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Public Sector Budget

Formulation and
Performance-Based
Budgeting

Simon Langford - Financial Consultant


SAP Canada Public Services
GTEC 2011
October 18th-19th 2011
Budget Reforms and Mandates Are Pervasive

The Government Performance and Results Act


(GPRA) makes this a requirement by
mandating that performance plans display,
generally by program activity, the funding level
being applied to achieve performance goals.
Performance budgeting shifts the focus of
attention from detailed items of expense - such
as salaries and travel - to the allocation of
resources based on program goals and
measured results.
Budget Formulation Business Processes

Historical Data
Modeling &
Adopt & Load Forecasting
to Control

Master Data Personnel


Integration with Expense
ERP Projections

Publishing & Centralized


Reporting Target Setting

Review &
Decentralized
Revise
Supplementals & Budget Requests
Decision Packages
Government Budgeting Is Getting Tougher
Flat World dynamics create both challenges and opportunities

Diminishing Increased
Revenues Demands

Increased Increased
Accountability Transparency
More Stakeholders with Increasing Demands
vs. Diminishing Resources
Economic Aid
& Development Public
Democracy Broadcasting
Public
Energy
Administration
Research

Justice

Constituent
Services
Health

Tax Revenue
Admin
Social
Services

Education

Transportation
Public
Utilities

Defense Banking
Postal
Retail Services Public Security Services Services
Transparency is Becoming More Mandated

EX-NFLD. CABINET MINISTER JAILED IN SPENDING SCANDAL

A former high-ranking Newfoundland and Labrador cabinet minister


has been sentenced to two years less a day in jail
for defrauding taxpayers of nearly $118,000.
Declining Revenues Amid Increasing Demands

Ottawa refuses to rescue AbitibiBowater 84


Thousands of jobs at risk as one of country's oldest companies
and world's biggest newsprint producer files for bankruptcy protection

Dial 311 for Halton Government Services


Learn more about 311
TONY BOCK/TORONTO STAR
CROMBIE BEGS CITY TO RESCUE 39
POOLS
VANESSA LU
PAUL MOLONEY Apr. 17, 2009
The tiny perfect mayor came to Toronto
Dial 211 for information on community, city hall to ask politicians to jump into the
water.
health and social services or visit
PBF is Strategic in this Economy
Budgeting is at the Center of Everything

Efficiency: Drives productivity and


reduces costs internally and externally

Insight: Fortifies decision-making and


improves allocation of scarce public
resources

Flexibility: Gives customers flexibility to


quickly adapt solution to meet evolving
requirements

SAP 2008 / Page 8


Evolution of Public Sector Budgeting
and budget formulation technology

3Public
Budget
Formulation
Business
Network
Get behind the
numbers with fully
integrated text

Link Budgets to Older technologies


Strategic and and build-it-yourself
Performance Based
Plans toolkits have failed to
2 Commercial Flexible and powerful
meet the unique
Planning Personnel Expenditure challenges of the
Projections
Tools modern public sector
Integration to existing budgeting reality
1 Display the numbers
financial, hr, capital
project, grant, and
Spreadsheets performance systems
Create simple charts
and graphs All centralized and
decentralized budget
Enter and Calculate Build simple formulation processes
rows and columns of mathematical accommodated in a
numbers algorithms single web-based
system

SAP 2008 / Page 9


PBF is Designed to Be Comprehensive
Enterprise Budgeting Solution
Highly Flexible
Functional Configuration
Incremental Budgeting To Support Different
Budget Zero-Based Budgeting Budget Approaches,
Approaches Initiative / Activity / Program Budgeting Processes, Types and
Performance Based Budgeting Outputs

Agency/Department
Agency / Department Budgeting (Requests)
Budgeting (Requests)
Central
CentralExecutive
ExecutiveBudgeting
Budgeting(Reviews/Recommendations)
(Reviews/Recommendations)
Budget Legislative
LegislativeBudgeting
Budgeting(Adoption)
(Adoption)
Processes Budget
Budget Execution: SpendingPlans
Execution: Spending Allotment/
Plans Allotment/Allocation,
Allocation,Budget/Position
Control
Budget/Position Control

Agency/Department Budgeting
Operating Expenditure (Requests)
Budgets
Central
CapitalExecutive
Budgets Budgeting (Reviews/Recommendations)
Budget Legislative Budgeting (Adoption)
Revenue Forecasting
Types Budget
Grant Execution:
Budgets Spending Plans Allotment/ Allocation,
Budget/Position Control(6+ Years)
Long Term Planning

Agency/Department Budgeting (Requests)


Financial
Central Plan / Spending
Executive BudgetingPlan
(Reviews/Recommendations)
Budget Adopted Budget (Control)
Legislative Budgeting (Adoption)
Outputs
Reporting & Analytics
Budget Execution: Spending Plans Allotment/ Allocation, Budget/Position
Published Budget Document
Control
Key Foundations of SAP Public Budget
Formulation Solution
Ease of Use & Configuration
Salary and Flexible Forms
Benefits Text Handling Decision & Process Analytics and
Projection and Publishing Packages Controls Modeling
Unlimited Scenarios Single point of entry Link budget/actual Single point of entry Expenditure &
Date-effectiveness on all for budget data and dollars to text, Expenditures Revenue
compensation and related text performance Forecasting
Revenues
benefits Real-time reporting of measures, etc. Trend Analysis
Justification
Table-Driven projections budgets including text Budget stages and Top-down
controls Performance
Integrated to position Customer budgeting, metric-
configurable Text Security Positions driven budget
control / org
management Fields Audit trails Map to your allocation
Text intensive different budget Allocation and
Position/employee, job Reorganizations
Reporting processes redistribution
class, bargaining group Decision cockpit for
forecasting Link performance to Base
package ranking and
Distribution to budget Budget Requests decision support Packages
Line Items, programs, Automated budget Capital
performance metrics, book publishing Spending
etc. Plans
Other
Configured by
budget people

Integration: SAP and Non-SAP


HCM, G/L, Budget Control, Position Control, Performance Management
Public Budget Formulation Foundations
Single point-of-entry for Budgets, Optimize Allocation of Public Resources
Text and Text Justification and Performance Provide policy-makers with the real-time fiscal
Publishing with automated budget book impact analysis to support decision-making
publishing
Rank and prioritize funding requests

Highly configurable date-effective


Personnel More Efficient Budget Process
Expenditure personnel cost projection
Projection supporting unlimited compensation Reduce time-consuming data manipulation
plans and duplicate entry
Automate budget requests, reviews, adoption
and publishing in one comprehensive budget
Flexible Forms with decision formulation solution
Decision
Packages cockpit for package ranking and
approval of requests
Improve Organization Performance
Integrate funding requests with strategic
Expenditure and revenue planning and performance management
Analysis &
Reporting forecasting and Modeling with
trend analysis
Greater Control
Control access, data collection and process
Budget stages, audit trails and flow with provide audit trails to all changes
Distributed budget state controls with user- throughout the budget process
Budgeting configurable budget form
templates
Solution Integration

Planning &
Performance
Management
Capital
Budget
Projects /
Control
Grants

SAP Public
Budget
Formulation
Payroll / Accounting
Benefits (G/L)

Position
Control
SAP Solutions:
Manage the Complete Performance Lifecycle

Strategy Management
Are we doing the right things?

Program
Execution
(ERP)

Cost Management Analytics SAP Public Budget Formulation


Public
SAP BPCBudget Formulation
Do our expenditures align with our
Have we allocated adequate
strategic vision?
resources?

Costs

Activities

Cost Objects
PBF Customers
City of San Diego Marin Water District
State of Louisiana Fairfax County, VA
South Florida WMD Fairfax County Schools, VA
City of San Antonio State of South Carolina
City of Toronto Texas State University
University of Cincinnati Chicago Metropolitan Water
Reclamation
Texas State University
Amtrak
Los Angeles Community College
District United States Department of
Agriculture
http://www.fsa.usda.gov/FSA/midas?area=home&subject=landing&topic=landing
Complement Planning - HR/Payroll,
Financial System, and PBF
HR/Payroll Public Budget Formulation
Employee Job, Pay Level Integration Employee Job, Pay Level
Master Data Special Pays Master Data Special Pays

Position Benefit Plans Position Benefit Plans


Master Data Benefit Rates Master Data Benefit Rates

Future Orientation
Financial System
Salary and Benefit
Budgets Integration Projections
Commitment
Item/CE
Salary and
Benefit
Budget
SAP 2008 / Page 17
PBF Calculation Order

Employee Employee data for salaries and benefits

Position Position data is used for salaries and benefits of


Vacant positions

Job data is used to calculate salaries and


benefits for business cases and is used if data
Job is not entered on employees or positions (e.g.
benefits)

PBF calculates such that if the most granular level of data exists (Employee), that
data is used; otherwise PBF looks to the next level (Position) followed by Job.

SAP 2008 / Page 18


PBF Standard Data Cubes

Projection Cube Position,


Salary projection scenario results Employee
and Benefits
Budget Cube
Historical actuals and budgets Position
Budget form requests Budget and
Amounts Financial
Positions Data
Posted salary projection
Service
Performance Measure Cube Performance
Performance measure Measures,
actuals/planned/budget Targets,
Actuals
Business User Provides a Fully
Integrated Strategy-to-Execution Offering
Aligned strategic Optimize operational
Enterprise Performance Governance, Risk,
decision-making
Management
decisions inside and
and Compliance
across teams Strategy outside the company
Strategy Business Risk Access
Management Planning Management Control

Profitability and Process Global Trade


Consolidation
Cost Management Control Services

Spend Environment,
Insight Analytics Health and Safety

Business
Insight Unified Collaborative
Network Decisions
Information Decisions
Optimization

Business Intelligence Information


Management
Execution
Query, Reporting,
Reporting Data Data Quality
and Analysis across multiple Integration Management
transaction systems
Dashboards and Search and
Visualization Navigation
Generate insight from Manage compliance, risk and Master Data Metadata
structured/unstructured
Advanced and optimize performance across the
Management Management
Analytics
internal/external data business network

SAP 2008 / Page 20


Business Intelligence Platform

SAP 2008 / Page 21


Business Intelligence Platform
Reporting via Web BI Widgets
Best in Class Enterprise-Reporting and Direct
Access to Data within SAP and non-SAP
Enterprise Query Reporting

Applications
Ad-hoc Reporting
Search
BI Mobile BI Widgets
BI Search
OLAP Analytics
Guided Querying
& Analysis

Mobile BI

Crystal Reports Xcelsius


Highly Interactive Visualization and
Visualization and Reporting

Dashboarding and Embedded within Microsoft


Office Environment
Formatted Reporting
Dashboard and Data Visualization
Seamless MS Office Live Office
Integration
Metadata Management
Entity Extraction
SAP BusinessObjects BI Platform

Reporting
Crystal Reports

Query & Analysis


SAP BusinessObjects Web Intelligence
SAP BusinessObjects Desktop Intelligence
SAP BusinessObjects Voyager

Dashboards & Visualization


SAP BusinessObjects Dashboard Builder
Xcelsius

Business Intelligence Platform


SAP BusinessObjects Enterprise
SAP BusinessObjects Builder
SAP BusinessObjects Live Office
SAP BusinessObjects Mobile
POLESTAR
Familiar key-word search to Directly on data
find business information No previous reports or
Answers your specific metrics need exist
questions
Search across all data Pre-indexed data provides
sources fast search and exploration
Any universe accessible
source
SAP 2008 / Page 25
Thank you!

Simon Langford - Financial Consultant


SAP Canada Public Services
simon.langford@sap.com
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