FC 108/19

Finance Committee

Table of Contents

INTRODUCTION

I. ORACLE FINANCIALS

II. PROGRAMME PLANNING, IMPLEMENTATION REPORTING & EVALUATION SUPPORT SYSTEM (PIRES)

III. ORACLE HUMAN RESOURCES MANAGEMENT SYSTEM (HRMS)

1. This report provides updated information to the “Progress Report on Administrative Information Systems” presented to the Finance Committee at its 107^th session in May 2004.

I. ORACLE FINANCIALS

Status of execution of "Plans for February 2004 – January 2005"

2. During the period from February 2004 to June 2004 work proceeded on the areas as set out in the May 2004 report to the Finance Committee. Specifically, the main areas of work covered were:

1. Redevelopment of Field Accounting System. A Project Charter was drafted and AFF will now proceed to analyze business requirements and prepare specifications for the new system.
2. Developments in the Accounts Payable (Payments) application. Work focused on further improvements in relation to the maintenance of vendor and banking information master files. This work will continue and be supplemented by activities which focus on using electronic workflows in support of accounts payable operations and processes.
3. Development of interface monitoring reports. Work continued on the documentation of interfaces and the development of reports to provide positive assurance on the correct functioning of interfaces for those areas where specifications had not yet been completed or where scope for improvements to existing reports had been identified.
4. Preparation and publication of the Corporate Accounting Manual. Work continued on the review and revision of existing financial policy and procedures and the preparation of further documentation necessary to constitute a comprehensive corporate accounting manual.
5. Further developments in the Data Warehouse. Further analysis and development work was completed in the Data Warehouse to facilitate the implementation of reporting functions based on information to be gathered from the Accounts Receivable AR, Procurement PO, Human Resources and Fixed Assets sub-systems.
6. Split Assessment Reporting. Work continued on the development of new reports to support corporate and budget holder requirements for the monitoring of Regular Programme resources.
7. Improved use of standard functionality in Purchasing business processes. A review of Procurement Service (AFSP) business processes and the specification of system changes to make better use of existing Oracle Financials release 11i functionality commenced, together with the specification of requirements to improve reporting and data analysis.

Issues and Comments

3. The project to redevelop the Field Accounting System is funded from arrears as approved by the Conference resolution 6/2001. Given the potential scope of the business requirements and that the project has only recently started, it may not be possible to fully deliver the arrears funded portion of the project by the end of the 2004-2005 biennium. It will be proposed that any unspent balance on the project is therefore carried forward into 2006.

II. PROGRAMME PLANNING, IMPLEMENTATION REPORTING & EVALUATION SUPPORT SYSTEM (PIRES)

Status of execution of "Plans for February 2004 – January 2005"

4. At the midpoint of the current planning period, excellent progress can be reported against the workplan, which was endorsed by the PIRES Inter Departmental Working Group and presented to the Finance Committee in May 2004.

1. Approved budget level for the PWB 2004-05. PIRES was used to compile and analyze the adjustments to the Programme of Work and Budget 2004-05 at the approved budget level, and to assemble the required documentation (FC 107/14).
2. Workplanning. The new workplanning module was placed into production in June, following the release of the 2004 adjusted allotments in PIRES, as part of the Departmental Programme Managers’ Toolkit.
3. Annual Assessment and PIR 2002-03. The new Annual Assessment / PIR 2002-03 module was released in mid-April and used to prepare summary assessments for all technical programmes entities and, through an integrated process, to collect the data required for preparing the PIR 2002-03 (C 2005/8).
4. Medium-Term Plan 2006-11. Through expanded features in the PIRES MTP module, the “non-technical” programmes were reformulated under the results-based New Programme Model. The collection and review of MTP proposals for all programmes was completed in July.
5. Corporate Budget Monitoring and Forecasting. Work on the analysis of role-based requirements is continuing and will be a priority for the remainder of 2004. Furthermore, three working groups of the Field Programme Committee (FPC) are analyzing the policy framework for field programme planning and monitoring. As noted in the previous report, it is unlikely that any systems development work will begin in this area within the current planning period due to the complexity of the integration issues.
6. Regular Programme/Field Programme (RP/FP) Interactions. The issue of integrating country strategies into corporate planning systems such as PIRES may be taken up in the FPC within the planning period. The recommendations of the Independent Evaluation of FAO’s Decentralization, being considered by the present sessions of the Programme and Finance Committees (FC 108/18) also address this matter. Based on the outcome of these various deliberations, the nature of the required monitoring and forecasting integration between PIRES and FPMIS may be clarified, permitting specific analytical and design work to commence.
7. Integration with Oracle HRMS. The analysis of integration points between PIRES and the HRMS began in April, and PBE is participating in HRMS workstream groups during the current HRMS improvements phase.

5. The planning of the next period is of considerable importance, since the PIRES arrears funding will be exhausted before the end of September 2005. Thus, in the absence of additional resources, PIRES must be brought to a sustainable state of development within that period, with as many of the Project’s objectives achieved as possible.

III. ORACLE HUMAN RESOURCES MANAGEMENT SYSTEM (HRMS)

Status of execution of “Plans for February 2004 – January 2005”

6. There has been good progress against the workplans for the period February 2004 – January 2005. Documentation of current Human Resources business processes is almost complete, and the main activity being executed in the April-September 2004 period is the identification of changes to streamline these business processes. Progress has also been made in the formulation of improvement proposals, and a procedure has been discussed with the Project Board and the Oracle Project Management Committee to allow speedy review and decision on process streamlining proposals.

7. Once the above steps are completed, the project will begin the Gap Analysis. This phase will examine in detail the standard Oracle package functionality required to support the improved Human Resources business processes. It should complete by the end of the first quarter of 2005.

8. It was reported to the Finance Committee in May 2004 that the cost estimate for the project totalled US$19 000 000, with a shortfall of US$5 021 000. Following the Gap Analysis, the functionality to be included in the final system and associated cost estimate will be confirmed with project stakeholders. The results of the Gap Analysis phase will be presented to the Finance Committee in the May 2005 report together with the final scope and cost estimates. An estimate of post-implementation costs will also be provided.

9. As reported to the Finance Committee at its 107^th session in May 2004, in line with the practice of applications upgrades followed by the Oracle Corporation and other package software providers, FAO is required to upgrade the Oracle Financials applications on a periodic basis. This is normally scheduled to occur every four years in FAO. The previous upgrade occurred in 2002, and the next planned upgrade to Oracle Financials would therefore take place no sooner than 2006. However, Oracle Corporation were commissioned by ILO to undertake a number of major improvements to the Oracle HRMS package to more closely align this with UN practices and procedures. FAO is in a position to take advantage of these developments, but these improvements are available only on a later version of the Oracle software than FAO upgraded to in 2002. Oracle Financials and HRMS are an integrated package, and this will require an earlier-than-planned upgrade of the Oracle Financials system in 2005. The financial implications of this will be presented to the Finance Committee in May 2005.

10. As reported to the Finance Committee in May 2004, the new target implementation date for the project is end 2006. The anticipated expenditure of US arrears allotted for this project has been re-phased across years 2004, 2005 and 2006, as indicated in the table below.

11. This will require a carry-forward of the unspent balance of arrears funding, estimated at US$2 900 000, into 2006. Therefore, the project has been included in the Capital Budgeting.

12. Actions are in progress to examine areas for cost reduction. Some reductions have been achieved whilst others are under investigation:

• the user training component will adopt a “training-of-trainers approach” to contain costs and to leverage existing resources, and its cost will be funded from the PWB 2006-2007 Corporate Staff Development funds. This will reduce the estimated project costs from US$19 000 000 to US$17 500 000.
• the Quality Assurance (QA) reviews that are part of the project methodology had originally been estimated at US$500 000. The project board concluded that investment in QA is necessary and should not be cut too severely. A new approach to QA foresees two reports for each year of project activity, including a significant first QA review in 2004, plus a post implementation report - a total of six reports. This is less than originally planned and it is expected that the cost will be lower than originally budgeted.
• solutions adopted by other UN agencies, and in particular the ILO, have been reviewed for re-use in the Organization’s HRMS system, with potential savings on configuration and extension costs.
• the Organization is exploring ways of reducing the unit cost of the system development portion by relocating system development activities to a lower cost geographical location. A study is underway to consider market rates, infrastructure costs, oversight arrangements, sustainability and ongoing costs.
• a phased implementation was discussed by the Project Board and a decision on this matter has been postponed until after the completion of the Gap Analysis phase. The board has noted that the HRMS project is a fundamental component of the FAO HR Management Reform, and implementing only part of the functionality would undermine the ability of FAO to meet its commitments in the area of Human Resource management. A phased implementation could also lead to higher overall project costs, albeit over a longer timeframe.

13. The decision on cost reductions should be available in the last quarter of 2004 and, together with more accurate project costs following the Gap Analysis phase, will enable the project to determine final project costs and provide a full report to the Finance Committee in May 2005.