REPORT FROM HORAN/COOPER/CAULFIELD PAYROLL TASK FORCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-01078R000100080001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 59
• Document Creation Date: December 23, 2016
• Document Release Date: December 9, 2011
• Sequence Number: 1
• Publication Date: June 10, 1987
• Content Type: MEMO

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STAT
ROUTING AND RECORD SHEET
SUBJECT: (Optional)
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;15 JUN 1987
Deputy Director
for Administration
STAT
STAT
STAT
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TRANSMITTAL
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10 June 87
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Note To: Hank & Bill
From: Jim
Subject: Report from
Payroll Task Force
This note contains my comments on the Payroll Task Force report:
Ma p. E_ Ej.nd.ings in Report
1. We need a single, integrated personnel/compensation system
built around the corporate database concepts.
2. Current OIT problems impacting ADP systems delivery:
OIT has too much work for their current resources;
OIT is forced to prioritize customer requirements (and
shouldn't have to);
OIT personnel are rotated too frequently, leaving projects
before completion;
OIT has many inexperienced people in the IDMS technology.
3. Need to quickly implement the OIT dispersed office support
(DOS) concept in OP and OF.
4. Reorganization or collocating compensation with personnel
is not the easy answer.
5. No single, large system development will work. Need to do
smaller, modular system developments.
b. A joint OF/OIT/OP Payroll/Personnel Task Force was formed in`
February. Task Force reports are due by September.
7. The current payroll/personnel systems are antiquated and
cumbersome to maintain. Only a few people truly understand
how they work.
My basic reaction to the paper is that it doesn't answer many of
the questions which you posed to the Task Force. However, I
don't believe that it would have been humanly possible for the
Task Force to do more in the 3-week period they were given.
I believe that more things go wrong because of bad management
than because of bad technology. A corporate database, or any
other integrated system, is only possible when the management
structures of OF, OF, and OIT are working toward a single goal.
The single thing which improved the applicant processing
procedures was Hank Mahoney's direction of OF, OS, and OMS
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attention and activities (especially the assignment of
as DD/OP-E). Trying to construct an integrated ADP system
would have failed where management oversight and insight
succeeded.
The only alternative I see to moving responsibility for
compensation to OP would be for Hank to undertake a similar
oversight role for this effort as well, and for us to collocate
the relevant parts of OF and OP. I don't believe that a third-
party influence role by OIT can suffice.
25X1
25X1
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ROUTING AND RECORD SHEET
SUBJECT: (optiael) Observations on th Report on the Agency
Payroll Function
FROM: Edward J. Maloney
Director of Information Technology
EXTENSION
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CIT IRIS
OIT #0384-87 LOGGED
24 June 1987
MEMORANDUM FOR: Deputy Director for Administration
FROM: Edward J. Maloney
Director of Information Technology
SUBJECT: Observations on thel (Report on STAT
the Agency Payroll Function
1. I have read the report you sent me on the Agency payroll function
authored by Let me add my observations. On the
surface, it would appear that we all know where we want to go, i.e., large,
neat, well-integrated administrative systems that can serve a whole host of
needs from pay-tech to deputy director, with very strong data discipline and
simplicity from which we could evolve for the next ten to twenty years. The
team looked at corporate data and OIT management, and then tried to develop
the issues associated with building a payroll function from a variety of
different perspectives.
STAT
2. They confirmed that each of the offices has a different perspective
on the issues. I agree with most of their observations. What they were
unable to do, however, was come to grips with the need to fundamentally change
the way we approach the problem. OF and OP must show more leadership in what
needs to be done (requirements); and OIT needs to show more leadership in how
we ought to do it. Right now all of us are too involved telling the other guy
how to do his job. The DOS concept will, I hope, move us to an environment
where the customer office makes most of the calls. -T
3. I agree, and have already talked to ~ that we need to move STAT
early on defining the data elements that are to be part of the corporate data
system. Gene will do this. This confusion, together with the confusion
(perhaps anxiety) associated with the DOS activity, and overlaid with the
stress of not enough people to get done the things that we want, all make for
a very tough environment to dig out of. As you and I have discussed over the
past two years, some of the things under way are to affect fundamental
change. That does not come easily or painlessly.
4. The authors of the report observe that there are a lot of issues that
are tough to deal with, that we all (OF, OP and OIT) ought to work as a team
to get all aspects of the issues resolved. Team work is great but I submit
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that is what we have been trying to do for the last ten years and we have paid
a high price in the rare examples where it has worked. For the most part, I
don't believe it has ever really worked and I don't believe it is working
now. Of course there are areas where team work is essential but overlaying
team work must be clear lines of responsibility and accountability. Anything
short of dramatic action in this particular area will be a signal for everyone
to keep plugging away as before. Someone must be in charge; someone must be
accountable.
5. My vote is to move the responsibility for all compensation systems to
the Office of Personnel. This doesn't have to mean people, positions, career
service, etc.); it does mean that OP will speak as THE responsible author of
priorities and requirements of our compensation systems PERIOD. Let's get on
with it.
STAT
Edward J. Maloney
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OoA ,995x- 81
2 June 1987
MEMORANDUM FOR: Deputy Director for Administration
FROM:
SUBJECT: The Agency Payroll Function
REFERENCE: Your oral request of 13 May 1987 to examine the
interrelationships of OIT, OP, OF on Payroll.
1. This paper discusses the results of interviewing key
employees in the Offices of Finance, Personnel and Information
Technology, and others, (see Attachment A). Discussions were
directed in accordance with our understanding of instructions we
received, (see Attachment B) and we used a prepared paper to
stimulate and engage those being interviewed, (see Attachment C).
We began our interviews at the working levels and progressed our way
up through each component level; the final interviews were held in
succession with the Office Directors and Deputy Directors.
2. First, there was strong, consistent support for a single,
integrated system which can share common data among DDA offices.
Secondly, use of a corporate data base, the new Integrated Data
Management System (IDMS), also received strong support. Thirdly,
all persons interviewed commented that standardization of data
elements is sorely needed in the DDA. Effective discipline,
enforced by OIT, will be essential to approach the maximum success
from the corporate data. This discipline is needed not only for
payroll/personnel related data, but also for all DDA systems
involving OS, OMS, OTE, OL, etc.
3. The Office of Information Technology has an overflowing
plate with resources strung out too far to guarantee quality. OIT
should realistically and firmly determine resources needed, i.e.
whether OIT has the available resources to do the job or whether a
private contractor should be engaged. The Director, OIT should
serve in an advisory role to customers on technical matters. OIT
should not be prioritizing customer requirements. The personnel we
spoke with in OIT are very dedicated, highly skilled and concerned.
However, at the same time they are frustrated with the overwhelming
amount of work and their difficulty in accomplishing timely high
quality work. Further, accountability is hampered by personnel
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rotations. It is accepted generally that employees often do not
remain on a project from start-up to finish. Everyone to whom we
spoke recognized that, IDMS, corporate data, is new. OIT is still
on the learning curve and is in the early stages of applications.
4. A 1984 Inspector General report on the Office of Finance
recommended that a systems division be established; this was
approved by the then DDCI. A Systems Division was subsequently
established in OF in October 1985 and includes a mix of both OF and
OIT personnel.
5. There is much interest, both pro and con, relative to the
newly proposed Dispersed Office Support (DOS) concept. The proposal
outlines the development of a DOS unit, composed of ADP specialists
from OIT and its customer office -- for example, OP. This unit
would be located in OP, managed by a senior OIT officer, and
directed by a Deputy Director/OP. The purpose of the DOS unit with
OP would be to foster better communications between system
implementors and the customer; to greatly enhance the implementors
understanding and knowledge of customer activities and priorities;
to provide timely ADP services to OP; to provide the customer with
an awareness of the system development and maintenance process; and
to insure compliance with OIT systems standards. It is our opinion
that we need to accelerate the implementation of a DOS unit in OP
and we need to establish a DOS unit in OF. In addition, we believe
that there is a definite role for an OIT consultant, at the GS-11 to
GS-14 level, in the DOS units.
6. The Agency payroll personnel systems are not integrated,
existing interfacing has difficulties. There were strong feelings
among those interviewed, including a commercial contractor, that
reorganization, in of itself, will not be the easy answer or
necessarily hasten resolution. Concensus ruled out a single big
system to address the significant payroll-personnel integrated,
shared information system. Such a system would take too long to
develop and is too people and money intensive. It also was
expressed that the working troops need help now. ELECTAS and PAIDS
II are examples which soon will assist OF. Decentralizing the
electronic input of Form 1152 will assist OP and OF. We must do
more of this modular development.
7. In February 1987, a two day meeting was held offsite and
included two levels of representaives from each of OIT, OP and OF.
Attendees report it was fruitful. Initially the parochial barriers
and mind sets were evident but the ensuing discussions broke that
down and the meeting concluded with an agreement for a joint
technical collegiate approach. As a result, the Payroll/Personnel
Task Force, composed of representatives of OIT, OP and OF, has been
charged to investigate the integration of personnel and payroll
information into a single computer system. The task force has 90
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days to develop a high level Technical Architecture plan, an
Implementation plan, and a Management plan. This joint effort is
underway and needs to be pursued with a firm deadline (see
Attachment D).
8. In many private companies the payroll function either has
been or is being placed into personnel offices. The public sector
payroll is much simpler as it involves hours and hourly rates
controlled by the company. The Agency's payroll is more complex due
to multiple categories of employees and contractual arrangements,
e.g. various scheduled tours of duties; staff and contract
employees, independent contractor, true names, pseudonyms and
aliases, etc.. Further, the continual changing government employee
pay and allowances legislation complicates Agency payroll. The
Agency must respond to these changes while considering various
impacts of security, cover, operational, and sensitivity issues,
including taxes and other external reporting requirements. Agency
payrolling is not simple. The operation is little understood
outside of the dedicated OF, OP and OIT employees who operate and
maintain the antiquated, manual and non-integrated systems. The
Agency has never missed a pay day. This is due in large measure to
the dedication and pride of the employees involved.
9. Regulations, policy and procedures must be designed and
developed to permit data input to the corporate data system rather
than requiring the system to accommmodate policies and procedures.
For example: 99% of travellers signing out of CTS arrive at foreign
post as scheduled, but commencement of allowances is held until an
arrival confirmation cable comes in to Headquarters. Allowance
payments are not being payrolled automatically on the day of
arrival, thus creating retroactive or delayed start up of payment.
The pay and allowances should be paid on time based on arrival
schedule, and payroll can handle the 1% exceptions as cables may
determine. This is a classic example of benefits to be derived by
converting manual functions to the computer for controlling
exceptions. Such streamlining in conjunction with computer
application and controls can be significant in improving service to
employees. Another opportunity for Senior Management to improve
services to the employee is to standardize certain procedures. For
example: Currently, Agency components demand or are given options
as to how to pay monetary awards, i.e. EFT, check to be sent to
office of the employee for personal presentation, etc. It took
several years and a nudge from the U.S. Treasury before management
agreed to pay all biweekly pay cases by EFT.
10. The Office of Personnel is the first contact point for a
new employee. This relationship starts in the applicant phase and
continues to the swearing-in of the appointee. That first
Form 1152, Request for Personnel Action, results in the Excepted
Appointment action and the Form 1150, Personnel Action triggers the
payroll system. From this point forward, all changes affecting an
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employee's compensation are triggered by OP actions, whether the
change involves basic pay, allowances, monetary awards, bonuses,
etc. Many of the delays in payrolling are caused by the "systems,"
which are paper and manual intensive. Now that Form 1152 is
automated, more of the monetary entitlements should be linked to
Form 1152.
11. Currently, an OIT-developed Electronic Time and Attendance
System (ELECTAS) and a Price Waterhouse-developed Payroll Automated
Inquiry Database System (PAIDS II), which will provide the
capability for automated retroactive pay computations, will go a
long way to automate two of the most labor intensive payroll work
processes while improving accuracy. The ELECTAS currently is being
implemented component by component, (OIT and OF have it now) the
PAIDS II will be phased in over the next four to nine months.
12. Moving payroll or colocating payroll will not, in itself,
solve problems of lack of automation, timeliness and accuracy.
Management in all three offices must support the immediate
development of modular applications, such as the aforementioned
ELECTAS, PAIDS II and Form 1152 to demonstrate commitment. These
modules should conform to the OIT systems standards as developed.
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Notes from Initial Meeting with DDA:
2. Duration of Review: 3 weeks (3 June 87)
3. Purpose - Payrolling - Joint Automated System with OP
a. Relationships between OP and OF, and OIT
b. Compensation Division - relationship to and with OP,
cooperation and procedures.
c. Look at Automated System - CD
What is being done now?
d. Is ACIS being developed hand-in-glove with OP?
e. DDA's intent to keep a Finance career service - does not
intend to dismantle Finance
f. DDA wants one automated system to serve both OP and OF.
How best can we go about to achieve this goal? DDA does
not want dual systems by OP and OF.
. Avoid traditions through use of computer.
C O N F I D E N T I A L
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13 May 1987
General review for identifying related payroll and
personnel processing problems with a view towards
upgrading into a single system.
This committee will wish to discuss the following areas, which
are provided as introductory starters and it is expected that
discussions may or will be expanded into other specific, related
areas:
A. How best does the Agency go about considering and developing
one, single, joint system containing common concern data related to
compensation and employee benefits payrolling which will efficiently
and effectively serve OP, OF and OIT? This is with the
understanding that "bells and whistles" will be built in to assure
controls and necessary compartmentation of certain information and
input, adjustments, query and reporting capabilities.
B. Considering the relationships between OP, OF and OIT, where
and what is the pain now? Are your systems taxed? What are data or
information exchange problems between offices which need
correction? Please be prepared to describe the level of pain.
C. What specific efforts need to be made to assure maximum
payrolling/personnel service in a timely, available and accurate
basis?
D. What, knowing what you know, would be your projection of
where we are headed?
E. Where would you like to be going? Give us your dream system
to solve your pain or problems?
F. Consider location of elements of OP, OF, and OIT performing
related payrolling function.
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NOTE: This solicitaition of information is being made in an effort
to determine the best way for OP and OF to come together to develop
a single, joint personnel compensation information and payment
system. No decisions have been made, the review is open-ended.
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CHARTER
Payroll/Personnel Task Force
20 May 1987
PURPOSE: The purpose of the Payroll/Personnel Task Force is to
investigate the integration of personnel and payroll information
into a single computer system.
MEMBERS: The Task Force will include three representatives, one
each from the Offices of Finance, Personnel, and Information
Technology. The members are:
STAT
GOALS: The Task Force will have three major goals that will be
worked in the following order:
1. Develop a highlevel subject-oriented Technical Architecture
for the new system. This architecture will encompass payroll and
personnel requirements and functions needed for the system. The
system will function within the Corporate Data environment, share
standardized data, and provide the flexibility to manage special
pay bonuses, retroactive pay, and other legislative pay changes
without changing the code.
2. Develop an Implementation Plan to build the system. This
will include the order of development, schedule for development,
and risk assessments associated with costs and schedules.
3. Provide a Management Plan to develop the system. This will
include the structure necessary to make decisions concerning
funding, maintaining standardized data, coordinating with
Corporate Data, and developing and testing the system.
TIME FRAME: The Task Force will work to complete the goals within
90 days. If the members later believe this time frame is too
short to complete all the goals, the offices will be notified of a
new time to completion.
ASSISTANCE: The members may task other personnel within their
offices for reasonable assistance as needed to complete the goals
efficiently.
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REPORTS: The Task Force will produce a written Technical
Architecture Plan, Implementation Plan, and Management Plan as
each goal is achieved. Plans will be coordinated with the three
offices involved.
STAT
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 STAT
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EXCQZ PT FRoM ~ECEM7' PRENTIC~-N4U ?IIBC/cI ri '
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PAYROLL REPORT
3-27.87 ON j
VOL. XLVI NO. 7 "PAY Ro
I
fourth notice that says if you don't pay up we're going to file a levy on your bank
account. Don't let this happen. Ask to be transferred to the Probl lution
Office. Plan in advance. Say you've got a problem you ca ' resolved. Tell them
you'll come down there and t (you can ese offices; you can contact
the service centers only by mail). If intent, you'll be transferred."
What then? Ask the PRO in e?PS to into explain your problem, ask
them to put a hold on yo unt. When they do this. 116 ust fix it before the
hold time runs a problem will automatically go to the au collection
syst 66 e i r job is collecting money," Skinner emphasized, so ask t or the
In her presentation to congress participants, Delores Risteau, Vice President of
the American Payroll Association, discussed the, reasons for the need to
communicate. She also explained the ways in which lines of communications can be
opened not only between payroll professionals but also with other employees of the
company such as the personnel people and data processing staff. Here are excerpts
from her presentation:
People talking to people. The art of talking to people is not something we
automatically develop. It takes time and a conscious effort to learn and maintain
good skills. Today, many professionals cannot effectively communicate with
anyone. But this is not an irreversible situation. Almost all of us can learn to feel
comfortable with open communication.
The art of communication is the ability to feel comfortable talking to other
people. The fact that it is necessary to talk to others in order to learn, identify
problems, and let others know our needs makes it easier to learn to communicate
with anyone. Many of us feel that if we are not professional speakers, the
presentation of new information or programs to our company management will
appear unprofessional. This is one feeling that is very hard to overcome for many of
our payroll professionals because they have little experience in this area.
The way to gain experience is to start out small. Remember that the management
staff is no different from the payroll professional when it comes to needing
information and discussing problems. They must rely on individuals like yourself to
provide accurate details and to discuss issues based on specialized knowledge.
Improved communication needed. Payroll's history of being out of the main-
stream of business operations and not being informed or involved in the major
decisions has overflowed into the area of communications as well. This has hurt the
payroll supervisor by isolating him or her from the areas where new information
and company objectives are established. (This is true for so many supervisors
relying on the information being funneled down from management for major
decisions affecting the operation of their departments.) As a result you are unable
to plan ahead for major changes.
Many payroll supervisors and other department personnel have told me that they
would give anything to be able to receive notification before changes happen within
their company. The changes which can cause a crisis in the payroll department are
usually the last communicated.
PRO office attached to their operation. And you'll stand a better chance of ge
your problem fixed.
Payroll Communications With Upper Management,
Personnel, and Data Processing.
F
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PAYROLL REPORT
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xiii
Payroll is very much in the background, unless you,bring it out in the open and
work to make your peers and supervisor aware of the ongoing contribution and
your need for participation in the operation of the company. What is happening
next week, next year, or over the next 2 years? Hpw many of the company
objectives will impact the overall payroll operation, procedures, and possibly the
computerized system? This is the information you need to acquire through
communication with people outside the payroll department. The questions which
arise from this statement are: How do you change, general attitudes? What can be
done to change the relationship with the supervisor who doesn't keep you
informed? Where can the information be obtained for increasin& your knowledge
and that of your staff?
Be visible and Involved. Let's try to answer the questions in a general sense. In
order to effect a change in how the general management staff sees you as a
supervisor you must be more visible. This can be difficult in many organizations.
You cannot just walk the halls introducing yourself to everyone. You must
implement a change in how you perceive your position as a supervisor and how
your peers and boss should see you as well. Identify the key people who can provide
more information or who you feel should participate in the decisions of your
department. Let your boss know how important you feel this association is and that
you would like to establish regular discussions with this group.
*WHAT TO DO-* It may be helpful to prepare a summary of the major changes
which have impacted your department over the past year and the cost for implementation
of recovery as a result of not having prior notice. When there is a direct cost involved
through overtime, missed deadlines or tax penalties, it is evident that payroll needs the
contact.
Just by being involved will create a change in the perception which other
departments have of payroll. Keep in mind that the personality of your supervisor
will dictate the method or approach you use to get over the initial hurdle. Only you
can determine the best technique for working with the varied personalities.
Remember you are the payroll expert in the organization. From this area of
expertise there will be one issue which can be used as a basis for the initial
approach.
Use your expertise. You must prepare a proposal for a new software package.
The programming staff and the finance departments are not convinced that the
current system cannot be held together for a while longer. However, your staff are
working more hours and performing more and more tasks manually. Each payroll
run requires more band aids to hold it together. The first thing that you must do is
to step back and look at the overall problem. Be very objective. Set aside the
emotional feelings which come from the long nights trying to isolate problems and
listening to the grumbles of your staff. This project may be the most important of
your career. List current issues; increase in labor costs for overtime, additional staff
to perform manual functions; and any other increase of costs. Remember even a
decrease in efficiency is costing the company.
Summarize your proposal for ease in presentation and use your statistical
material for backup support. Facts tell the story. Your proposal may be given to
your direct supervisor or may be given to upper management. You should be
prepared to present facts and figures. Knowing your material is the key. If the
proposal is to be given to management, do not release the material to another
6 ? 1987 by Prentice Hall. Inc.
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person for presentation. You have the knowledge and can support your material
with answers to questions. Even the most disinterested person will be impressed
with a well-prepared report and well supported facts are hard to dispute.
If the boa doesn't Inform. This is the toughest situation to deal with because you
are being left out. Important changes are taking place and your boss does not even
think to inform you. Keep in mind that the priorities are different for you and for
your boss. If this person is supervising multiple departments, it may very well be
that this was an oversight. If this happens frequently, you should confront the
situation and talk to your boss about what is happening and work out better
communication. If the payroll is as important to the company as the studies tell us,
then the boss will want to work with you. If you hit a wall and cannot seem to
make the boss see the importance in your request for more timely information,
YOU must decide whether to push for your request or to back down and try doing
the best job possible. Where do you go when you're not making any progress in
communicating with the boss? If your company has an employee relations
department you should be able to lodge a formal complaint or the personnel
director should be able to provide assistance in handling the individual as well as
the situation without hanging yourself in a noose.
Now may be the time when you have to defend your position within the
company and take a firm stand. This is not what you wish to hear but, there is no
ready answer to this problem. Personalities cannot be classified in neat orderly
types. The person you need to form a link with has different motives, priorities, and
a different personality than yours. All these factors must be taken into account and
considered when working out your strategic plan.
Remember to retain your professionalism in handling such a very touchy
situation.
Improving communications with personnel. Let's talk about improving your
communication with the personnel supervisors. This may not be a favored subject,
but it is a fact, payroll and personnel are still at war:
When payroll and personnel do not share common interests and openly discuss
their problems and system needs, neither will they be able to meet the overall
commitment required in business today. Communication between these depart-
ments is essential to your job.
The original source for the payroll employee data is with the personnel input.
Information, which is incorrect or late, creates payment problems for payroll. It is
payroll, not personnel, that looks bad when an employee is not paid correctly. So
the primary need creates the basis for forming open communication lines.
Week after week the payroll staff grumbles about the paperwork from personnel
but rarely is anything done to correct the situation. Neither department takes the
initiative to improve the conditions. Payroll and personnel depend on the same
information and this dependency requires cooperation.
There seems to abound throughout companies the myth that payroll and
personnel are working for different management teams. The separate reporting
lines cause aif automatic wall to be thrown up. The organizational needs are the
only important issue and must be put above reporting lines and differences in
responsibility. Payroll is dependent on personnel for information and personnel is
dependent on payroll for information. If either group fails to do its job, it affects the
other.
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Resolving differences. Major companies with active ' war conditions between
payroll and personnel have been very creative with solutions. In one company the
two groups were moved into the same room. Management felt this would bring
them into closer proximity and take away the problems. The solution contained the
problem but did nothing to solve the basic differences.
Another company changed the reporting lines and had both departments report
to the Industrial Relations manager. Now they didn't argue with each other, they
had a new person who knew nothing about what either department was responsible
for and made decisions based on labor law and statistical information. The real
problem is lack of communication between the supervisors of payroll and
personnel. Regardless of the ultimate reporting responsibility, these two depart-
ments must work out their differences and work together.
A cooperative team of payroll and personnel supervisors can meet the needs of
both departments and fulfill company objectives. In order to obtain this goal, steps
must be taken to improve the ability to meet and discuss areas of concern. Since
payroll is totally dependent on personnel for employee information, they have
much more to be gained in a new relationship than does the other department.
Take the first step and contact the personnel supervisor for lunch. The relaxed
environment will make it easier to talk. Be up front and lay out the problem which
you feel exists.
Be willing to accept criticism of attitudes within your staff or even possibly
yourself. If this is to be a serious attempt at laying the groundwork for improved
teamwork, then be professional about the process. Personnel may have built up a
bit of hostility of their own.
The results you are looking for are to improve efficiency while improving the
relationship for both departments. If both supervisors are willing to work on the
same goal, start with an analysis of the efficiency levels for both departments.
Efficiency level checklist. The following checklist will provide a starting point
for you. Your needs may be greater or much less, or you may only wish to work on
the open discussions before jumping into a major analysis. The method must suit
your needs and your style as well.
Step 1. List every function performed by each group.
Step 2. List the source of information required to perform each function.
Step 3. Meet and compare lists.
Step 4. Identify all functions using same source.
Step 5. Identify all functions duplicated on both lists.
Step 6. Analyze major problem areas with the input from one system or
department to the other and discuss possible solutions to eliminate the
repetitive work and the rework on errors.
Step 7. Re-align functions if possible to eliminate duplicate work in either
department. Improve the efficiency levels.
Step 8. Written agreement between supervisors for plan for improving efficiency
and ongoing problem resolution between the departments.
Step 9. Inform your staff of plan and new procedures.
This is not a solution to the missing communication. It is only an approach
which can serve two purposes - to open the doors to better relationships and to
L ? 1987 by Prentice Hall, Inc
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future discussions in the formation of better communication. The start is at the
beginning. So even if you have attempted this move before, try again. The person
may be more receptive this time. They may also be weary of the battling
relationship. People talking to people does make a difference.
Communication with data processing and technical staff. The methods of
communicating with data processing and your programmers may require an
entirely different approach than with any other group. The data processing staff
have one purpose: to create information reports through the specific programs
scheduled through the system job stream. They are not involved in the daily
operations of the business and are not interested in becoming involved unless it
directly affects their job.
For years, those of us in payroll heard that we spoke a foreign language with
"fica, fui, sui, etc." Now that honor belongs to the data processing and technical
staff who talk about "bits, tape versus disc, and job: streams." Many of the data
processing and technical people feel that the general system user does not know
what they need and cannot translate the information so, why not give them what
we think they will use. This is not an uncommon occurrence in major companies
who have utilized full computerization for 25 years. How many times in the past
have you requested information reports or changes to existing reports just to be
told that it cannot be done. Does this mean cannot be done today, tomorrow or
ever?
The frustration caused from the type of interplay on terms usually forces the
supervisor back to performing the task manually. The feeling that there is no
recourse or way around the situation, leads back to the manual versus computer.
Do not revert back to performing the task manually: Verify for yourself that the
data is available on the data base, that the basic software can re-sort in a different
order, and also that the information is not already available on a different report.
Be knowledgeable. There is one important thing to remember. Become know-
ledgeable so it is not easy for others to convince you that it is impossible to turn you
in another direction. Relationships with data processing must be developed with
shared knowledge and ideas. Find out how the computer works. If you are
responsible for a major system operation and input to the system, learn the basic
operation in order to properly use the equipment and system.
The best way to become familiar and comfortable with computer operations,
programmer language and the overall operation of computerized systems is
through formal, basic data processing classes. Most companies offer data
processing, analysis and basic programming.
Add this information to knowledge of your company's system requirements, and
you have a basis for association with the members of your system support team.
The programmers, system analysts as well as the data processing supervisors who
are responsible for the operation of the payroll system are your support team.
Without them there would be no production of the information supporting the
payroll (Unctions.
The experience and training are very different between most payroll supervisors
and data support professionals. Many payroll professionals have been selected and
some drafted from various positions within the company and have received their
formal payroll education through 'trial and error'. They have had to learn quickly
in order to complete the job.
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The data support professionals have had formal training in their area of
expertise, processing of data, operations, programming and analysis. They
naturally expect that all other people must become as knowledgeable as they are if
communication is to flow. Yet at the same time, some do not want to share the
knowledge since the mystery will go away and they will no longer be a select
powerful group.
Respect has been earned for the highly efficient technical group. They have
become the experts in operation of the systems, but you are still the expert in
payroll operations. The first step is to identify the common ground for the 'experts'
and allow for the exchange of knowledge to happen.
How do you go about this sharing process?
? Prepare a summary of what you have learned about the operations, list sensible
questions which address the problem areas and operations which you do not fully
understand. These questions are the key to opening the door of communication
with your support team.
? Ask for their time and state the purpose of the request. Allow the meeting to be
held in their offices or work areas, everyone is more comfortable in familiar
surroundings and materials may be available there which will be needed in the
discussions.
? Present your summary of the overall operation of the system and ask for
verification that the information is accurate for the basics you have presented. This
exchange will begin the process of information sharing between you and the
support group.
? Let them know that you have prepared questions for areas you do not
understand or where information was not available in your research. If time allows
and everyone is agreeable, present your questions. Remember that some questions
may require research and cannot be answered at the first meeting. Set up a
followup meeting which is agreeable to all for the additional information to be
presented and discussed.
By using an approach similar to the one presented here, you will let others know
that you take the process of learning very seriously and that you are willing to take
an active part in the team effort of operating the system. The resolution of problems
will be easier with everyone working together. And through the application of each
person's experience and knowledge resolution may be much faster than before.
Payroll and Human Resources Interface
"Payroll is the oldest support function in an organization. It started out simply
with calculating pay. There wasn't any personnel department at that time, just
perhaps art? individual responsible for personnel," observed Charles E. McKnight,
Arthur Andersen & Co. "The real birth of personnel as a true separate function
occurred in the 1950s, but the function appeared way down the organization
chart." Today there's a need for a closer interface between the two, McKnight said,
and he outlined some of the history that has led up to this need. Dana LaChapelle,
also of Arthur Andersen, followed up with a discussion about the implementation
of an integrated payroll /personnel system.
Historical perspective. Payroll has traditionally been placed under a vice
president of finance, personnel under an administration vice president. Personnel at
0 ? 1987 by Prentice Hall. Inc
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first didn't have the stature of payroll. For example, when it gained the
responsibility for hiring, it didn't also gain the responsibility for keeping records.
By the early 1960s both the payroll and personnel functions became more complex.
- Automation. Automation started coming about in the '60s with a payroll
application. Then came the advent of MIS (management information systems),
which grew out of payroll and was placed under finance. Soon benefits, which had
also started under payroll, moved out into its own entity under finance.
- Compliance reports. In the '60s and '70s we were faced with compliance
reports: EEOC, OSHA, ERISA. All of these legislative reporting requirements
were affecting payroll, benefits, personnel, and MIS. How did we respond to
compliance reporting? McKnight asked. Find out who had the most data.
Personnel had some, but a lot of it was in file drawers. With compliance sparking
their efforts, businesses began taking a closer look at ways to merge data systems.
Today's problems. Payroll, with 20 years' experience with automation, had
learned the technology. Human resources, as personnel was now called, was just
beginning to develop data base systems, but they weren't "state of the art" systems.
Further, there was still a lot of manual effort involved, McKnight pointed out. In
reality, we had two separate systems with data communication between the two.
Changes to these separate systems are difficult, McKnight said. Payroll changes
tend to be quantitative, mandated/legislated, while human resource systems are
qualitative, and although the information is important it has no true feedback. But
the '80s are where we are facing serious problems:
- Problems associated with deregulation. We're seeing lots of merger and
acquisition activity, McKnight said. (About 90% of the workshop participants had
been involved in such activity.) How do you cope with different corporate cultures?
Different benefits? Different data bases?
- Problems associated with downsizing. There's more work here for payroll as
companies cut back on redundant support functions and reduce middle manage-
ment levels. Payroll still has to pay people, human resources still has to handle
personnel matters, but you're both losing your staffs.
- The issue of decentralization. "Decentralization is the buzzword of the '80s,"
McKnight said. "Let's decentralize while we're downsizing and while we're trying
to expand the business through acquisitions and mergers. It's a tough problem
you're facing: balancing economy of scale with responsiveness to the visions, and
with fewer people at your fingertips." How do you accommodate deregulation,
downsizing, and decentralization' "My answer is automation," McKnight said.
- Automation. There's been an amazing growth of the number of PCs in offices.
They're wonderful stand-alone "functions," McKnight said. But few organizations
have truly capitalized on the decentralization and dissemination capabilities of PCs.
You must plan for more use.
McKnight said he proposes that the barriers come down between payroll and
human resources. The two must work more closely together. "The information you
both have is only good if you can consolidate it for management's use. "
The human resource information system. What's needed in a total human
resource information system (HRIS)'' If you look at it in terms of a wheel with
spokes, the employee data base would include the following items, Dana
LaChapelle explained:
? Applicant processing
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? Salary administration and employee relations
? Payroll processing
? Benefits and retirement (vacation and sick pay, medical and dental, flexible
spending, deferred compensation, pension accumulation, retirees, benefits profile)
? Employment history
? Training and development
? Position control and manpower planning
? Compliance reporting
The total integration of employee data offers you flexibility, timely and accurate
management information for planning and control, and simplified procedures and
manual processing requirements. Why should you have an integrated pay-
roll/personnel data base? It simplifies employee data base maintenance; it provides
accuracy; it eliminates redundancy ("where there are multiple sources of
information, there are multiple interpretations of information"). And most
importantly, she said, it recognizes that human resource information is a corporate
asset and that systems shouldn't reflect departmental orientation. "This under-
scores the need for payroll to work with other human resource functions," she
emphasized.
Keep this in mind: Payroll functions remain static - payroll systems provide a
means to pay employees. Their functions include maintaining pay data, collecting
pay data, processing pay input, computing pay, controlling pay, disbursing pay and
interfacing pay data. Other human resource areas define the rules - these systems
are dynamic and changing.
A systems development approach. The key success factors in systems develop-
ment, LaChapelle said, are:
- Adequate user involvement throughout the systems development life cycle. This
includes both the functional and technical specifications. "Don't abdicate your
responsibility in the systems development process," she advised payroll partici-
pants.
- Clear communication with the MIS department. How will you manage the
project? LaChapelle said that first you need to develop and get commitment to a
comprehensive work plan. You have to identify the steps, spell out responsibilities,
and set a realistic schedule. You need an organizational structure for the
administration of the project, and it should be one that fosters communication and
provides a means for resolving policy issues. And you need to set controls in place
(defining review and reporting procedures, for example). All these items are part of
the strategic planning that must be done before starting the project.
The four-step approach. The first phase is the information planning phase in
which the goal is to develop a blueprint for MIS activities. You will need to identify
the projects, personnel, policies, and economics of the MIS system. What are the
payroll manager's responsibilities in this phase? LaChapelle mentioned these:
is Help review current operations to provide an adequate and accurate perception
of the operations in your department.
? Describe information objective.
? Define the support you get from current systems. Be sure to specify the
requirements that aren't being met.
G ? 1987 by Prentice Hall. Inc
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Quotes of Note
"You can't run a payroll department without being a perfectionist." -
Carl L. Jahn, Payroll Manager, Mayo Clinic
"Social Security will be there when you get there. It's operating on a
financially sound basis today, despite the legitimate concerns of a few years
ago." - Dorcas Hardy, Commissioner. Social Security Administration
"Once you get a contact at the IRS, hang on to it! It's like gold! And get
the person's phone number." - Floyd Skinner, tax consultant
"Payroll managers and tax administrators have a lot in common .
including the challenge of managing constant change. With the dawn of this
information technology age, change means much more than rewriting job
descriptions and adding new job responsibilities. It often means getting used
to entirely new ways of doing business. And the rate of change is accelerating
with time, not slowing down. As only Yogi Berra could put it: 'The future
ain't what it used to be'." - Lawrence B. Gibbs, Commissioner of Internal
Revenue
p
information plan.
? Help define the conversion strategy.
- Step 2. Preliminary systems design. The key outputs of this step, LaChapelle
said, are: application software evaluation and design; installation plan; and cost-
benefit analysis. The payroll manager's responsibilities:
? Review the project scope and the work plan.
? Ensure adequate user participation.
? Help define application software selection criteria.
? Help select the package and spell out any necessary changes.
? Help develop the plan for migration - user participation, conversion
timetable, critical path/target dates.
- Step 3. Systems installation. The key outputs of this step include installed and
tested software in place; user procedures developed; and the converted system in
place (be sure this includes the manual procedures in your department). The
payroll manager's responsibilities:
? Monitor project work plan.
? Ensure adequate user participation.
? Help resolve design points and issues.
? Review and approve conversion plan.
? Develop user procedures and make sure they're workable and understandable.
? Conduct training.
? Assist in system testing and conduct user test.
? Convert to new system.
- Step 4.? Production system support. In this final stage, the payroll manager has
the following important responsibilities: Help monitor the system, including both
the automated and manual procedures. "When you update the system," LaCha-
pelle pointed out, "be sure to update the procedures."
? Review the project descriptions that are being developed as
art of the
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? Identify and document desired system changes.
? Set priorities for enhancements.
? Help implement changes.
Although this is the final step, remember that this systems development
approach is an ongoing process in which you'll be repeating steps as the need arises,
LaChapelle reminded participants. And be sure you always have clear lines of
communication with the MIS department.
Education in Payroll - You Can Make It Happen!
"Today's payroll manager or administrator needs software and hardware savvy,
current tax knowledge, accounting expertise, and awareness of all manner of
government requirements," James Maumus, Payroll Manager, McDermott Incor-
porated, told congress participants in a keynote address. -Maumus, 1986 Payroll
Man of the Year, recollected how some of the audience probably got their payroll
jobs:
"You may have been an accounting clerk, a bookkeeper, or an accountant. And
the payroll manager needed someone to fill a vacancy. You were told: 'There's
nothing to it. It's just clerical work. You can do it.' or 'We have a real mess down
there and we need someone with your organizational skills. You can do it."'
This won't work anymore, Maumus said, and payroll people, especially APA
members, must educate their management, their colleagues, and the community
where they work about the job of the payroll professional.
What you can do. Payroll practitioners need sources of education in all the new
elements of their jobs - taxes, electronic systems, accounting, and government
requirements. Although APA and its local chapters have taken some steps to
provide these educational opportunities, more must be done to promote formal
payroll education in recognized educational institutions, Maumus said. "You must
teach payroll to others," he stressed, "because people not engaged in payroll on a
regular basis can't teach it to others." How to go about this:
- Demand payroll education in local colleges, universities, and business schools.
Make yourself available to participate. Seek out the school administrators and
explain the need. Offer to work with them to prepare a continuing education plan,
for example.
- Use this acceptance to show businesses and managers in your area the
importance of education for payroll staffs.
- Remember that only you can demonstrate the importance of payroll.
Case in point. As a self-taught trainee himself, Maumus said he recognized the
need for formal educational programs. So he approached the continuing education
division at the University of New Orleans. The proposal: a program of 12 two-hour
sessions leading to Continuing Education Units and a certificate in payroll
accounting administration. The proposal was accepted after he convinced the
university administration of employers' needs for such a program. The proof of the
need: although it was anticipated that only a dozen or so "students" would show up
for the course, 35 people registered immediately and another 35 were soon
knocking on the door.
"You should consider doing the same," Maumus said. "You have the skills,
knowledge, and ability!"
Q ? 1987 by Prentice Hall. Inc
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Joint
Financial
Management
Improvement
Program
December 1986
Meeting the
Challenge of
Modernizing the
Government's
Financial Systems
By Using Off-the
Shelf Software
and Systems
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The Joint Financial Management Improvement Program (JFMIP) is
a joint and cooperative undertaking of the Office of Management
and Budget, the General Accounting Office, the Department of the
Treasury, and the Office of Personnel Management, working in coop-
eration with each other and with operating agencies to improve
financial management practices throughout Government. The Program
was initiated in 1948 by the Secretary of the Treasury, the
Director of the Bureau of the Budget, and the Comptroller General,
and was given statutory authorization in the Budget and Accounting
Procedures Act of 1950. The Civil Service Commission, now the
Office of Personnel Management, joined JFMIP in 1966.
The overall objective of the Joint Program is to make
improvements that contribute significantly to the effective and
efficient operation of governmental programs. Activities aimed at
achieving this objective include:
--Developing general objectives in those areas of common
interest to the central agencies for guiding the improve-
ment of financial management across government and
promoting strategies for achieving those objectives.
--Reviewing and coordinating central agencies' activities and
policy promulgations affecting financial management to
avoid possible conflict, inconsistency, duplication, and
confusion.
--Undertaking projects and special reviews of significant
problems and new technologies in financial management and
publishing the findings and conclusions, often in the form
of "best practices," as guidance to the operating agencies
and with recommendations, if appropriate, to the central
agenices.
--Acting as a catalyst and clearinghouse for sharing and
disseminating financial management information about good
financial management techniques and technologies.
--Reviewing the financial management efforts of the
operating agencies and serving as a catalyst for
further improvements.
The JFMIP plays a key role in mobilizing resources and
coordinating cooperative efforts in the improvement of financial
management practices, and relies on the active participation of
Federal agencies to be successful. The Joint Program is guided by
a Steering Committee consisting of key policy officials from each
of the central agencies. A key official from a program agency,
currently the Department of Agriculture, also serves on the
Steering Committee. A small staff headed by an Executive Director
provides support to the Committee.
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MEETING THE CHALLENGE
OF MODERNIZING THE GOVERNMENT'S
FINANCIAL SYSTEMS BY USING
OFF-THE-SHELF SOFTWARE
AND SYSTEMS
Joint Financial Management Improvement Program
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EXECUTIVE SUMMARY
The purpose of this paper is to explore the challenge and
principal issues related to using commercially packaged software
and government-owned systems, in lieu of custom development of
systems, as a means for modernizing the government's financial
systems. The paper also explores ways for accelerating the
modernization effort.
All the major aqencies participated in at least one of two
forums held in September and October, 1986, on this topic. The
forums addressed a number of questions, including:
o Can commericial software meet the accounting and volume
processing reauirements of large agencies?
o To what extent should agencies be customizing vendor-
supplied core software to cover current requirements?
o Can vendors respond timely to future user needs and new
governmentwide requirements?
o Can the strategy of using off-the-shelf software be
enhanced by standardization of core financial requirements
across all major agencies?
o How do the use of off-the-shelf software and the
government's initiative on further standardization of data
elements, classifications, etc., relate to each other?
This paper answers these and other key questions which were
discussed in the two forums.
The overall conclusion is that the use of off-the-shelf
software represents a preferred approach for modernizing the
government's financial systems, thus confirming the policy set
forth in office of management and Budget Circular A-130. Most of
the agencies expressed a strong sentiment for letting the market-
place meet, to the maximum extent possible, their needs for modern
financial systems.
In addition, nearly all agencies were supportive of
initiatives toward further standardization as a means to achieve
greater uniformity and integration of systems and to better meet
the information needs of managers.
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ACKNOWLEDGEMENTS
The Joint Financial Management Improvement Program would like
to thank those many agency people who participated in the off-the-
shelf software forums held on September 19, 1986, and October 22,
1986, and contributed their thoughts and experiences for the
benefit of others. We owe a special thanks to the Federal Finan-
cial Managers' Council for its willingness to co-sponsor the
September 19 forum, and to the Department of Labor for hosting
both forums.
In addition, we also owe special appreciation to those many
program and central agency officials and staff who, in providing
their thoughts and insiqhts on the draft paper, appreciably
increased the value of the finished product as an implementation
guide for Federal agencies.
a&"
David V. Dukes
Executive Director
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Page
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . i
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . i i
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . 2
KEY QUESTIONS AND ANSWERS . . . . . . . . . . . . . . . . . 4
1. Can Commercial Packages Truly Meet the
Accounting and Volume Processing Require-
ments of Large Agencies? . . . . . . . .
2. To What Extent Would it be Appropriate for
Aqencies to Customize Vendor-Supplied Core
Software to Cover Unmet Requirements? . . . . . . . 6
3. Can Vendors Respond Timely to Future Needs
of Agency Users and to New Governmentwide
Requirements? . . . . . . . . . . . . .
4. Can Vendors' Software Packages Meet
Agencies' Management Information System
(MIS) Needs and Future Direction? . . . . . . . . . 9
5. Are the Time and Costs Required for Imple-
menting Off-the-Shelf Software Often
Understated? . . . . . . . . . . . . . . . . . . 10
6. Are There Long-Term Risks in Relying on
Vendors to Support the Financial Software
Needs of the Government? . . . . . . . . . . . 11
7. Do the Advantages of Using Commericial
Packages Outweigh the Advantages of
Upgrading or Rebuilding Existing Federal
Agency Systems? . . . . . . . . . . . . . . . . . . 11
8. Can the Strategy of Using Off-the-Shelf
Software be Enhanced by Developing Generic
Functional Requirements for Use Across
Government? . . . . . . . . . . . . . . . . . . 13
9. How Do the Use of Off-the-Shelf Software and
the Government's Efforts to Standardize Data
Elements Relate to Each Other? . . . . . . . . . . 14
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INTRODUCTION
A key improvement objective of the Federal Government is to
modernize, integrate and consolidate its financial systems. The
goal for the future is a single, integrated financial manaqement
system for each major agency. Related objectives include accu-
rate, comparable financial information and efficient, effective
internal controls.
To give policy direction to this effort, the Office of
Manaqement and Budget (OMB) issued Circular A-127, "Financial
Management Systems," dated December 19, 1984, and followed up with
additional quidance several times during 1985. One of OMB's most
significant new reauirements was incorporated in Circular A-130,
"Management of Federal Information Resources," dated December 12,
1985. Under this Circular was the requirement j hat agencies must
acquire "off-the-shelf" software and systems in any replace-
ment of current systems, unless the cost-effectiveness of develop-
ing custom software is clear and has been documented. This new
requirement qave rise to a number of important issues among the
agencies.
In the meantime, the initiative to modernize, integrate and
consolidate financial systems has been moving slowly. It clearly
is in need of a significant boost to speed up the agencies'
efforts.
The purpose of this paper is to discuss the challenges
related to use of off-the-shelf systems and to offer suggestions
for resolving issues so as to help clear up concerns and confusion
among the agencies. In addition, the paper provides suggested
actions for accelerating_ the efforts toward modernization. The
paper incorporates many of the comments and thoughts of aqencies
which reviewed the discussion draft.
1/"Off-the-shelf" software and systems includes commercial and
qovernment-owned applications software and commercial applica-
tions-building software tools such as data base management
systems, decision-support systems, report generators, data
dictionaries, and other fourth qeneration lanquaae (4GL) tools.
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In modernizing financial systems, OMB's basic approach with
the agencies has been to let them achieve the goals of Circular
A-127 in a manner that best suits their needs, except that:
- the systems they develop must not be too costly;
- the systems must reduce and consolidate the number of
current financial systems;
- the systems must enhance uniformity of budget, accounting,
etc. ; and
- the systems must enhance internal controls.
To implement this strategy, the agencies have been precluded
from building their own customized financial systems (custom
building normally takes too long, is normally too costly, and does
not seem to enhance uniformity). They have been directed to:
- acquire and use commercial off-the-shelf software, where
feasible;
adopt and install another agency's system (if it meets the
tests of a modern system);
- use cross-servicing from another Federal agency (such as
the General Services Administration and Agriculture's
National Finance Center); or
- use some combination of these approaches.
The policy requiring the use of commercial software has been
a particular challenge to the large agencies. In mid-July, 1986,
the Federal Financial Managers' Council and the Joint Financial
Management Improvement Program co-sponsored a forum on Circular
A-127. At that forum, a number of the large agencies expressed a
belief that, without any success stories to point to, vendors'
current off-the-shelf software packaqes have not shown to be
adequate to meet their complex accounting requirements. The only
Federal agency implementations to look at and talk about have been
in basically uncomplicated bureau-level operations, perhaps with
limited functional activities compared to the immense scope of
departmentwide accounting requirements and activities of the large
departments.
This issue and other concerns (such as generic functional
requirements and standardization) were discussed in another co-
sponsored technical forum on September 19, 1986. The forum was
attended by representatives from all the central and major agen-
cies. Several agencies discussed their evaluations of off-the-
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shelf accounting systems and several bureau-level agencies
discussed their implementation and actual use of commercial
software packages. A second forum was held by the JFMIP Steering
Committee on October 22, 1986, with several deputy assistant
secretaries and controllers to review, from a policy viewpoint,
the use of off-the-shelf commercial software and standardization
of functional requirements.
The forums ended with several agencies continuing to have
mixed views due in large part to the lack of success stories at
that point among the large agencies. However, subsequent to the
forums, a number of successful large-scale implementations of
packaged software have come to light in State and local govern-
ments, as well as one in Canada's Defense Ministry. Nevertheless,
a number of issues, discussed in the next section, need to be
resolved. In spite of these issues, most agencies favored the use
of commercial software, and a few favored use of an appropriate
government-owned system, as cost-effective bases upon which to
build toward long-term improvement of the government's financial
systems. Most agencies believed that the major drawbacks of
commercial packages could, in time, be overcome with appropriate
central agency policy direction and coordinated efforts of the
agencies working with the software vendors. Nearly all agencies
expressed their support for governmentwide standardization of core
requirements under leadership of the central agencies through
JFMIP.
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KEY QUESTIONS AND ANSWERS
The off-the-shelf software concerns and issues identified in
the two forums are summarized into the following nine key
questions:
1. Can commercial packages truly meet the accounting and
volume-processing requirements of large agencies?
2. To what extent would it be appropriate for agencies to
customize vendor-supplied core software to cover unmet
requirements?
3. Can vendors respond in a timely fashion to future needs
of aqency users and to new governmentwide requirements?
4. Can vendors' software packages meet agencies' MIS needs
and future direction?
5. Are the time and costs required for implementing off-the-
shelf software often understated significantly?
6. Are there long-term risks in relying on vendors to
support the financial software needs of the government?
7. Do the advantages of using commercial packages outweigh
the advantages of upgrading or rebuilding existing
Federal agency systems?
8. Can the strategy of usinq off-the-shelf software be
enhanced by developing generic functional requirements
for use across government?
9. How do the use of off-the-shelf software and the govern-
ment's efforts to standardize data elements relate to
each other?
Each of these questions is addressed in the following
paragraphs.
1. Can Commercial Packages Trul Meet the Accounting and Volume
Processing Requirements of Large Agencies?_
This question has two dimensions for commercial packages:
Can they handle the more complex functional accounting require-
ments found in large agencies? And can they handle the higher
volume processing loads of these agencies?
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Complex Accounting. Large agencies do indeed have complex
accounting requirements, including trust funds, working capital
funds, management funds, cost allocations, etc. Many of the
requirements are programmatic in nature, such as those that are
found in many of the government's loan programs, and there is a
question whether current packaged software can handle the many
breakouts of data for the major agencies which have diverse
functions. Where specific requirements are unique, there should
be no expectation of vendor software meetinq those requirements.
The more unique the requirements are, the greater is the deterrent
to cost-effective use of vendor software.
The experience of a cross-section ofsevera1-._agencies and
bureaus (HUD, GAC), FBT;~ai road Retirement Board, and Agricult-
ural Stabilization and Conservation Service) using three different
vendors is that commercial software does meet most of their
cenera77acMunting needs. The main difficulty that these agencies
have experienced is that they have had to either conform their
internal procedures to the methods established in each of the
vendor's packages, or modify or build around the software packages
to conform to the agencies' practices (modifying or customizing
the vendor's software is an issue discussed later). Despite these
drawbacks, ._the ....agencies which are using commercial packages are
generally pleased with them because they are- much improved over
their old systems.
Several major agencies have evaluated currently available
commercial software and are either in the process of procuring
packages or installing them. These agencies have concluded that
commercial software meets a high percentage of their accounting
requirements. Since these requirements are generally common to
all agencies, the conclusion to be drawn is that off-the-shelf
packages will likely meet a high percentage of the accounting
requirements of other large agencies as well. They believe that
packaged software provides a strong, cost-effective base upon
which to build enhancements or interfaces to satisfy unmet or
unique requirements. Also, there is evidence of considerable
flexibility in agencies' requirements. However, agencies should
guard against any attempt to force programs to fit an available
accountinq package if the results would be impractical.
Volume Processing. Another potential requirements problem
that concerns the large agencies, but has not been a problem to
the smaller aqencies, is whether vendors' software can efficiently
handle hiqh-processinq production volumes for online input of
transactions and huge batch updates of files. Clearly, this area
requires careful evaluation. Commercial packaqes, by nature, are
designed to be extremely flexible in order to satisfy a wide
variety of client requirements. Highly flexible, extremely table-
driven systems, however, seem typically unable to efficiently
handle the high-volume, transaction-processing requirements of
large agencies. It is possible, therefore, that vendors may have
to modify their packages to permit efficient, large-volume pro-
cessing. Agencies should look for system architecture, network-
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inq, and distributed processing as possible means to enable
commercially available systems to operate efficiently.
As another means, agencies might seek licensing concessions
from the vendors to provide software packaqes at a reduced price
for the purpose of conducting full-scale evaluations of the
capacity capabilities of the software. This cautionary step would
avoid unduly exposing the Federal agencies to heavy development
and conversion costs.
2. To What Extent Would It Be Appropriate for Agencies to Custom-
ize Vendor-Supplied Core Software to Cover Unmet Requirements?
The answer to this question is proceed with caution. Custom-
ization involves three basic types:
1. Interfaces - This is software especially required to pro-
vide two-way data flow between the vendor's software and
other systems of the agency (for example, to permit data
from a payroll system to update files of the vendor-
supplied general ledger package). The interface software
between systems is absolutely essential and must be
included in the development effort.
2. Building functionality around (or outside) the core pack-
age - Agencies may have unique functional needs that are
not met by a vendor's basic software package. Therefore,
an agency may be forced to add new software to meet those
requirements. This should be done, however, only where
the agency has concluded that the requirement is either
truly unique or absolutely essential to the agency and
the vendor will not modify its core software to
incorporate the requirement. The resultant module would
have to be interfaced with the core. This approach,
however, can create for an agency an environment of
potentially qrowinq complexity and cost to maintain. For
profitability reasons, a vendor may not want to modify
its core software if it believes the change will not have
broad acceptance and marketability to its existing or
potential base of users. Agencies are encouraged not to
modify the core software themselves, because to do so
risks losing the vendor's maintenance support, future
upgrades, and possible new functional modules which
integrate with existing modules.
3. Integrating enhanced functionality into the core pack-
age - This approach is highly desirable on the condition
the vendor makes the modifications and maintains the
enhanced core as part of the vendor's proprietary product
line. If a new function is needed, but is not offered by
the vendor, it may be preferable to negotiate with the
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vendor to construct either an integrated or a stand-alone
module as a vendor proprietary package. The package
would then become available to other users under the
vendor's licensing fee or leasing arranqement. The
aqency may have to make trade-offs with the vendor to
gain broad appeal to other users.
As a matter of choice, agencies should attempt to negotiate
with vendors to incorporate chanqes and integrate functions into
the existing packages. Vendors would then maintain the enhanced
packages as part of their proprietary product lines.
If vendors will not agree to incorporate changes into their
proprietary product lines, agencies should build functionality
around the package and interface this additional functionality to
the core package rather than modify the core package.
The objective remains to place the responsibility for main-
tenance and upgrades on the vendors rather than the qovernment.
Since the vendor will be performing the maintenance and upgrade
services for several agencies, the overall cost should be less
than havinq each agency maintain and upgrade its own system.
Agencies need to form user groups to apply pressure on the
vendors to respond to common requirements and to maintain these
common reauirements as part of the core package. User groups will
also assist in achieving and maintaining uniformity among aqencies
over the long term.
3. Can Vendors Respond Timely to Future Needs of Agency Users and
to New Governmentwide Requirements?
One of the management improvement objectives of the central
financial agencies is to improve the uses of financial data so
that the decisionmaking needs of the operating and central agen-
cies are better supported. Such an effort could result in a
requirement to capture new data elements.
Can vendors respond to such a requirement and to other user
needs? Any answer to this question would be largely speculative
because of lack of experience in these areas. However, some
insights are possible.
Future Needs of Users. Most of the vendors are offering some
fourth generation language (4GL) tools, including propriety lan-
guages developed by and for the vendor. The most prominent one is
reports generators which give users the flexibility to design
their own reports, thus enabling users to obtain data in a variety
of forms out of the existinq data base. Many people believe that
vendors will continue to enhance their software technologically.
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Adding new functional modules, however, can be costly and
time-consuming because a number of vendors have desiqned their
packages as "architecturally closed"?/ systems, in some cases
using proprietary languages. Adding a new module to operate
interactively with existing functions can mean a complete redesign
of the entire package. This appears to be true even though a data
base management system (DBMS) may be employed as part of a
vendor's package. (Note that most vendors which offer a DBMS with
their applications packages seem to be using the DBMS primarily
for file maintenance and only secondarily for limited query
capability.)
To avoid major redesigns, it is preferable to design a system
with all of the needed functions in mind. This means specifying
the requirements to at least a macro level and identifying the
interrelationships of the functions. Given these constraints, it
is unlikely that vendors will be willing to redesiqn their pack-
ages at a reasonable cost every time an agency wants a new func-
tion. This area appears to need much more thought for the future.
New Governmentwide Requirements. If vendors are to support
the Government's needs, they must be willing to be responsive to
changing requirements. For example, if the Congress were to enact
legislation which imposed new accounting requirements on the
agencies, as the Congress did with prompt pay legislation in 1982,
vendors must be willing to make the needed changes. Implementa-
tion, of course, should allow time for the necessary negotiations
with the vendors. It may be desirable for the agencies to agree
on one or more lead agencies for procurement purposes and negoti-
ate the changes through their vendor-user croups.
Can all of this be done timely? Vendors will probably be as
timely as most agencies have been in doing it for themselves. In
addition, the cost should be less overall since the cost would be
spread by the vendors over a base of multiple users.
The most effective means for getting vendors to be responsive
appears to be through the formation of strong user groups which
can exert pressure on the vendors. Above all, the government as a
whole can itself be more effective if it will define its needs and
when it requires the software. This issue is addressed later.
2 7"Architecturally closed" means that the applications software is
designed in such a way as to be highly difficult and costly to
modify for adding new features or integrating the existing
applications with new application modules. In addition, the
vendor may be using proprietary languages.
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4. Can Vendors' Software Packages Meet Agencies' Management In-
formation System (MIS) Needs and Future Direction?
The answer is that vendors' packages currently fall short of
meeting today's MIS needs of agencies. This is an area that
deserves more attention by vendors and the agencies as well.
Financial management systems are the cornerstone for a well
functioning management information system which supports
management decisionmaking. Agencies in general have not developed
the capability to effectively relate or integrate financial data
with other management and program data, for example, productivity
data. As a result, management is usually forced to make decisions
based on ad hoc or, frequently, anecdotal information.
A number of agencies are now considering solutions to this
problem through the use of DBMS and other software tools. If
properly designed, the DBMS provides the capability for creatinq a
"corporate data base" containing the functional and program data
which manaqement draws upon for assistance in making decisions.
The principal difficulty is to define the data needed and to draw
the data together into the DBMS from the agency's various
management and program feeder systems. A related problem is to be
able to draw the data together in a way that assures consistency,
accuracy, and reliability of feeder systems data.
Many of the currently available off-the-shelf accounting
packages provide data dictionary functions, communications
functions to upload and download data between mainframes and mini/
micro computers, report writer functions, and inquiry functions.
Also, many of the vendor packages operate in a DBMS environment.
However, the primary focus of these packages is on transaction
accounting and related applications. Vendors generally have not
focused much attention on the broader MIS needs of agencies, more
than likely because the agencies themselves have not focused on
these needs.
In developing an MIS capability, agencies face the problem
that their various systems operate in differing hardware and
software environments and cannot talk to each other except in
batch mode. Vendor products typically lack compatibility, inter-
operability, and portability. The computer industry is being
urged by the Defense Department and others to correct these
problems so that systems can be replaced or upgraded without being
locked into a single supplier.
Recently, vendors' packages have begun to address these
problems with generic interface and networking software which
transforms incoming data from one system into interpretable data
for another system. Agencies need to assist vendors in defininq
reauirements in this area, so as to enable vendors to refine the
software currently available to perform this function.
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5. Are the Time and Costs Required for Implementing Off-the-Shelf
Software Often Un erstateW?_,
Historically, time and cost estimates for all types of
software development and installation activities have been under-
stated. However, the accuracy of the estimates for off-the-shelf
software should greatly improve as more agencies acquire and
install commercial packages and share their lessons learned with
other agencies.
The development and implementation process is complex and
includes several steps: requirements analysis, acquisition, in-
stallation, testing, training, and conversion. Experience shows
that all the steps in this process for an accounting system, using
off-the-shelf software, has taken as little as a year in a highly
controlled small environment, but can take four or more years in a
highly fragmented, decentralized large agency.
Users need to be involved throughout the process so as to
gain the greatest possible acceptance.
The requirements analysis is an important, but often slight-
ed, step. Experience shows that a detailed analysis can take from
three months to a year or more for the accounting function alone.
The length of time will increase as the number of functions being
analyzed and documented is increased. A requirements analysis is
essential to identify unique requirements, and for proper selec-
tion of packages and successful implementation in the shortest
possible time. This is particularly true when an agency finds it
necessary to change its internal procedures and retrain people so
they can adapt to the standards contained in the vendor's package.
An agency must map carefully how it will get from where it is to
where it has to be under the vendor's software. A requirements
analysis aids this process.
Agencies should tell vendors "what is needed," and avoid
telling them "how to do it." The "how of it" should be left to
the vendors.
Evaluation and selection of packages is not trivial either,
particularly when multiple functions are involved and several
software interfaces may have to be designed and built. Agencies
should cost out in-house versus packaged solutions, including full
cost of developing or acquiring, implementing, operating and
maintaining software under both modes of developinq systems.
Agencies need to recognize that the cost of packages can run
several hundred thousand dollars (depending upon the number of
functions being acquired), and three-to-four times that amount for
contractor and in-house support for enhancements, additional mod-
ules, and interfaces. Unless the packages are implemented almost
"as is," which is unusual, agencies can expect to pay somewhat the
same for computer operating costs in support of development test-
ing of either a vendor-supplied system or a custom-built system.
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6. Are There Lonq-Term Risks in Relying on Vendors to Support the
Financi Sa oftware Needs of the Government'-"
There are some risks. Without "portability" or "interoper-
ability," an agency will be locked to a single vendor. The
government as a whole may end up with only three or four primary
vendors. Once the Federal business is exhausted, with each vendor
gaining a share of the market pie, the competition to continue to
meet the government's maintenance needs at a fair and reasonable
price may be diminished. However, the emergence of "portability"
and "interoperability" could chanqe this.
Vendors may not have absolute commitment to meet long-term
integration needs of the government. Also, a vendor could
suddenly go out of business, resulting in costly reprocurements
and conversions from one system to another. Therefore, an agency
needs to evaluate each vendor's stability and commitment to the
government marketplace.
While these risks may someday become real, they need not be
a primary deterrent to the use of commercial software. The risks
inherent in supporting off-the-shelf software packages seem
considerably lower than in relying on vendors to support agencies'
custom systems developed by vendors under contract to the govern-
ment. The government's policy of favoring the use of off-the-
shelf systems is likely to be less costly overall and result in
faster implementation of systems. In addition, vendor systems are
likely to become increasingly adaptable to changing requirements
and technology.
7. Do the Advantages of Using Commercial Packages Outweigh the
Advantages of UpgradingorRebuilding Existing Federal Agency
Systems?
A number of agencies are considering the possibility of
upgrading or rebuilding qovernment-owned custom systems to meet
their accounting requirements. This section sets forth the
principal advantaqes and disadvantages of commercial software
versus upgrading or rebuilding an existing system. Some of these
advantages and disadvantages were discussed in previous sections.
Advantages of Using Commercial Packages vs. Rebuilt Custom
-~_,--_-- ------- -
Systems
o Commercial packaqes will likely be less costly to acquire
and faster to install, particularly if the agency's custom-
built system requires major rework. The underlying premise
is that vendors can spread their costs across multiple
users, whereas the custom-built system's costs must be
absorbed entirely by one agency.
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o The expectation is that vendors will meet new requirements
needs of Federal agencies at much less cost than the cost
of modifying a custom-maintained system. Again, the
principle here is: the larger the user base, the cheaper
the maintenance is to the individual users.
o Vendors have made significant progress in recent years in
incorporating new technology in their software. This
progress is expected to continue as an ongoing process.
The new technology will be made available automatically to
agencies under annual licensing fees paid to vendors. If
agencies choose custom-built systems, agencies may find it
very expensive to maintain those systems consistent with
changing technology. Continuing budget restraints may make
this impossible.
o Vendors can acquire and keep high quality professional
staff devoted to developing and maintaining their packaged
software. Federal agencies cannot compete with the private
sector on salaries for quality staff. In addition, agen-
cies may not even be able to sustain an adequate staffing
level to properly support its custom-built systems.
o Working through vendor user groups enhances the probability
of the Federal Government achieving greater uniformity in
its accounting systems in a much shorter timeframe.
Disadvantages of Commercial Packages vs. Rebuilt Custom
Systems
o Currently, commercial packages do not meet as high a number
of accounting requirements as custom-built systems. How-
ever, experience is showing that most vendors are anxious
to do business with the Federal agencies and are willing to
modify their packages to meet most Federal requirements.
The challenge is to make the needed modifications, working
through user groups, so that they satisfy multiple agen-
cies, rather than only one agency. In so doing, the costs
to the Federal Government should be less.
o Available commercial packages may not meet an agency's
technical requirements, for example, operation in a
particular ADP or DBMS environment. In such an event, an
agency should survey the vendors to ascertain whether they
are developing the needed capability and when it would be
available. Other solutions should also be explored, such
as use of generic interface and networking software. The
costs and benefits of all feasible solutions should be
determined before deciding in favor of upgrading or
rebuilding an existing. Federal agency system.
o An agency may become locked into a single vendor. For
business reasons, the vendor may decide to reduce its
support of the Federal business or may even go out of
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business. To offset this possibility, agencies should
acquire software only from vendors who are willing to
contract their capacity and capability to support the
Federal agencies over the long-term, perhaps for at least a
5-year period.
The overall conclusion to be drawn is that the advantages
seem to weigh heavily in favor of letting the marketplace meet
agencies' financial systems needs over the long-term. If an
agency has serious doubts, it may need to undertake a detail cost-
benefits analysis of the available alternatives.
8. Can -the Strategy of Using Off-the-Shelf Software Be Enhanced
by Developing Generic Functional Requirements for Use Across
Government?
The answer to this seems to be an unqualified yes, but as a
longer-term strategy. Such an effort, if undertaken, should be
done in a way that would enhance the current overall modernization
initiative, not cause it to slow down. In addition, all agencies
should be involved in the process.
The Department of Transportation (DOT) began an effort about
two and one-half years ago to develop a generic model of account-
ing and fund control requirements that might be used government-
wide. A draft of those requirements has been completed. DOT
intends to use the document as its requirements statement for
bidding by vendors. The document's value to other agencies,
however, is untested at this point. Several agencies have
expressed interest in comparing the document's comprehensiveness
and validity against their own developed requirements. In addi-
tion, the DOT document may prove to be a useful guide for those
agencies which have not yet done their own requirements, thereby
acceleratinq their efforts. Further, if several agencies endorse
or further enhance the document (perhaps through user groups), it
could prove valuable in qettinq vendors to agree to enhance their
current software packages.
A similar approach might be useful with respect to other
financial management functions, including requisitioning, purchas-
ing, contracting, receiving, accounts payable management, accounts
receivable management, travel management, cost, supply management,
property management, and buildings management. An agency which
has developed functional requirements for a particular function
(for example, property management) could make its requirements
document available to other interested agencies for comment and
suggested enhancements. Once the requirements are endorsed by the
agencies, they could provide the foundation, perhaps under a lead
agency concept, for vendors to develop or enhance packages that
would meet the requirements. Alternatively, a central agency
might enter into master agreements, which agencies can ride, with
a number of resource-strong contractors.
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Any effort to develop generic functional reauirements across
government must be based on a multi-vendor strategy so as to
encourage healthy competition amonq vendors in supplying financial
management packages to the Federal agencies.
9. How Do the Use of Off-the-Shelf Software and the Government's
Efforts to Standardize Data Elements Relate to Each Other?
The two are related in that they both support the initiative
to modernize, integrate, and consolidate financial systems within
and among the Federal agencies. However, as a practical matter,
the two are separate. For example, the recently concluded effort
to develop and issue a standard qovernmentwide general ledqer for
use throughout Government had no direct relationship to the
Government's use of off-the-shelf software and systems. Rather,
it is related to the Government's goal to make qovernmentwide
reporting and consolidated financial statements more consistent
and meaningful by standardizing the account structure used by all
Federal agencies.
At present, however, standards are not in use across Federal
agency lines for computer processing or editing of accounting
transactions. Differences arise among agencies because of lack of
agreement on definitions of terms and edit criteria, and because
the agencies process transactions differently in their various
accounting systems, even within the same Federal agency. Use of
off-the-shelf software may not solve this problem because of the
differing processing methods used by one vendor to the next. Yet,
to the extent that such packages are flexible enough to meet the
varying needs of the agencies, they may also prove to be flexible
enough to meet additional standardization requirements.
A new initiative is needed to develop further uniformity in
Federal financial information through standardization of appropri-
ate data elements, definitions, etc. The scope of such an initia-
tive requires further thought. It should be designed so that it
will not significantly impact agencies' current efforts to modern-
ize their financial systems usinq off-the-shelf software and
systems.
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ACCELERATING MODERNIZATION
The central aqencies share a common interest in efforts to
accelerate the modernization of the Government's financial sys-
tems, particularly in the large agencies. These efforts include
the furthering of standardization of terminology and data elements
and development of a framework for improving the information
support of management. A number of things can be done.
Establish Commitment. Acceleration begins with top manage-
ment -- the heads of agencies. They must recognize that the
problem exists and be willing to make a commitment to resolve it
as a priority matter. The September 19, 1986, memorandums on this
subject from OMB Director James Miller and Deputy Director Joseph
Wright to the heads and deputy heads of agencies, respectively,
represent a significant step toward obtaining that commitment.
The agency heads have been put on notice that the upgrading of the
Government's financial manaqement and accounting systems will be a
major part of OMB's FY 1988 budget reviews.
Set a Goal and Strategic Plan. In its Circular A-127, OMB
has set the goal --a single, integrated financial management
system for each major aqency -- and has required each agency to
develop a 5-year plan for achieving the goal. What each agency's
plan needs to reflect is a general vision and the broad strategic
building blocks for achieving the goal for itself. A vision and
plan are essential to avoid wandering from one idea to another.
Confirm the Off-the-Shelf System Policy. Despite a number of
lingering concerns, and acknowledging that a number of issues need
to be resolved, using off-the-shelf software and systems continues
to be a viable policy. This approach should enable faster imple-
mentation at substantially less cost than custom-building a system
from scratch. In addition, reaffirmation of the policy will fur-
ther encourage the vendor community to be responsive to the
Federal Government.
OMB's policy has permitted an agency to adopt another agen-
cy's system if the system meets the tests of a modern system. To
date, no agency has stepped forward with a modern system that will
meet a large department's requirements without major rework. Any
proposal to redesign and rebuild any existing system for any of
the large agencies must be carefully weighed against the advan-
tages of using vendor-supplied software or cross-servicing offered
by another agency.
As a means to speed implementation of new systems, agencies
need to he encouraged to implement vendors' core software packages
"as is," if at all possible. The policy should discourage agen-
cies from customizing the core software except to meet unique
requirements. If enhancements of the core are needed, aqencies
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should work with the vendors and through vendor user groups to get
those enhancements incorporated in the core.
Cross-servicing is an alternative which agencies should
consider seriously, because it offers at less risk the opportunity
to use proven systems which are already meetinq the government's
accounting system needs. To be acceptable, however, it must fit
with an agency's goal of a single, integrated system which will
meet the information needs of manaqement, and also be less costly
than using commercial off-the-shelf software.
Establish a Tactical Plan for '87 and '88. If agencies are
to show significant progress by the end of FY 1988, then what gets
done in FY 1987 is key. If not completed already, agencies need
to establish very quickly several concrete steps that will lead to
real, substantive progress toward achievinq the above stated goal.
These steps include the following:
- The agency needs to assess at what stage the agency is in
with respect to its development and implementation process:
planning, requirements analysis, acquisition, installation,
etc.
- The agency needs to develop for itself a tactical plan,
consistent with its 5-year plan under Circular A-127, for
achieving substantive progress in '87 and '88.
- The agency head needs to establish an oversight mechanism
for keeping the agency's management involved and to resolve
issues as they arise.
- Agency management needs to establish a mechanism for
keeping user components involved in what's happening.
Having "ownership" of the system is a key concept for
gaining user organizations' acceptance of a new system.
The tactical plan itself is key. It should be based on a
buildinq block approach. An agency's plan needs to include
acquisition, if cost beneficial, of one or more software packaqes
as an '87 action item for implementation in one or more major
components of an agency during FY 1988. If an agency has not yet
done a requirements analysis, it could obtain the requirements
analysis of one or two agencies that have completed theirs. The
agency could then use these as a guide for doing a "top down"
functional requirements analysis for the purpose of identifying
unique needs and providing the basis for selecting one or more
vendor packages. This step can then be followed by a more de-
tailed analysis, if necessary, to implement the packaqe in the
selected agency components.
If an agency is uncertain how its financial management
functions will be integrated with its management information
system functions, the agency management could choose to bridge
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between the agency's financial processing data bases and the
agency's MIS data base by developing temporary interfaces for the
short term.
Fund the Tactical Plan. Agencies already have their appro-
priations for FY 1987. Agency heads can demonstrate their commit-
ment to the modernization initiative by allocating resources from
FY 1987 funds for the first installment purchase of appropriate
commercial packages. The funding needs to include any required
contractor assistance for implementation. The plan should call
for any needed additional purchases of packages and contractor
assistance from FY 1988 funds.
Care is needed in selecting a funding approach for system
modernization so as to avoid risky aggregation of budget requests
that makes them visible targets for cuts. The central agencies
can help by articulating effectively to the Congress their support
for implementation of departmentwide integrated systems.
Continue Standardization andtheImprovement of Financial
Information. The need for better data and information is increas-
ing rapidly as the efforts increase to reduce the budget deficit
and improve productivity. Also, standardization is seen as a
means to make information more meaningful while at the same time
reducing costs. Therefore, it is important to develop these
initiatives under the direction of the central agencies, in
consultation with the operating agencies.
Work Cooperatively. Clearly, the central agencies and the
operating agencies agree on the goal to improve financial manage-
ment. It is the cornerstone that leads to overall improved man-
agement of Federal programs and operations. A cooperative spirit
is key to achieving that goal. As problems arise, they need to be
addressed quickly by agency management, and as needed with appro-
priate OMB officials.
Agencies can benefit significantly from the experiences of
each other. For example, requirements analyses and procurement
approaches can be shared.
The JFMIP and Financial Managers' Council can hold short
forums geared to addressing cross-cutting problems and issues.
Workshops and conferences can be used to disseminate information.
Summa. Under Reform '88, agencies have already devoted
much thinking to reforming their financial systems. The time has
come to crvstalize this thinking into concrete implementation.
Agencies will want to use every avenue available to them to accel-
erate the modernization initiative and demonstrate substantive
progress during the next 2 years.
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JOINT FINANCIAL MANAGEMENT
IMPROVEMENT PROGRAM
666 ELEVENTH STREET, N.W.
SUITE 705
WASHINGTON, D.C. 20001
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300
Address Correction Requested
99298549 [0283] M/001
Director, Office of Finance
Central Intelligence Agency
Special Fourth Class Rate
Postage & Fees Paid
GAO
Permit No. G100
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ROUTING AND RECORD SHEET""
SUBJECT: (Optional)
Integrated Personnel/P=oll System
FROM: :
Allen Elkins
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28 August 1987
MEMORANDUM FOR: Deputy Director for Administration
FROM: Allen R. Elkins
Director of Finance
SUBJECT: Integrated Personnel/Payroll System
1. Background - Representatives of the Office of Personnel,
Office of Information Technology and Office of Finance have been
examining how we can best integrate Agency personnel and payroll
systems. A joint task force report being issued raises significant
concern that requires me to go on record with a "heads up" at this
time. With the impending move of Compensation Division to the Office
of Personnel, I recognize that Ted Price will soon have primary
responsibility for this effort but I think it is crucial that
progress continue toward developing an integrated personnel/payroll
system in the IDMS/R environment.
2. Current Status - The approach currently being considered
would complete the work done by our Price Waterhouse contractors to
provide Compensation Division with on-line access in IDI.IS/R for query
and update of certain payroll data and permit these data to be
transferred to the existing biweekly system. This provides
short-term relief to Compensation Division but does not fix the
broader problem of replacing the outmoded payroll system and
providing critical personnel data in a common data base. The next
step being proposed by the task force is to leave the existing
personnel system in the GINS environment and to duplicate the4data in
IDI1S/R for use by a new biweekly pay system with a completion date
estimated for January 1990. The personnel system would be built
after the payroll system.
3. Concern - My concern with tnis approach is that it will
perpetuate separate personnel and payroll system components for too
many years. I doubt that a truly integrated personnel/payroll system
with decentralized input and query throughout the Agency would be
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SUBJECT: Integrated Personnel/Payroll System
available before 1991 at the earliest. I believe this would be
unacceptable to Agency managers.
A secondary concern is that the proposal of the task force for
building a new biweekly payroll system appears to be underestimated
by 200 percent or more. The completion date of twenty-six months for
a new payroll system is bound to slip unless additional talent and
money are applied to this effort. Replacing our existing payroll
system is a top priority for the Agency that requires earlier
resolution.
4. Summary - Please be assured that the decision to move
Compensation Division from the Office of Finance to the Office of
Personnel has no bearing on my concern expressed in this memorandum.
The need to integrate the personnel/payroll system has been an active
effort for me and my staff over the past two years. We have searc1ed
for commercial systems, examined government systems such as the
Department of Agriculture personnel and payroll system, and worked on
both in-house and contractural development strategies. Based on
these experiences, I believe it is appropriate to alert you that the
current approach that the Office of Personnel is considering appears
flawed. It will not achieve any near-term integration of personnel
and payroll systems. Alternative systems and schedules should be
examined before we develop new systems in a manner that may
perpetuate a separate personnel and payroll system. I believe we
should be undertaking incremental development of an integrated
personnel/payroll system. I would be happy to discuss this further
if you wish.
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