Government Exhibit P4038-R
Greyhound Lines, Inc. Greyhound Canada Transportation Corp. Detailed Business
Case for Implementing a Human EIMS
Project Core Team
Confidential GDD 005132
Table of Contents Executive Summary
Confidential GDD 005133 Projected Return on Invesment(ROI)
Confidential GDD 005134
The goal of this project is to review Greyhound's (GLI and GCTC) system needs, assess viable alternatives, and provide a recommendation to management for a solution to improve Greyhound's ability to manage human resources effectively. This solution or project shall be referred to as the Employee Information Management System (EIMS). The solution will accomplish the following goals:
Once senior management has approved the recommendation, the main purpose of the Project Team will be to facilitate implementation. Greyhound Lines Inc. is no longer just GLI. It is a blending of GLI, Greyhound Canada Transportation Corp., and its subsidiaries. The future undoubtedly holds acquisitions, mergers, and consolidation of subsidiaries within Greyhound. There are 58 different sources of data currently identified within the Greyhound systems encompassed by this project. These are comprised of 10 major systems, 24 secondary systems, databases or data sources, and 24 interfaces and reporting tools between the major and minor systems and/or other mission critical systems of Greyhound. As the company grew, indivicual department's developed or purchased their own software solutions. While this works fine for the individual departmental needs, it has some major faults. With information residing in so many places, updating becomes a difficult task. Which database is correct? Many of these systems are no longer supported, and Greyhound loses any synergies they may gain from a single source database. Reporting across multiple databases is constrained, and the ability to provide managers with real time data and reports to manage their business is restricted. Confidential GDD 005135 In order to select the best possible solution for Greyhound's business needs, three different business alternatives were evaluated. The specific alternatives were as follows:
To assess the value of the individual alternatives, each was rated and scored based on the 12 primary customer requirements for the project goals. In addition, a cost was determined, a list of pros and cons developed, and key points were identified. Based on the data and information gathered, a recommendation was prepared and presented. The recommendation is Alternative 3, Implement an Integrated HRMS System. Such a solution will provide for Greyhound and its subsidiaries the ability to fulfill the customer's current, future needs and meet the current, future requirements related to those needs. The Project Team recommends Alternative #3 as the best long-term strategic solution for the company. The primary reasons for the recommendation are: An integrated technology solution will best meet the current and future business needs of Greyhound From a technology perspective this is "hand's down" the best alternative and consistent with all IT best practices for corporate system architecture. From a business perspective, this strategy provides the greatest possible upside to optimizing operations and streamlining processes. Confidential GDD 005136 In June 2001, Greyhound (GLI and GCTC) initiated the EIMS project to recommend a strategy for addressing Grehound's Human Resource, Payroll, and Driver Management information needs. A Project Team was constructed with representatives from the functional areas within Greyhound that were seen as being under the EIMS umbrella. The listing of the actual Project Team members can be found in Appendix 1 - Project Team. This document is the detailed business case created by the Project Team. It contains all the specifics on how the business case was built and the processe used to evaluate and select the final alternative for the recommendation. System Issues - Major risks, problems, and constraints The major risk today is the age of our current systems. Historically, the company has not made a significant investment in these systems, which resulted in a "piece meal" or "band aid" approach. This approach resulted in a system environment that is unstable, inflexible to change and constrains Greyhound's ability to streamline business processes. For instance:
HR2000 (used by GCTC HR) is a DOS based applicationinstalled in 1990. Like HR-1 above, the vendor no longer supports the current version of the system and the programming language (REV-G ) is even more out of date. A total of 14 risks, problems, iind constraints were identified in this system. Confidential GDD 005137
Driver information is currently stored in a variety of data repositories (at least 12) scattered throughout the organization. Examples of the driver data include:
It is important to note these are individual data sources stored in an assorted variety of spreadsheets, standalone databases as well as major systems such as Driver Pay and BOSS. This creates a magnitude of data integrity, process inefficiencies (duplicate keying) and reporting constraints for the organization. Confidential GDD 005138 The following sections:
present the costs associated with business processes and support present the risks, problems and constraints from both a business and technical perspective supplement these facts and opinions with actual war stories from the field The diagrams in this section show examples of:
the complexity of the current business processes the opportunity for improvement Technical Environment Diagram 1: GLI/GCTC High Level Systems Structure shows the current systems environment. Diagram 2: GLI/GCTC Integrated Systems Structure depicts the expected environment with the implementation of an integrated HRMS system. As the diagrams illustrate, consolidating the current databases has a direct impact on the environment supporting them. This is especially evident in the interface sections. The major interfaces between the major databases (HR, Payroll, Driver Pay, Oracle) are reduced significantly. This is a microcosm of the improved efficiencies that will be inherent with an integrated system. Confidential GDD 005139 Diagram 1: GLI/GCTC High Level Systems Structure Confidential GDD 005140 Diagram 2: GLI/GCTC Integrated Systems Structure (Recommended Solution) Confidential GDD 005141 Table 1: Technology Components statistically summarizes the major technology components and shows the opportunity for improvement. Table 1: Technology Components
Note: A detailed listing of all the individual pieces is included in Appendix 3 - Current Environment. Business Processes GLI has approximately 200 processes related to HR and Payroll. To demonstrate complexity of the current business environment we flowcharted the processes to highlight the risks (or "failure points"), the cost, as well as the opportunity for improvement by automating process steps and decisions (or best practices). Confidential GDD 005142 Each process presented includes a flow chart of the current process or "current state" (current), a flow chart of the streamlined process or "end state" (future) as well as a quantitative summary of the potential improvements. The processes presented include:
The following diagrams reference the term "failure point". A failure point is any point in the process where data can be dropped, added incorrectly, or corrupted causing data integrity issues. Note: The future processes as defined for purposes of this section are relative to the implementation of an integrated HRMS system. Salary Change Process - Non-Drivers GLI processes approximately 11,000 non-driver salary changes each year. The Best Practices re-engineering assumes that the data entry is done by the Managers in a decentralized fashion using Manager Self Service and workflow is used for approval and for notification purposes. Diagram 3: GLI Salary Change - Non-Driver (Current) depicts the current process and Diagram 4: GLI Salary Change - Non-Driver (Future) encompasses the future view of the process. Confidential GDD 005143 Diagram 3: GLI Salary Change Non-Driver (Current) Based on current policies Confidential GDD 005144 Diagram 4 : GLI Salary Change - Non-Driver (Future) Based on current policies Confidential GDD 005145 Table 2: GLI Salary Change - Non-Driver Process Analysis shows the number of failure points, process steps, decisions, and process costs associated with the current and future process designs along with the calculated percentage of change from current to future. Table 2: GLI Salary Change - Non-Driver Process Analysis
ADP Company Transfers This process is necessary because of the structure of the ADP Payroll System. It maintains 6 different "databases" called companies. We have approximately 100 of these "transfers" each year. An employee moving from a driver to a driver supervisor or an employee moving from customer service / food service to the TIC would constitute an ADP Company Transfer. In a single, integrated database environment, these "transfers" would no longer be required. Only a move to a company with a separate EIN would require a transfer. An example of this would be an employee of GLI moving to GSS. Diagram 5: GLI ADP Company Transfer (Current) shows the current process as having to be done by GLI. The future process is non-existent as shown in Diagram 6: GLI ADP Company Transfer (Future). Confidential GDD 005146 Diagram 5: GLI ADP Company Transfer Confidential GDD 005147 Diagram 5: GLI ADP Company Transfer (cont.) (Current) Confidential GDD 005148 Diagram 6: GLI ADP Company Transfer (Future) This process is completely eliminated with the implementation of an integrated HRMS System Table 3: GLI ADP Company Transfer Process Analysis shows the number of failure points, process steps, decisions, and process costs associated with the current and future process designs along with the calculated percentage of change from current to future. Table 3: GLI ADP Company Transfer Process Analysis
Daily Changes The Daily Changes process moves changes entered into HR-1 to ADP. The process runs daily on business days. In an integrated HRMS system, this type of data transfer would not be required because the HR and Payroll systems will simply be modules of the same application and will share the data. The remaining step in the process will be the transfer of data to Kronos. Diagram 7: GLI Daily Changes Current shows the current processes and Diagram 8: GLI Daily Changes Future tne anticipated processes. Confidential GDD 005149 Diagram 7: GLI Daily Changes (Current) This process moves the changes from HR-1 to ADP and then to Kronos Confidential GDD 005150 Diagram 8: GLI Daily Changes (Future) With an integrated HRMS system, the only data movement necessary will be to Kronos.
Table 4: GLI Daily Changes Process Analysis shows the number of failure points, process steps, decisions, and process costs associated with the current and future process designs along with the calculated percentage of change from current to future. Table 4: GLI Daily Changes Process Analysis
Activities based costing and benchmarking has historically been used to assist organizations in measuring internal processes and as a tool to identify opportunities for improvement. In conjunction with this initiative, both the Payroll and HR departments were analyzed for comparison with other companies and the transportation industry. The comparison benchmarks were supplied by CDG and Associates, an independent consulting organization. Greyhound's expenses were adjusted to provide the best possible "apples to apples" comparison. The details regarding the benchmark comparison can be found in the Appendices. Note: All cost calculations include both direct departmental costs and IT support costs in the calculation. Confidential GDD 005151 GLI US Payroll Costs This graph shows that Greyhound's cost per payment is: in the upper 75th percentile among all companies GCTC Payroll Costs The graph below shows that GTC's cost per payment is: in the upper 75th percentile among all companies (way off the chart) Confidential GDD 005152 GLI Human Resources This graph shows GLI's HR cost per employee is: Roughly $ 250 or 78% lower than the average of all companies in the survey GCTC Human Resources This graph shows GCTC's HR cost per employee is: $ 562 or 50% lower than the companies in the survey Note: All cost calculations include both direct departmental costs and IT support costs in the calculation. Confidential GDD 005153 Summary While benchmarking is more of an art than a science and should not be the only factor in a major decision, you can draw the following conclusion from the above analysis.
Detailed Analysis of Risks, Problems and Constraints The following section provides detailed information regarding the risks, problems and constraints, as well as highlights a few corresponding opportunities where appropriate. Both the Technical Risks and Business Issues are addressed. Technical Risks of System Failure Maintaining the current environment and set of systems to perform the current mission critical business needs has a number of risks to the company. The risks are primarily due to the retention of old products discontinued by the vendor from both a development and support perspective. Below are examples of technical risks as a result of Greyhound's current environment:
1. Internal Resource & Vendor Product Support HR1/HR2000 are Greyhound's HR software packages written in the late 1980's by Ceridian. Greyhound has internally supported these products since 1997 when the vendor discontinued support. HR1 and HR2000 are written in discontinued development languages; A-REV and REV-G respectively. This directly equates to increased risk and cost to Greyhound. GLI paid $ 250K for a consultant to stabilize HR1 and resolve programming issues. Since the technology is "dead", the resource pool available to support these applications is diminishing. Due to the discontinuation of support, Greyhound no longer has access to:
If the system encounters a serious error causing corruption or degradation, the vendor will not supply any assistance. Confidential GDD 005154
No future enhancements or patches will be developed or released. In 1998-2000 modifications to government compliance/business issues such as COBRA and HIPAA were coded within Greyhound at substantial internal cost. This also includes modifications to any government reports. 2. HR-1 Program Size and Memory Limitations There is a hard limit of 34,000 characters for a program written in HR-1. There are currently at least 3 critical programs near this code size limit:
HR-1 is limited in the amount of RAM, or memory it can utilize. Furthermore, because it is an older DOS-based product, it can only access Expanded memory. Expanded memory is an out-dated memory access method no longer automatically available on computers. In order to provide expanded memory, a special memory manager must be configured on each computer. This memory manager does not always work correctly with newer hardware. This can cause significant issues with the availability, response, and usability of HR-1 on a computer. 3. HR-1 Network Protocol, Client & Latency Limitations
HR-1 is limited to running on an IPX network. The IPX protocol is specific to Novell NetWare networks, thus database files must reside on a Novell file server. Revelation Technologies does have a utility that will allow HR-1 to run on TCP/IP Confidential GDD 005155 networks. However, performance is generally slower and there are more technical issues involved with keeping the application stable.
A "network client" is required for each PC on a network. Greyhound uses the Novell NetWare client provided by Novell. There are serious compatibility issues with the recent versions of the Novell NetWare client and HR-1. Users of HR-1 must have an older version of the NetWare client installed on their PCs. This client cannot be patched or upgraded as this causes HR-1 to not work correctly on that machine. This limitation restricts our abilities to upgrade the computers of HR-1 users if there is a "bug fix" or maintenance patch available for the Novell NetWare client.
HR-1 is very sensitive to "network latency". Latency is a measure of the responsiveness of a network. If the network is very busy, and requests process slowly, it is said to have high latency. The higher the latency of the network, the more unstable HR-1 becomes. In some instances, this means that no other network applications, such as email, can be run at the same time as HR-1. This causes significant frustrations for the users who just want the program "to work". Furthermore, network latency is a very difficult issue to diagnose and correct. 4. ADP: No Test Environment GLI does not have a test environment for the ADP Payroll application. The primary reason for this is that the application is hard-coded to connect to a particular data source. ADP does not provide an easy method of choosing which database to connect to. A compromise has been reached where we have created a test company code within the production environment. This allows us to test some basic import functionality. However, it does limit our abilities to fully test changes to the interface between HR-1 and ADP. In Atlanta on the ADP mainframe, the test process consists of "flipping a switch" that allows us to process a test payroll run. If for any reason they forget to "flip the switch" it can cause several days worth of clean up. It has happened in the past. Discussion of Business Problems, Constraints, & Risks Maintaining the current environment and set of systems to perform the current mission critical business needs has a number of risks to the company. The risks are primarily due to the retention of old products that have been discontinued by the vendor from both a development and support perspective. The following list contains the Top 10 Business Issues as result of Greyhound's current environment: Confidential GDD 005156 Top 10 Business Issues (GLI/GCTC)
Payroll Outsourcing Costs (GLI/GCTC) The annual costs to outsource Payroll processes which includes W2, T4, and tax filings are:
Note: These costs increase 5% per year. 3 x 5 Index Cards (GCTC) GCTC still relies on 3 x 5 paper index cards to track the following information:
Confidential DD 005157 Examples of significant issues presented by Index Card filing are:
Mission Critical Systems & Floppy Diskette Interfaces (GCTC) GCTC's link between the Payroll and HR systems is a floppy diskette. Ceridian produces the diskette and it is uploaded to the HR2000 system. This process is archaic and labor intensive (if, adjustments are required). Vacation, Sick, and Personal Days (GLI/GCTC)
Interest Savings on Tax Payments (GLI) ADP requires funding for tax liabilities to be sent to them 1 day prior to the check date. The liability is not due to the government entity until the day after the pay date. Examples of the related issues:
Confidential GDD 005158 Inefficient Processes and Points of Failure (GLI/GCTC) The presence of additional databases, interfaces, and points of data entry present process inefficiencies and data integrity issues. Simple employee record maintenance changes such as address, W4, beneficiary, emergency contact, name, and phone number changes require a number of processes for the employee, manager, and HRIS associates. A prime example is an address change. Table 5: Address Change Process Analysis
A Point of Failure is any point in the process where data can be dropped, added incorrectly, or corrupted causing data integrity issues. Consequently, a great deal of research is required to monitor the data integrity between systems. Table 6: Points of Failure illustrates reduction in points of failure an integrated HRMS system could provide. Table 6: Points of Failure
NOTE: Details can be found in Appendix 3 - Current Environment, Current Environment Systems, Programs, & Major Interfaces table. Effective Dating (GLI/GCTC) No Greyhound HR/Benefits/Payroll related system provides effective (future or past) dating. The primary consequence is the need for manual paper processes to be applied at the exact correct time. If the changes are early or late, the ramifications have led to the following incorrect items: Confidential GDD 005159
Procedures to accommodate for this lack of functionality cause a great deal of inefficiencies. Two examples of these work-around processes are Annual Enrollment/Benefits and Merit Increases. Annual Enrollment/ Benefis Since the new benefits can not be applied to the live system with an effective date for the new elections, ITS is forced to create a temporary parallel environment. The future elections are entered irto a replica HR system instead of entering the data directly into the system. ITS allocates $ 13,000 annually in costs to the annual enrollment process. This figure is an average amount based on the experience of the past three years. Merit Increases There are two significant issues in the merit increases:
Because pay increases can not be entered in the system with a future effective date, the increase dates must be manually tracked. This is done using a variety of methods: 3 x 5 cards, spreadsheets, MS databases, and notes pinned to computers. The changes must be entered in at the correct time in the pay cycle to accurately pay the employee with the old/new rates. The timing issues make Greyhound susceptible to missed increases and/or multiple costly retro checks to make up for the differences. Managing personnel files
Confidential GDD 005160
Having this data on-line instead of in paper copies will reduce the time spent shuffling paper and the possibilities of fraudulent activities. Garnishment Processing (GCTC/GLI)
Confidential GDD 005161
Confidential GDD 005162 Limited deduction and earnings codes Both GLI and GCTC are running out of earnings and deduction codes. For instance, the ADP system provides 84 earnings and 101 deduction codes. At this time only 18 earnings and 4 deduction codes remain. The negative impacts of this limitation are:
Additional Business Issues In addition to the Top 10 Business Issues covered above, the following lists other important business issues Greyhound faces today. Appendix 4 - Additional Business Issues and Initiatives contains detailed descriptions of these.
Confidential GDD 005163 The overall objective of the EIMS project is to develop and implement the best strategy for Greyhound. This strategy focuses on fulfilling customer needs as determined by the Executive Steering Committee. Customer Needs
Customer Requirements Fulfilling the customer's needs will be accomplished with the EIMS project by meeting the customer's requirements.
Confidential GDD 005164
After reviewing Greyhound's objectives, the Steering Committee enlisted a team to research and identify the solution to best address the current issues. Confidential GDD 005165 In order to select the best possible solution for Greyhound's business needs, three different business alternatives were evaluated. The specific alternatives were as follows:
To assess the value of the individual alternatives, each was rated and scored based on the 12 primary customer requirements for the project goals. For each alternative, a cost was determined, a list of pros and cons developed, and key points were identified. Based on the data and information gathered, a recommendation was prepared and is stated in the Recommendation section of this document. Confidential GDD 005166 Approach Alternative 1 represents keeping systems and processes as they stand today. This will mean there will be no changes of any kind made to the following environments: GLI HR/Payroll/Benefits Scope and Timeline None applicable as nothing will be changing. Cost of Alternative The current costs of business are assumed to remain constant. They are as follows: Table 7: Alternative 1- Five Year Cost of Ownership
Confidential GDD 005167 Scoring versus Project Goals The alternative was evaluated and scored based upon its abilities to fulfill the Customer Needs and meet the 12 primary Customer Requirements. This alternative scored an averaged raw score of 5 on its ability to fulfill the needs of the customer. This translates to a 20% meeting of needs. Alternative 1 received an averaged raw score of 12 in meeting the primary customer requirements translating to a 20%. The detailed score sheets for this alternative can be found in Appendix 5 - Scoring of Alternatives along with the Scoring Criteria used. Pros and Cons
Summary of Key Points Greyhound is "taking care of business" and will continue to do so under this alternative. Additional costs or capital outlays will be minimized or nonexistent. Greyhound will remain in the 20th century and continue to have the pain points and points of failure with the DOS applications, manual processes, multiple databases and interfaces, and outsourcing costs they currently have. Current subsidiaries and future acquisitions cannot be incorporated into the current systems and "workarounds" will need to be developed to support them with HR and payroll functionality. This could result in an increase in headcount to provide the required functions for these groups. Confidential GDD 005168 Alternative # 2: Modularize and Band Aid Approach This alternative focuses on taking the current Greyhound applications and making only necessary changes to mission critical applications in order to allow Greyhound to move beyond the 20th Century. In order to do this, Greyhound will need to:
Assumptions For purposes of evaluating this alternative the following assumptions were used.
Confidential GDD 005169 Scope and Timeline A specific timeline for this alternative cannot be established at this time. The Project Team does not have the information to build one and all projects involved are subject to approval, resources available, and projects currently in process or pending. Scoring versus Project Goals Alternative 2 was evaluated and scored based upon its ability to fulfill the Customer Needs and meet the 12 primary Customer Requirements. The alternative scored an averaged raw score of 13.7 on its ability to fulfill the needs of the customer. This translates to a 54.7% meeting of needs. Alternative 2 received an averaged raw score of 33.3 in meeting the primary customer requirements translating to a 55.6% level of accomplishment. The detailed score sheets for Alternative 2 can be found in Appendix 5 - Scoring of Alternatives along with the Scoring Criteria used. Cost of Alternative Table 8: Alternative 2 - Five
Confidential GDD 005170 Pros and Cons
Confidential GDD 005171 Summary of Key Points Risk of system failure will be improved by replacing the existing DOS applications. However, the risk associated with maintaining and integrating separate applications and databases will remain. The high degree of customization and system integration complexity will result in higher support costs, lack of flexibility and some degree of system risk. The lack of total integration will limit the company's ability to dramatically improve processes. IT support costs will be higher to address the risk associated with system complexity and high degree of customization. Employee data will be divided among three (3) databases thereby limiting data access, integrity, and reporting. Integration of affiliates will be possible, but speed of integration will be limited and the cost will be increased. Confidential GDD 005172 Alternative # 3: Implement an Integrated HRMS System Approach Alternative 3, the implementation of an integrated HRMS system, was looked at from the perspective of only implementing core systems for HR/Benefits, Payroll, and Driver Management. For purposes of evaluation, any additional services/products available above and beyond what we can accomplish in Alternative 2 were not included in this section. The recommendation of which alternative to choose was therefore based upon an "apples to apples" comparison and nothing more. In order to accomplish this goal, this aternative will require the following:
Assumptions The following list contains the assumptions made in regards to this alternative:
Confidential GDD 005173 Scope and Timeline The Scope can not be established for this Alternative due to lack of knowledge as to which HR software would be implemented. A timeline is contained in section Project Timeline of this document. It does not address or take into account other projects currently under development and pending or waiting to be approved. Scoring versus Project Goals The alternative was evaluated and scored based upon its ability to fulfill the Customer Needs and meet the 12 primary Customer Requirements. This alternative scored a raw score of 23 on its ability to fulfill the needs of the customer. This translates to a 92% meeting of needs. Alternative 3 received an averaged raw score of 57 in meeting the primary customer requirements translating to a 95.0%. The detailed score sheets for this alternative can be found in Appendix 5 - Scoring of Alternatives along with the Scoring Criteria used. Cost of Alternative The one-time investment to implement this strategy is $ 6.1 million dollars over the next 6 years or 0.11% of GLI's projected revenues. The following table shows the investment by major software module and the net present value investment in today's dollars (NPV). Table 9: Investment Summary of Alternative 3 (In 000's)
[a] One-time investment for occurs over the first (2) years. Confidential GDD 005174 Key Points:
The first step in justifying this investment is to explore issues and opportunities throughout the current systems in greater detail. Table 10: Alternative 3 - Five Year Cost of Ownership
Notes:
Confidential GDD 005175 Pros and Cons
Summary of Key Points An integrated HRMS solution will fulfill the needs and meet the requirements of Greyhound's customers with those customers being HR, Benefits, Payroll, Driver Operations (GCTC's Driver Management), and Safety (GCTC's Health & Safety). Greyhound will move into the 21st Century with the capability and flexibility to adjust to the ever-changing business needs of the current and future Greyhound and its subsidiaries. Confidential GDD 005176 Improvements to systems and processes will result in the benefit of reduced costs across every functional area in which the system is implemented. With the current lack of vendor support and their associated costs, system maintenance costs will be incurred. But on the flip side, costs incurred currently for complying with government requirements will be eliminated as the vendor will be responsible for those. Provide a means to entice, retain, and proactively manage Greyhound's most valuable asset, its employees, along with increasing overall employee morale and reducing turnover rates. Integration of critical employees data into a single database will allow access to more accurate, up to the minute data for reporting purposes along with a higher level of confidence in employee data when making business decisions. Confidential GDD 005177 The recommended solution presented in this Evaluation and Selection Project by the Project Team is Alternative 3 - Implement an Integrated HRMS system. To meet the current and future business needs of Greyhound, current systems/data sources need to be combined to keep Greyhound financially competitive and help to retain our most valuable asset, our employees. Bringing together the numerous Greyhound systems/data sources into an integrated system will provide Greyhound with far reaching benefits well into the 21st Century. To meet the data, reporting, and decision-making needs and requirements of our employees and management an integrated system is paramount in the areas of Human Resources, Payroll, Benefits, Driver Management, and Safety. Such a solution will provide for Greyhound (GLI, GCTC, and all subsidiaries) the ability to fulfill their customer's current, future needs and meet the current, future requirements related to those needs. With an integrated system recommendation in hand, the Project Team performed further work and reached a recommendation on the preferred solution, Oracle HRMS. The details on reaching the preferred solution can be found in the next section, Software Vendor Selection and Recommendation. Summary of Key Reasons for Recommendation The key reasons for making this recommendation are:
Confidential GDD 005178 Five Year TCO Comparison Table 11: Five Year TCO Comparison (000's)
[a] HR package is lower in Alt #3 due to sharing of databases and tools with payroll system.
Key Points:
Confidential GDD 005179 A table comparing each alternative in terms of the project goals, financial considerations and key factors is provided below:
Confidential GDD 005180 Pros and Cons
Confidential GDD 005181 Software Selection and Recommendation In June of 2001, the Project Team was defined (Appendix 1 - Project Team) and began an in-depth process to evaluate Human Resource Management System (HRMS) software packages. An initial field of 22 prospective vendors was identified as potential partners based upon their abilities to possibly meet Greyhound's business needs. Using a basic set of criteria and research tools, 18 vendors were eliminated to obtain a more manageable number of vendors to evaluate. Evaluation criteria used in this process were:
Research tools used in this process were:
Based on the information gathered, the team narrowed the list to four vendor candidates, Lawson, Oracle, PeopleSoft, and Ultimate Software. The first three were chosen based upon their ability to meet the basic high-level technical and business requirements of Greyhound and the Gartner Group's identification of them as market leaders. Ultimate Software was chosen as a candidate based upon their low cost and highly respected payroll module. Gartner Group Magic Quadrant TM The Gartner Group Magic QuadrantTM is one of the most respected and widely referenced industry tools when comparing HRMS systems. The Magic QuadrantTM reflects the trends affecting large enterprises as well as the issues of viability, functionality, technology, service, and support. Confidential GDD 005182 Table 12: Gartner Group Magic Quadrant "Vendors in this market provide consistently high support for core HRMS functionality, but will continue to be differentiated based on their ability to support the integration, collaboration, and specialization within and beyond their enterprise". -Gartner Group Advisory, 2001. Note: Originally published Q4 2000 (most recent version at the time of our initial evaluation). Overview of Evaluation Methodology To assist in the evaluation, an outside consulting firm was engaged. The consulting firm and Project Team started the process with a formal written Request for Proposal (RFP) that stated Greyhound's product requirements, then allowed each vendor candidate to demonstrate their product at Greyhound offices in Dallas and Calgary. Both the RFP and on-site demonstrations were weighted and scored by the Project Team with the finished products being the: Fit/Gap Analysis - an evaluation tool to determine "if" the software meets Greyhound's stated requirements Confidential GDD 005183 Additionally, the Project Team conducted both reference checks and site visits to firms utilizing the products as well as continued their independent research. Lastly, the vendor candidates were asked to provide responses to a supplemental set of questions focused on addressing any remaining questions or issues. The results from this second round of interviews and questions were summarized in a document entitled "Vendor Functionality Follow Up Matrix" which is included in Appendix 6 - Vendor Functionality Follow Up Matrix. Each major portion of the evaluation process is discussed in the following sections Request for Proposals A Request for Proposal (RFP) was defined and developed by the Project Team and sent to the four vendor candidates. The RFP was composed of basic Greyhound project required documentation (cover letter, timeframes, document formats, communication protocol, Greyhound Agreement, etc.), narrative questions, technical questions, and the product requirements. The Project Team developed the RFP components of narrative questions, technical questions, and product requirements. The defined requirements for each component were primarily gathered from Joint Application Development (JAD) sessions with the Project Team members or Subject Matter Experts (SMEs) for the functional areas involved. Utilizing the product requirements, vendor candidates evaluated and scored themselves on their ability to meet Greyhound's business needs. The vendor candidates returned the completed RFPs to Greyhound. Once the RFPs were returned, the vendor candidate's self-evaluations of the product requirement were reviewed in an attempt to eliminate vendor candidates from the process. Greyhound eliminated Ultimate Software from consideration based upon deficiencies in Canadian payroll module, garnishment module, number of large clients, and system architecture. These product requirements, as defined and with the vendor candidate responses, became the basis for the scoring process of the vendors. On-Site Demonstrations On-site demonstrations were then scheduled with the three remaining vendor candidates at GLI and GCTC. This was done to provide the Project Team with one point of contact with the vendor candidates while minimizing the amount of time required attending the demonstrations. The primary objectives of the on-site demonstrations were to:
Confidential GDD 005184
Vendor Scripts Each functional area, with GL and GCTC collaborating, developed the Vendor Scripts. The scripts contained a list of items to be addressed during the demonstration and were provided to the vendor candidates prior to the demonstration to assist in their presentation preparation. The departmental Team Leads were responsible for making sure their team understood the vendor candidate's solution to each script requirement. The objectives of the Vendor Scripts were to:
The Project Team scored and ranked the vendor candidates based upon these on-site demonstrations through the Fit/Gap Analysis and Vendor Score Card tools. Project Team Evaluation Results Fit/Gap Analysis Scoring and Weighting The Project Team used a Greyhound defined method for scoring and weighting the results of the Fit/Gap Analysis. The specifics on the criteria and process used can be found in Appendix 8, Fit/Gap Analysis Criteria, Process, and Results. Fit/Gap Scoring Results The Project Team scored only their functional area with the exception of requirements in the reporting, general and security sections. GLI and GCTC individually scored their specific requirements along with those requirements relevant to their organization. The calculated weighted scores were totaled and brought together to produce a final vendor candidate Fit/Gap score. The final Fit/Gap scores were then used to compare and contrast vendor candidate products to determine which was a best fit for Greyhound. Confidential GDD 005185 Following is a summary showing how the three vendors scored for All Requirements, The scores and rankings represent the calculated GLI and GCTC weighted scores combined with no averaging involved. Table 13: Fit/Gap Analysis - All Requirements
The detailed score sheets of the Fit/Gap Analysis are contained in Appendix 8 - Fit/Gap Analysis Criteria, Process, and Results. The overall results are very close between the vendors in this area with slightly greater than 3 percentage points separating first from last. This is expected as the HRMS software market is mature and the overall functionality of the major vendors is similar. Vendor Score Card The Vendor Score Card was an evaluation tool for scoring functionality covered in the Vendor Scripts. The Project Team scored each section under a functional area with a score ranging from 1 to 5, low to high respectively. The scores were based upon the evaluator's determination of "how" the software met Greyhound's requirements addressed during the vendor demonstration. In addition to assigning a score, the Vendor Score Card contained areas for recording comments, strengths, and weaknesses with each section. A final section at the end of each functional area allowed for an "overall impression" score along with a summary of Pros and Cons. After each team member evaluated and scored the product, the respective departments of GLI and GCTC met independently, discussed the results, and agreed on a company specific departmental team score. Below is the composite Vendor Score Card for GLI and GCTC for the three vendor demonstrations conducted. To produce these composite scores, the company specific departmental scores were combined and averaged. The Project Team feels the Vendor Score Card is the better tool as it evaluates "how" the software meets our requirements. Confidential GDD 005186 Table 14: Vendor Score Cards
Overall, the f|nal project team grades were: Oracle "A" (96%) Lawson "B" (87%) Confidential GDD 005187 Key reasons for the scoring differences are: Oracle's software is rated "materially" better in the following areas: Business functionality Ability to accurately assess payroll taxes for employees Confidential GDD 005188 Ability to report on custom accumulators Technical functionality Unlimited number of user defined fields (Examples: safety, driver data) Lawson's software is rated "materially" better in only one area: Business functionality Ability to search pay information by check number PeopleSoft Elimination After the scoring was completed, PeopleSoft was eliminated from further consideration due to:
Confidential GDD 005189 Reference Checks and Site Visits The Core Team composed a list of questions to address the objectives and facilitate the client reference interviews. The Core Team interviewed references provided by the vendor candidates in addition to those identified without the vendor candidate's knowledge. In total 5-6 references were checked for each vendor candidate. Lawson client references check ed were Canadian Auto Association, Cross Mark, Dart, McDonalds, and Petroleum Helicopters. The clients for Oracle were Agilera, ATA, Club Corp, Gevity, Liberty Mutual, Mrs. Bairds, and Stone & Weston. Project Team members also conducted site visits for each vendor candidate to clients selected and arranged through the vendor candidates. The visits consisted of one site visit per vendor cadidate. Dart was visited for Lawson and Club Corp for Oracle. The scoring methodology used to provide the Project Team with reference relevance can be found in Appendix 9 - Reference Scoring Methodology along with the actual client reference sheet for each reference. The reference checks provided a great deal of valuable information. Key information learned and gleaned from the reference checks is contained in the following synopsis. Table 15: Reference Checks Information
Confidential GDD 005190 Vendor Site Visits Following the vendor candidate demonstrations, there were several questions regarding functionality that lingered with the Team. In order to answer these questions, the Team developed a matrix comprised of the strengths, weaknesses, and critical assumptions from the demonstrations as agreed to by the Core Team. Sources for the matrix were:
After completing the matrix, it was sent to the respective vendor candidates for confirmation/rebuttal. Greyhound requested that the vendor candidates validate, clarify, and return the matrix within three days. The full matrix with the responses can be found in Appendix 6 - Vendor Functionality Follow up Matrix, Following the return of the matrix, the Core Team requested visits to both Lawson and Oracle facilities. The purpose of the visits was to establish additional rapport, view the facilities, address any new issues or concerns, and address any additional inconsistencies found in the vendor candidate responses to the Vendor Functionality Follow Up Matrix. After these additional vendor site visits, the Core Team felt very comfortable with its assessments and assumptions regarding the Vendor Functionality Follow Up Matrix for both vendor candidates and found their previous decisions confirmed. Five Year Total Cost of Ownership Key Assumptions:
Confidential GDD 005191
Confidential GDD 005192 Table 16: Five-year Cost of Ownership Comparison [b]
Confidential GDD 005193 Overall the TCO is very close between the vendor candidates and consistent with general industry observations. Thpse can be summarized as follows:
Contract Terms The last major evaluation performed was a review of the contract terms, which govern the overall business relationship. Oracle has a fairly simple, standard agreement that they typically do not customize. The simplicity of the agreement allows Oracle the freedom to use business practices (primarily pricing issues) and support policies to heavily influence the on-going relationship with their customers. Historically, this has created conflicts in their customer relationships. Over the past six months, Oracle has been more flexible in meeting Greyhound's contract concerns and provide amendments that address our past relationship issues related to length of product support and database licensing. As part of our discussions to date, Oracle has offered to reduce our on-going database license costs by $ 100,000 per year ($ 500,000 over five years) if we purchase their HR / payroll solution. This cost saving is not included in the TCO numbers above in order to provide a fair comparison. Lawson provides a typical licensing and support agreement that is common in the industry. They seem willing to address our contractual requirements and have also addressed our product support concerns. It should be noted that at this point in time, we have not negotiated in earnest with Lawson. While the key contract terms are very similar between the two vendor candidates, Lawson's contract is rated better. This is primarily due to the fact they warrant the "unmodified" product will operate according to its specifications provided the software is under a support agreement. Contract Comparison Table 17: Key Contractual Issues and Differences directly compares the key contract terms for Lawson and Oracle. Confidential GDD 005194 Table 17: Key Contractual Issues and Differences
Confidential GDD 005195 Gartner Group Analysis of Strengths and Limitations
Market Focus and Implementations The following table, Table 18: Current Version Implementation Statistics shows detailed information for Lawson and Oracle. Due to the fact the company size has a major part in these numbers, it must also be noted that Lawson is a "niche" market vendor with approximately 75% of their clients being in the Health Care Industry. Oracle on the other hand is a huge corporation with the majority of their business clients being the manufacturing arena. Confidential GDD 005196 Table 18: Current Version Implementation Statistics (as of 11/19/01)
Financial Comparison Matrix Each of the vendor candidates was also analyzed to assess their financial stability. The information was gathered from company financial reports, investment web sites, and Dunn and Bradstreet research. A summary of the findings follows, Table 19: Financial Comparison Matrix, with detail documents found in Appendix 11 - Vendor Financial Comparison. Confidential GDD 005197 Table 19: Financial Comparison Matrix
Notes: Current year computed Ratios are based on the latest 12 months results (Source MSN.com) Confidential GDD 005198 Oracle's financial statements were graded the best of the group primarily based on their high profit ratios and low debt ratios. Lawson's financial ratios are considered good, however prior year results are a concern, and Lawson has a louver overall profit ratio. Technical Environment Diagrams 9 and 10 depict the "new" system environments with an integrated HRMS system for both Lawson and Oracle. The differences are apparent in that Lawson requires additional databases and interfaces that are depicted in gray at the bottom of Diagram 9. Confidential GDD 005199 Diagram 9: Lawson HRMS Systems Structure Confidential 005200 Diagram 10: Oracle HRMS Systems Structure Confidential 005201 It is the recommendation of this Project Team to choose Oracle's suite of HRMS products for implementation at Greyhound. Their products meet, with few exceptions, the requirements for the current and future business needs of Greyhound Lines, Greyhound Canada, and any current subsidiary and future acquisition. Following are the Key Reasons upon which this recommendation was based. Key Reasons for Recommendation Functionality Reasons
Confidential GDD 005202 Approval Proxy provides two key advantages/benefits:
This can be done by defining how long the task sits before 1) a reminder notice is sent to the approver, 2) a notice is sent to all other parties involved, and/or 3) the task is escalated to the next approver or person in line. These two items alone would reduce quick checks, upset employees, and allow District Managers to identify the weak links in their chain. Confidential GDD 005203
Confidential GDD 005204
Technical Reasons
Confidential GDD 005205
Synergistic Reasons
Other Reasons
Confidential GDD 005206 Implementation Consultant Selection Note: This section is still being constructed waiting approval of the software,yendor by the Executive Steering Comnittee. Once the number of software vendor candidates had been narrowed to two (Lawson and Oracle), the project team then developed a formal Request for Proposal (RFP) for Implementation Consultant services. This RFP was submitted to eight different vendor candidates. Four bids for Oracle implementation services and three bids for Lawson implementation services were received. Table 20: Implementation Quotes lists the vendor candidates that received the RFP and what their response was. Table 20: Implementation Quotes
NOTE: The "No Bid" response letters are contained in Appendix 13 - Supplemental Materials of the Detailed Business Case NOTE: The quote price does not include travel, expenses, contingencies, or taxes Confidential GDD 005207 The four Oracle implementation services bids were received from TSC, Sierra, Ciber, and Oracle/Experio. The bids ranged in cost from $ REDACTED to $ REDACTED The three Lawson implementation services bids were received from Lawson, DigiTerra, and Experio. The bids ranged in cost from $ REDACTED to $ REDACTED Based on the range of costs for the Oracle bids, an Average of $ REDACTED for implementation services was used for the business case. After the initial bids were received, it was decided that additional information concerning the scope of project was needed. Details on the additional information can be found in Appendix 12 - External Consulting Estimates. To gather this information, a "Scope Map" was developed. This Scope Map was based on a similar document provided in the bid from Sierra. The Scope Map was then submitted to each of the vendor candidates, who were asked to complete the document and then return it to the project team. The Project Team is currently working on evaluating the Scope Map responses and grading the RFP responses. The RFP responses are being evaluated on the following criteria:
Once the RFP Responses and the Scope Map have been evaluated and scored, the Project Team will reduce the number of vendor candidates to two. Once this has been done, the remaining two vendor candidates will be asked to do oral presentations, and then a finalist will be determined. The completion of these tasks is also dependent on the final software selection being approved by the Steering Committee. Confidential GDD 005208 Architecture and Development Considerations To help differentiate between the solutions offered by both Oracle and Lawson, the application architectures and development tools available were compared and evaluated. This process was done to determine which solution would fit within Greyhound's existing network architecture the best and had the best available tools, from Greyhound's perspective. The pros and cons of each solution as they relate to this section were considered during this process. In addition, a review of the systems environment is briefly discussed. Application Architecture refers to what network protocols the solution uses and how the users access the application. There are two basic architectures in use for applications. The first architecture is a traditional client/server application which has an application installed on the client PC with additional components installed on a server. The second architecture is a web-based, or thin, client. In this architecture, all of the application components are installed on a server and the application is accessed through a web browser. Both Oracle and Lawson utilize a web-based architecture for their applications. In addition, Greyhound currently has several internal development projects under way that also utilize a web-based architecture. These include Load Count Entry, Travel & Charters, Kiosk Ticketing, and Terminal Staffing. This web-based architecture provides several benefits over the traditional client/server architecture.
Confidential GDD 005209 One of the main concerns in the Application Architecture is what network protocols and standards the system uses to communicate between the different parts of the system, including the client PC. Since both Oracle and Lawson utilize a web-based application architecture, with a web browser as the client software, there are several main protocols and standards for network communication and data transmission that are relevant. The following chart lists these elements and whether or not each vendor candidate supports them. For a definition of these items, please see the Terminology section of this document. Table 21: Architecture Elements Relevancy Comparison
Both systems support the use of Java components. However, Oracle uses a Java applet to provide the main user interface for power users. Power users are those employees that use the application on a day-to-day basis as part of their job function. The Java applet provides a more familiar "look and feel" to the application for the users, similar to traditional client/server applications. Lawson uses a web page interface for their power users. This style of user interface functions quite differently from typical client/server applications, and could result in a longer learning curve for the users. An important aspect of any solution, Development Tools refers to the complete set of tools available to modify and/or maintain the solution. This includes the user interface designers, report writers, source code management tools, database management tools, and modeling tools. Oracle and Lawson have taken vastly different approaches to the Development Tools available for use with their solutions. Oracle uses an integrated set of development tools written by Oracle, specifically for use with their applications. Lawson has adopted an open, standards based approach that allows a developer to use any tool they want, so long as it complies with either the Microsoft COM+ or Java standards. Confidential GDD 005210 Oracle Tools Some of the tools in Oracle's integrated development tool set are the:
There are pros and cons associated with using a proprietary set of development tools. Table 22: Development Tools Analysis shows the pros and cons. Lawson Tools Lawson has adopted an open development tools approach. They support any development tool that is compliant with the Microsoft COM+ standard in addition to Java development tools. Lawson also provides several tools of their own such as the HTML Toolkit. The openness in this development tool approach means that new user interfaces (forms or screens) can be created using a Java development tool, Microsoft Visual Basic, Microsoft Visual C++, or Delphi along with Lawson's proprietary tool, HTML Toolkit. Confidential GDD 005211 Table 22: Development Tools Analysis
The HRMS solution will requirje at least three distinct instances, or environments, Production, Development, and Test. While it is possible, technically, to host all three environments on one server, this is not advisable. It would be better to leave the Confidential GDD 005212 Production environment on a stand-alone server. The Development/Test environments can be placed on the same server. Having separate servers for the Production and Development/Test environments provides these advantages.
The actual hardware configurations necessary and the associated costs are covered in Impact on the Operational Environment. The web-based architecture utilized provides for easier maintenance on the client PCs and simplifies deploying system upgrades and enhancements. Both solutions are equal on this point. Perhaps the biggest differentiator between the two solutions is in their approach to development tools and the associated drawbacks. Oracle's proprietary, integrated set of development tools requires the developer to use the topis provided by Oracle to make modifications. Confidential GDD 005213 Impact on the Operational Environment This section discusses the impact implementing an HRMS solution will have on Greyhound. It covers in detail the impact on hardware (desktop and server), network, database, disaster recovery, and other considerations. User Environment Minimum PC Requirements Minimum PC requirements have been determined as follows:
Based on the Minimum PC Requirements, Greyhound may need to replace some of the following PCs.
Confidential GDD 005214 Server Hardware Greyhound will need to buy hard drives and processors for the HRMS database and application servers. The actual application and database servers to be utilized with the HRMS solution will be purchased as part of the Oracle Financials 10.7 to 11i upgrade project. There is no anticipated purchase of additional web server hardware for the implementation. The HRMS solution will be able to utilize the Apache web servers in Greyhound's existing web farm. There is enough room in the ODC and North Dallas data centers to house the new solution and failover servers. Diagram 11: Data Center Configuration shows the configuration to be used. Diagram 11: Data Center Configuration It is expected that the solution being implemented will use the TCP/IP network protocol. At this time, the impact the deployment of Manager Self Service or Employee Self Service will have on Greyhound's current network configuration is unknown. Sites that connect at 56k may need to be upgraded with the deployment of Self Service. Currently, there is no anticipated need to increase the bandwidth between ODC and North Dallas for Disaster Recovery options. Confidential GDD 005215 The installation of an Oracle 8.x database is planned with the HRMS solution implementation. The selection of an Oracle database meets Greyhound's current standards for databases. Disaster Recovery is a great concern for any organization when it comes to mission critical applications and data. There are basically two options available to Greyhound for Disaster Recovery with both utilizing the Development, Test, and Failover environments. The two options and their associated diagrams are given below:
Diagram 12 - ODC Failover Environment Confidential GDD 005216
Diagram 13 - North Dallas Failover Environment Regardless of the option chosen, the Production server will be located at ODC Data Center. Should the Production server fail, the Development/Test/Failover servers would become the Production servers. All development and testing would cease until such time the Production servers were available again. Confidential GDD 005217 Table 23 - Disaster Recovery Options Pros and Cons
Data Replication The complexity of data replication ties directly to the decision regarding Disaster Recovery. The location of the servers has a great impact on data replication. Downtime Failover to the Disaster Recovery servers will require no manual intervention and will take less than 1 hour to enable for both software solutions. Greyhound Service Level The expected service level for the HRMS system from Greyhound resources will need to be 24 x 7 x 365. Any outage greater than 24 hours is unacceptable. Customer Support The Greyhound Help Desk Will be responsible for password changes. They will need to be trained on this function. Confidential GDD 005218 Lawson HRMS Implementation and Disaster Recovery The prior details of this section are based strictly upon an Oracle HRMS implementation. The research done encompassed both solution options (Oracle and Lawson) and there were differences found regarding a Lawson implementation that the Project Team felt need to be included in this section. The most significant of the differences was that a Lawson implementation will require an additional .25 FTE to support the additional database instances. Diagram 14 - Lawson EIMS ODC Failover Environment and Diagram 15 - Lawson EIMS North Dallas Failover Environment graphically show this statement. Table 24: Oracle/Lawson Disaster Recovery Option Costs shows the number of actual differences in database instances and the costs associated with them. Diagram 14 - Lawson EIMS ODC Failover Environment Confidential GDD 005219 Diagram 15 - Lawson EIMS North Dallas Failover Environment Confidential GDD 005220 Table 24: Oracle/Lawson Disaster Recovery Option Costs
Confidential GDD 005221 The company will be required to make a substantial investment of capital and resources to implement the recommended strategy. The investment is estimated at $ 90 per employee per year or $ 7.50 per month over the next six years. This investment will provide the company an opportunity to reduce operating expenses by over $10M during the same period. Producing a potential return on investment of 7% before taxes and interest. Five-Year Total Cost of Ownership The five-year total cost of ownership (TCO) is calculated based on the total costs associated with the project and projected at $ 7.8M. These expenses include capital expenditures, operating expenses and capitalized internal labor costs. The detail is presented above. The detail of cost assumptions used to prepare this comparison are located Appendix C of the Executive Business Case. Table 11: Five-year TCO Comparison follows on the next page and shows the specifics. Confidential GDD 005222 Table 11: Five Year TCO Comparison (000's)
[a] HR package is lower in Alt #3 due to sharing of databases and toois with payroll system.
Key Point: The overall cost difference between the most viable alternatives (#2 & #3) is less than 1% when you compare identical core functionality. Confidential GDD 005223 In preparing the business case, the team listed over 50 benefits that took over 40 pages of text to discuss (see Supplemental Materials: Benefits Assessment). There were numerous immaterial hard cost savings such as reduced shipping costs, lower overtime and contract labor uncovered during the benefit analysis, however they were not included in the ROI calculation as many are assumed covered in the "soft cost" assumptions below. For the ROI calculation, we focused exclusively on material benefits that could be quantified and classified in one of three ways.
Hard Cost Savings Five areas of hard cost savings are presented in the ROI model.
Confidential GDD 005224 Soft Cost Savings Process improvement estimates made by the departmental managers are classified as "soft costs" as they are not realized without future management decisions regarding utilization of resources. For example, we estimated the 120 driver managers could save 25% of their time in managing personnel files, completing new hire paperwork and processing of safety compliance documents. This equates to only a 6% improvement in their overall job function or $ 381K annually in company benefits. The team is not making any recommendations regarding personnel decisions, however in order to convert these soft savings to hard savings, management could consider:
The final decisions regarding these benefits are outside the scope and responsibility of the project team. In the HR and payroll departments, a detailed process cost analysis was completed. The cost analysis was an allocation of total cost center expenses to a function or process within the department. After seeing the on-site demonstrations from each software vendor, the managers were asked to estimate the potential improvement they thought the system would allow in each department process. The process improvements are due to better data, fewer sources of data, better system integration, elimination of manual processes, and the implementation of advanced automation products such as employee and manager self-service, and workflow. The detailed analysis and work papers are included in Appendix B of the detailed business case. Overall the results for both the GLI and GCTC were identified as follows: HR process improvements of approximately 13% or $ 331K annually The HR improvements are considered conservative when compared to findings at other companies. According the Hackett Group: "Employee Self-Service is Confidential GDD 005225 proven effective in reducing HR operating costs- Failure to deploy technology enabling employee self-servie has been demonstrated to raise the health and welfare costs by as much as 69%" Based on benchmark data representing 80% of the Dow Jones Industrials and 60% of the Fortune 100. Health and Welfare Administrative Cost per Employee Soft cost savings (not included in ROI) Given the time constraints and the inability of all company managers to see the vendor demonstrations, only the departments mentioned above were considered major areas for process improvement. However, there is a general consensus a modern system will allow every company manager to improve their productivity in completing HR / payroll administrative tasks and better utilize employee resources. Cost Avoidance There are a few opportunities classified as "cost avoidance" since the actual expense is neither recurring in nature nor guaranteed to occur. However, the project team feels there is a strong likelihood it will occur and that the new system along with the corresponding process improvement effort will reduce the company's exposure in the future. In summary three opportunities areas are included:
Confidential GDD 005226
Employee Benefit Premiums A comparison of the data found in the US HR and payroll system found 105 employees were active in the benefit system yet no payroll earnings were paid through payroll. Due to current PAF process and the challenges of integrating our current systems, it is highly probable a lag occurs between when employees are classified inactivated in payrol (or "terminated") and the time the employee is terminated in the benefit systelm. The new integrated system can reduce this potential company expense. For conservatism, we calculated the potential overpayments based only on union employees and reduced the result by 25%. The result is a cost avoidance opportunity of $ 313K annually. Details regarding the actual calculation are included in the Benefit section of Appendix C. Unearned vacation and sick time Greyhound currently does not have a system to accurately track vacation (including holidays) and sick time. In the past, 6 locations were surveyed to better understand how paid leave is actually tracked for non-driver hourly employees. The results found that on average the company granted or lost $35 per year in wages per employee. Using this average for only hourly employees it is estimated the company's additional expenses is $ 175K annually. Again this result was factored by for conservatism in two ways, 1) we only considered hourly employees and 2) we factored down the entire result by 25%. This estimate resulted in $ 131k in reduced wages and increased employee productivity per year. The detailed assumptions and calculation are included in the detailed ROI analysis accompanying this document. Safety database improvements The safety department currently uses an Access database program to track driver safety information. The department currently plans to spend an estimated $ 86K in one-time improvements to their system. With the implementation of the recommended solution for drivfer information, the department has agreed to forego this expenditure. Cost avoidance (not included in ROI calculation) Accurately estimating the risk associated with governmental fines for non-compliance in filing and reporting employee information and safety information are difficult to compute and not included in the ROI model. Additionally, we did not Confidential GDD 005227 include any company benefits related to lower employee turnover or training cost savings from lower driver attrition. Projected Return on Investment (ROI) The five year total cost of ownership and benefits identified above were combined to produce an estimated Return on Investment for the company. For simplicity and conservatism, capital expenditures were slightly accelerated to occur over 2 years. Project benefits were ramped up over 3 years for additional conservatism, with Year 5 being the first year all benefits are realized, therefore a six-year model is presented. Confidential GDD 005228 Table 25: Return on Investment by Software Module Total Project
Confidential GDD 005229 Table 26: Return on Investment by Benefit Type Total Project
Cummulative ROI Calculation and NPV @ 12%
Confidential GDD 005230 Risks in Undertaking the Project In undertaking a project that directly impacts two companies (GLI & GCTC) and three of their mission critical functions (HR, Payroll, Financials), there are associated risks. Major
Minor
Inherent with a Major Project
The preceding risks will be mahaged by the Greyhound Project Team working with the implementation consulting firm to ensure the project is delivered on time and managed appropriately. The scope risk will be managed by the Steering Committee. Risks Avoided by Undertaking the Project By replacing the current HR/Payroll solution and with successful implementation, the following risks will have been mitigated. Confidential GDD 005231 System Failure The current environment poses a significant risk of a system failure for the following reasons:
Points of Failure Non-integration and multiple databases inherently creates additional processes and "Points of Failure". Table 6 - Points of Failure illustrates the improvement integration would provide. The presence of additional databases, interfaces, and points of data entry present process inefficiencies and data integrity issues.
Risk of Governmental Fines and Penalties
Confidential GDD 005232 Greyhound Employee Risks
Financial Risks to Greyhound
Confidential GDD 005233 Overview of Scope and Approach There are 2 basic ways to implementing a system of this size and complexity. The first is the "big bang" approach where the goal is to implement all the software modules and functionality at once. This approach allows a company to begin capitalizing on the opportunities quicker, yet has a higher risk of implementation failure and is difficult to manage effectively. The second is a "phased implementation" where the entire project is divided into smaller phases each with a staggered due date. Features and benefits build gradually over the project life with the company realizing the full benefits over time. This approach is used to help mitigate the risk of implementation and provides the organization with more control through the project life cycle. Based on the complexity of the project and recommendations from outside consulting firms, phased approach to implementation is recommended. The phased approach outlined below was developed based on the following constraints and considerations: Planned Upgrade to Oracle Financials - Due to the tight integration between the financial system, payroll and human resources, it is highly recommended that the upgrade to Oracle financials be completed before the implementation of the EIMS system. At the minimum the financial systems key general ledger classifications and tables must be converted before the HR or payroll modules are implemented. This will avoid the creation of temporary interface programs and lower the overall implementation risk of the project. The detailed scope and projett plan for each phase will be created in conjunction with our external consultants and will change based on needs and priorities. Therefore, only a brief synopsis is presented here for discussion. All major scope and approach decisions will be made by the Executive Steering Committee. Confidential GDD 005234 Phase 0 Overall project planning and analysis for the entire project will be detailed with the external consultants. Final project scope and implementation phases will be completed and presented to the steering committee. The planning and initial pre-configuration will encompass all five phases below to ensure the system is designed to meet the current and future needs. During the initial phase it is assumed Oracle financials will be loaded to allow proper integration to occur. Phase 1 HR/Benefits/Driver Management - GLI In this phase, we implement the core HR system for the GLI operations, a basic driver management system, as well as limited advanced functionality in workflow, self-service and advance benefits. By implementing a limited amount of advanced functionality we have the opportunity to evaluate the results, before making larger investments. Due to the highly unstable nature of the GCTC HR environment, there is a pressing need to address GCTC in this phase and the steering committee will continually evaluate this option as more detailed planning occurs. Phase 2 - Payroll - GLI Phase 2 will consist of core payroll functionality for GLI. It is recommended that the payroll implementation coincide with either July 1 or January 1 to mitigate governmental tax reporting issues. Additionally, due to the integration between payroll and general ledger, the 11i financial upgrade should be completed before this module is fully implemented. Phase 3 - HR/Benefits/Driver Management - GCTC Phase 3 includes all HR functionality for GCTC as well as limited functionality in the areas of driver management, advanced benefits and self-service. This is the equivalent of Phase 1 above, however should result in a better implementation due to the learning curve being completed in Phase 1. Phase 4 - Payroll- GCTC Phase 4 consists of core payroll in GCTC to be implemented on a cutover date that makes business sense. By delaying this phase, the Canadian union pay solution should be implemented thereby reducing the implementation complexity. Phase 5 - (On Going) Once the base modules have been installed, advanced functionality can be prioritized and implemented based on business needs. Confidential GDD 005235 Diagram 16: Project Timeline Gantt Chart Confidential GDD 005236 The following are project/industry specific acronyms/terms used within the business case: CDG - The 3rd Party consulting firm specializing in HRMS applications engaged to assist Greyhound with the RFP, Selection, and Evaluation process. DOT - Department of Transportation EIMS- Employee Information Management System...name given to the project in lieu of the HR/Payroll or HRMS system because it encompasses more than just the HR and Payroll systems. This project would include Driver Management/Safety/DOT, GCTC, in addition to the HR and Payroll modules. *GCTC - Greyhound of Canada Transportation Corporation...refers to the Canadian operations only. *GLI - Greyhound Lines, Incorporated- refers to the United States operations only. *Greyhound - Term used to refer to the combination of GLI and GCTC as a single entity. HRMS/HRIS - Human Resource Management System (synonymous with HRIS)...system or collaboration of systems managing the HR and Benefit related business functions. Payroll often is assumed to be incorporated in this set of processes. HTML - This is the HyperText Markup Language. This is a markup language that is used to define how data should be displayed in a web browser. It might specify something should be displayed as a bulleted list, or in a table, or as a formatted paragraph. It does not define the data itself, but merely how to display it on the screen. HTML data (web pages) is transmitted using HTTP. HTTP - This is the HyperText Transport Protocol. It is the primary standard for formatting messages to send across the World Wide Web. It controls what headers must be present in a valid message so that a web browser can correctly interpret the content. Messages formatted according to the HTTP standard are then transmitted across the network (either internal or external) using TCP/IP. JAD - Joint Application Design...detailed sessions conducted with each department's subject matter experts to identify the current processes, business needs, and future possibilities for improvement with a new system. Java - Java is actually more of a programming language, but is often used to provide additional functionality on a web page. A Java applet runs within the web browser as a stand-alone application. The applet communicates back and forth with the server using TCP/IP. Confidential GDD 005237 Point of Failure (Failure Point) - Any point in a process where data can be dropped, added incorrectly, or corrupted causing data integrity issues. RFP - Request for Proposal SME - Subject Matter Expert...employees who perform specific processes day in and day out. These employees are the experts of their business process and the key to identifying all the business requirements for a new system. SWOT - Strengths, Weaknesses, Opportunities, and Threats/Risks of current environment. Departmental synopses of themes gleaned from the Joint Application Design (JAD) sessions. TCP/IP - This is the Transport Control Protocol/Internet Protocol. It is the primary standard protocol for transmitting data across a network. This protocol specifies how the information is packaged for transmission, and how these packets are addressed so that they reach the correct destination. XML - This is the extensible Markup Language. It is related to HTML, since it is a tag-based markup language. However, instead of specifying how data should be displayed, it describes the data itself. This allows specific message formats to be defined when transmitting data from one application to another, or from a web browser back to the server. There is also no limitation on what tags may be used. Since this is an extensible language, anyone may define the tags that they want to use, so long as both the sender and the receiver understand them. The differentiation between GLI, GCTC, and Greyhound is paramount to clearly understand the objectives of this business case. 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