Department of Information and Technology Services DOITS IT

Department of Information and Technology Services (DOITS) IT Strategic Plan 2018 – 2020 Addressing Information Technology Opportunities, Risks and Threats Washington, D. C. February 2018

The importance of information technology systems for GS/OAS daily operations has been recognized by the Board of External Auditors Reports “The Board notes that IT is an essential enabler for the day-to-day operations of the OAS; in fact the IT infrastructure is used by all staff for operational purposes and for the delivery of technical programs. ” “The Board is concerned about the continued reliance on an aging OASES platform and associated databases. ” “The Board recommends that the OAS consider any surplus of the ICR fund be earmarked for administrative requirements, including the necessary improvements to maintenance and infrastructure. ” Information Technology is the foundation for the day-to-day operations. Without a reliable IT system, the GS/OAS cannot operate on a daily basis and/or provide services to Members States. To have a modern administration, the GS/OAS needs a modern information technology infrastructure.

The importance of information technology systems for GS/OAS daily operations has been recognized by the Member States PROGRESS TOWARD ACCOUNTABILITY, EFFICIENCY, AND EFFECTIVENESS, AND RESULTS IN THE OAS GENERAL SECRETARIAT AG/RES. 2911 (XLVII-O/17) C. 7: Information Technology Strategic Plan To instruct the General Secretariat to include in its proposed program-budget for 2018 sufficient resources to upgrade critical information technology systems and processes based on the Strategic Plan for Management Modernization of the Organization of American States and the Information Technology Strategic Plan 2018 -2020 presented by the General Secretariat. Despite this recognition, only $200, 000 was allocated in Program Budget 2018 to address critical IT requirements, when $5 millions are urgently needed. $25 M $50 M A ‘piecemeal’ approach does not work

GS/OAS core administrative systems (ERP) are in a critical condition DOITS has been working hard to keep the GS/OAS ERP (OASES) alive: • Oracle’s data base engine is no longer supported by Oracle • Oracle’s Electronic Business Suite (EBS) current version, is no longer supported by the vendor. • Not even external software companies provide support to GS/OAS current version of EBS • ‘Band-Aid’ approach: significant investment in people’s time in finding temporary fixes without addressing the root causes of our problems • Exponential exposure of a total system failure that will impact directly on day to day operations with the inherent possibility of loss of data. • Shut down procedures to avoid systems crashes with potential loss of data has increased in 2017 near to 3 days of interruptions. • Data integrity problems have been discovered mainly in end-of-month and end-of-year financial closings. • Inherent incapacity of streamlining existing processes or defining new ones.

GS/OAS core administrative systems (ERP) are in a critical condition Color code: Supported Extended Support Unsupported Electronic Business Suite 11. 5. 8 11. 5. 10 12. 0. 0 ORACLE 12. 1 12. 2 Oracle Fusion Oracle ERP Cloud 2006 Timeline OAS 2007 2008 2009 11. 5. 8 2010 2011 11. 5. 10 2012 2013 2014 2015 2016 11. 5. 10 Data Base Engine 8 i 9 i 10 g 11 g ORACLE 12 c 2006 Timeline OAS 8 i 2007 8 i 2008 2009 10 g 2010 2011 10 g 2012 2013 2014 10 g 2015 2016 11 g

GS/OAS core administrative systems (ERP) are in a critical condition RBCS DHR LMS Human Resources OPDB ORACLE DB Engine PES DP App TECS DFS General Ledger Payables Receivables No payroll No checks Cash Management No financial statements No purchase orders Grants/Projects Payroll Fixed Assets TXF App DGS App Fixed Assets (Inventory) Purchasing App Legal CPR App PIMS OASES

GS/OAS core administrative systems (ERP) are in a critical condition 1. Current ERP annual maintenance costs: 1. Maintenance costs of OASES current licenses $ 160 K No 2. payroll Maintenance costs of existing apps $ 50 K No checks No financial statements 3. Support cost of outsourced apps $ 25 K No purchase orders 4. External support costs (consultants) $ 80 K 5. Complementary applications development cost t $160 K 6. OASES DOITS support costs $ 450 K OASES Underthethese Total annual cost of maintaining status circumstances quo $ 925 K DOITS cannot guarantee “day to day operations” of GS/OAS Spending $925, 000 every year just to keep systems runnning = $4. 6 millions in 5 years • Without having resolved any problem • Without the capability of streamlining any process at all • Exponentially increasing the risk of total collapse of existing ERP 2. Daily cost of OASES downtime = $ 205, 000 x number of days of failure. • Number of day the system failed in 2017= 3 days • Total cost of downtime in 2017= $ 615, 000 2017 total annual cost of ownership of GS/OAS current ERP = $ 1, 540, 000

A modern OAS requires a modern ERP With a modern ERP, the GS/OAS will be able to: 1. Automate, streamline and strengthen financial, procurement, human resources management and business processes; 2. Increase its accountability, improving the ability of the GS/OAS to report effectively and in a timely manner to donors 3. Manage information efficiently and securely; 4. Gradually convert to IPSAS, or any other standard enabling GS/OAS capability to apply for grants from organizations such as EU, WB. 5. Manage projects in a consistent way in order for donors to gather project information such us progress, results and impact on beneficiaries. 6. Integrate in a consistent and proactive way GS/OAS National Offices. 7. Promote a dramatically change in the GS/OAS culture and way of doing business

How do we get there ? $17. 15 $15. 81 $18 $14. 48 $16 $13. 15 $11. 70 $14 $10. 61 $12 $9. 27 $7. 94 $10 $6. 61 $8 $5. 16 $6 $4 $2 $0 $3. 35 $3. 70 $4. 05 $5. 10 $4. 75 $4. 40 $5. 45 $5. 80 $6. 15 $2. 30 TCO savings of $$11 M OVER 10 YEARS* YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 Oracle ERP On-Premise vs. Oracle ERP Cloud TCO Analysis 10 year Cumulative Cost Comparison Migrate to Cloud App YEAR 8 YEAR 9 Re-Implement EBS Note: Estimates based on client data provided and assumptions for operational data not provided. Source: ORACLE YEAR 10 Re-Impleme Migrate to Cloud App

Why move to the Cloud ?

Why move to the Cloud ?

Why move to the Cloud ?

The quicker we implement the cloud-based system, the cheaper it will be Start of activities: July 2018 15 month implementation 2018 (40%) 2019 (60%) Total 1, 344, 088. 00 2, 016, 132. 00 3, 360, 220. 00 Travel 201, 613. 20 302, 419. 80 504, 033. 00 Licenses 450, 000. 00 900, 000. 00 1, 995, 701. 20 2, 768, 551. 80 4, 764, 253. 00 Consultancy Total project cost 18 month implementation 2018 (34%) 2019 (66%) Total 1, 283, 391. 20 2, 491, 288. 80 3, 774, 680. 00 Travel 192, 508. 68 373, 693. 32 566, 202. 00 Licenses 450, 000. 00 900, 000. 00 1, 925, 899. 88 3, 314, 982. 12 5, 240, 882. 00 Consultancy Total project cost 24 month implementation 2018 (25%) 2019 (50%) 2020 (25%) Total 1, 234, 178. 75 2, 468, 357. 50 1, 234, 178. 75 4, 936, 715. 00 Travel 185, 126. 75 370, 253. 50 185, 126. 75 740, 507. 00 Licenses 450, 000. 00 1, 350, 000. 00 1, 869, 305. 50 3, 288, 611. 00 1, 869, 305. 50 7, 027, 222. 00 Consultancy Total project cost

Source of funding • Resources of this magnitude have not been identified in Program Budget 2018 and it is unlikely that such investment would be allocated in the Program Budget without affecting the implementation of other priorities • The quicker to move forward with the project, the quicker we will avoid a system collapse and the cheaper it will be • SAF estimates that the surplus in the Indirect Costs Recovery Sub-fund (ICRRS) for the 2017 exercise is $5, 5 millions; • ICRRS can be used for infrastructure projects (aa. 79 and 80 of the General Standards) Board of External Auditors Reports “The Board recommends that the OAS consider any surplus of the ICR fund be earmarked for administrative requirements, including the necessary improvements to maintenance and infrastructure. ”

Recommendation To upgrade the existing system we recommend to: 1. Authorize the GS/OAS to proceed to upgrade existing ERP to a cloudbased modern ERP system 2. Approve, on an exceptional basis, the use of $4. 8 millions from the ICR reserve sub-fund in order to finance this project that is essential to guaranteeing OAS “day to day” operations 3. Implement the project within a 15 -month period, which is the most cost -efficient option

Annexes

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Plan

Upgrade of Existing ERP Implementation Costs ORACLE licensing costs = $ 450, 000 / year Change Management Implementation Plan is a must

Department of Information and Technology Services (DOITS) IT Strategic Plan 2018 – 2020 Addressing Information Technology Opportunities, Risks and Threats Washington, D. C. February 2018

Information Technology Risks and Threats Matrix Current Situation Risks with Status Quo Infrastructure lease not renewed Risk Mitigation Threats Impact Cessation of some or all operations Critical In progress RFP awarded. GS/OAS core Oracle ERP stays in current unsupported version. Financial and Human Resources systems failure No upgrades to Information Security Systems GS/OAS data compromised; staff cutoff from accessing data/information. Cessation of some Disaster Recovery or all operations, platform not upgraded possible loss of data. Infrastructure overhaul not completed Inability to provide additional services Critical Very High Medium Ad/hoc internal developed software tools Actions /Resources needed - Lease Renewal (modernize equipment) - Lease is not renewed (maintain some obsolete equipment) - GS/OAS business process redefinition - Migrate to current Oracle software/Cloud. - External professional support Budgeted recurring cost/year IT Capital Fund $ 0 $600, 000 $500, 000 $150, 000 $4, 000 ~ $700, 000 Ad/hoc internally- Additional Funds needed developed to upgrade existing $105, 000 / $200, 000 software infrastructure - Partial solution using third party Additional Funds needed provider $0 to modernize - Backup core data to Cloud Analysis of Additional Funds potential vendors $90, 000 / $2, 000 ~$ 150, 000 $30, 000