With that stated, M. I. 3754 establishes the framework for the reorganization. Through this enactment, leaders envision a consolidated and coordinated system of services that is (1) rationally organized, (2) effectively managed, (3) centered on client needs, and (4) accountable for results; services officials are responsible for implementing systems and approaches which will achieve this vision. Implementation efforts will be guided by several key principles:
Focus on Client Needs and Program Delivery
According to San Mateo’s article “Mergers Present Unique Integration Problems,” One of the biggest challenges in any merger effort is maintaining the level of service during the transition. State and federal laws or contractual agreements with customers, for example, may mandate that certain information be maintained or services provided. Even in the absence of contracts or laws, customers may be alienated by a sudden change in procedures or the elimination of a service. Unless the system of the acquired company is falling apart, it makes sense to keep it operational until its functionality can be added to the system of the new parent firm. (p. 52)
Clients who seek the services and protections of the enterprise today face a bewildering array of organizations, office locations, and overlapping (sometimes conflicting) programs and services. From the leadership’s point of view, there is a lack of coherence and a lack of integration in the services being provided to individual clients, groups of clients, or geographic areas. This fragmentation can compromise the dignity and independence of some of society's most vulnerable members. It can also cause staff to lose focus on client service.
A new integrated and well-coordinated enterprise will enter into partnerships with consumers, local communities, and the private and non-profit sectors to significantly improve the quality and level of services available to those in need. This transformed enterprise will serve consumers better, be more responsive to local needs, and emphasize individual choice and personal responsibility.
Information will be assembled across the entire enterprise to provide a clear picture of the complete set of resources available and services being provided to individuals, families, children, local communities, and groups of clients. Performance goals and measures that emphasize successful outcomes and quality of client service will be established and monitored for organizational units, employees, and contractors.
The new enterprise will move away from "business as usual" and operate as a unified organization that continuously strives to improve performance and manage costs through innovation, creativity, and deployment of technology-based solutions.
Effective Stewardship of Resources
Consolidation and reorganization of administrative support services is the first step toward a leaner and more cost effective services enterprise. Beginning with human resources (personnel) management and procurement, the company has already begun the process of bringing administrative support functions under its direct control. In addition to the obvious opportunities to save dollars, central coordination of administrative services will better support subsequent program and department consolidations and allow the reallocation of resources from administration to client service and program delivery.
Consolidation and integration of program support services, particularly the determination of eligibility for health and human services programs, presents another significant opportunity to be more cost effective. The company envisions the establishment of a single integrated eligibility determination process and system to control intake and enrollment of clients into all of the services programs. In addition to saving dollars, consolidated eligibility determination will also promote the improvement of client service, by clarifying and simplifying the points of entry, and by providing alternate channels (e.g., call centers and the Internet) for customer interaction.
Program consolidations into the new services departments will also provide an opportunity for more cost effective operations. As 11 agencies are merged into four, their central office and regional/field operations and facilities can be integrated and streamlined. This will mark the beginning of continuous quality management across the entire health and human services enterprise, not just in its component parts, and will allow for the discovery and optimization of major cross-program (non-administrative) business processes such as integrated case management, clinical evaluation, and outcome-oriented cross-program contract management.
Partnerships with local organizations and the private sector also provide an opportunity for more cost effective and client-focused operations. In some cases, it will prove advantageous for us to contract for services which can be more cost effectively provided by local contractors.
Finally, there is ample evidence in government and the private sector demonstrating that information technology can save money, improve accountability, and improve customer service. Again, this is referencing the article of Mateo.
Of course, management isn't always blind to systems issues. Before, Blue Cross/Blue Shield of Massachusetts purchased Bay State Health Care last year; the company conducted an extensive survey of that firm's systems. "We pulled back all the covers we could think of," says Bob Hollinger, vice-president and Chief Information Officer of Blue Cross. Hollinger's group produced a financial projection that detailed how the integration of Bay State's systems would affect Blue Cross. Although the acquisition didn't hinge on this report, it was an important factor in the decision-making process. (p. 52)
Appropriate adaptation of the Internet, wireless broadband technologies, neural networks, and other technologies promise to pay a significant return on investment. Enterprise-wide systems will support human resources management, financial management, procurement, and eligibility determination across the enterprise, and a single, integrated view of customers and clients is an ultimate goal.
III. Organizational Design
M. I. 3754 challenges the company to develop a new, consolidated organizational structure that enhances delivery of services, improves efficiency, and generates cost savings. This consolidation will require a strategic approach that is careful, deliberate, and incremental in nature to provide the maximum benefits without disruption to service delivery. This section of the Transition Plan establishes a strategic approach to meeting the organizational requirements of M. I. 3754, including guiding principles for the consolidation and approaches to creating the new consolidated departments and administrative services structures.
Implementing M. I. 3754:
To further understand the current operations of existing agencies in preparation for implementing M. I. 3754 requirements, the company conducted a functional review of each agency. This functional review demonstrated that:
(1) Each existing services agency has different organizational structures, based on different business models. Some are organized around traditional programs, others around constituent groups, and others around service delivery models.
(2) Each agency manages administrative support differently. Many smaller agencies outsource administrative functions, while larger agencies have sizable administrative support organizations. Also, there are variations in whether administrative support is centralized or decentralized.
(3) Each agency also manages field operations differently. Some agencies do not have any regional offices, while others have the majority of staff located in regional offices. Organizational and reporting structures for field personnel also differ between agencies.
(4) Each agency has different regulatory and compliance requirements. M. I. 3754 provides a catalyst services to redesign its organizational structure to increase consistency between agencies. In particular, M. I. 3754 mandates the consolidation of both existing agencies and administrative support activities across the enterprise.
Article I of M. I. 3754 requires the consolidation of existing agency programs into its four new departments:
Ordered Task Department
Controlled Task Department
Emancipated Task Department
Attainment Task Department
Standard Management Structure
Integrating the Organization - An interim reorganization focused on moving relatively quickly into the structure defined by M. I. 3754 while maintaining current service delivery.
Optimizing and Transforming the Organization - A more thorough reorganization focused on generating cost savings and continuous improvements to service delivery, but still performed within the M. I. 3754 -defined structure.
Integrating the Organization
Following a brief planning period, leadership will officially integrate health and human services into the structure prescribed by M. I. 3754 and further defined during planning. Integration-related activities include:
Implement interim "integrated" structures - Each department will adopt its interim, integrated organization structure, including the standard management structures outlined above. The department's new Director will appoint the second-level management in each department.
Reassign staff - While staff will maintain their reporting relationships and programmatic assignments, they will become official employees of the new department.
Optimizing and Transforming the Organization
Once each new department is created and integrated, leadership and each Director will begin the process of identifying ways to optimize, streamline, and reorganize each department to generate cost savings, business process improvements, and improvements to service delivery. Each department head will also be asked to adopt the standard processes described in the following section which will be required of all transformation-related processes. In addition, other optimization-related activities will include:
Identify common customers and services - Each department will inventory its customer base, service delivery mechanisms and regional office structures.
Identify redundancies and savings opportunities - Once common customers and services are inventoried, each department will then identify redundancies and opportunities for collaborative service delivery that might generate cost savings and improvements to service delivery.
Review and redesign business processes - Each department will also undertake activities to review its existing business processes and identify opportunities for eliminating redundancies and streamlining operations.
IV. Managing the Transformation
The transformation challenge facing the company and its member agencies is large, multifaceted, and complex. To help ensure that the transformation progresses as smoothly as possible, maintains its focus, and generates the required outcomes, the company is employing a robust, proven approach to managing the transformation effort. It is robust in that it requires each component of the transformation effort to be governed by and coordinated closely with senior leadership according to a prescribed set of guidelines and procedures. It is proven because it is based on best practices and approaches from similar transformation efforts that have been adapted to address the unique challenges facing the enterprise.
Phases of Transformation
Planning Phase
Immediately following the passage of M. I. 3754 in May 2003, the company created a number of interagency steering committees to plan its implementation. Leadership initiated a functional review that focused on documenting current agency business functions and analyzing requirements for the future consolidation of the powers, duties, functions, programs, and activities as required by the Legislature. Leadership developed global visions, goals, and strategies for agency, program, and administrative services consolidations. Leadership also began immediate integration activities for selected administrative services (e.g., human resources management).
In late summer 2003, the company also organized the Transition Oversight Committee (TCO) to guide the implementation of M. I. 3754. The TCO managed the development of this Transition Plan and is currently working with leadership to complete the Implementation Work Plan. During the Planning Phase, company also developed communications and risk management plans and has been reporting to the Transition Oversight Committee on a regular basis.
Integration Phase
The Integration Phase of the transformation effort will officially begin with the submission of the Transition Plan. This phase of work will encompass all of the initial organizational consolidations mandated by M. I. 3754 and will involve the actual transfer of powers, duties, responsibilities, and budgetary control from existing organizations to new organizations. In general, these transfers will provide a transitional organization structure and control for consolidation; optimization and eventual transformation of the enterprise will take place after these initial transfers have been completed. However, the company envisions that many optimization initiatives can be started before the official end of the Integration Phase. In other words, the Integration and Optimization phases will overlap (Richie, 2000).
During the Integration Phase, leadership will identify and appoint the Directors of the four new departments. Leadership will also appoint the leaders of newly integrated initiatives, including administrative services directors and leaders of integrated program support operations such as eligibility determination. These new leaders will work with leadership and the TOC to identify service improvement and cost savings opportunities across the enterprise, and design customized solutions for those opportunities.
As with any reorganization, some positions will be added, redefined, or eliminated to fit the new organization and operations. Staffing recommendations will be developed with input from staff and management. To the extent possible, the company will rely on normal attrition to realize staff reductions. Staff for the remaining positions will be selected through an equitable process that includes evaluation of each person's skills and performance.
Optimization Phase
Merging agencies and combining staff, however, is not enough. M. I. 3754 requires and directs the company to complete and expand on the initial services transitions and implementation initiatives described above, using enterprise teaming operations, new infrastructures, and appropriate asset and facilities management approaches during the Optimization Phase.
The Optimization Phase will be that phase of the project where the longer-range vision of M. I. 3754 and the company begins to be realized. Immediately following the integration of staff and budgetary control, leaders with accountability for a particular department or service area will be expected to begin rationalizing and streamlining the business processes for which they are responsible. This phase may include integration of existing information systems, identification of opportunities for outsourcing or community-based partnerships, and consideration of other cost reduction or service improvement initiatives. As these agency-level initiatives are defined, the company will continue to refine its public, advocacy group, and provider feedback approach to determine if additional project-specific or agency-specific feedback would prove useful.
Transformation Phase
In M. I. 3754, the final "Transformation Phase" during which the company continues implementation of initial and additional changes to the delivery of services. It is the company vision of, a services system which is not simply more efficient and cost effective than the current collection of agencies, but which is transformed in very fundamental ways to significantly improve the quality of services provided to clients who want those services. Some examples include integration of appropriate program and client service delivery channels across the enterprise, attendant enterprise-wide integration of information and technology, and maturation of the company culture into a world-class organization with a single-agency mindset and an accountability-focused culture. M. I. 3754 requires the Transformation Phase to include continued implementation of changes in services department management activities, continuation of risk assessments, and conducting a transformation review of the changes to the delivery of services.
Clusters of Transformation Work
The transformation effort will be managed by organizing activities into the six clusters of work typically employed in transformations such as this.
1. Strategy
The strategic components of this Transition Plan document (including the vision, goals, guiding principles, and organizational design) represent the strategic components of the enterprise level of transformation. Building on the structural and directional guidance provided in M. I. 3754, the company has developed in this plan a strategy and direction for accomplishing transformation of the enterprise in the next three to five years.
The company and the TOC will work to ensure that the overall transformation strategy becomes integrated into the work of each individual project and into the culture of the entire organization. The communication plan will serve as the primary coordinating vehicle for this dissemination of strategic vision.
The company will also periodically evaluate its strategic direction, not necessarily for the purpose of changing decisions or direction but to evaluate progress against its strategic goals and make adjustments, if necessary.
2. Value
To carry out the effective stewardship and management of resources, the company will deploy a business case approach for the transformation effort. TOC will track the progress of realizing the benefits of M. I. 3754 by creating an enterprise-level baseline target for benefits from cost savings and cost efficiencies as well as expectations for service delivery improvements. Using the fiscal note associated with M. I. 3754 as a starting point, TOC will analyze the estimated cost savings and refine the numbers with respect to the current organizational, programmatic, and financial environment.
Each project will likely generate savings throughout the lifespan of the project. During Integration, savings might be generated through reductions associated with consolidation. During Optimization and Transformation, savings might be generated through additional staffing reductions, efficiencies resulting from process reengineering and efficiencies resulting from new technologies.
3. Compliance
The transformation effort does not solely involve or affect stakeholders at the state level or within the health and human services enterprise. Accordingly, TOC will develop an approach for the assessment of all compliance and funding source impacts of Integration, Optimization, and Transformation activities. The following list includes areas that will be included in the overall compliance planning effort:
Funding Sources: TOC will work to ensure that existing funding sources are not jeopardized as a result of organizational, programmatic, or other changes associated with the transformation.
Management Reporting: TOC will design and implement a management reporting approach for implementation with the new fiscal year to support long-term operations of the consolidated departments.
Cost Allocation Plan: TOC will develop a cost allocation plan that will address the need for the allocation of direct and indirect costs of the health and human services departments and programs as they change during consolidations of first the Integration Phase and later the 4. Optimization Phase
Budget: TOC will develop a framework for mapping current organizational, programmatic, and strategy-based budgets to the new integrated organization structure.
Finance and Accounting: TOC will develop a strategy and work plan for changing the account code structure to reflect the new department structure and develop a plan for transitioning financial responsibilities related to audit findings
5. People
Experience has shown that the greatest challenge faced by transformations of this magnitude involve insufficient focus on the human and organizational components of transformation. The definitions of successful transformations such as this typically (and often appropriately) focus on cost savings and enhanced service delivery priorities. The transformation effort will not be truly successful, however, if the company does not carefully and thoroughly address the employees who will be most affected by the transformation. Accordingly, the company will employ a Change Management component of the TOC to coordinate the following related activities:
Cultural Change - Employees are now accustomed to working for a single agency that is loosely affiliated with a larger health and human services "system". These staff will find that working for a new organization in title will soon lead to working in an improving culture as well.
Communications - Communication planning and management will play a critical role in the success of the overall transformation effort. TOC will develop a strategic and structured approach to communication to help ensure consistent, coordinated enterprise-wide communications.
Workforce Transition - To make these transitions as smooth and conscientious as possible, we will employ a structured, analytical, sensitive approach to managing workforce transition.
6. Process
Specific administrative and programmatic business process changes (and their associated efficiency improvements and cost savings) will be defined and implemented by each individual transformation project or initiative based on guidance and direction provided by leadership and the TOC, including:
- Business process improvement initiatives will be closely aligned with the overall enterprise cost savings and performance improvement goals outlined in this document.
- Key administrative services business processes (such as purchasing, human resources, and information technology) related to the administrative services consolidation will likely be reviewed and reengineered first, with a goal of quickly identifying efficiencies and cost savings.
- The TOC will assist individual projects in reviewing key high-impact business processes, identifying reengineering opportunities, and prioritizing which processes should be reengineered, based on a business case that ties to the enterprise cost savings goals.
- Business processes will be evaluated based on outcomes and performance, and reliance on historical precedent to justify ways of doing business will not be acceptable.
- Most business process reengineering will be conducted during the Optimization Phase of each project's life cycle.
- Business processes that can be better and more cost-effectively performed by an external organization will be considered for outsourcing (Nelson & Quick, 1994).
Technology
Impact of the transformation on information technology (IT) will be driven not only from the consolidation of IT organizations but also from the realignment of visions, goals, and objectives of the newly created departments and programs. We will embark on an information technology strategy development process to assess the current IT capabilities, assets, and needs across the enterprise. This strategy will drive change in several areas (Heintze, T., & Bretschneider):
- Alignment of IT staff and infrastructure to the enterprise strategy and objectives.
- Increased access to enterprise services
- Delivery of innovations to the customer service processes
- Management of IT infrastructure to provide effective, reliable, and secure support for operations and management
- Management of development and delivery of IT products and services
- Management and monitoring of programs and projects
- Sourcing of IT products and services from the marketplace
While most specific technology enhancements will be defined and implemented by individual projects, we are working at the enterprise level to enhance efficiencies and reduce costs by planning for and building a technology infrastructure that supports the consolidated enterprise. In particular, we are working with the ongoing Enterprise Project Office (PeopleSoft implementation) to coordinate and jointly plan transformation activities. The company has also begun work on laying the technical foundation for a more seamless, transformed health and human services enterprise by planning for and beginning to build an integrated and consolidated technical infrastructure in the following areas:
- Data center operations, including server consolidation, web hosting consolidation mainframe consolidation, and computer operations consolidation
- Enterprise email system
- Help desk operations
- Desktop support
- Data and voice communications
- Local area network (LAN) support
The company will also assess the impact of such enterprise-level information technology planning on allocation of costs for the enterprise (Heintze & Bretschneider, 2000).
Program Management
Program Management is the implementation of strategy through the coordinated management and execution of multiple initiatives or projects (Nelson & Quick, 1994). The purpose of establishing a TOC to oversee and monitor the transformation of the enterprise in accordance with M. I. 3754 is to assist leadership in planning, facilitating, and overseeing the portfolio of projects that will achieve the consolidation of the agencies, the improvement of services delivery to clients, and the streamlining of administrative support services.
The vast majority of work required to transform enterprise will be organized into individual initiatives or projects, many of which are already underway. These projects include all administrative services consolidation initiatives, new department creation and consolidation initiatives, and other initiatives. Initiatives related to the transformation effort will be given official project status and will be governed by the TOC.
In order to provide a consistent framework for management of these initiatives, the TOC will provide management oversight and guidance to verify that critical functions are accomplished throughout. The table below lists a high-level structure of the kinds of activities that will be used by the TOC to establish a consistent structure for the work of the projects.
V. Transition Oversight Committee
This section of Mergers, Inc transitional plan will describe the scope and the organization of the Transition Oversight Committee (TOC). The TOC will oversee the processes used to manage the merger effort. “As humans being, we’re creatures of habit and resistance to change can be a source of functional conflict” according to Robbins, (2001). The TOC will monitor the merger of Mergers, Inc.
The TOC will oversee and monitor the in accordance with M.I. Plan 3754 to assist leadership in the planning, facilitating, and overseeing the consolidation of the departments, clients and streamlining the administrative support service.
Transition Guiding Principles
The company will use the following principles to establish the TOC.
Strategy guides structure - using the strategy of M. I. Plan 3754. This will guide the transformation effort and enable a smooth transition of the entire merger. Not focusing on every activity but focusing on key elements. Concentration will be directed to the issues, milestones, interdependencies, risk and critical path. Prioritizations of ongoing projects by ensuring resources are deployed to support projects during this transformation period and prioritization projects with the most benefits.
Keep it clear and simple - provide a plan that is clear and simply enabling all departments to maintain quality customer service.
Open communication - Ensure open communication is maintained throughout the merger with all departments, stakeholders and the public.
Transition Oversight Committee Role and Responsibilities
The Executive Director assumes the responsibility for the Merger and is accountable to the stockholder and the Transition Oversight Committee. The Merger Steering Committee that is comprised of department leaders will assist the Executive Director. The Executive Director and the chairperson of the Merger Steering Committee will serve as chairperson of the Merger Steering Committee. Responsibilities of these leaders are described below.
The board of Directors will appoint a director who will manage the TOC. The TOC will be staffed by agency personal from the merging company throughout the merger’s and a third-party advisor. The TOC manage project selection, monitoring and tracking projects, and managing projects that make up the merger portfolio. The TOC project will perform the majority data based project assessments using the tools, methodologies, and business case development. All staff will also perform standard TOC monitory, tracking, and administrative activities. Whenever possible, survey feedback should be gathered because “everyone in an organization can participate in survey feedback.” (Robbins, p. 409)
The TOC will asses, select, launch, and monitor ongoing projects of the merging companies. Additionally, the TOC is accountability for project execution and the completion belongs of departmental projects.
Scope of Transition Oversight Committee
The TOC will manage the overall merger by:
- Facilitating the merger effort under the governance of the Executive Director
- Overseeing the assessment and selection process for the transformation projects
- Overseeing, monitoring, and tracking approved merger projects by consolidation and optimization of projects
- Managing the issuance of work orders for approved projects
- Establishing, providing, and training on standard templates for project plans, work plans, milestone plans, and status reports
- Managing changes of merger projects
- Monitoring implementation of the plan to communicate clearly and frequently with stakeholders on the implications and process of the merger effort
- Conducting frequent feedback surveys to assess the change in culture ensuring individuals and groups within the organization work more effectively together
- Tracking cost saving
VI. Risk Management Plan
As we consolidate our concerns have broadened and deepened to include regulations, capital markets financial reporting, globalization, intellectual capital, and of course, information systems. We must create a risk-intelligent organization. With a new regulatory environment, globalization and ever-evolving technology, we need a holistic organizational risk-management strategy. At risk are our asset protection, liability management, cost containment and company growth, and integral to the process is technology. An effective risk management requires and enterprise wide system that reduce risk in these areas, as well as growth for the company.
Our approach to risk management is use of the TOC, whose job is to make sure risk is properly understood and translated into meaningful business requirements, objectives, and goals. Risks and rewards are clearly established to ensure that the corporate –liability view is clear to each department and they are fully engaged in managing their portion of the risk.
Second, appoint a Chief Technology Officer, CTO, whose job is to ensure that the company is protected in technology related arenas, such as network security and data management. The CTO will be responsible for creating computer systems, analytical tools, and data warehouses that are the backbone of risk-management systems. Many administrative, technical and physical controls used to mange risk are to be computerized. The CRO needs to fully understand the technical, administrative, and operational requirements needed to develop risk management applications and infrastructure.
Third, the TOC and CTO will lead two teams. A cross-functional team comprised of a representative from each of the four new departments. A core team will be composed of representatives from the information systems tech, programming and operation, security, internal audit, physical security, and the general counsel office.
The TOC Director must be a comprehensive, integrative thinker and a good communicator, coordinator, and facilitator who can balance a variety of interests and strategic demands presented by the cross-functional team. But while the director should provide organizational direction and oversight of risk objectives and programs, the core team will identify, select, and implement the necessary control solutions using the following procedure:
“* Assess existing control activities and system compliance/testing program(s).
* Identify information systems management processes used to mitigate technology and information systems operations-related risks.
* Assist with control definition, implementation, and process monitoring, leading to:
* Availability, integrity, and confidentiality of information assets.
* Least privilege, ensuring individuals have the smallest set of privileges and access rights necessary to do their jobs.
* Separation of duties, providing a second person to review sensitive or critical actions taken by an individual.
* Event logging and monitoring.” (Pundmann, Kobel, 2003, p.63)
Risks tend to fall within four categories: financial, operational, compliance, and strategic. (Pundmann, Kobel, 2003, p.63) As the organizer of data, information systems are integral to each. A risk-identification process is to be developed by the cross-functional team to apply to each category and a preferred practice used to achieve a no risk environment. The preferred practices should cover six control areas to address the administrative, physical, and technical control architecture and to ensure that the overall control solution is fully operational. The control areas should include:
“* Policy, standards, and procedures.
* Technical control architecture.
* Organization roles and responsibilities.
* Management processes.
* Training and awareness.
* Compliance and assurance.
Once the plan is in place and compliance is achieved, the group doesn't disband. The team is convened as needed when new requirements emerge or compliance issues arise.” (Pundmann, Kobel, 2003, p.63)
The next step is applying the process company wide, with the cross-functional team involved throughout the analysis process. Everyone gains a common understanding of the issues and mitigation alternatives. In this manner, the company develops a risk language on which to build an implementation strategy. The company defines its environment and understands how information flows to and through the environment.
As the risk teams work together, over time, the process can be undertaken much more quickly to discern whether the controls mandated by a new regulation or business strategy need to be established.
With this approach, any given system has the same assigned risk value, whether you're speaking to internal audit, information systems, security, or other business units. This creates alignment within a company over the interpretation of risk so that everybody's making decisions under the same paradigm. The benefit is that as situations change, there's an enterprise wide model to address the change. This protects the company, allows the company to better manage costs, and takes the politics and emotion out of decision-making.
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