Copyright © 2015 LRWL Inc. All Rights Reserved. Copyright © 2015 LRWL Inc. All Rights Reserved.
Tacoma Employees Retirement System
LRWL Inc. Presentation
March 12, 2015
Copyright © 2015 LRWL Inc. All Rights Reserved.
LRWL Chris Fikes – Project Director Ben Lott, CPA, PMP – Vice President
Introductions
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Agenda Topics
LRWL Experience LRWL Project Deliverables for TERS
Recap of Deliverable 3 Recap of Deliverable 4 Recap of Deliverable 5
Strategic Roadmap – 3 Options Option 1 – New Pension Administration System Option 2 – Major SAP Initiatives and Supporting Projects Option 3 – Status Quo
Next Steps / Path-Forward Questions and Answers LRWL Recommended Alternative
3
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Our Corporate Mission “To assist public retirement systems in exceeding
the expectations of their customers. We do this by providing the most experienced and professional staff in the industry.”
Founded 1981 - Technology and management consulting firm Since 1994 - focused exclusively on
supporting the public pension industry Retirement Benefits administration
LRWL Experience - Background
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LRWL “Corporate Experience”: 70+ clients
LRWL Staff “Individual Experience” – prior to joining LRWL: 60+ clients
LRWL is among the largest firms of its type that specializes in Technology and Management consulting for the public pension industry (we don’t do any implementations or programming or coding – avoid conflict of interest)
20 highly qualified, highly experienced professionals on staff
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LRWL Experience - Background
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LRWL Experience – All Clients
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At one extreme, we are proud to point out that of the 20 largest
public pension systems in the US, more than half have utilized LRWL’s services in major projects related to meeting their strategic goals – CalSTRS, NYSLRS, NJDPB, NCRSD, etc.
…But perhaps more important, at the other end of the spectrum is
the list of LRWL’s 20 similar sized clients that are more comparable and closer peers to TERS
Our experience has shown that pension systems with fewer than 20,000 participants tend to have many similarities; we use that criteria for comparisons
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LRWL Experience – TERS Specific
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LRWL Experience: Similar Sized Clients
Retirement System Port
folio
Va
lue
($B
illio
n)
Tota
l Pla
n Pa
rti-c
ipan
ts
(000
’s)
Num
ber o
f A
genc
y Em
ploy
ees
A-B
us
Ana
lysi
s /
BPR
B-E
valu
atin
g
Exis
ting
PAS
C-R
FP
Cre
atio
n fo
r C
usto
m
D-R
FP fo
r PA
S So
lutio
n
E-D
ata
Con
vers
ion
F-IR
S an
d 41
5 Ex
perie
nce
H-V
endo
r Ev
alua
tion
I-CO
TS
Kno
wle
dge
J-In
tegr
atio
n of
Doc
umen
t M
gmt
San Bernardino County ERA 5.0 29.9 30
Milwaukee ERS 4.0 26.8 40
Los Angeles Fire and Police PS 15.7 25.8 125
District of Columbia RB 4.2 24.9 48
Colorado FPPA 3.4 23.7 25
Fairfax County ERS 2.5 22.4 32
San Diego City ERS 3.8 20.2 60
Alameda County ERA 5.2 20.1 82
Denver ERP 1.7 19.3 25
Contra Costa County ERA 5.0 18.6 37
Virgin Islands GERS 1.3 18.2 89
Baltimore ERS 2.1 19.2 24
Kern County ERA 2.3 15.9 20
Austin ERS 1.7 11.5 14
City of San Jose DRS 4.6 11.2 34
San Mateo County ERA 2.7 10.5 20
Fort Worth ERF 2.0 10.3 19
Tulare County ERA 0.9 8.2 9
Sonoma County ERA 1.3 8.1 15
City of Springfield CRS 0.3 7.7 4
City of Fresno RS 2.1 5.8 14
Tacoma CERS 1.4 5.6 7
El Paso Firemen & Policemen’s PF 0.9 3.3 5
Charlotte Firefighters’ RS 0.3 1.5 3
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Current business and systems assessments
Strategic technology planning
Business case development, needs / feasibility analysis
Best practices identification and implementation assistance
Business process re-engineering
Organizational change management – including planning, participating, and facilitating 9
LRWL Experience – Core Project Activities and Tasks
RFP development Procurement assistance Contract negotiations QA - Quality Assurance PM – Project Management OPM – Oversight Project
Management IV&V – Independent Verification
and Validation Testing planning and assistance Data cleansing analysis Imaging and workflow support Employer reporting change
support Staff augmentation
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Deliverable 1: Project Workplan Deliverable 2: Project Status Reports Deliverable 3: Current Technology Assessment Deliverable 4: Business Processes and Best Practices Deliverable 5: Strategic Roadmap Deliverable 6: Summary Report / Board Presentation
Note that Deliverables 3, 4 and 5 are included as supporting material to this Summary Report / Board Presentation.
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LRWL Project Deliverables for TERS
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Overview of TERS Organization Identify Existing TERS IT Projects Trends
Public Retirement System Trends Private Sector Financial Services Industry Trends Technology Trends
Current Technical Environment LRWL Analysis and Recommendations
Five (5) Short-Term Improvements Two (2) Mid-Term Improvements Six (6) Long-Term Improvements
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Recap of Deliverable 3 Current Technology Assessment
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TERS Business Processes and Best Practices Evaluation of twenty (20) TERS business processes
resulting in individual high-level summaries, as-is process flow diagrams and LRWL provided process-specific best practice recommendations
Level of Automation and Transaction Volume Assessment of the level of automation that exists today at
TERS and the transaction volume for those identified processes.
LRWL Global Best Practice Principles A listing and overview of seventeen (17) best practice
principles seen in the Retirement System industry.
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Recap of Deliverable 4 Business Processes and Best Practices
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LRWL has been working with TERS to understand their existing business, their existing technology and solutions, and more importantly their vision for the future of their organization
Staff indicted and expressed their concern that often their work requires additional manual and/or spreadsheet verification in order to ensure accuracy and completeness
A Visioning Session with TERS staff and LRWL resulted as to what the future may look like for TERS
The Strategic Roadmap resulted in three (3) primary initiatives / options regarding TERS information processing environment: Option 1 – New Pension Administration System Option 2 – Major SAP Initiatives and Supporting Projects Option 3 – Status Quo.
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Recap of Deliverable 5 Strategic Roadmap
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Each alternative was described along with the expected benefits, envisioned challenges, projected timeframe, and projected costs
Overall intent was to provide information and alternatives for consideration; so that a decision or formal direction could be made by the TERS Board of Administration.
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Recap of Deliverable 5 Strategic Roadmap
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Description A new pension administration system (PAS) would enable TERS staff to:
Perform all of their duties associated with their business operations in a single commercial off-the-self (COTS) solution
With full retirement-industry capabilities Including peripheral features such as imaging, workflow, case
management and correspondence generation. These solutions exist in the marketplace and are all browser-based thus
allowing for participant (i.e., members, annuitants, etc.) to perform their own self-service capabilities
This alternative includes the following steps: Develop a comprehensive Request for Proposals (RFP) Conduct a formal procurement Implement a stable, state-of-the-industry, fully integrated solution
capable of supporting TERS mission well into the future. There are probably 4 to 6 vendors who would be interested in the TERS
project.
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Strategic Roadmap – Option 1 New Pension Administration System
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Expected Benefits Improved service levels to members Improved management of member, retiree and employer
information Improved accuracy of all information collected, maintained, and
provided by the retirement system Improved timeliness and accuracy of responses to members'
inquiries Improved system audit and control capabilities Improved management reporting features Increased and improved Web-based, self-service functions to
members, retirees, and employers
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Strategic Roadmap – Option 1 New Pension Administration System
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Expected Benefits (continued) A secure environment for the receipt and transmittal of information
(data) related to members, retirees, and employers Continuous upgrade, new versions and releases provided by vendor Seamless integration of pension administration, imaging, workflow,
CRM, ad-hoc reporting, and other peripheral components Incorporated into a peer, user-group community of other system
users (i.e., clients) of the same solution – allowing for participation and involvement in future product features, enhancements and vendor annual conferences
Positioned for the next evolution of technology where the vendors are already enabling their solution for access and processing via mobile devices.
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Strategic Roadmap – Option 1 New Pension Administration System
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Challenges The cost is more expensive than other options It requires more staff time to work with the solution provider over
the course of the project Learning curve involved for staff to understand new solution, new
technology, new capabilities, etc. Limited marketplace and solution offerings available Potential for obsolescence of vendor over time.
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Strategic Roadmap – Option 1 New Pension Administration System
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Proposed Timeline
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Strategic Roadmap – Option 1 New Pension Administration System
Project Activity Tentative Start Date
Tentative End Date
Projected Duration
RFP Development 4/1/2015 8/31/2015 5-months
Procurement Process / Contract Negotiation
9/1/2015 2/28/2016 6-months
Pension Administration Project 3/1/2016 8/31/2018 30-months
3rd Party Project Management / OPM / QA 3/1/2016 8/31/2018 30-months
Post-Implementation Support 9/1/2018 Ongoing Ongoing
City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing
Additional IT and/or TERS Staff 1/1/2016 Ongoing Ongoing
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Projected Costs
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Strategic Roadmap – Option 1 New Pension Administration System
Project Activity Projected Cost (Low)
Projected Cost (High)
Projected Cost (Average)
One-Time Costs: RFP Development $100,000 $150,000 $125,000 Procurement Process / Contract Negotiation $30,000 $50,000 $40,000 Pension Administration Project $3,000,000 $7,000,000 $5,000,000 3rd Party Project Management / OPM / QA $500,000 $1,000,000 $750,000 TOTAL One-Time Costs $3,630,000 $8,200,000 $5,915,000 Annual Recurring Costs: Post-Implementation Support $200,000 $600,000 $400,000 City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000 Additional IT and/or TERS Staff $125,000 $175,000 $150,000
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Projected Costs – Comparable Systems
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Strategic Roadmap – Option 1 New Pension Administration System
SYSTEM 1 (2014)
SYSTEM 2 (2013)
SYSTEM 3 (2012)
SYSTEM 4 (2011)
SYSTEM 5 (2009)
Number of Agency Employees 14 21 35 11 10
Number of Employers 1 3 1 1 3
Number of Active Members 8,387 5,100 5,900 3,669 5,000
Number of Retirees 4,831 4,300 4,900 2,267 2,000
Non-Recurring Project Costs
Hardware Hosted $231,119 Hosted Hosted $65,063
Commodity Software $46,929 $580,379 Hosted Hosted $78,266
Implementation Services $3,486,577 $6,411,977 $5,921,884 $2,052,650 $2,456,005
Software License n/a $975,000 n/a $242,800 $260,000
Total: Non-Recurring Project Costs $3,533,506 $8,198,475 $5,921,884 $2,295,450 $2,859,334
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Description A series of SAP initiatives and other supporting projects which, when
bundled together, could be accomplished by TERS, the City of Tacoma IT, and other 3rd party vendors / consultants
These initiatives would require dedicated staffing and project funding in order to complete them in a reasonable timeframe
The initiatives would build-upon and enhance the current offerings of the SAP solution
The supporting projects would provide peripheral benefits to the TERS business operations
The benefit would be to leverage what exists today (i.e., SAP) and build upon it as needed
With the understanding that it would not be a full Pension Administration System (PAS).
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Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects
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Expected Benefits Staff has an existing familiarity with SAP TERS has a good working relationship with City of Tacoma IT Implementation of ECMS / Imaging can be conducted as a stand-
alone project with a defined scope. Solution will provide online access for TERS staff to participants’ documents; as well as provide TERS with an overall document retention and backup solution of critical information
Increased and improved Web-based, self-service functions to members, retirees, and employers
Project(s) may be completed in less time than a new pension administration system as the scope is less
Project should be less expensive than a new pension administration system.
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Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects
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Challenges TERS is still reliant on SAP which is not a full-functioning Pension
Administration System There may continue to be conflicting priorities between / among the
various city departments so TERS may not have a fully dedicated team on their project(s)
Staff will not get all the functionality and features envisioned as they expressed during the Visioning Sessions (i.e., automation, future product enhancement, seamless solution integration, etc.)
The projected timeframes and projected costs contained within this alternative are less certain due to limited “data-points” for comparison purposes
If the project experiences any problems and/or delays there are limited alternatives available to TERS to leverage completion.
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Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects
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Proposed Timeline
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Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects
Project Activity Tentative Start Date
Tentative End Date
Projected Duration
Electronic Content Management System (ECMS)
4/1/2015 12/31/2015 9-months
Member Self-Service 4/1/2015 12/31/2015 9-months Workflow Management System (WMS) 4/1/2015 12/31/2015 9-months Workflow Management System (WMS) – Leverage General Government & TPU Effort (2017/2018 Biennial Budget)
1/1/2017 9/30/2017 9-months
In-House, Online Pension Calculator 4/1/2015 12/31/2015 9-months Centralize Numbering System in SAP 4/1/2015 7/31/2015 4-months Employer Self-Service 4/1/2015 5/31/2015 2-months City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing 3rd Party Project Management / OPM / QA 4/1/2015 3/31/2016 12-months
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Projected Costs
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Strategic Roadmap – Option 2 Major SAP Initiatives and Supporting Projects
Project Activity Projected Cost
(Low)
Projected Cost
(High)
Projected Cost
(Average) One-Time Costs: Electronic Content Management System (ECMS)
$75,000 $125,000 $100,000
Member Self-Service $100,000 $200,000 $150,000 Workflow Management System (WMS) $75,000 $125,000 $100,000 In-House, Online Pension Calculator $100,000 $300,000 $200,000 Centralize Numbering System in SAP $50,000 $150,000 $100,000 Employer Self-Service $10,000 $40,000 $25,000 3rd Party Project Management / OPM / QA $200,000 $300,000 $250,000 Total One-Time Costs: $610,000 $1,240,000 $925,000 Annual Recurring Costs: City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000
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Description This alternative would be for TERS to keep doing what they do
today (i.e., status quo) TERS would continue to work with the City of Tacoma IT to prioritize
projects and complete them Historically under this approach a few projects are completed
periodically pending the needs of TERS and the City of Tacoma’s IT availability
As projects get completed; new projects are added and it is a continuous process of reviewing and re-prioritizing the projects.
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Strategic Roadmap – Option 3 Status Quo
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Expected Benefits The expected benefit of this alternative is that all parties are familiar
with the process, the people and the reduced scope of complexity TERS is able to request projects and then pending their review and
prioritization; the City of Tacoma IT works on those projects and completes them accordingly
This approach uses very little resources (i.e., 1 or 2 people from the City of Tacoma IT)
This approach has minimal specific project cost other than the yearly IT assessment charges.
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Strategic Roadmap – Option 3 Status Quo
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Challenges TERS is still reliant on SAP which is not a full-functioning Pension
Administration System There may continue to be conflicting priorities between / among the
various city departments Staff will not get all the functionality and features envisioned as they
expressed during the Visioning Sessions (i.e., automation, future product enhancement, seamless solution integration, etc.)
The projected timeframes and projected costs are less certain due to limited “data-points” for comparison purposes; however most items are essentially at a $0 cost as they are worked on as time permits
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Strategic Roadmap – Option 3 Status Quo
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Challenges (continued) There will always be new initiatives / competing priorities and thus
certain items on the list will remain on the list indefinitely without any certainty for completion
TERS staff frustration not only with the existing system but also with the uncertainty for when “help will be on the way” due to the continuous re-prioritization of outstanding items.
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Strategic Roadmap – Option 3 Status Quo
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Proposed Timeline
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Strategic Roadmap – Option 3 Status Quo
Project Activity Tentative Start Date
Tentative End Date
Projected Duration
City of Tacoma Employee Self Service (ESS)
2/1/2015 10/31/2015 9-months
Membership Eligibility Table 2/1/2015 4/30/2015 3-months Notification Mechanism 2/1/2015 10/31/2015 9-months Reporting Tool 2/1/2015 1/31/2016 12-months Letter Generation 2/1/2015 1/31/2016 12-months Health Department Data Maintenance & Record Keeping
2/1/2015 3/31/2015 2-months
Electronic Content Management System (ECMS)
TBD TBD TBD
Member Self-Service TBD TBD TBD Workflow Management System (WMS) TBD TBD TBD In-House, Online Pension Calculator TBD TBD TBD Centralize Numbering System in SAP TBD TBD TBD Employer Self-Service TBD TBD TBD City of Tacoma IT Yearly Assessment 1/1/2016 Ongoing Ongoing
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Projected Costs
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Strategic Roadmap – Option 3 Status Quo
Project Activity Projected Cost (Low)
Projected Cost (High)
Projected Cost (Average)
One-Time Costs: City of Tacoma Employee Self Service (ESS) $0 $0 $0 Membership Eligibility Table $0 $0 $0 Notification Mechanism $0 $0 $0 Reporting Tool $0 $0 $0 Letter Generation $0 $0 $0 Health Department Data Maintenance & Record Keeping
$0 $0 $0
Electronic Content Management System (ECMS) $75,000 $125,000 $100,000
Member Self-Service $0 $0 $0 Workflow Management System (WMS) $0 $0 $0 In-House, Online Pension Calculator $100,000 $300,000 $200,000 Centralize Numbering System in SAP $50,000 $150,000 $100,000 Employer Self-Service $0 $0 $0 Total One-Time Costs: $225,000 $575,000 $400,000 Annual Recurring Costs: City of Tacoma IT Yearly Assessment $30,000 $100,000 $65,000
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Next Steps / Path-Forward Discuss any concerns or questions regarding each of the Options Make a decision or provide formal direction on which Option to
pursue Further refine the exact scope of the selected Option Build a workplan Execute against the workplan Report against the workplan.
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Questions????
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LRWL Recommended Option LRWL recommends Option 1 New Pension Administration System based upon: The Industry Trends in the Marketplace The Limitations of the Current Technical Environment The Industry Best Practices and Guiding Principles The Limited Levels of Automation and Reliance on Manual /
Spreadsheet Processing that Exists Today This Approach having a Defined Path with Reliable Activities based
upon Comparable Timeframes and Costs Overall Concern that if this option is not chosen by TERS today it
still may be chosen a few years down the road…so why wait Our Understanding of the TERS Organization and Business
Processes
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LRWL Recommended Option LRWL recommends Option 1 New Pension Administration System based upon (continued): Our Understanding of the Existing TERS IT Projects Our Corporate Experience and Expertise Our Work with Other Retirement Systems The Value of TERS being part of a User-Group with their Peers that
use the same Pension Administration System Continuous Upgrades and New Releases Assurances and Protection should the City of Tacoma every move-
away from the use of SAP Built-in Best Practices, Process Automation and Seamless
Integration.