2011 in just three areas of compliance: collective bargaining agreements, multi-state and international operations, and state and federal regulations.

1 This number excludes hourly paid employees. Perhaps a more telling number for 2011 is the number of W2s printed, 50,917.



Table 2: Regulatory and Compliance Comparison - 1982 and 2011

1982 2011

Regulatory and Compliance Profile

Scope of bargaining agreements:

Prohibited from negotiating salary, hours of work, overtime, premium pays, leave, corrective action, performance management

Civil Service Reform opened the scope of bargaining to include all of these areas

Geographic compliance scope:

3 states

USA only

33 states, plus DC

27 countries, including USA

Federal, state, and hospital requirements and regulations:

HEPPS was implemented to be compliant for the time, but lacks the flexibility to keep up with change

Over 30 major federal regulatory programs and requirements, numerouse changes to state and hospital rules & regulations, including: ADA, FMLA, COBRA, FLSA for state employers, new state retirement and insurance eligibility rules, extension of bargaining rights to temporary employees, new Joint Commision rules, etc.

1.1 Background Furthermore, HEPPS is a payroll system not a human resources management system (HRMS).

Because the basic data design of HEPPS is centered on point-in-time payroll processing and labor distributions rather than people management, there is no access to person-level information required to function as or integrate with a modern workforce management system. In the current environment we cannot provide information about the nature of our workforce, only about what individuals were paid. A modern HR system is designed to enable an employer to plan, manage, and analyze the organization’s intake, classification, staffing, orientation, compensation and benefits administration, performance management, and employee and labor relations.

The HRP Replacement Project Team2 – in collaboration with Executive Sponsors3, Executive Advisors4, and a Core Team5 of stakeholders – has developed business goals and requirements that reflect the current and anticipated needs of the University. In addition, team members have researched leading vendor solutions and consulted with peer institutions about their experiences implementing new HRP systems.

At different points in the Feasibility Study project, the University reviewed and assessed the business and deployment models to determine what models, if any, could be removed from consideration. The assessment took into account the University’s business goals, complexity, and implementation timeline.

2 See Appendix F.6: Project Team for a list of team members. 3 See Appendix F.1: Executive Sponsors for a list of the sponsors. 4 See Appendix F.2: Executive Advisors for a list of the advisors. 5 See Appendix F.3: Core Team for a list of team members.



Information collected through the informal vendor questionnaires and system demonstrations was also used in the assessment. Additionally, the University looked for opportunities to partner with other agencies.

Based on the extensive research and discussions with peer institutions and leading vendors, the team has narrowed the implementation focus on specific business models and deployment options:

Subscription-based, managed solution – Outsourced system

Subscription-based, managed solution – SaaS

Subscription-based, managed solution – Hosted and managed by a vendor or third party

Licensed Commercial software – Hosted by vendor or third party

The UW has defined the requirements for a new system and plans to issue an RFP. The University will consider all viable options, including SAP, Oracle, Workday, ADP, Lawson, and other solutions being used or implemented in large, higher education institutions and medical centers.

1.2 Recommendation The recommended next step is to issue an RFP to procure a university-wide solution for payroll and human resource management, which will serve faculty and staff student employees.

After the RFP has been approved by the Office of Financial Management and the Office of the Chief Information Officer (OCIO), it will be published and the UW will move into the Procurement phase.

Concurrent with the procurement stage will be a Business Process Redesign project working under a separate charter.


July 9, 2012 P a g e | 9 Overview

2 Overview The University of Washington (UW) is one of the largest employers in the state of Washington. It has a large, complex, and diverse workforce of 40,000 people including faculty, staff, and student employees who support the University’s core mission in the areas of teaching, research and service. The University’s total payroll for 2011 was approximately $2.2 billion6.

The University includes UW Medicine, which owns or operates Harborview Medical Center, University of Washington Medical Center, Northwest Hospital & Medical Center, Valley Medical Center, a network of UW Medicine Neighborhood Clinic, the UW School of Medicine, UW Physicians, and Airlift Northwest.

University has approximately 16,000 contract classified employees in 24 bargaining units. Union employees represent a wide variety of job classifications, among them: Registered Nurses, Technical employees, Skilled Trades, Police Officers, Service employees, Administrative/Clerical/Laboratory employees, and Academic Student employees.

There are complex cost allocation rules, including tracking staff costs to specific funds and grants. Additionally, there are more operational cost accounting needs in the UW Medicine and operational support units on campus.

And yet in spite of the size and complexity of the institution, the UW operates using a 29+ year old payroll system and without a centralized human resource management system (HRMS), as illustrated in Appendix D: Existing UW HR/Payroll Systems on-a-Page. The payroll system contains minimal human resource data. The lack of a system to support workforce management has resulted in departments developing their own solutions (aka “shadow systems”) to meet their day-to-day HR management needs. The shadow systems are inherently inefficient, have limited integration, and no assurance of data integrity, consistency, or security. An integrated HR/Payroll system is needed to meet the requirements of an increasingly complex regulatory and labor environment, to enable efficient and effective payroll and staff management, and to provide university managers and employees with information needed to fulfill their responsibilities and maximize the value of their university experience.

2.1 The Need for Integrated Business Processes and Systems The University needs an integrated solution for payroll and human resource management that has the flexibility to respond to the complex and changing payroll rules and regulations, as well as process payroll for all UW employees. It must retain all information about positions, appointments, and employees, including a full life cycle of activities, from recruiting to retirement or separation. An HR system informs the payroll system of such information as who is employed, what position they hold, benefits eligibility, etc., but also contains critical workforce information including organizational information, individual skills and competencies, performance ratings, labor relations information, licensure requirements, and career development plans. In addition, the solution needs to integrate with data and existing systems from the entire University. In the long term, access to this information should support the University's ability to recruit, retain, and develop faculty and staff. Figure 1 presents a high-level view of the functionality needed to provide an integrated approach to managing HR and payroll.

6 Source is the University of Washington 2011 Annual Report –http://f2.washington.edu/fm/uw-annual-report/.

http://f2.washington.edu/fm/uw-annual-report/



Figure 1: High-level, Integrated Approach to HR/Payroll

2.2 Business Capabilities Figure 2 on page 11 identifies the high-level capabilities needed in the new system. The diagram subdivides each major capability into business processes. The capabilities provide an organizing foundation and common language for the creation of requirements and RFP questions. The illustration is further described in Appendix A: Capabilities and Attributes.



Figure 2: HR-Payroll Capability Decomposition

2.3 Objectives The University plans to replace the existing payroll system with an integrated HR/Payroll system composed of a set of applications that address the business needs of the enterprise as outlined in Figure 2 and listed in Appendix A: Capabilities and Attributes. To help guide the conduct of the Feasibility Study and subsequent RFP and selection process, the Executive Sponsors identified and prioritized the following critical business objectives:

Reduce risk of aging, fragile, non-existent, obsolete and non-supportable systems by modernizing systems and performing required technology renewal

Improve regulatory compliance by implementing systems that are compliant with federal and state regulations, and are upgraded by the vendor to maintain compliance over time

Improve integration and information available for decision-making and planning

Reduce number of duplicative shadow systems by providing a more robust set of business applications



Provide comprehensive business continuity/disaster recovery plans for payroll and human resources

Provide a flexible, scalable, resilient, and sustainable infrastructure environment

Enhance business processes and efficiency by implementing best practices where practical

Streamline business process integration between the departments, campuses, medical centers, and UW administration services

2.4 Structure and Governance The Feasibility Study has a 3-tier structure for decision-making and project governance:

The Executive Sponsors provide strategic guidance on key issues, and make decisions on change management, resources, funding, and key issues and recommendations.

The Core Team and Technical Team7 provide tactical guidance, issue resolution, and make recommendations for consideration by the Executive Sponsors.

The Project Team handles day-to-day project tasks and deliverables.

7 See Appendix F.4: Technical Team for a list of team members.


July 9, 2012 P a g e | 13 Approach

3 Approach The Feasibility Study was initiated in late 2010. It consists of a series of complementary tasks discussed in this section. The tasks include:

Complete requirements

Conduct peer research and vendor sessions

Assess risk

Assess policy issues

Assess solutions

Assess technical foundation

Develop the Request for Proposal (RFP)

Figure 3 presents the feasibility study tasks in a timeline format.

Figure 3: HR/Payroll Feasibility Study Timeline and Approach



3.1 Complete Requirements This step focused on gathering and refining business and system requirements. The complete set of requirements is composed of required and desired features and capabilities, which fit into two main areas: functional or technical. Each area has its primary community: business owners, technical experts, and the project team. Although all team members had an opportunity to review all the requirements, the primary communities were the ones that did the majority of the work in their respective areas. Figure 4 is an illustration of the high-level process of developing business requirements.

Figure 4: Overview of Developing Requirements

3.2 Peer Research and Vendor Sessions Research included interviews with peer institutions and focused sessions with leading vendors. These sessions provided a window into the user experience, implementation, and high-level functionality of the major packages on the market8.

3.2.1 Peer Institution Phone Interviews

Table 3 lists the peer institutions with which phone interviews were conducted.

8 Educause also provided research material. See Appendix G: Educause Peer Institution Payroll Systems for details.



Table 3: Peer Research Interview List

School HR System/Year Key Characteristic

Georgia State University ADP 2009 Vendor

University of Cincinnati SAP 2006 Vendor

Georgetown University Workday Vendor

Kent State Banner Multiple Pay Cycles

Louisiana State University Homegrown 2010 Homegrown

University of Texas – Austin Homegrown Medical Center

University of Michigan Oracle PeopleSoft 2001 Vendor

Arizona State University Oracle PeopleSoft 2007 Implementation Lessons Learned

University of Utah Oracle PeopleSoft/KRONOS Medical Center

U of Wisconsin – Madison Homegrown 1989, updating to Oracle PeopleSoft

System of schools & Medical Center

U of North Carolina Oracle PeopleSoft/KRONOS Vendor

The working team created a questionnaire that was used during each phone interview. The questions covered topics such as:

Size and organizational complexity of the institution being interviewed.

Whether the institution has a medical center. If so, the interviewer asked a series of questions about the degree of integration of the academic and medical center in payroll, benefits, and compensation.

The institution’s software implementation

Satisfaction with the vendor, the system, cost, and overall experience, including problems and their resolutions

Experience with vendor support, including implementing system upgrades

Implementation costs, including personnel and other expenses

Issues pertaining to position management, labor distribution, integration with other systems, and so forth

See Appendix H: Phone Interview Questionnaire for the full questionnaire.

Preliminary fact-finding efforts focused on the eleven institutions listed in Table 3. As a result of the phone interviews, the initial list was pared down to institutions with which the University of Washington



shared a major characteristic, such as size or institutional complexity. The first analysis also eliminated institutions that use a system written in-house. Table 4 is a sample comparison of interview information with three peer institutions, University of Cincinnati, Georgia State, and the University of Michigan.

Table 4: Peer Interviews - Side-by-Side Comparison

Characteristic Univ. of Cincinnati Georgia State Univ. of Michigan Univ. of Wash.

Current system SAP ADP PeopleSoft Legacy mainframe

When implemented 2006 2009 2001 1984

Users Core – 800

Self service – 10,000

Core – 100

All – 8,000

Core – 2,600

Self service – 58,000

Core/HEPPS –1,800

Potential Time: 11,000

Potential All/Self-service: 44,000

Former System Legacy mainframe PeopleSoft Legacy mainframe Legacy mainframe

Implementation:

Sequence

18 month, Big Bang

Finance, HR, Student

18 month, Big Bang

NA

2 years, Big Bang

Finance, Student, HR

Recommendation Pending

Medical Center Separate Payroll and Benefits from University

NA Same Benefits and Payroll as University

Same Benefits and Payroll as University

Resources 24-36 FTE

Cost NA

20-40 FTE

$20M/yr Est.

100-150 FTE

$50-$100M Est.

TBD

Decision Driver / Process

Finance already SAP, RFP

Consultant recommended, RFP

Finance & Student already PeopleSoft, RFP

TBD

Overall Satisfaction Yes Yes Yes NA

Customization Low Moderate High Goal = LOW

Labor distribution In Finance system In HR system Custom: dual source TBD

Position management

Partial In use Not using Recommended

Org structure redesign

Full redesign No change Minor changes TBD



3.2.2 Vendor Session Plan

Research also included informal phone and onsite system demonstrations with key vendors in the industry: ADP, Lawson, Oracle, SAP, and Workday. A series of questions were prepared for the phone interviews held in advance of each vendor demonstration. In preparation for the onsite system demonstrations, the team created a packet of information for the vendors. The vendor packet material is in Appendix I: Vendor Session Handouts. They included:

Agenda.

Background: The current and future states of HR/Payroll at the UW; high-level stats demonstrating the scope and complexity of human resources and payroll at the UW; and UW attendees (by function, not name); and UW contact.

Business demonstration scenarios.

Technical demonstration scenarios.

HRP on a page (current systems) – See Appendix D: Existing UW HR/Payroll Systems on-a-Page.

List of the systems that make up the existing HR/Payroll system.

HRP Capability Decomposition diagram – See Figure 2.

Figure 5 illustrates the plan executed for the vendor sessions.

Vendor Sessions Plan – 2011

Vendor Packet

Boiler Plate•Agenda•Biz Demo Scenarios•Tech Demo Scenarios•HRP On-a-page•HRP Scope Breakdown

Vendor Questions*•Business/General/Tech•Functionality Fit/Gap

Vendor Packet sent as a single Word Document.

*Project Team conducted phone interviews with Vendors to discuss questions in the packet prior to Session. Project Team reviewed answers and flagged anything needing review during sessions.

Vendors Sessions

Vendor Intro/Overview (45 min)

Functional Demo Scenarios (2 hrs)•Onboard to Promote•Timesheet to Payday•Self Service (Employee/Manager)

Technical Demo Scenarios (1.5 hrs)•Show & Tell•Interfaces•Configuration Management

Plan to invite 5 vendors over 3 weeks (2 sessions/week)

•ADP•Lawson•Oracle•SAP•Workday

Email Vendor Packets

Vendor Phone

Interviews

Conduct Vendor

Sessions

Evaluation

Cost Questionnaire*•UW Metrics

Vendor Questions (Interview Summary)•Business/General/Tech•Functionality Fit/Gap

Demo Results•Functional•Technical

Results may facilitate voting to narrow business models.

* Cost Questionnaire with UW Metrics sent to Vendors after the Sessions, then collected for review during evaluation.

Evaluation

Outcomes

Narrow Business Models Based on:•Cost•Vendor Questions•Demos•Functionality

Increase Knowledge•What’s out there?•Look and Feel

Inform Implementation Options

Inform RFP

Summarize Outcomes

Gather Cost Data

Figure 5: Vendor Sessions

The vendor sessions highlighted the following broad themes for success:



Up-front process improvement

Data conversion coupled with data cleansing

Governance with strong executive sponsorship

Change management

Campus engagement strategy is needed for the RFP phase and beyond

Table 5 summarizes informal, high-level feedback and tradeoffs from the initial vendor demonstrations in early 2011.

Table 5: Vendor Feedback Summary

Category Feedback

Company & Experience Limited experience and knowledge of higher education – ADP, Lawson

Deployment Options (Licensed vs. subscription-based)

Insufficient information to recommend narrowing based on the demonstrations; cost difference will inform final recommendation

Functionality ADP: Strong payroll, weak HR

Lawson, Workday: Strong HR; weak payroll

All but Workday: Dated interface, awkward navigation

Workday: Doesn’t have key sets of functionality

Configuration All: Highly configurable; close to as much work as customization

Integration ADP: No web services; integration tools lacking

Infrastructure All but ADP: Support multiple platforms

Remaining unknowns and uncertainties about managing configurations, learning curve for new tools.

3.2.3 Cost Data

In order to assist in providing market analysis and budgetary planning, the vendors were given a Cost Questionnaire to complete. The document described the size and complexity of the workforce and the required capabilities of the HRP replacement system. The questionnaire asked for responses to five questions. Table 6 summarizes the vendor questions. See Appendix J: Cost Estimate Questionnaire for the full questionnaire.



Table 6: Cost Questionnaire

Question Description

1 Identify [from a list] and describe the deployment model for which you are providing an estimate.

2 Provide estimates of implementation and ongoing costs (annual TCO) with the data separated into core HRP functionality and non-core HRP functionality. Provide both the low and high end of the cost range.

3 Describe which functionality is core and which is non-core. What drives the cost to the lower or higher end of the range?

4 Provide estimates of the amount of time it will take to implement the functionality. What drives the time estimate to the lower and higher end of the range?

5 List opportunities for potential savings and ROI projections you think will result from replacing our legacy systems.

Figure 6 is a high-low cost range analysis by vendor. The questionnaire was part of an informal vendor research effort that requested range (low-high) information. This figure shows ranges for vendors by deployment model.

Figure 6: Cost Range by Model

Figure 7 illustrates the projected, estimated cumulative expense over ten years for SaaS and Hosted models only. The information provided by the vendors is in line with the budget estimates developed in collaboration with the Office of Planning and Budgeting.

Note: The data in Figure 7 is a combination of vendor estimates summarized in Figure 6 and assumptions about costs to the UW for internal support. The latter component was



estimated based on IT hourly rates provided by UWIT Business & Finance.

Based on cost questionnaire responses, the Core Team determined that no business model fell outside the University’s planned estimated price range.

Figure 7: Estimated Ten Year Cumulative Expense by Model

3.3 Risk Assessment Senior project leadership asked a sub-group of central Payroll and Human Resources Core Team members and senior staff from UWIT Information Management to identify key risk-based requirements related to HR/Payroll system functionality and to assess the state of current systems to achieve those requirements. The group used a toolkit developed by UW Enterprise Risk Management (ERM) for assessing risks based on the likelihood of an event occurring and the impact of an occurrence. Representatives from the Attorney General’s Office and UW Enterprise ERM served as advisors for the group.

Five reports were developed as a result of this exercise:

A “heat map” depiction of the likelihood and impact of the risk from low to high

A summary risk view that outlines the risks by ranking and business category

A summary risk map with representative examples that illustrate the challenges at each risk level and within each functional level.

An assessment by major functional unit groups the risk and ranks the potential for financial, compliance, and regulatory impact

Current mitigation plans, which outline mitigation efforts currently in place for the risk areas



In summary, the risks associated with the continued use of an aging and highly customized mainframe system are significant. They include the following:

The HEPPS payroll system was designed in the 1970s when the business environment and expectations were very different than they are now; for example, 24x7 availability and web access.

The common use of shadow systems throughout the institution creates data integrity and data security risks.

The rapidly changing business and regulatory environments require that systems be much more flexible to meet critical requirements in such areas as:

o FLSA regulations that govern overtime and regular pay

o Labor contract provisions, such as those regarding union dues deductions, pay provisions, and leave benefits

o Employee leave entitlements and recordkeeping requirements set forth in federal and state regulations; for example, Family Medical Leave Act (FMLA), and Family Care Leave, respectively

o Time collection, record keeping, and reporting

o Benefits administration, including eligibility determination and calculation of compensation-based benefit deductions, such as insurance premium deductions, Flexible Spending Accounts (FSA), and Dependent Care Assistance Program (DCAP)

o Business continuity and disaster recovery

o Tracking completion of mandatory trainings and renewal and expiration of required certifications

o Administration of involuntary payroll deductions, such as child support or tax levies

o Tracking work authorizations such as I9 forms, eVerify results, and so forth

The legacy HEPPS system is written in COBOL, a language that is no longer widely taught in the United States. Most COBOL programmers are nearing retirement.

3.4 Policy Issues This project has a far-reaching impact on human resource and payroll policy and procedures at all levels of the organization.

A governance structure is in place to deal with issues that arise. The governance structure, discussed in Section 2.4, provides a framework within which issues can be identified, researched, escalated (if needed), and resolved. Issues are tracked using a project issues log and are categorized based on project phase (e.g., planning, procurement, implementation, etc.). This activity will continue through future phases of the project. Examples of issues addressed during the Feasibility Study include:

Project Scope – Whether to include or exclude labor distribution and position management capabilities from scope

Deployment Options – What deployment options will be pursued in the procurement to align with University priorities and objectives



3.4.1 Escalation

The Core Team can resolve many issues on its own without escalating to the Executive Sponsors. Sometimes, however, the Core Team may decide an issue does require escalation to the Executive Sponsors. These issues are usually ones that would impact the scope of the process or implementation of the new system. Any issue that requires Executive Sponsor support or approval is assigned to a single owner on the Executive Sponsor team who is responsible for resolving and signing off the final decision or approach associated with the issue.

3.4.2 Position Papers

A position paper is created when an issue is escalated to the Executive Sponsors for approval. Position papers have a standard format:

Title – Provides a very brief summary of why the paper is being submitted; for example “Confirm that Position Management/Control is in Scope (for the purpose of the RFP)”

People involved – Includes the Coordinator, the Owner(s), Advisor(s), and Core Team Members

Resolution Due Date – Date by which the issue needs to be resolved

Issue – Brief description of the issue

History/background – Further explains the problem and provides the context of why it matters

Recommendation – States the recommendation of Core Team Members, which will be ratified or rejected by the Executive Sponsors



3.5 Evaluate Solutions During the early stages of the Feasibility Study, the University, with the assistance of an external consultant, identified and categorized major business models and solution providers for core HR/Payroll functionality. The top row of boxes in Figure 8 provides an overview of the solutions within the playing field. The lower part of the illustration identifies players in each category. There is some overlap. The lines are blurring between business models and the deployment strategies as vendors and customers combine deployment solutions – some outsourcing, some SaaS, some on-premise. For more information about each of the business models, see Section 4.

Figure 8: Business Model Solutions and Solution Providers

The vendor marketplace was assessed in terms of core and niche solutions. Core solutions were categorized as solutions encompassing basic, integrated human resource and payroll management features, such as employee records, job descriptions, personnel actions and management, position management, payroll, HR compliance, compensation management, benefits administration, manager self-service, and employee self-service9. This marketplace is considered both mature and innovative.

Niche solutions provide an application or suite of applications that address a specified need or function, such as time and attendance, recruiting and application management, learning management, or performance management. This market is less mature with considerable change and “churn” in the marketplace. Some core solution vendors bundle and re-sell third-party niche solutions with some degree of integration.

9 Of the features listed, only personnel actions, payroll, and employee self-service are parts of UW’s current system.



To assist in evaluating business models, deployment models, and needs, an HR-Payroll Capability Decomposition business model was created. It outlines key business functions, as illustrated in Figure 2.

3.6 Assess Technical Foundation The technical foundation began with guiding principles as articulated by the University of Washington Strategic Roadmap for Information Management and Administrative Systems and Enterprise Architecture Group (EAG) guiding principles.

At a fundamental level, these documents informed the development of technical requirements, which in turn helped with framing of questions for the RFP. The vendors’ answers will be evaluated in terms of how well the vendor’s proposed solution satisfies the requirements and supports the guiding principles and vision. For example, the Strategic Roadmap and EAG guiding principles both emphasize the importance of interoperable solutions. Technical requirements address interoperability from a number of perspectives, such as workflow, platforms and clients, interfaces, and open standards.

The requirements were grouped into four categories: system architecture, integration, security, and service management. Figure 9 illustrates the technical capabilities and components.

Figure 9: Technical Requirements Capabilities



3.6.1 Strategic Roadmap for Information Management and Administrative Systems

The UW’s Strategic Roadmap provides a foundation10 of guiding principles and vision for the future in areas of information, governance and investment, and solutions and processes.

3.6.2 Enterprise Architecture Guiding Principles

Enterprise Architecture guiding principles provide a framework to assess enterprise software solutions from the technical perspective. Table 7 summarizes the guiding principles.

Table 7: Enterprise Architecture Group Guiding Principles

Principle Description

Strategic UW has a single, federated enterprise-wide architecture that is closely aligned with UW’s mission, vision, and values. Take a big picture viewpoint when making decisions. Don’t sub-optimize based on immediate project goals.

Governed Data Data is a critical UW asset that must be governed according to UW Policies. Data has a single source of truth enriched by robust metadata.

Secure Understand the security classification of the system’s information and design accordingly. Secure the boundaries between architectural components. Consider both malicious and accidental misuse. Manage risk.

Service-Oriented Business functionality is delivered as modular, reusable, loosely-coupled services with well-defined interfaces and data models. Services are the building blocks of systems.

Simple Systems and components should be as simple as possible but no simpler, following well-defined patterns and blueprints. Duplicate as little as possible.

Standard Embrace standards where they exist. Prefer standard, open architected systems over proprietary solutions. Reduce needless diversity and complexity.

Maintainable Consider the system’s full lifecycle and design its components to be maintainable throughout their lifecycle. Design for extensibility. Components must be testable. An undocumented system is not maintainable.

Reliable A system is only as reliable as its weakest link. Design components to avoid single points of failure. Define availability targets and design accordingly.

Scalable Design components to support elasticity, and to adapt cost-effectively to changes in load, up or down.

Measurable Effective system administration requires measurement of system performance. Design systems and components for monitoring, logging, and run-time tuning and diagnostics.

10 For information about the UW Strategic Roadmap, see http://www.washington.edu/uwit/im/roadmap/report/guiding.html.

http://www.washington.edu/uwit/im/roadmap/report/guiding.html


July 9, 2012 P a g e | 26 Major Options Considered

4 Major Options Considered Figure 10 is an overview of core HR/Payroll business models, and their corresponding deployment options and vendors.

Figure 10: Business Models and Vendors

Business model options

Five categories of business models were considered: custom-developed; consortium-developed; licensed commercial software; subscription-based, managed solutions; and fully outsourced solutions.

Deployment options Six categories of deployment options were considered: on-premise; hosted by vendor or third party; hosted and managed by vendor or third-party; software as a service; and outsourced11. Some business models offer multiple deployment options.

Vendors The bar graph under the business model diagram indicates the major vendors in each space. Some of the vendors have offerings in more than one business model and/or deployment space.

11 There are different types of outsourced deployment models based on what is outsourced: hardware and infrastructure, applications, business processes (BPO), customer service, and so forth.



The following topics look more deeply at each of the business models. Section 4.6 discusses the pros and cons of the deployment option and the decision by the Core Team and Executive Sponsors to eliminate the on-premise deployment option.

4.1 Business Model 1 – Custom-Developed Software

Custom-developed software is designed, developed, implemented and maintained by the UW. It is installed on-premise in the UW’s data center.

Provider: The infrastructure and the applications are managed, operated, and maintained by UW staff.

4.2 Business Model 2 – Consortium-Developed Software

In this business model, the software is designed, developed, and maintained by a consortium, such as Kuali. The software would be implemented and installed on-premise in the UW’s data center. The infrastructure and the application are managed, operated, and maintained by UW staff. This solution allows the potential future implementation of cloud computing12.

Provider: The Kuali Foundation is in the early stages of developing an HR/Payroll solution.

4.3 Business Model 3 – Licensed Commercial Software Solutions

In this business model, the university licenses the software. Responsibility for infrastructure, application management, help desk, training and so forth varies by deployment option:

On-premise deployment: The software is installed on-premise in the UW data center. The infrastructure and the application are managed, operated, and maintained by UW staff. The university would also be responsible for managing the user help desk, ongoing user training, and business analysis, although these services can be supported by contractors, if required.

Hosted deployment: The software is installed in a third-party data center.

12 Cloud computing is computing delivered as a service. Shared resources, software, and information are provided over a network, typically the Internet.



The infrastructure (hardware, operating system) is managed and operated by the vendor staff13. The hosting vendor is responsible for keeping the infrastructure available and performing according to the service agreement. The application is managed and maintained by UW staff, including applying upgrades and patching, application performance, integration, security administration, and so forth.

Providers: Examples of commercial software providers of large-scale HR/Payroll systems include Lawson, Oracle eBusiness Suite, Oracle-PeopleSoft, and SAP. There are many options for hosted data centers; for example:

Lawson uses Amazon EC2 as an external hosting service provider.

SAP has hosting partnerships with EMC, Cisco, VMware, and others.

Oracle partners with Amazon.

4.4 Business Model 4 – Subscription-based Managed Solutions

In this business model, the university subscribes to a service that is hosted elsewhere. The deployment options are discussed in the following topics:

Section 4.4.1 Commercial Software, Hosted and Managed by the Vendor or a Third Party

Section 4.4.2 Software as a Service (SaaS)

Section 4.4.3 Outsourced Solution

Section 4.4.4 Traditional Outsourced Solutions vs. SaaS

4.4.1 Commercial Software, Hosted and Managed by the Vendor or a Third Party

The first deployment option is commercial software implemented, hosted, managed, operated and maintained by the software vendor and/or a third party. In most cases, multiple vendors are involved in providing the total solution – e.g., the software provider, the hosting vendor, and the application managed service (AMS) provider. UW pays the provider or providers for services on a subscription basis. Examples of commercial software providers of large scale HR/Payroll systems include:

Lawson, managed by Lawson or a third party

Oracle, eBusiness Suite, managed by Oracle OnDemand, or a provider such as Accenture, CapGemini, CSC, Fujitsu, or IBM

Oracle, PeopleSoft managed by Oracle OnDemand, or a provider such as Accenture, CapGemini, CSC, Fujitsu, or IBM

SAP, managed by a provider such as Accenture, ACS, CGI, CSC, or IBM

13 This arrangement is referred to as IaaS, Infrastructure as a Service.



4.4.2 Software as a Service (SaaS)

With a software-as-a-service (SaaS) option, the provider gives UW access to a shared multi-tenant system using a web interface and the client pays on a subscription basis. Pricing models for HR/Payroll systems are usually on a per-employee basis.

Historically, licensed commercial software has been the predominant model for large organizations; however, SaaS deployments are growing at twice the rate of on-premise licensing. SaaS has been widely adopted for HR/Payroll solutions by small and midrange businesses. SaaS is used broadly by larger enterprises for recruiting, performance management, and talent management. It is expected to be a growing deployment method for HR applications. Primary advantages of a SaaS solution include:

Frees up IT staff to focus on mission-critical applications and core competencies.

Reduces costs by taking advantage of provider expertise in the application area and economies of scale.

Depending on the provider, it can provide 7x24 system support, improved reliability, and business continuity/disaster recovery.

Supports a more rapid deployment since there is no hardware setup, no software installation, and limited options for customization.

Seamless upgrades performed by the provider.

Because the client is subscribing to a shared system, system modification is generally not allowed beyond the standard configuration set-up options.

SaaS implementations are generally directed by business-unit sponsors and managed by business area project managers, with internal IT in a support role that is focused on integration, security, and reporting.

There are several SaaS providers of HR/Payroll solutions, although most of them are targeted toward the small and mid-sized enterprise market14. The primary large enterprise SaaS provider is Workday.

4.4.3 Outsourced Solution

With a traditional outsource option, the provider gives access to the system and customer pays on a subscription basis. Pricing models for HR/Payroll outsource systems are usually based on the number of employees or related consumption metrics, depending on the service provided.

Outsourcing has been widely adopted for payroll and HR processing by large and small organizations. The primary advantages of a traditional outsource solution are the same as those in SaaS, as listed in Section 4.4.2, above.

Examples of large enterprise outsource HR/Payroll system providers include ADP and Ceridian.

4.4.4 Traditional Outsourced Solutions vs. SaaS

The major differences between SaaS solutions and traditional outsource solutions are:

14 SAP provides a SaaS solution called Business By Design for small businesses, but does not currently provide an enterprise SaaS solution.



Large outsource providers typically offer a broad range of business process outsourcing services in addition to system outsourcing.

SaaS software typically uses more up-to-date technologies, and data exchange and integration standards.

4.5 Business Model 5 – Business Process Outsourced Solution (BPO)

Many organizations have outsourced some pieces of HR administration for a long time – major examples are benefits administration, use of third-party recruiters, and relocation administration. Comprehensive HR BPO involves more strategic outsourcing of major administrative functions to a single outsource vendor. Typically, outsourced processes include payroll, employee administration, compliance, benefits administration and enrollment, and COBRA administration. BPO vendors offer employee self-service and employee call centers.

Reasons to consider BPO include:

To offload routine administrative tasks in order to focus on more strategic HR activities such as recruiting, performance management, compensation management, and learning.

To leverage specialized functional expertise such as multi-state payroll or COBRA administration.

To avoid the expense of a major internal HR/payroll system project.

There are two primary approaches to outsourcing business operations:

The “lift and shift” method, whereby the client keeps its procedures and systems largely intact, but outsources the operations. While there is less impact on end users and fewer change management issues, there are few efficiencies to be realized from the outsource process. This type of outsourcing is not a viable option for the UW given the age of the current system.

Use the outsource vendor’s standard processes and their technologies. The advantage is that there is more opportunity for cost efficiency and a potential technology upgrade. The major disadvantages are the change management requirements and the impact on end users.

Some key considerations with outsourcing include:

Understanding how the outsource provider interacts with the business users.

Having contingency plans in case the vendor does not survive or changes the types of services they are providing.

Ensuring real-time data access, particularly for enterprise data warehouse and reporting needs.

Planning the vendor management function. A very clear service level agreement is essential. Vendor performance and contract management needs constant management and vigilance.



Business process outsourcing projects are not IT projects and should be directed and managed by business leaders. IT managers and staff play a supporting role primarily in the areas of data conversion to the outsourcer and managing data transfers for data warehouse reporting.

Examples of large enterprise HR/Payroll business process outsource providers include: Accenture, ACS (Xerox), ADP, Ceridian, Convergsys, Hewitt, IBM, Logica, and NorthgateArinso.

4.6 Strategic Elimination of Business and Deployment Models At different points in the Feasibility Study project, the University reviewed and assessed the business and deployment models to determine which models, if any, could be removed from consideration. The assessment took into account the University’s business goals, complexity, and implementation timeline. Information collected through the informal vendor questionnaires and system demonstrations was also used in the assessment. The University also looked for opportunities to partner with other agencies. This section summarizes the assessment results.

4.6.1 Business Models Eliminated from Consideration

The University has eliminated four (4) business models from further consideration:

Custom Developed Software

Creating a custom solution reproduces the current environment, including all of the weaknesses of the on-premise deployment solution, as discussed in Section 4.1. It shifts compliance, business resumption, and cost overrun risks to the university, adds complexity to the procurement process, and is the least aligned solution in terms of the business goals discussed in Section 2.3 and the UW Strategic Roadmap.

Business Process Outsourced Solution

Business process outsourcing is a fully outsourced solution. It was eliminated because it cannot handle the complexities of UW, the medical centers, and research units, which all require localized knowledge and processes.

Consortium-Developed Software

The consortium business model was eliminated early in the Feasibility Study. The higher-education consortium provider, Kuali Foundation, is in the early stages of developing an HRP solution. However, their timeline did not mesh with the time constraints of the UW HRP project.

Licensed Commercial Software Solutions - On Premise Deployment

In May 2011, the Core Team, Advisors, and Issue Owners met to discuss the possibility of removing the on-premise deployment option from consideration. Of the various business models, the on-premise model is the least aligned with the UW’s business goals (see Table 3 below) and the most likely to result in a continuation of the UW’s current approach toward customized software and business processes. One of the dangers of an on premise model is inadequate or un-sustained funding for system maintenance and upgrades. The UW is more likely to stay current with the software using the SaaS or outsourced models.

Table 8 was compiled using information from the peer research and vendor sessions described in Section 3.2. The table highlights the trade-offs in terms of business goals and associated risks for the remaining deployment models. It was an instrumental factor in the decision to eliminate the on-premise deployment model. Scanning down the COTS On-premise column highlights the option’s mismatch with the stated business goals.



Table 8: Deployment Option Trade-off Matrix

Pros/Benefits √ Risks/Weaknesses X Neutral ---

COTS15 On

Premise

COTS Hosted

COTS Hosted & Managed

SaaS System Outsource

BUSINESS GOAL 1: Improve regulatory compliance

Tax-related risks X X √ √ √

Other regulatory/compliance risk X X √ √ √

Ability to stay compliant over time X X √ √ √

BUSINESS GOAL 2: Align with UW’s funding/financing strategies

Upfront capital investment X --- --- √ √

Ongoing external costs --- X X X X

Ongoing internal(HR/Payroll) costs --- --- --- --- ---

Ongoing internal(IT) costs X X √ √ √

Predictable ongoing costs X X √ √ √

BUSINESS GOAL 3: Improve integration and information available for decision making and planning

Real-time integration √ --- --- √ X

Real-time data for EDW √ --- --- √ X

BUSINESS GOAL 4: Cost and maintenance of business continuity/disaster recovery plans for payroll and HR

Business continuity/ disaster recovery X √ √ √ √

BUSINESS GOAL 5: Implement the most cost effective solution to meet the business needs

Economies of scale X --- √ √ √

Implementation cost overrun risk X X X √ √

Time to implement X --- √ √ √

BUSINESS GOAL 6: Reduce risk of aging, non-existent, obsolete and non-supportable systems

Modernize systems √ √ √ √ √

15 COTS is the abbreviation for commercial-off-the-shelf software



Pros/Benefits √ Risks/Weaknesses X Neutral ---

COTS15 On

Premise

COTS Hosted

COTS Hosted & Managed

SaaS System Outsource

Required technology renewal X X √ √ √

Reduce shadow/supplemental systems √ √ √ √ √

BUSINESS GOAL 7: Improve business processes and efficiency

Ability to customize √ √ --- X X

Control over business processes √ √ --- X X

BUSINESS GOAL 8: Improve business process integration

Control over user experience √ √ --- X X

BUSINESS GOAL 9: Provide flexible, scalable, resilient and sustainable infrastructure environment

Computing power on demand X √ √ √ √

SAS 70 data center X √ √ √ √

7x24 system availability & support --- √ √ √ √

BUSINESS GOAL 10: Free IT resources to focus on mission-critical business areas

Free up IT infrastructure resources X √ √ √ √

Free up application/IM resources X X - - -

BUSINESS GOAL 11: Reduce shadow systems

Reduce shadow/supplemental systems √ √ √ √ √

BUSINESS GOAL 12: Manage other risks

Dependence on vendor performance X X X X X

Dependence on vendor viability X X X X X

Security and data privacy X X X X X

Deployment options will be a consideration in the RFP evaluations. Trade-offs and approaches for reducing and managing risks will be assessed in the final selection and contract. Business Goal 12 and its associated risks will be addressed and minimized through contract terms and conditions (such as indemnification) and the new UW procedures and practices to manage the implemented solutions.



4.6.2 Partnership or Shared System Solution

Over the past 12 months, the UW explored partnering opportunities with two agencies: Community and Technical Colleges (CTC) and Washington State University (WSU). The UW is maintaining close contact with representatives from each organization to continue ongoing discussions of the business needs and desired timelines for each party, and to determine if there was is sufficient synergy to partner.

Community and Technical Colleges – The University of Washington participated in meetings with the State Board for Community and Technical Colleges in the spring and summer of 2011 to discuss affinities between the two organizations. The CTC’s ERP Project Director attended the vendor demonstrations that the UW hosted as part of its feasibility study information gathering. The UW shared its business requirements and planned timeline with the CTC. CTC is focusing on a complete, integrated ERP solution, while the UW’s most pressing needs are for HR/Payroll. The needs of the CTCs differ from the UW in ways that make partnering on this effort sub-optimal for both entities. Key issues include divergent business requirements (e.g., multiple medical centers, cost allocation and labor distribution to meet needs of a Tier 1 research institution, etc.), different governance needs, and different timelines and focus areas for business process redesign.

Partner with Washington State University – WSU is currently implementing a new Student Information System (SIS) using Oracle On-Demand and is not on the same timeline as the UW for replacement of its HR/Payroll system. The CIOs for the two organizations, Kelli Trosvig and Viji Murali, remain in close communications and have an agreement to share documents and leverage information and best practices when practical.

Beginning in July 2012, Ms. Murali will join UW’s HR/Payroll Executive Sponsor group as the WSU HR/Payroll representative. She will act as an intermediary to provide WSU leadership with information and insight into the UW’s HR/Payroll system replacement effort, represent the broad scope of WSU interests as they relate to the HR/Payroll systems and services, and attend Executive Sponsor meetings to gain an understanding of issues and approaches being used by the UW. WSU will also provide a representative to attend UW Core Team meetings, vendor demonstrations, and other meetings to learn the details not only about vendor capabilities, but also UW’s procurement and evaluation approaches. There is a strong likelihood that the two organizations will partner on future endeavors.

The UW has defined the requirements for a new system and plans to issue an RFP. The University will consider all viable options, including SAP, Oracle, and other solutions being used in large higher education institutions and medical centers. If the chosen solution will also work for other organizations, the UW is open to leveraging that solution in whatever ways makes sense to the UW and other organizations in the State.

UW intends to include in the contract that the successful vendor’s products and services will be available to all public higher education institutions and State of Washington organizations.


July 9, 2012 P a g e | 35 Decision to Issue a Request for

Proposal

5 Decision to Issue a Request for Proposal The activities and approaches described so far have helped to resolve the question of which document to issue: Request for Information (RFI), Request for Proposal (RFP), or Request for Quotation (RFQ):

RFI – We would not gain any new information through an RFI.

RFQ – The vendor interviews, peer institution interviews, and research did not identify one vendor or a small group of vendors with offerings sufficiently unique to justify proceeding directly to a quote.

RFP – The Core Team recommends moving into the procurement process. This recommendation has been accepted by the Executive Sponsors and the Board of Regents. The procurement process will be used to make a decision that is in the best interest of the University of Washington.

A fourth alternative, No go, is not considered an option.

The UW will issue an RFP. Vendors may respond with proposals in any of the remaining categories, as illustrated in Figure 11. The remaining business model/deployment model options are:

Subscription-based, managed solution – Outsourced system

Subscription-based, managed solution – SaaS

Subscription-based, managed solution – Hosted and managed by a vendor or third party

Licensed Commercial software – Hosted by vendor or third party

The major commercial solution providers (Lawson, Oracle, SAP, Workday, ADP, and Ceridian) have offerings in these four areas.


July 9, 2012 P a g e | 36 Decision to Issue a Request for

Proposal

Figure 11: Remaining Business Models and Deployment Options


July 9, 2012 P a g e | 37 Impacts

6 Impacts Impacts to the greater UW community will be felt not just from the implementation of a new HR/Payroll system, but also from widespread changes throughout the institution, which will be required to support the new system. For example, many currently decentralized and highly variable business processes will be automated and standardized across units, which will change how people work and the duties of their jobs. Table 9 describes change drivers across the university community.

Table 9: Change Drivers and Anticipated Impacts

Change Drivers Description

Standardization of business processes

Decentralization and lack of institution-wide systems have led to variation in business processes across UW. Implementation of an integrated HR/Payroll central system presents the opportunity to standardize business processes.

Anticipated Impacts:

Standardized business processes will result in university-wide consistent data quality, which will reduce variation and exceptions in processing and reporting.

Standardization will foster focused training and ease of cross-training.

Standardization will improve ability to coordinate and focus business process improvement efforts.

Standard configuration will enforce community-wide compliance; while preserving some flexibility to meet local needs.

Automation of business processes

Moving business from paper-based processes that are supported by multiple, non-centralized systems to a highly automated, central system will results in visibility into and efficient control of business processes. Automation will also eliminate double-entry inefficiencies and increase data accuracy.


Use of automated triggers and alerts in a modern system will reduce the amount of time it takes to correct errors and move business processes along a path to completion.

Some actions – such as time entry for campus employees – may require employees whose duties do not currently require computer access to be provided with computer availability.

Users may need to reorganize and/or change their work to fit the new system.




Automated workflow Automated workflow reduces or eliminates paper-based approvals and reliance on email approvals. It provides well-documented and flexible approval processes, audit trails, and tracks approval histories, as well as visibility into approval status.


Initially, the setup of approval routing, individual settings and preferences, and delegation will be a significant effort involving department managers, payroll coordinators and other support staff in HR, Payroll, and other central administrative units.

The amount of approvals requiring action as a result of new businesses will likely increase significantly. The added volume of automated email approval actions and notifications will be an important acceptance factor.

Currently, many payroll actions are managed using a post-entry review process, known as PERMs. There will be a shift to up-front action approvals and less post-entry review. This may increase work load, but it will decrease the risk of non-compliance and errors due to corrections and re-entry.

Business rule capture and enforcement

Compliance control will be improved significantly by implementation of an HR/Payroll system provided that business rules are first well documented, streamlined, and built into the system. Done well, the result will be efficient compliance control and enforcement, reduced errors, and business rule visibility.


Data will be validated at the point-of-entry.

Only valid options will be presented to users entering data.

Reduce the amount of time spent correcting errors.

Reduce payment errors, such as overpayments.

Improved ability to apply and enforce changing business rules.

Information for decision making; access to quality analytical data

Centralized systems will enhance the quality and uniformity of data. These improvements will enhance and support business intelligence.


Accurate and timely analysis.

Reduce data collection and manipulation time.

Reduce shadow systems.




Consistent and accurate data/institutional data definitions

Data quality is highly dependent on consistent data, built on a foundation of well-documented and understood data definitions.


Reduce conflicting and problematic reporting issues, such as multiple ways to count full-time equivalents (FTEs).

Will require start-up and on-going training effort regarding consistent use of data fields and changes in terminology as a result of the new system.

Access to operational data

Enhanced access to uniform, well designed data by UW decision support staff will support quality reporting and analysis.

Anticipated Impact

Expanded catalog of reports and analysis tools, such as cubes16.

Access to uniform and well-defined data will make institution-wide reporting and analysis easier to create and understand.

Significant start-up effort to build a catalog of reports and interfaces using new data elements.

Integration across systems

Legacy systems rely on multiple, older technologies, which make integration across systems a difficult prospect. Implementation of modern technologies and centralized systems will improve integration across HR/Payroll systems and their interfacing systems.

Anticipated Impact:

Significant effort will be required for data mapping and integration between the replacement Payroll and Time & Leave systems and the existing finance systems; and between the replacement Payroll and Time & Leave systems and the UW Medicine Health System.

Technology changes New systems will be written in programming languages that provide adaptability, functionality, and flexibility.


The IT staff may need to learn new technology skills, such as service-oriented architecture.

Adhere to a standardized software development lifecycle will help ensure quality.

16 A cube is a data structure that facilitates fast analysis of aggregated data. For more information, see http://msdn.microsoft.com/en-us/library/aa140038(v=office.10).aspx.

http://msdn.microsoft.com/en-us/library/aa140038(v=office.10).aspx




Flexibility to meet compliance requirements

HR/Payroll requirements are in a constant state and increasing rate of change.


Implementation of modern HR/Payroll system will increase our ability to keep up with compliance requirements, while reducing the cost of doing so.

System-related compliance risks will be transferred to the vendor in the business models being considered.

Increased knowledge focus, reduced data entry and processing work

Automating several business processes will allow a shift of focus from data entry/processing work to knowledge focused work.


Reduced need for entering the same data into multiple systems.

Routing workflows may increase workflow notifications.

A training effort will be required for central HR/Payroll staff, Managers, and Payroll Coordinators as their work focus shifts from data entry, auditing, and correction to maintaining quality business processes, data quality, and up-to-date system functionality and compliance.


July 9, 2012 P a g e | 41 Organizational Impacts

7 Organizational Impacts This section summarizes potential organizational impacts on the University of Washington, UW Medicine, and affiliated agencies as a result of the proposed HR/Payroll system replacement project. These anticipated organizational effects have been categorized as follows:

Changes in business processes – see Section 7.1

Job duties, roles, and responsibilities – see Section 7.2

Anticipated training needs – see Section 7.3

Anticipated change management needs – see Section 7.4

Impact on organizational structure – see Section 7.5

7.1 Changes in Business Processes Although all of the business goals in Section 2.3 hint at the importance of improved business process efficiency, two business goals address it directly:

Enhance business processes and efficiency by implementing best practices, where practical

Streamline business process integration between the departments, campuses, medical centers, and UW administrative services

Functionality provided by a modern HR/Payroll system is structured around business processes. Best practices are built into the systems and drive business process efficiency. As part of the detailed Fit/Gap phase of the implementation, the University will determine which system business processes will be adopted.

7.1.1 Business Process Redesign Project

The UW recognizes that transformational business changes are required to effectively leverage a modern HR/Payroll system. Peer research indicates that planning the desired future state for the UW’s business processes and making high-level decisions ahead of the start of the system implementation is critical to avoid cost delays and reduce the risk of reproducing the UW’s current cumbersome processes.

In preparation for the selection and implementation of the new HR/Payroll System, the UW will conduct a separate project to document the institution’s current as-is business, plan the desired future state for the UW’s business processes, and lay the foundation for change management. This work will increase our understanding of campus business processes and functions not met by the UW’s current HR/Payroll systems. The Business Process Redesign (BPR) project will be executed concurrently with the procurement with an expected duration of 6-12 months. The resources and outcomes of this effort will become part of the implementation team after contract execution and will be a critical success factor for the detailed fit/gap phase of the implementation.

7.2 Job Duties, Roles, and Responsibilities Roles and duties aligned with authorization roles will need to be defined and documented clearly in preparation for implementation of the new system. ASTRA, the current authorization system, does not



capture all of the roles and duties that will be needed in the future to support the complete set of business processes. In some cases, the existing business processes are not automated. In other cases, roles and duties aligned with existing are not systematically documented. Among the roles currently involved in HR/Payroll are:

Employee (includes faculty, staff, student, courtesy appointments, and other employees)

Person (other than employee such as applicants for employment, etc.)

Managers

Payroll Coordinators

Unit staff who perform HR/Payroll activities

Central HR staff (including Compensation, Benefits Administration, Employee Relations, Labor Relations, HRIS, Professional and Organizational Development, etc.)

Central Payroll staff

Departmental timekeepers and leave record-keepers

Central and departmental computing data analysts and report developers

Data consumers (external parties, such as Bargaining Units, who are dependent upon HR/Payroll information)

Duties currently aligned with certain roles may be shifted as a result of modifying role definitions or the nature of the new system functionality and workflow.

7.3 Anticipated Training Needs A sustained, durable institution-wide training and communications effort will be critical for successful implementation of the new HR/Payroll system. Training efforts will need to focus on the needs of each population: staff, faculty, students, managers, and executives. Training materials will be a combination of materials created and delivered by the vendor in collaboration with UW trainers and subject matter experts.

We will leverage information from the RFP and solution demonstrations to inform training needs. However, until a vendor and solution have been chosen, training needs cannot be discussed at a detailed level because the solution and vendor will determine the training needs.

While the project team is well aware that there will be a significant requirement for training on the new business processes, it is too early to project the full scope and nature of training needs.

7.4 Anticipated Change Management Needs Both the new system and the resulting changes to the existing business processes will require considerable change management. The project team will create a change management plan early in the implementation phase to prepare campus for the upcoming changes. Among the anticipated changes are the following:

Changes to existing business processes

Introduction of new business processes



Changes to existing policies

Introduction of new policies

Potential changes in job duties

In May 2012, at the recommendation of the Core Team, the HR/P Replacement Project formed an Advisory Group17 composed of administrators, directors, and managers from different colleges, departments, and organizations to help build a bridge to the campus community. The creation of this group will enhance two-way communications with campus stakeholders and the project. Advisory Group members will provide input and insight on project issues that may be seen as difficult, such as those that require balancing the needs of departments and units against those of the enterprise. The Advisory Group will serve as champions to the campus and will identify priorities for change management and business process redesign efforts. The Project Team will leverage the Advisory Group to determine when and how to engage campus at specific points in the process to get feedback and understand the impact to campus.

The project is in the process of hiring a Communications Manager to develop and execute a communications plan to keep campus stakeholders at all different levels in the university informed about the project’s progress and the changes that can be anticipated.

7.5 Impact on Organizational Structure The implementation of a new HR/Payroll system and related business process change is anticipated to have several impacts on organizational structure from a system and reporting perspective. Whichever solution the University selects will have its own data model to support HRP relationships and reporting. The University will need to leverage the new data model to meet its business needs and ensure the new system’s data structure and architecture can support data integration with other systems, such as the Financial Accounting Systems (FAS). These impacts are the subject of on-going discussions.

17 See Appendix F.5: Advisory Group for a list of group participants.


July 9, 2012 P a g e | 44 Recommended Next Steps

8 Recommended Next Steps Based on the results of the feasibility study and discussions with the Core Team and Executive Sponsors, four recommendations have been accepted and approved by the sponsors:

Prepare and issue an RFP for a replacement HR/Payroll system and move forward with a procurement

Conduct external readiness assessment

Engage external counsel in advance of the procurement

Begin work on documenting current processes and plan for the future

8.1 Prepare and Issue RFP As discussed in Section 5, the Core Team has recommended moving forward with drafting and finalizing the RFP, and initiating the procurement phase of the replacement effort. UW has completed drafting the RFP and is in the process of finalizing the document. On October 24, 2011, the UW’s Board of Regents accepted the recommendation to move forward to the Procurement Stage and formally engage the State of Washington to obtain approval to issue the RFP.

Upon approval from the State to issue the RFP, the UW will release the RFP and initiate the first stage of the procurement. UW’s procurement process for the HR/Payroll replacement effort will solicit bidder responses in a structured, four-stage approach. Responses received in each stage will be evaluated and will inform scoring and selection for participation in future stages of the procurement process, as illustrated by Figure 12.



Figure 12: Procurement Strategy

High-level Summary by Stage

Stage 1 – Mandatory & Mission Critical Requirements:

Bidders will respond to mandatory and mission critical questions, certify compliance with UW's Negotiation Procedures and provide other requested information

Stage 2 – Functional, Technical, and Bidder Questions; Solution Components, and Detailed Requirements:

Bidders will respond to the Stage 2 questions, identify requested solution components and respond to detailed requirements. In addition, Bidders will respond to the Key Business Terms Document.

Stage 3 - HR/Payroll Solution Demonstrations, Cost Proposals, and Contract and Project Documents Issues:

Bidders will present solution demonstrations on-site at UW’s Seattle campus and respond to additional functional and technical questions about or requirements for their solution. After the solution demonstrations, Bidders will submit cost proposals and a detailed issues list for the contract and project documents.

Stage 4 – Finalist Bidders Follow-Up Demonstrations, Implementation

Bidders will be required to conduct follow-up solution demonstrations at the UW Seattle campus; submit revised pricing, and participate in an Implementation



High-level Summary by Stage

Planning Study & Contract Negotiations: Planning Study and contract negotiations prior to contract signing. UW may also require the Bidder to prepare responses to additional questions and/or requirements. During contract negotiations, the University will work with the finalists to complete the contract documents, detailed statement of work, project plan, and resource plans prior to contract signing.

The goal of the procurement is to select a vendor and solution, and make a recommendation to the Executive Sponsors and the Board of Regents. To further that goal, an evaluation approach has been created in tandem with the RFP. The Project Team is working with representatives from Procurement Services, the Attorney General’s Office, outside counsel, and an outside consultant to ensure that the evaluation and procurement approach are robust, in line with industry best practices, and aligned with the priorities established in the RFP.

When the contract is fully executed, UW will begin the first phase of the replacement effort. The first major task will be a detailed fit-gap analysis in which the Project Team will assess the fit of the University’s detailed requirements and desired future state business processes against the solution with the goal of identifying any critical gaps that cannot be corrected. If a non-correctable gap is discovered, the implementation may be halted.

Concurrent with the procurement stage will be a Business Process Redesign (BPR) project working under a separate charter.

8.2 Gartner Readiness Assessment The UW engaged Gartner from January-April 2012 to conduct an independent, external readiness assessment to determine the UW’s readiness to initiate the HR/Payroll replacement effort, identify related risks, and recommend risk mitigation strategies in preparation for the HR/Payroll replacement effort. Key activities performed by Gartner include:

Interviewed key stakeholders including the Executive Sponsors, the Core Team, members of the Technical Team and the Project team

Reviewed project deliverables, including the RFP, and other relevant documents

Gartner conducted the assessment based on its risk management methodology in January and February 2012. Gartner delivered its assessment and recommendations to the Executive Sponsors in April. Appendix E: Gartner Readiness Assessment presents Gartner’s executive summary findings. The UW is currently executing a prioritized set of action items based on Gartner’s recommendations.

8.3 Engage External Counsel UW has secured the services of an external counsel who has experience developing and negotiating SaaS and hosted solution contracts for large scale IT and/or HR/Payroll system projects for higher education clients. Work performed to date by external counsel includes:



Reviewed the draft RFP from a legal perspective to identify potential issues prior to releasing the RFP to the vendor community

Advised UW on contracting best practices and worked with UW to reframe portions of the staged procurement to leverage best practices throughout the process

Drafted contract documents and a detailed statement of work which will be provided to the bidders selected to move into Stage 3 of the procurement

Worked with UW to align the contract documents and the RFP

During the procurement, the external counsel will:

Review selected portions of vendor proposals, as requested, to advise the UW of potential issues or concerns

Work the UW’s Attorney General’s Office, Procurement Services, and the Project Team to conduct the implementation planning study and negotiate with the finalists

8.4 Business Process Redesign (BPR) Project The UW is initiating a separate project to document the UW’s current HR, Payroll, and Academic HR business processes and plan the desired future state in advance of the start of the system replacement effort. The UW is currently securing the services of an external consulting firm through a competitive procurement for the following services:

Project Scoping, Planning and Prioritization

Document Existing Business Processes

Plan and Document Future State Processes

Build Change Management Plan

The project is anticipated to begin in July 2012 and complete in March 2013. The Business Process Redesign project will run concurrently with the HR/Payroll Replacement procurement. Work products from the BPR project will be used to inform content for system demonstrations and potentially other procurement activities.


July 10, 2012 P a g e | 48 Capabilities and Attributes

Appendix A: Capabilities and Attributes

Table 10 describes the business capabilities needed for the new system.

Table 10: Capabilities and Business Processes

Capability Business Process and Description

Workforce Planning

Organization – Process to maintain an organizational structure that supports a variety of business functions such as reporting, communication, workflow and routing, tracking, and access and authorization.

Position – Process of creating and maintaining positions and their attributes, and satisfying position reporting requirements. Part of this business process is the definition of a dollar amount for each position, including salary and fringe benefits, based on FTE or salary expenditure. For classified employees, the process includes calculating the average budgeted step.

Succession – Process of identifying and developing internal personnel with the potential to fill key or critical organizational positions.

Staffing Acquiring Applicants – Process of tracking applicants through the stages of the recruiting process. It includes, but is not limited to, accepting applications and resumes for an opening or requisition, interviewing, and selecting and recording the dispositioning of candidates. Acquiring applicants also includes screening and completing background checks, such as visa, affirmative action, I9, SSN, W4, and so forth.

Acquiring Requisitions – Process of creating, posting and maintaining job requisitions, includes the processes to recruit employees and faculty, such as advertising, etc.

Reporting – Provides applicant flow and related affirmative action reporting, ad hoc reporting, and data queries regarding recruiting and selection.

Onboarding – Process of hiring.

Separating – Process of ending an employee's appointment with UW for one of a variety of reasons and/or sub-processes, including but not limited to, voluntary resignation, retirement, layoff or reduction in force (RIF), or disciplinary dismissal. This process includes the necessary steps required for ending an appointment, processes for performing mass separations, and managing the unemployment insurance program and responding to claims and appeals.

Compensation Compensating: Benchmarking – Process for matching internal job content to external jobs of similar content. Used to design employer compensation packages, benchmarking includes such activities as completing and conducting salary surveys; comparing salary levels and job classification demographics using geographic data; and determining appropriate salary rates or ranges for new positions and job offers to ensure salary is competitive and commensurate with job duties. Monitoring and developing new strategies for employee compensation are also parts of benchmarking.




Compensating: Salary Schedules and Increases – Process of defining salary schedules and processing increases, including step adjustments based on salary schedule rules and an employee's eligibility, as well as administering other salary increases; e.g., merit and in-grade increases. It also includes the process of defining and performing mass salary increase for locally defined groups of employees.

Compensating: Earn Type Management – Process of defining discrete subtypes of earnings including amount values, calculation rules, and tax, benefit, and reporting implications. This business process also includes establishing and applying earnings type eligibility to individual employees or groups of employees.

Compensating: Job Classification – Process of grouping jobs with similar duties, complexities, and preparation requirements into common job titles with the same general levels of pay. Includes defining job classifications including position descriptions, assigned salary ranges, job families or hierarchies, bargaining units, and associated EEO categories.

Compensating: Administration & Compliance – Process of defining the compensation rules to ensure proper calculation of an employee's base salary. This process includes determination of overtime eligibility and compensation based on service – such as longevity or seniority pay – and schedule. Examples include application of labor contract or civil service compensation rules and FLSA regular rate and overtime calculation rules.

Compensating: Compensation Rules – Processes for creating and maintaining rules relating to compensation management; such as, periodic increment rules, earning types usage rules, job classification usage rules, and so forth.

Benefits: Administration – Process of defining the rules to ensure proper designation and management of employee retirement, insurance, and related benefits. Includes calculating and updating benefit rates; administering benefits continuation during periods of FMLA-covered leave and other ongoing benefits eligibility; performing non-discrimination testing for benefits; and defining benefit plans and programs including medical, dental, life, AD&D, disability, savings plans, retirement, and flexible spending accounts. This process also includes defining the different benefit programs and the plans eligible for election within each program; tracking irrevocable and other employee benefit elections; calculating benefits retroactively; administering COBRA; updating an employee's benefits based on a change in the employee's position or other criteria; and the process of enrolling employees in benefit plans including medical, dental, life, AD&D, disability, savings plans, retirement, and flexible spending accounts.

Benefits: Communication – Includes new employee benefits orientation and enrollment; outreach regarding benefit programs and options; annual open enrollment and event-based opportunities to make changes in benefits selections; and recurring, customized benefits program/services communications throughout the year.

Benefits: Vendors – Process of reviewing and monitoring of existing contracts, policies,




and procedures that relate to retirement, insurance, and optional benefits programs.

Employee Relations

Performance Evaluation and Reviews – Process of consulting with managers regarding setting goals and coaching for improved employee performance. This includes storing the performance record, tracking due dates for performance reviews and monitoring the manager’s completion and employee’s receipt of the completed review.

Recognition – Process for an employee recognition program including tracking employee eligibility, years of service, vendor relations, award inventory, options, and selections by employees.

Corrective Action – Process of consulting with managers regarding performance issues and recording and monitoring disciplinary actions consistent with the applicable employment program.

Disability Accommodation – Processes for submitting, processing, and tracking requests for accommodation services, advice and resources such as interpreter services, disabled parking, or transportation requests, or facilities modifications. Disability accommodation also includes arranging and documenting what accommodations were provided such as job modifications, issuance of assistive equipment, and so forth.

Health & Safety: Hazards – Process of tracking and reporting hazards.

Health & Safety: Incidents – Process for tracking and reporting incidents in the workplace.

Health & Safety: Violence Prevention – Process of training, tracking, reporting, and preventing workplace violence.

Health & Safety: Workers Compensation – Process of tracking workers’ compensation incidents and claims, tracking an employee on workers’ compensation leave, and integrating workers compensation leave with overall leave management.

Employee Communications – Process of informing employees about HR programs, services, benefits, employment policies, and the organizational mission and goals.

Work History: Faculty Tsenure – Process of tracking faculty-related data, such as tenure, tenure track, course evaluations, and promotion review and monitoring.

Work History: Data – Process of recording and storing all activities that affect faculty and staff, such as personnel actions, salary adjustments, training, awards, honors, and so forth.

Work History: Faculty Promotions – Process of monitoring for tenure-track and non-tenure-track faculty.

Work History: Faculty Biography – Process of recording and storing faculty biographic information.

Faculty Management – Process of recording and tracking faculty specific information including – but not limited to – Faculty Senate activities, rank, student assessments,




salary increases, teaching load, and so forth.

Employment Actions – Processes that support events that occur while being an employee, such as job reclassification, transfer, distribution change, retention events, status changes, appointment changes, reappointments, and so forth.

Employee Development

Educating – Process of maintaining a training and development system, including creating and managing courses and schedules for training throughout UW and Medical Centers and tracking external classes for which employees are eligible. Also includes billing and accepting payment for educating services.

Training – Process of tracking employee training and skills. This includes tracking enrollment in courses, course completion, and tracking costs and administering notifications.

Competencies – Process of tracking and maintaining training and competency needs by employee and position.

Certification – Process of tracking mandatory and compliance-related training by job classification code, department, and so forth; for example, new employee training, yearly asbestos training, and safety training for certain groups of employees.

Administering Labor Relations

Contract Management – Process that supports labor contract proposal analysis, scenario building, and decision support for negotiations.

Rule Management – Process of maintaining and managing all article provisions related to the full range of collective bargaining agreements.

Bargaining Unit Maintenance – Process of defining new and revised bargaining units and assigning and tracking an employee's affiliation with a bargaining unit.

Grievance Administration – Process of recording and tracking grievances, including stages and responses, by a variety of attributes, such as organization, issue, bargaining unit and job classification. This business process also includes facilitating grievance resolution, reporting, and analysis; and processes that support dispute resolution for employment-related issues between bargaining unit employees and UW.

Labor Reporting – Process of regular reporting to unions and governance organizations, e.g., PERC, regarding the composition and detail of bargaining unit membership. This business process also includes ad hoc reporting and data query regarding bargaining unit composition and activities for planning and development of labor relation strategy.

Time and Leave

Time Collection and Leave Rules – Process of creating and maintaining work schedules, time rules, leave eligibility, leave accrual, leave usage rules, and leave schedules.

Timekeeping – Process of managing work schedules, recording and assigning time to appropriate categories of work or leave, and approving and adjusting time.

Administering Leave – Process of managing the leave eligibility rules of various




employment programs and labor agreements; assigning leave accrual schedule to individual positions, as well as the process for employees to request and managers/staff to review and approve or deny employee requests for leave. Administering leave also includes processes for accruing and adjusting employee leave instances and balances, such as inter-state agency leave-balance transfers, organizational leave liability amounts, and the effects of leave on tenure, salary step, and leave accrual rates; faculty voting; tracking and documenting employee leave eligibility and usage (such as FMLA, military leave, sick leave, annual leave, etc.); employee leave communications and so forth.

Time and Leave Self-service – Includes self-service for employees, managers, and other roles

Time and Leave Reporting – Includes regular and ad hoc reporting and data query regarding time and leave.

Payroll Collect Payroll Activity – Process to collect all time, adjustment, employee deduction, and employer contribution transactions that should be processed during the pay cycle. Transactions may have been supplied via electronic feeds or input for processing.

Calculate Payroll – Processes to define pay periods and payment schedules and calculate gross pay, employee deductions, employer contributions, and net pay by uniformly applying one or more rule sets. Calculations must comply with all federal, state, and local laws, and all collective bargaining agreement provisions.

Record Payroll Activity – Process to maintain accounting period balances for earnings, employee deductions, employer contributions, hour and dollar balance adjustments, and hours worked as defined by one or more rule sets. Keeps a record of all payment activity for a single payment.

Remit Payment – Process for direct deposits, checks, vendor payment, off-cycle payments, pay cards, and reprints.

Verify Payroll – Process of reviewing the aggregate earnings, deductions, and contributions for reasonableness and completeness; and ensuring each current gross payment meets the expected outcome for the payee.

Finance Interface – Process of sending encumbrance, accruals, salary and wage expenditure, payroll deductions, and staff benefits expenditure from each payroll to the financial system. This process provides an official financial record of salary and wage encumbrances and related expenditures.

Labor Distribution – Process of entering and maintaining labor distribution data for earnings. It also includes distributing all earnings, deductions, and taxes to the appropriate funding sources.

Overpayment Processing – Process to collect money when employees are paid for hours that they did not work or are paid at an incorrect rate.

Involuntary Deductions – Processes for defining types of garnishments, including




disposable earnings and calculation rules. This process also includes enrolling employees in garnishments, tracking payments, and removing the employee when the garnishment has been resolved.

Payroll Tax Processing – Process of defining federal, state, and local taxes, including calculation rules and limits. It includes the process of setting up an employee’s tax record and the reconciliation and remittance of federal, state, and local payroll taxes.

Monitor Employment Eligibility – Process for monitoring an employee’s identity and authorization to work in the United States. This process applies to both U.S. citizens and non-U.S. citizens. It includes verifying that non-resident aliens hold an active, valid visa as well as processes for I-9, eVerify, monitoring visa information and verifying Social Security numbers.

Off-cycle Payments – Process to create off-cycle ("manual") checks for individuals in circumstances such as underpayments, emergency checks, and replacement checks

Payroll Self-service – Self-service for employees, managers, and other roles.

General Reporting – Processing of information and reports for payroll reporting, including the creation of payroll reports necessary for validating the payroll, ad hoc reports, vendor files, quarterly reports, and so forth.

Year-end Reporting – Processing of information and reports for year-end, including the production of employee forms such as W-2s, 1099-R, 1042S and other IRS reporting; and collection and posting of miscellaneous amounts, such as fringe benefits, for year-end reporting.


July 10, 2012 P a g e | 54 Glossary

Appendix B: Glossary

The Glossary contains terms used in the Feasibility Study that may not be in the RFP Glossary.

Term Definition

Advantiv The Advantiv tool is a web-based collaboration platform that will be used for the submission of proposal responses. In the context of Figure 4, it refers to a feature of Advantiv that assists in the gathering of requirements.

BPO Business process outsourced.

Business processing outsourcing is the outsourcing of specific administrative processes, such as health care administration or recruiting.

Cloud computing Cloud computing is computing delivered as a service. Shared resources, software, and information are provided over a network, typically the Internet.

Core solution A core HRP solution is one that provides these basic, integrated human resources and payroll management features:

Position Management

Compensation Management

Benefits Administration

Payroll

Labor Distribution

Time and Leave

Appointee and Employee Records

COTS Commercial off-the-shelf software.

Cube A cube is a data structure that allows fast analysis of aggregated data. For more information, see http://msdn.microsoft.com/en-us/library/aa140038(v=office.10).aspx.

DCAP Dependents Care Assistance Program

DCAP is a benefit that allows you to take a pre-tax deduction for eligible dependent care expenses from your pay. For more information, see http://www.washington.edu/admin/hr/benefits/worklife/dcap.html.

DoP Washington State Department of Personnel.

FSA Flexible Spending Account.

An FSA is tax-exempt account that saves you valuable tax dollars on eligible medical expenses. For more information, see

http://msdn.microsoft.com/en-us/library/aa140038(v=office.10).aspx

http://www.washington.edu/admin/hr/benefits/worklife/dcap.html


July 10, 2012 P a g e | 55 Glossary

http://www.washington.edu/admin/hr/benefits/saving/medical/fsa.html.

IaaS Infrastructure as a Service.

The solution software would be licensed by the client and installed in a third party data center. The vendor’s staff manages and operates the infrastructure.

Niche solution Specialized solutions that exist outside a core HRP solutions. Examples of niche solutions are recruiting and application tracking systems, time and attendance systems, and performance management systems.

SaaS Software as a Service.

The solution provider gives access to a shared multi-tenant system using a web interface and the client pays on a subscription basis.


July 10, 2012 P a g e | 56 High-level Time Frame

Appendix C: High-level Time Frame

Figure 13 is a high-level timeframe for the HR/Payroll replacement project. It includes integration design, KRONOS implementation, and business process redesign, as well as the HR/Payroll Replacement Project stages discussed in this document.

Figure 13: High-level Timeframe for HR/Payroll System Replacement Project


July 10, 2012 P a g e | 57 Existing UW HR/Payroll Systems

on-a-Page

Appendix D: Existing UW HR/Payroll Systems on-a-Page

Figure 14 illustrates the current HR/Payroll system at the University of Washington.

Figure 14: Existing HR/Payroll System on-a-Page


July 10, 2012 P a g e | 58 Gartner Readiness Assessment

Report Findings

Appendix E: Gartner Readiness Assessment Report Findings

The purpose of the ratings is to help identify specific areas of focus during the preparation, selection, and implementation of the HR/Payroll solution. The ratings did not suggest a need to stop or delay the project; however some of the findings have impacted the project timelines.

Appendix E.1: Overall Project Assessment Here is an excerpt from the Executive Summary:

Overall, the project is moving in the right direction. UW has assembled an excellent team and has done a good job in gaining consensus around core goals and moving a complex project forward. Key accomplishments include the following:

The project is being planned and executed in the context of UW’s Strategic Roadmap for Information Management and Administrative Systems. HR/Payroll is the first of the three core administrative systems scheduled to be replaced under this Roadmap.

Governance groups have been established to clarify priorities, resolve cross-functional issues, and manage the project on a day-to-day basis.

A Feasibility Study Report (FSR) has been completed to clarify the overarching goals and strategic implementation approach.

Core project controls are in place. There is a detailed project plan to drive the various activities and Executive Status Reports, Executive Sponsors Meeting Minutes and Project Team Status Reports provide a reasonable picture of project progress.

Both HR/ Payroll solution vendors and business process vendors were informally interviewed as part of the FSR process. Additionally, solution vendors provided demonstrations of their products. Knowledge gained from these interviews has been utilized in the development of the FSR as well as to inform the RFP.

The draft RFP has been completed.

External legal counsel, who has experience in contracts and negotiations for similar projects, has been hired to provide expertise to the HR/Payroll project. (Gartner, Readiness Assessment – HR/Payroll Implementation (March 23rd, 2012), slide 9)

Appendix E.2: Assessment Ratings The Gartner rating system is based on the state of the project when they performed the assessment in Spring 2012, before the beginning of the selection phase and still early in the planning phase. The ratings reflect their assessment of UW’s readiness to move forward with key stages of the project, such as issuing the RFP, and the status of critical pre-implementation activities.

The Gartner assessment ratings use a three-part rating scale, as illustrated in Figure 15.



Report Findings

Figure 15: Gartner Rating Scale and Interpretation

The assessment ratings address three general areas – Cultural Readiness, Resource & Effort Awareness, and Project Readiness, as shown in the next three figures.

Figure 16: Gartner Cultural Readiness Rating

Figure 17: Gartner Resrouce & Effort Awareness Rating



Report Findings

Figure 18: Gartner Project Readiness Rating


July 10, 2012 P a g e | 61 Participating Sponsors and

Teams

Appendix F: Participating Sponsors and Teams

The HR/Payroll replacement project community includes the following teams:

Executive Sponsors

Executive Advisors

Core Team

Technical Team

Advisory Group

Project Team

Appendix F.1: Executive Sponsors The Executive Sponsors are listed below.

Executive Sponsors Title and Organization

Cheryl Cameron Vice Provost for Academic Personnel, Office of the Provost and Professor, Dental Public Health Sciences, School of Dentistry

Mindy Kornberg Vice President, Human Resources

Paul Ishizuka Financial Planning Officer, UW Medical Centers

V’Ella Warren Senior Vice President Treasurer Board of Regents



Teams

Appendix F.2: Executive Advisors Executive Advisors are listed below.

Executive Advisors Title and Organization

Ann Anderson Associate Vice Present and Controller, Financial Management

Jackie Bardsley Information Technology Consultant, Bardsley Associates, Inc.

Harry Bruce Dean, Information School

Sara Gomez Associate Vice Provost for Information Management, UWIT/IM

Gary Quarfoth Associate Vice Provost, Office of Planning and Budgeting

Kelli Trosvig Vice President and CIO, UW Information Technology

Lisa Yeager Program Manager, HR/Payroll Program, UWIT/IM



Teams

Appendix F.3: Core Team Members of the Core Team are listed below.

Core Team Members Title and Organization

Alin Hunter Manager, HR/Payroll Systems, UW-IT Information Management

Bill Shirey Director, Enterprise Application Services, UW-IT Information Management

Cindy Gregovich Associate Controller, Payroll, Travel, and Records Management

Curtis Colvin Associate Director, Medical Centers Staff Services

Ginny Montgomery Assistant Director, Payroll Office

Jackie Bardsley Information Technology Consultant, Bardsley Associates, Inc.

Joe Kittleson Executive Director HR Information Systems, HR Administration and Information Systems

Katy Dwyer Executive Director of Benefits, Human Resources - Benefits

Lisa McDonald Policy Development Analyst, Office of Planning & Budgeting

Liz Coveney Associate Vice President, HR Administration and Information Systems

Michele Jacobs Administrator, Psychology

Rhonda Forman Assistant Vice Provost, Office of Academic Personnel

Shelley Middlebrooks HR Compensation Executive Director, Human Resources Compensation Office

Shirley Runkel Director, Academic Human Resources

Stacey Fauchald Director, Academic & Medical Staff Appointments, Administration and Finance



Teams

Appendix F.4: Technical Team Members of the Technical Team are listed below.

Technical Team Members Title and Organization

Alan Lechtenberg Technology Manager, Information Systems, UWIT

Alin Hunter Technology Manager, UWIT/IM

Bill Shirey Director, Enterprise Application Services, UWIT/IM

Doug Devine Analyst, Information & Data Management, Office of Planning & Budgeting

Eric Elkins Data Warehouse Business Analyst, UWIT/IM

Fabio Alves Senior Applications System Engineer, UWIT/IM

Gary Prohaska Technology Manager, UWIT

Joe Kittleson Executive Director HR Information Systems, HR Administration and Information Systems

Marylin Silva Senior Applications System Engineer, UWIT/IM

Paul Schurr Integration Architect, Application Infrastructure Engineering, UWIT

Pete Libbey Software Engineer, DSWE, UWIT

Ping Lo Systems Programming Manager, UWIT



Teams

Appendix F.5: Advisory Group Participants in the Advisory Group are listed below.

Advisory Group Members Title and Organization

Brian Tyl HR Manager, Neurology & Psychiatry, and Behavioral Sciences, School of Medicine

Cheryl Ewaldsen Assistant Director of Human Resources, Housing & Food Services, Student Life

Chris Cunnington Administrator, Computer Science & Engineering

Denise Rollin HR Director, BothellE

Eric Dahl Manager, Employment and Payroll Services, Libraries

Gary Pedersen Executive Director, Chemistry, Arts & Sciences

Heidi Tilghman Manager, Affiliate Assistant Professor, Humanities Shared Services Center Germanics, Arts & Sciences

Jennifer Buck Associate Director of Human Resources, Educational Outreach

Kelly Campbell Director, Administration & Operations, Institute for Health Metrics and Evaluation

Pam Grindley Director of Human Resources, Foster School of Business

Patti Colaizzo Director, Organizational Resources and Relations, Facilities Services

Shelby Fritz Director of Operations, Tacoma

Sheryl Vick Administrator, Microbiology, School of Medicine

Vicki Anderson Ellis Director, School of Social Work



Teams

Appendix F.6: Project Team Project Team members are listed below.

Project Team Members Title and Organization

Cynthia Berman Senior Computer Specialist, UWIT/IM

Ginny Montgomery Assistant Director, Payroll Office

Jeani Wells Business Analyst/Data Architect, UWIT/IM

Jeannette Lasseter Program Operations Specialist, UWIT/IM

Jessica Allen Senior Project Manager, UWIT/IM

Kris Olsen Business Analyst, UWIT/IM

Lisa Yeager Program Manager, HR/Payroll Program, UWIT/IM


July 9, 2012 P a g e | 67 Educause Peer Institution Payroll Systems

Appendix G: Educause Peer Institution Payroll Systems

Table 11: Educause Peer Payroll Systems is a copy of the Educause peer payroll system spreadsheet.

Table 11: Educause Peer Payroll Systems

Year Vendor Product 3 yrs System Carnegie Public FTE

Head count

University of Washington 1982 ISI

Y N DR EXT Public 35,080 39,675

University of Oregon

DR EXT Public 19,882 21,452

Florida International University 2006 ADP ADP N N DR EXT Public 28,413 38,759

Georgia State University 2009 ADP ADP N Y DR EXT Public 22,769 28,229

Kent State University 2006 Banner

SunGard Higher Education N N DR EXT Public 19,907 22,944

Auburn University 2006 BANNER


University of Illinois at Urbana-Champaign 2003 Banner SCT

SunGard Higher Education N Y DR EXT Public 40,812 43,246

Boston University 1978 GEAC Other Y N DR EXT Private 27,675 31,766

Iowa State University 1997 homegrown Homegrown N N DR EXT Public 24,620 26,856

Michigan State University 1980 homegrown Homegrown Y N DR EXT Public 42,847 46,510

University of Wisconsin-Madison 1989 homegrown Homegrown Y Y DR EXT Public 38,515 41,620

Washington State University 1986 homegrown Homegrown N N DR EXT Public 22,423 25,352

Louisiana State University 2010 Homegrown Homegrown N N DR EXT Public 26,970 28,810

Rutgers, The State University of New Jersey 1972 Homegrown Homegrown Y N DR EXT Public 32,419 36,041

Texas A&M University 1979 Homegrown Homegrown N Y DR EXT Public 44,531 48,039

University of California, Davis 1970 Homegrown Y N DR EXT Public 29,558 30,568

University of Georgia 1981 Homegrown Homegrown N N DR EXT Public 31,324 34,180

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Head count

University of Maryland 2001 Homegrown Homegrown N N DR EXT Public 33,211 37,000

University of Southern California 1985 Homegrown Homegrown Y N DR EXT Private 30,927 33,747

University of Texas at Austin 1988 Homegrown Homegrown N N DR EXT Public 47,047 49,984

University of California, Irvine 2001 Homegrown/vendor More than one N N DR EXT Public 26,243 26,984

New York University 1996 Integral Integral Y N DR EXT Private 35,554 42,189

University of Pennsylvania 1988 Integral Integral Y N DR EXT Private 21,454 24,107

University of Washington 1982 ISI ISI Y N DR EXT Public 35,080 39,675

Colorado State University 2003 Oracle Oracle/Oracle N N DR EXT Public 24,439 28,882

Ohio University 2001 Oracle Oracle/Oracle N N DR EXT Public 19,907 21,369

University of Virginia 2002 Oracle Oracle/Oracle N Y DR EXT Public 21,981 24,541

West Virginia University 2000 Oracle Oracle/Oracle N N DR EXT Public 26,267 28,840

Arizona State University 2007 Oracle PeopleSoft

Oracle/PeopleSoft N N DR EXT Public 56,770 67,082

Kansas State University 1996

Oracle PeopleSoft Human Resource Information System


The Ohio State University 1997 Oracle/PeopleSoft

Oracle/PeopleSoft N Y DR EXT Public 48,518 53,715

University of Kansas 1997 People Soft Oracle/PeopleSoft Y N DR EXT Public 26,177 29,365

University at Buffalo 2005 PeopleAdmin Other N N DR EXT Public 25,269 28,192

Harvard University 2002 PeopleSoft Oracle/PeopleSoft N N DR EXT Private 21,825 26,496

The University of Iowa 1999 PeopleSoft Oracle/PeopleSoft N N DR EXT Public 25,438 29,152

University of Michigan-Ann Arbor 2001 PeopleSoft Oracle/People N Y DR EXT Public 39,195 41,028























Head count

Soft

Indiana University 2002 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 37,279 40,354

North Carolina State University 2006 PeopleSoft Oracle/PeopleSoft Y N DR EXT Public 28,251 32,872

Northern Illinois University 2001 PeopleSoft Oracle/PeopleSoft N N DR EXT Public 20,630 24,397

The University of Arizona 2009 PeopleSoft Oracle/PeopleSoft N N DR EXT Public 33,942 38,057

University of California, Berkeley 2002 PeopleSoft Oracle/PeopleSoft N N DR EXT Public 34,222 35,396

University of Colorado at Boulder 2000 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 28,735 32,469

University of Delaware 2001 PeopleSoft Oracle/PeopleSoft N N DR EXT Public 18,754 20,500

University of Houston 2001 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 29,069 36,104

University of Minnesota 2000 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 41,333 51,140

University of Missouri 2002 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 27,047 30,130

University of North Carolina at Chapel Hill 2010 PeopleSoft


Western Michigan University 1992 PeopleSoft Oracle/PeopleSoft N Y DR EXT Public 20,643 24,818

Florida State University 2005 PeopleSoft/Oracle


University of Massachusetts Amherst 2002

PeopleSoft/Oracle


University of North Texas 2003 PeopleSoft/Oracle


University of Florida 2005 PeopleSoft; Oracle/People N N DR EXT Public 47,009 51,474






















Head count

Soft

Purdue University 2007 SAP SAP N Y DR EXT Public 38,318 41,433

University of Cincinnati 2006 SAP SAP N N DR EXT Public 24,868 29,617

University of Kentucky 2006 SAP SAP N N DR EXT Public 23,935 26,054

University of Nebraska - Lincoln 1999 SAP SAP N N DR EXT Public 21,250 23,573

The University of Tennessee 2002 SAP N Y DR EXT Public 28,000 30,410

University of New Mexico 2008 SCT Banner


Virginia Commonwealth University 2006 SCT Banner


Virginia Tech 1997 SunGard Banner N N DR EXT Public 28,606 30,739

Wayne State University 2002 SunGard UDC Banner


University of Alabama 2006 SunGard HE Banner


Oklahoma State University 1999 SunGard SCT

SunGard Higher Education N Y DR EXT Public 19,280 22,995

The University of Texas at Arlington 1996 UT Austin Other Y N DR EXT Public 19,182 25,084
















July 9, 2012 P a g e | 71 Phone Interview Questionnaire

Appendix H: Phone Interview Questionnaire

This questionnaire was used by the project team during phone interviews with vendors.


July 9, 2012 P a g e | 74 Vendor Session Handouts

Appendix I: Vendor Session Handouts

The Vendor Packet was sent to vendors in preparation for phone interviews and initial demo sessions.


July 9, 2012 P a g e | 81 Cost Estimate Questionnaire

Appendix J: Cost Estimate Questionnaire

The HR/Payroll System Cost Estimate Questionnaire was used to gather informal cost estimates for specific modules and functionality.


July 9, 2012 P a g e | 82 Cost Estimate Questionnaire

Feasibility Study: Human Resource – Payroll Management ...

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