The State of California is at a crossroads in the evolution of its Human Resource (HR) function. As a critical part of efforts to streamline and make government operations more efficient, the State is evolving from a centralized HR environment to a highly decentralized HR environment in which more and more HR decision making is delegated to local departments and campuses to effectively manage their most important resource – their employees.

The State of California has an opportunity and obligation to make critical changes that will improve the technology used to issue payments, streamline governmental operations, and enhance functionality. California’s current HR systems are inadequate to meet the needs of today’s government environment, and rely on old technology that puts the State at risk of a systems failure. By investing in the state’s administrative infrastructure through the replacement of 30-year-old HR systems, the potential risk of a major system failure can be mitigated.

Like other large public and private organizations, the State has outdated “business practices” that need to be eliminated or redesigned to make the entire organization operate more efficiently. The restructuring of the state’s Payroll and HR related business practices is the foundation for a future system.

Investing in a new HRMS/Payroll system infrastructure will also address current business problems. Existing systems, which were designed prior to the enactment of collective bargaining laws, fail to include critical functionality and do not provide management information in the manner needed to ensure proper administration of State programs. Replacement of the systems could reduce ongoing maintenance expenditures, eliminate costs associated with exception processing, and automate numerous business processes that are currently handled manually.

The State Controller's Office is responsible for issuing pay to employees of the State Civil Service, California State University (CSU), Judicial Council and judges, legislative staff and elected officials. Employees are spread throughout California and in other states, ranging from elected officials, managers and supervisors, and higher education faculty, to rank and file workers in a variety of occupations. The State includes over 150 departments and 24 CSU campuses. To meet its responsibilities, the SCO operates large, complex legacy systems. While there are interfaces between the various systems, they were designed as separate stovepipe applications and thus are not integrated.

The problems with existing systems are summarized in the following areas:

Lack of flexibility – The current systems lack flexibility, making system modifications large, complex efforts. As modifications continue to be made through patches to the system, the estimates for changes become more complex and more costly. The design and complexity of the system, as well as the business practices that the State has established, continue to be major contributing factors to the lack of flexibility in the systems.

Outdated technology in danger of failure – The core systems operated by the SCO are based on outdated technology that is in danger of failure. The SCO operates several statewide, automated systems that are large and complex. The existing systems were built in the early 1970s, prior to collective bargaining. They were developed using design approaches and programming practices that do not take advantage of current technologies, and will not meet the evolving needs of the State. Most of these legacy systems have been subjected to years of continuous and substantial changes and additions. Due to the nature of these aging technologies, the technical staff to support them has become increasingly scarce.

Lack of needed functionality – California’s current systems were designed to meet limited objectives at a time when the State had a much smaller workforce, labor and tax laws were not as complex, collective bargaining did not exist, and management information was not as critical. Some examples of the problems with existing functionality are:

• A bi-weekly payroll system does not exist that can be used for large groups of employees. This capability has been requested by the Department of Personnel Administration and unions, and is considered by the SCO as an improvement over the current payroll processes.
  
  
• A statewide automated position management system does not exist in State government. The current systems track positions for the current fiscal year and provides some information for the budget year-end process. The systems require collection and tracking to occur through manual processes or department-created systems. Position information continues to be submitted on hard copy. This effort is labor intensive and inherently inaccurate. As a result, departments struggle with the need to track and manage their authorized, established, filled, and vacant positions.
  
  
• An automated time and attendance system does not exist to capture time at the employee level. Current functionality is limited to total time worked, and does not maintain daily or hourly time. In addition, with the Fair Labor Standards Act, time and attendance has become a major workload problem in some agencies. While most employees are paid on a monthly basis, law enforcement and firefighters can accrue overtime on a 28-day cycle. This option has been adopted for some large bargaining units. As a result, reconciling monthly pay with 28-day overtime periods has become a tremendous workload for departments.
  
  
• Management information capabilities do not exist that deliver information to the operating managers, nor is there a user-friendly means to extract information for departments to manage their human resources or payroll expenditures.
  
  
• Employee self-service features, or virtual human resources, do not exist in the current systems. Such transactions as home address changes, direct deposit enrollment, tax changes, and benefit enrollments must be completed on a hard copy, submitted to the HR office, and either key-entered by department staff or forwarded to the SCO for processing. Pay information is not available online, and employees must ask their HR office for information when it is needed.
  
  
• User-friendly functions do not exist in the current legacy systems. The general design of the system is based on green screen technology, rather than a graphic user interface. The systems do not include any help features or ties to training pages. As a result, use of the systems requires extensive on-the-job and classroom training.
  
  
• An electronic workflow capability does not exist. Thus departments/campuses rely on paper processing and manual entry into the SCO legacy systems.
  

Implementing a new HRMS/Payroll system will allow the State to move from a transaction-based system to an enterprise database that supports the demands of management in the new information age. Specific examples of the potential benefits for enhancing operational effectiveness are as follows:

Improved Service Levels
A new HRMS/Payroll system will establish the foundation for sustainable e-government and, therefore, significantly improve communications/services at the departmental and state levels. E-government refers to the integration of people, business processes, information, technology, state government programs, and policy to achieve new, multi-channel approaches to government service delivery. E-government leverages technology to fully integrate all aspects of the State’s daily business, including workflow, staffing, front-line and back-office activities. This will help the State make many of its services more accessible and responsive to the needs of department/campus HR staff and employees (e.g., 24 x 7, self-service, etc.) and assist in supporting the efficiency, effectiveness, reliability, and affordability of its services.

Increased Efficiencies
The current state business processes are paper-based and labor intensive because of the non-integrated nature of the current systems and processes. These function-specific and departmental-specific systems and processes have evolved over time and have created organizational inefficiencies, and duplication of effort.

The process redesign inherent in implementing a new HRMS/Payroll system presents an opportunity to examine and adopt best practices. These best practices can be rapidly integrated into the state’s business process to achieve efficiencies that support the State’s overall goals and objectives. Employees trained in the use of a new integrated system will more easily apply their new skills across functions. This improved transferability, coupled with the implementation of a common computing platform, supports a more technologically flexible and agile workforce.

Improved Decision-Making
Management and operational data is currently stored in a variety of legacy systems that exist centrally and at the agencies. This makes it particularly difficult for program managers to get the information that they need to make sound business decisions. An integrated HRMS/Payroll system will allow program managers to easily access the management and operational data.

The 21st Century Project procured a new HRMS/Payroll system because of the potential for system failure and the lack of functionality and flexibility of existing systems. The next generation solution must be flexible to accommodate a combination of decentralized and centralized HR information. To be successful, the implementation of new administrative environments for the State needs to be undertaken in an expeditious manner.

The State of California has an opportunity to make critical changes that will streamline government operations and enhance functionality. A re-examination of HR administrative practices could lead to better management of the State’s resources. The departments and campuses need flexibility to become more effective in managing their HR function. Central agencies need additional information to adopt innovative approaches for maximizing the productivity of the workforce and reducing costs. The implementation of a new HRMS/Payroll system can provide the catalyst for change.

The 21st Century Project is consistent with California Performance Review (CPR) goals.

CPR states, "In addition to smarter services, California must replace the duplicative and conflicting financial, human resources and procurement systems with a common set of management tools that are interoperable across state government. California has multiple accounting and financial systems across the departments and there are duplicative, conflicting legacy systems supporting the major back office operations of the state. Additionally, the payroll system is nearing the end of its useful life. All these outdated stove-pipe systems increase the cost of government, seriously complicate any efforts to build cost-effective, inter-departmental enterprise-wide e-government applications and result in basic information about state operations being unavailable to policy makers and the public when and where it is needed."