Review of the Departmental Financial Management System Renewal Project: chapter 2

1. Introduction and Background

This System Under Development (SUD) Review of Environment and Climate Change Canada’s (ECCC) Departmental Financial Management System (DFMS) Renewal Project was included in the departmental 2013 Risk-Based Audit and Evaluation Plan approved by the Deputy Minister, upon recommendation by the External Audit Advisory Committee.

A SUD review differs from other internal audits in its “real-time” approach, as field work is carried out during the design/development and implementation of the system under development, and the reporting of findings is more informal and timely (see also Annex 1 - Review Methodology and Criteria).

Deloitte LLP was retained to conduct this SUD review. Deloitte LLP has developed a generally recognized approach to conduct SUD reviews in the federal government and has used this approach to review other federal government information technology (IT) implementation projects, including SAP implementation projects.

Environment and Climate Change Canada’s (ECCC’s) Departmental Financial Management System (DFMS) is a critical contributor to the support of program delivery and resource management in the Department. The DFMS is being renewed to replace ECCC’s existing Oracle-based system (referred to as MERLIN) with the Systems, Applications and Products (SAP) software, in line with Treasury Board’s Standard on Enterprise Resource Planning Systems.
 
ECCC migrated its DFMS to SAP software on April 1, 2015; Agriculture and Agri-Food Canada (AAFC) is hosting SAP for ECCC in a shared services partnership.

Expected benefits of the DFMS renewal included:

• reduction in overall risks and costs, by leveraging AAFC’s investment and expertise in SAP;
• increased alignment with Government of Canada directions and priorities; and
• improved efficiencies and capacity due to common configuration, common financial management business processes and common master data.

Migration to SAP was led by a DFMS Project Team at the Finance Branch, supported by resources from the Corporate Service Branch. SAP end-users, including managers and their staff, were given the opportunity to offer input into the configuration of the new system and supported business processes through a number of working groups, such as communities of practice focused on a specific business practice (e.g. Procurement-to-Payment), and the Business Transformation Advisory Committee.

The DFMS Renewal Project is being undertaken in several phases. Scoping and planning activities, feasibility assessments, resource determination and the development of project approval documents were completed in fiscal year 2013-2014. During this period, ECCC examined comparable SAP implementations in other government departments, had discussions with Treasury Board and developed a high-level definition of its requirements. In February 2013, discussions with AAFC were initiated and a letter of intent to proceed with implementing AAFC’s SAP solution at ECCC was signed in June 2013. An assessment of the fit of the SAP solution at AAFC with ECCC’s requirements and of the relationship management requirements inherent in a hosted systems environment was also conducted.

In August 2013, ECCC received agreement from all parties, including Treasury Board’s Office of the Comptroller General (OCG) and the Chief Information Officer Branch (CIOB) regarding ECCC’s migration of its DFMS to SAP, hosted by AAFC. A Memorandum of Understanding (MoU) setting out the goals for the partnership, the roles and responsibilities of the parties, and the financial arrangements that underline the partnership between ECCC and AAFC was signed in October 2013.

Subsequently, the Planning Phase of the implementation project proceeded. Key deliverables documenting Planning Phase activities included the Project Charter and the Business Case to obtain project approval for the Implementation Phase of the project.

Implementation Phase activities began in October 2014. During this phase, the ECCC project team reviewed and documented financial and asset management business processes at ECCC and used revised process designs to support preparation of the SAP system for use by ECCC. Configuration of SAP by a joint AAFC-ECCC technical team at AAFC followed the standard SAP project methodology to design, build and implement the software in preparation for “go-live” on April 1, 2015.

During the course of the SUD review, in December 2014, the DFMS Renewal project team recommended to ECCC’s senior management team that additional project work on asset management business processes at ECCC and the SAP functions that support these business processes be completed following ECCC’s cutover to SAP on April 1, 2015. This extension of the project, focused on the Enterprise Asset Management (EAM) component of SAP, has been referred to as Phase 2 of the DFMS Renewal project. For clarity, this report refers to ongoing project work after April 1, 2015 as EAM Phase 2. Lead responsibility for managing the implementation of SAP at ECCC shifted from the Finance Branch to the Corporate Services Branch for EAM Phase 2 in early 2015-2016.