MINUTES APPROVAL OF MINUTES

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1 MINUTES Meeting of the Administration Committee of the Board of Trustees of the State Universities Retirement System Friday, September 14, 2018, 10:30 a.m. State Universities Retirement System 1901 Fox Drive, Main Conference Room Champaign, Illinois The following trustees were present: Mr. Antonio Vasquez, Chair (via conference call, Mr. Aaron Ammons, Mr. Mark Cozzi, Mr. Tom Cross, Mr. Dennis Cullen, Dr. John Engstrom, Dr. Fred Giertz, Mr. Craig McCrohon (via conference call), Dr. Steven Rock, Ms. Lisa Schumacher and Mr. Collin Van Meter Others present: Mr. Martin Noven, Executive Director; Mr. Doug Wesley, Chief Investment Officer; Ms. Bianca Green, General Counsel; Ms. Kristen Houch, Legislative Liaison; Mr. Albert Lee, Assistant General Counsel; Ms. Emily Vock, Associate General Counsel; Ms. Brenda Dunn, Director of Human Resources; Ms. Suzanne Mayer, Chief Benefits Officer; Ms. Kelly Carson and Ms. Annette Ackerman, Executive Assistants; Ms. Mary Pat Burns of Burke, Burns & Pinelli, Mr. Eyal Darmon, Mr. Owen Davies and Ms. Teri Bennett of Accenture. Administration Committee roll call attendance was taken. Trustee Ammons, present; Trustee Cross, present; Trustee Engstrom, present; Trustee Rock, present; and Trustee Vasquez, present (via conference call). APPROVAL OF MINUTES Trustee Tom Cross presented the minutes from the Administration Committee meeting of June 7, 2018 and June 8, Trustee Steven Rock made the following motions: That the minutes from the June 7, 2018 Administration Committee Meeting be approved as presented. That the minutes from the June 8, 2018 Administration Committee Meeting be approved as presented. Trustee Aaron Ammons seconded and the motions carried with all trustees present voting in favor. Trustee Antonio Vasquez joined the meeting via phone conference at 10:53 a.m. APPROVAL OF CLOSED SESSION MINUTES Trustee Cross presented the Closed Session Minutes from the Administration Committee meeting of June 8, Trustee Rock made the following motion:

2 That the Closed Session Minutes from the June 8, 2018 Administration Committee Meeting be approved as presented and remain closed. Trustee John Engstrom seconded and the motion carried with all trustees present voting in favor. There was no formal chairperson s report. CHAIRPERSON S REPORT RENEWAL OF SURS INCLUSION GOAL Ms. Tara Myers provided a brief overview of the history of the SURS inclusion policy which establishes guidelines for the inclusion of minorities, women and persons with disabilities in the SURS procurement process. Ms. Myers noted that this policy is reviewed annually and the proposed SURS procurement goal is brought before the board for approval as required by Section of the statute. Ms. Myers reviewed the previous fiscal year s goal and advised that although the stated goal was not met, she recommends the goal be maintained at 25 percent. She also advised that staff will continue to pursue increased opportunities toward attaining the stated goal. Trustee Engstrom made the following motion: That based on staff recommendation, the 2015 Inclusion Policy would be approved as presented. That the SURS goal for contracts and purchases from businesses owned by minorities, women and persons with a disability be maintained at 25 percent for fiscal year That the SURS goal for increasing the racial, ethnic and gender diversity of its senior staff be to promote diversity, ensure a culture of inclusivity and recruit from a diverse, qualified pool of potential applicants. Trustee Rock seconded and the motion carried with all trustees present voting in favor. A copy of the staff memorandum titled SURS Inclusion Goal Memo and a copy of the State Universities Retirement System (SURS) Inclusion Policy are incorporated as part of these minutes as Exhibit 1 and Exhibit 2. ORGANIZATIONAL REVIEW STUDY UPDATE Mr. Eyal Darmon of Accenture presented the results of the operational review that was conducted for SURS. After pointing out the current understaffing of the organization, as well as the impact of member demographics and the implementation of the buyout option, Mr. Darmon provided his input regarding the future staffing needs to accommodate the expected increase in claims. During the space utilization study, it was determined that the current space is less than half of the government standard and that the current building is inadequate to meet the needs of the organization. Mr. Darmon proposed a few short term technology suggestions for the board to review while Accenture finalizes their long term technology recommendations. Accenture will present their proposed recommendations during the October or December meeting. Discussion ensued as staff and representatives from Accenture addressed questions from trustees.

3 A copy of Accenture presentation titled SURS Operational Review Results is incorporated as part of these minutes as Exhibit 3. Trustee Ammons physically left the meeting at 11:45 a.m. Trustee Ammons joined the conference call at 12:00 p.m. IT STRATEGIC PLAN FY Mr. Jefferey Saiger presented the IT strategic plan highlighting the goals, principles and strategic imperatives that will guide the activities of the IT department for the next three years. A copy of the staff memorandum titled IT Strategic Plan FY19-FY21 and a copy of the presentation titled IT Strategic Roadmap are incorporated as part of these minutes as Exhibit 4 and Exhibit 5. IMPLEMENTATION TIMELINE FOR BUYOUT OPTION Ms. Kristen Houch discussed the proposed timeline to implement Public Act which provides two voluntary buyout programs for SURS. Ms. Houch provided background on the complexity of SURS benefits, as well as the technical difficulties and administrative challenges associated with the buyout options. Ms. Houch relayed staff s recommendations in relation to division needs and costs associated with implementing the new buyout options. A supplemental budget amount was recommended in order to provide the resources needed to begin implementation. After further discussion, Trustee Rock made the following motion: That a supplemental budget of $861,612 be approved for expenses related to the implementation of the buyout options, which includes the authorization to hire no more than six full-time employees and no more than six contractual employees in fiscal year 2019 to begin to address the staffing needs identified by Accenture. Trustee Engstrom seconded and the motion was followed with a roll call vote: Trustee Ammons Trustee Cozzi Trustee Cross Trustee Cullen Trustee Engstrom Trustee Giertz Trustee McCrohon Trustee Rock Trustee Schumacher Trustee Van Meter Trustee Vasquez aye aye nay aye aye aye absent aye nay aye aye Motion passed.

4 A copy of the staff memorandum titled Implementation Timeline for PA is incorporated as part of these minutes as Exhibit 6. STAFFING AND SPACE NEEDS Mr. Noven reaffirmed the staffing needs for the organization noting the current building space has exceeded capacity, leaving no room for new employees. Mr. Noven provided details to the trustees regarding the contract and possible acquisition of the building adjacent to the current SURS location. Discussion ensued as Mr. Noven and Ms. Bianca Green addressed questions from trustees. Trustee Vasquez made the following motion: That staff is directed to execute the real estate purchase agreement to purchase the building at 1801 Fox Dr., Champaign, IL. Trustee Engstrom seconded and the motion was followed with a roll call vote: Trustee Ammons Trustee Cozzi Trustee Cross Trustee Cullen Trustee Engstrom Trustee Giertz Trustee McCrohon Trustee Rock Trustee Schumacher Trustee Van Meter Trustee Vasquez aye nay nay aye aye aye absent aye abstain aye aye Motion passed. A copy of the staff memorandum titled FY19 Division Needs and a copy of the spreadsheet titled Resource Needs are incorporated as part of these minutes as Exhibit 7 and Exhibit 8. VACATION POLICY Trustee Cross discussed the current vacation policy set forth for staff and made note of his concerns with the policy. Trustee Cross reminded the group that at recent meetings the board directed staff to work with Ms. Mary Pat Burns and outside counsel to develop an agreement to revise the vacation policy. Ms. Burns stated that the guidelines have been set for the revision to the policy and will be presented in written form during the October meeting. Trustee Fred Giertz made the following motion: That staff is directed to work with labor counsel and fiduciary counsel to amend the vacation policy to provide that non-civil service employees hired on or after October 1, 2018, shall accrue vacation days as follows:

5 years 10 days years 15 days years 17 days years 20 days years 22 days 26 years and over 25 days Any exceptions shall be approved by the executive director and the board chair. No employee hired on or after October 1, 2018, shall accrue more than 56 vacation days. Current employees shall have three years to reduce any days over 56 days or lose the excess days. Trustee Cross seconds and was followed in a roll call vote: Trustee Ammons Trustee Cozzi Trustee Cross Trustee Cullen Trustee Engstrom Trustee Giertz Trustee McCrohon Trustee Rock Trustee Schumacher Trustee Van Meter Trustee Vasquez aye aye aye aye aye aye absent aye aye abstain aye Motion passed. PERSONNEL MATTERS Due to time constrains, this agenda item was deferred to a later date. PUBLIC COMMENT There was no further business before the board and Trustee Engstrom moved that the meeting be adjourned. The motion was seconded by Trustee Giertz and carried with all trustees present voting in favor. Respectfully submitted, MMN; kc Mr. Martin Noven Secretary, Board of Trustees

6 Exhibit 1 To: Administration Committee From: Tara Myers, CFO Date: September 1, 2018 Re: Recommendation of SURS Inclusion Goal for Fiscal Year 2019 Overview The Board of Trustees of State Universities Retirement System (SURS) adopted an Inclusion Policy in December 2009 to establish guidelines for inclusion of minority, women or disabled owned businesses in SURS procurement processes consistent with 40 ILCS 5/1-109 and 40 ILCS 5/ (6). The policy was updated September The policy is reviewed and a procurement goal is approved each year. There are no updates to the policy. The procurement goal is included in the SURS Diversity Report to the Governor and General Assembly. Fiscal Year Board Approved Goal Actual Purchase % % 21.1% % 13.8% % 20.0% % 17.4% % 13.2% % 15.1% The plan for Fiscal Year 2019 is to maintain the goal at 25%, with the intent to continue expanding our minority-, female-, and persons with a disability-owned vendor group. The SURS staff will continue to be proactive during Fiscal Year 2019 in seeking minority-, female-, and persons with a disability-owned businesses in our procurement opportunities. In addition to the SURS Inclusion Goal, in pursuant to 40 ILCS 5/ (10), SURS has an aspirational goal of no less than 20% utilization of businesses owned by minorities, females, and persons with disabilities of contracts awarded for information technology, accounting services, insurance brokers, architectural and engineering services, and legal services. The actual purchases from businesses owned by minorities, females, and persons with disabilities for the aspirational goal vendors for Fiscal Year 2017 and 2018 were 15.1% and 22.5% respectively.

7 Exhibit 1 Recommendation Staff recommends: No changes to the 2015 SURS Inclusion Policy, That the SURS goal for contracts and purchases from businesses owned by minorities, female, and persons with a disability be 25% for Fiscal Year 2019, That the SURS goal for increasing racial, ethnic and gender diversity of its senior staff be to promote diversity, ensure a culture of inclusivity and recruit from a diverse, qualified pool of potential applicants.

8 Exhibit 2 State Universities Retirement System (SURS) Inclusion Policy (09/11/2015) The purpose of this policy is to establish a framework for the inclusion of businesses owned by minorities, females, and persons with a disability in SURS procurement processes and for the inclusion of increased diversity of SURS fiduciaries, consistent with 40 ILCS 5/1-109 and 40 ILCS 5/ The goals of this policy are to: promote competitive utilization of businesses owned by minorities, females, and persons with a disability in SURS contracts and services; and advance racial, ethnic, and gender diversity of SURS fiduciaries, including consultants and senior staff. Policy SURS is responsible for the prudent administration of SURS members trust fund. SURS strives to insure that members and taxpayers receive the maximum value for each dollar spent. To this end, SURS recognizes that promoting diversity of fiduciaries and vendors provides an open, competitive and diverse business environment. SURS procurement and employment processes will further diversity in vendors and fiduciaries, including consultants and senior staff. SURS employment processes to promote racial, ethnic and gender diversity of SURS fiduciaries, including senior staff must be developed to work in tandem with existing State University Civil Service System law when appropriate. To this end, SURS is committed to the ongoing efforts to seek job candidates from underrepresented groups, bring them into the organization, and offer additional growth/leadership opportunities with the intent of creating mutually beneficial long-term employment partnerships. SURS procurement process includes a concerted effort to attract qualified minority, female owned business enterprises, and businesses owned by a person with disability (as defined by the Business Enterprise for Minorities, Females, and Persons with Disabilities Act: collectively, MWDBE ) to participate in the procurement process. SURS further commits to the objective evaluation of all qualified businesses regardless of race, gender or handicap in fair consideration of all suppliers and consultants in the acquisition of goods and services. 1

9 Exhibit 2 SURS stresses its goal of inclusion of MWDBE firms among prospective providers of purchased goods and services. Special efforts will be made to insure identification of eligible firms for inclusion in the bid process, including monitoring of MWDBE-related listings to identify possible MWDBE contractors and service providers. MWDBE firms will be identified using resources such as the United States Small Business Administration, Illinois Central Management Services Business Enterprise Program and other public agency resources. SURS will seek new ways to expand our efforts to do business with MWDBE suppliers and consultants. If necessary, SURS will take proactive action to ensure that certified minorityowned, women-owned and disabled-owned business enterprises are provided notice of, and given the opportunity to demonstrate their ability to provide products and services at competitive prices. SURS staff who either directly or indirectly determine procurement needs or procurement decisions will seek and encourage MWDBE businesses to submit bids each time SURS publishes a request for bids or proposals. SURS contracts require vendors to avoid unlawful discrimination in employment and to assure equality of employment opportunity and compliance with the Illinois Department of Human Rights' regulations concerning equal employment opportunities and affirmative action. Pursuant to 40 ILCS 5/ (10) SURS shall set an aspirational goal of no less than 20% utilization of businesses owned by minorities, females, and persons with disabilities of contracts awarded for information technology, accounting services, insurance brokers, architectural and engineering services, and legal services. This information will be tracked, but is not required to be reported. SURS has set a goal of 25% for purchases from businesses owned by minorities, women, and persons with a disability as a share of all of its contracts and purchases. This information will be tracked by the Chief Financial Officer and reported annually as required by Public Act SURS has set a goal to promote diversity from the top down and the bottom up to ensure a culture of inclusivity. SURS will also recruit from a diverse, qualified pool of potential applicants to increase the racial, ethnic, and gender diversity of its senior staff. This information will be tracked by the Director of Human Resources and reported annually as required by Public Act

10 Exhibit 2 (30 ILCS 575/2) Sec. 2. Definitions. (A) for the purpose of this Act, the following terms shall have the following definitions: (1) "Minority person" shall mean a person who is a citizen or lawful permanent resident of the United States and who is any of the following: (a) American Indian or Alaskan Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment). (b) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam). (c) Black or African American (a person having origins in any of the black racial groups in Africa). Terms such as Haitian or Negro can be used in addition to Black or African American. (d) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rico, South or Central American, or other Spanish Culture or origin, regardless of race). (e) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands). (2) "Female" shall mean a person who is a citizen or lawful permanent resident of the United States and who is of the female gender. (2.05) "Person with a disability" means a person who is a citizen or lawful resident of the United States and is a person qualifying as being disabled under subdivision (2.1) of this subsection (A). (2.1) "Disabled" means a severe physical or mental disability that: (a) results from: amputation, arthritis, autism, blindness, burn injury, cancer, cerebral palsy, Crohn's disease, cystic fibrosis, deafness, head injury, heart disease, hemiplegia, hemophilia, respiratory or pulmonary dysfunction, an intellectual disability, mental illness, multiple sclerosis, 3

11 Exhibit 2 muscular dystrophy, musculoskeletal disorders, neurological disorders, including stroke and epilepsy, paraplegia, quadriplegia and other spinal cord conditions, sickle cell anemia, ulcerative colitis, specific learning disabilities, or end stage renal failure disease; and (b) substantially limits one or more of the person's major life activities. Another disability or combination of disabilities may also be considered as a severe disability for the purposes of item (a) of this subdivision (2.1) if it is determined by an evaluation of rehabilitation potential to cause a comparable degree of substantial functional limitation similar to the specific list of disabilities listed in item (a) of this subdivision (2.1). (3) "Minority owned business" means a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it. (4) "Female owned business" means a business which is at least 51% owned by one or more females, or, in the case of a corporation, at least 51% of the stock in which is owned by one or more females; and the management and daily business operations of which are controlled by one or more of the females who own it. (4.1) "Business owned by a person with a disability" means a business that is at least 51% owned by one or more persons with a disability and the management and daily business operations of which are controlled by one or more of the persons with disabilities who own it. A not-for-profit agency for persons with disabilities that is exempt from taxation under Section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability". *** (9) "Control" means the exclusive or ultimate and sole control of the business including, but not limited to, capital investment and all other financial matters, property, acquisitions, contract negotiations, legal matters, officer-directoremployee selection and comprehensive hiring, operating responsibilities, costcontrol matters, income and dividend matters, financial transactions and rights of other shareholders or joint partners. Control shall be real, substantial and continuing, not pro forma. Control shall include the power to direct or cause the direction of the management and policies of the business and to make the dayto-day as well as major decisions in matters of policy, management and 4

12 Exhibit 2 operations. Control shall be exemplified by possessing the requisite knowledge and expertise to run the particular business and control shall not include simple majority or absentee ownership. (10) "Business concern or business" means a business that has average annual gross sales over the three most recent calendar years of less than $31,400,000 as evidenced by the federal income tax return of the business. A firm with gross sales in excess of this cap may apply to the Business Enterprise Council for Minorities, Females, and Persons with Disabilities for certification for a particular contract if the firm can demonstrate that the contract would have significant impact on businesses owned by minorities, females, or persons with disabilities as suppliers or subcontractors or in employment of minorities, females, or persons with disabilities. (b) When a business concern is owned at least 51% by any combination of minority persons, females, or persons with disabilities, even though none of the three classes alone holds at least a 51% interest, the ownership requirement for purposes of this Act is considered to be met. The certification category for the business is that of the class holding the largest ownership interest in the business. If 2 or more classes have equal ownership interests, the certification category shall be determined by the Department of Central Management Services. 5

13 Exhibit 3 SEPTEMBER 2018 SURS OPERATIONAL REVIEW RESULTS

14 CURRENT MEMBER SATISFACTION LEVELS Exhibit 3 Overall, SURS members are very satisfied with the customer service that SURS currently provides. Members were most satisfied with in-person interactions, citing that SURS representatives were very helpful in explaining confusing retirement information. SURS CALL CENTER 1 IN-PERSON SERVICE 2, 3 91% 92% 98% 95% Were satisfied with service received while speaking with a SURS rep Were satisfied with the rep s ability to identify their main concerns Were satisfied with SURS counseling services Were satisfied with SURS reception service MEMBER COMMENTS Source: 1 SURS Call Center FY18 Survey Data 2 Counselors FY18 Survey Data 3 Reception FY18 Survey Data My wife and I were very pleased with the professional manner that the SURS representative was able to address our questions regarding our upcoming retirement. She also assisted us in completing our retirement application and are satisfied that we are as prepared as we can be. SURS Member who visited the office 4 4 Reception FY18 Survey Comments 5 FY2018 Retirement Survey Comments My one-on-one meeting with a representative was most helpful. The rep was courteous and very knowledgeable. Having the rep come to my place of work was also a plus. SURS Member 5

15 FUTURE STAFFING LEVEL IMPACTS Exhibit 3 BUYOUT OPTION The potential addition of a buyout option could result in a sharp increase in backlog levels without an increase in staff. If 22% of SURS members opt for the buyout (as occurred in Missouri after adding a buyout option), SURS could see it s backlog grow from 5 months to 26 months over the 3-year buyout period. ACTUARY CHANGES 382% Increase in claims following July 2013 money purchase event 250% Increase in claims following January 2016 money purchase event MEMBERSHIP PROFILE LEGISLATIVE CHANGES 280% Increase in counseling appointment and benefit estimate requests in FY14 350% Increase in claims requests in FY14 48% of the current active member population (80,000 members total) will be eligible for retirement within the next 10 years.

16 SURS IS UNDERSTAFFED WHEN COMPARED TO INDUSTRY PEERS We analyzed the staffing levels at the pension systems with 30% more and 30% fewer members than SURS (160, ,000 members). Utah Retirement Systems was at the lower end with 166,000 members, and Illinois Municipal Retirement Fund at the upper end with 298,000 members. If SURS s staffing model was similar to that of its peers, it would need to increase its staff size to 158 FTEs, 21 more FTEs above current approved FTE count. 300, , , , ,000 50,000 - Total Membership Pension Membership ~ 160k - 230k Staffing Levels 194 Number of Staff SURS Pension Membership ~ 230k - 300k Exhibit 3 16 Peers Analyzed staffing levels at peer groups 30% larger and 30% smaller than SURS 158 FTEs Bringing staffing up to peers levels would raise SURS to 158 FTEs 21 FTEs Additional FTEs from Current levels Source: SURS FY18 Board Report Stats NASRA, August 2017: Roll Call Avg. Active Memb. Avg. Staff

17 SHORT TERM TECHNOLOGY RECOMMENDATIONS 1. IMPLEMENT A VIRTUAL AGENT FOR MEMBERS & EMPLOYERS Virtual agents are not just a new customer channel or user tool; they will power the next generation of digital experiences. We typically see three use cases for Virtual Agents in Pensions: 24/7 Customer Care Customer Advisory Staff Optimization Exhibit 3 Level of Effort: $ K Implementation Timeframe: weeks 2. ENHANCE SURS SOCIAL MEDIA STRATEGY TO IMPROVE MEMBER ENGAGEMENT SURS members are increasingly interacting with social media (65% of SURS members use social media more than once a week), highlighting an opportunity for SURS to engage with its members across different platforms to inform them about plan options, provide updates on SURS, and offer members additional mediums of interacting with SURS. Level of Effort: $ K Implementation Timeframe: 8-10 weeks

18 Backlog in Months OUR RECOMMENDATION: SURS STAFFING PROFILE 1. Implement Short Term Technology Recommendations 2. Staff increases by 23 FTEs (to reach 160 total) to accommodate the increase in claims (Legislative, Buyout, Actuarial) 3. Approved FTEs would steadily decrease through normal turnover after peak period 4. FTE levels would stabilize at 152 FTEs while backlog returns to stable level 5. Backlog would level out at 4-6 months Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Source: SURS FY18 Board Report Stats NASRA, August 2017: Roll Call Backlog and Staffing Projection 2 FTE 3 Backlog in Months FTEs 23 FTEs Number of FTEs needed to accommodate short term increases (buyout, actuarial, legislative) 152 FTEs Number of FTEs needed in the long-term. Exhibit 3

19 Exhibit 3 CURRENT SPACE UTILIZATION OVERVIEW Over recent years, SURS has been forced to improvise additional workspaces in order to accommodate increasing staff. Workspace size varies: some spaces are around 80 sq ft, while others are below 65 sq ft, because many offices are double stacked or storage space has been converted. Sq Ft Per Person Average Sq Ft Per Person Spaces Currently available, including converted spaces >50% SURS average sq ft per person is less than half of the government standard 0 Govt Avg 1 SURS 2 Sources: 1 Government Accountability Office, March 2018: Federal Buildings Agencies Focus on Space Utilization As They Reduce Office and Warehouse Space 2 Ratio Report

20 Exhibit 3 CURRENT FLOOR PLAN IS COMPARTMENTALIZED Rooms converted to workspaces Multiple rooms that were not previously used as workstations (e.g., storage rooms, copy rooms etc.) have been converted to accommodate staffing increases, putting stress on building infrastructure, such as the HVAC system = Source: SURS Current Floor Plan

21 Exhibit 3 NEXT STEP Accenture to finalize long term technology recommendations Provide long term technology recommendations to SURS Leadership and present in a future Board meeting

22 QUESTIONS Exhibit 3

23 Exhibit 4 MEMORANDUM TO: FROM: RE: Board of Trustees Jefferey S. Saiger Chief Technology Officer IT Strategic Plan FY19-FY21 DATE: September 14, 2018 This document sets forth the goals, principles and strategic imperatives that will guide the activities of the IT department for next several years. It outlines a philosophic approach to ensure that the IT organization is meeting the needs of SURS stakeholders both today and into the near future. In an environment rife with risk, uncertainty and unpredictability, it is important that the SURS IT department recognize and strengthen those areas necessary to the continual, high-quality delivery of services to our fellow staff, employers and members. We believe that in following the IT Strategic Plan, SURS IT will be well positioned to do so. Our Strategic Plan was developed using a combination of staff feedback, emerging technology trends, business needs, industry best practices and career experience. The intent is for it to be a living document; continually modified to accommodate evolving requirements. Staff is pleased to present this to you and welcomes any questions or feedback. Thank you. Sincerely, Jefferey S. Saiger Chief Technology Officer

24 IT Strategic Roadmap FY Exhibit 5

25 Exhibit 5 Table of Contents Executive Summary Understanding SURS SURS Mission SURS Strategic Goals In-Flight Project Initiatives PESTLE Analysis of Influential Factors IT Implications from Organizational Goals Current State of IT Current IT ORG Chart IT SWOT Analysis IT Process Maturity Analysis Common Themes from Stakeholder Conversations Current IT State Assessment Target State of IT SURS IT's Biggest Opportunities 3-Year Target State 3-Year Proposed ORG Chart IT Project Budget Allocation IT Strategic Goals Goals Alignment Mapping IT Goals to Capabilities IT Guiding Principles IT Initiatives to Organizational Goals Mapping Execution Prioritization Drivers Program Roadmap Risk Analysis Communication Plan Strategy Refresh Plan

26 Exhibit 5 Executive Summary Situation SURS has a diverse blend of technologies within the organization s portfolio. Some technologies are fairly contemporary, while others have been in service for decades. As with the technology, the IT staff is also a blend of recent hires as well as long-tenured staffers. The IT department is comprised of two teams. The first is Application Development and Research; tasked primarily with keeping the core retirement system updated to reflect new requirements. The second is Technical Support; responsible for the infrastructure, operations and data security. Facilities and Support Services (mailroom and imaging) also report up through to the Chief Technology Officer. Complication The workload of the IT department is heavily influenced by factors outside of SURS control. Any new legislative changes to the pension program requires a reprioritization of in-progress initiatives, and reallocation of programming resources. With so much emphasis placed on maintaining the core retirement system, other facets of running a successful organization have been neglected, resulting in staff implementing manual processes throughout the organization. Resolution With renewed executive and organizational support, the IT organization has decided to create an IT strategy that considers the current and anticipated needs of the organization, industry trends, current capabilities, and regulatory expectations to create a plan that will facilitate and enable the organization s key business objectives. This three-year roadmap will provide the IT organization with the direction needed to address urgent technology issues, while also establishing a foundation for organizational growth.

27 Understanding SURS Exhibit 5

28 Exhibit 5 SURS MISSION To secure and deliver the retirement benefits promised to our members

29 Exhibit 5 SURS Strategic Goals Assure the financial soundness of the system Secure the annual required contribution, produce risk-adjusted investment returns that exceed our investment benchmarks and manage expenses Achieve high levels of customer satisfaction Deliver fast, accurate, timely, cost-effective and empathetic service by meeting or exceeding our service standards Be a great place to work with an emphasis on learning, growth and diversity Develop leaders, share our knowledge, fill skill gaps and commit to being a diverse organization Develop and sustain efficient, responsive, high-quality internal processes, tools and technology Improve our member communication, workflow processing capabilities and systems sustainability, reliability and record keeping Protect member assets and information through sound risk management and ethical practices Strengthen our internal controls and risk-management programs, and continue current ethics training and compliance efforts

30 Exhibit 5 In-Flight Project Initiatives In-Flight Category Aug '18 Sept '18 Oct '18 Nov '18 Dec '18 Jan '19 Feb '19 Mar '19 Apr '19 May '19 Doc Link/PO Automation P Required Minimum Distributions R Final QA with users Build, Test, Implement Employer 6% 3% Billing R Test & Implement 6% Build, Test, Implement 3% KTM Automation P Build, Test, Implement Back-end End User Computing Updates Phase 1 P Member Website Re-Development S Buyout program R FIS & HCM Modernization Phase 1 P Phase 1 is 27% implemented 1 Developer pulled to other projects. 1 Developer remains 100% allocated Design, Build, Test, Implement Functional Requirements, Issue RFP, Design, Configure/Build, Test, Implement RFP's in progress PII Data Classification C Building Safety Systems Refresh C IssueRFP, Design Issue RFP, Design, Build, Test, Implement Conference Room Upgrades P Chiller Replacement R RFP to post 10/1 Engage Engineering Firm, Issue RFP Design, Build, Test, Implement Design, Build, Test, Implement Categories: C=Compliance, P = Productivity/Efficiency, R = Required/Governance, S = Strategic

31 Exhibit 5 PESTLE Analysis of Factors Impacting SURS Political Changes in politics can have a significant impact on funding sources shifting responsibilities Trustee elections & appointments can impact direction of organization initiatives Federal or state legislation changes can result in uncertainty Leadership changes impacts political standing Volatility in expectations and preferences from government or board can create sudden change for the organization Changes in the state legislature may impact ability to grow Election can impact how the organization does accounting Difficulty in always finding qualified firms for competing bid requirements Difficult to finance certain operations, including staff Economic Social Labor market is competitive organization has to offer more attractive packages (pay/benefits) to recruit specialized talent Over time, as demographics of membership changes, so will expectations of social interactions & delivery of services Technology labor market is very competitive Operations are becoming more data intensive Constituents have high expectations, including uninterrupted connectivity and fast resolutions on technology-related issues Change of technology outpaces organizational capacity to adapt Technological Legal Constant stream of RFPs, contract renewals and purchasing creates significant workload Upcoming audits need to monitor compliance Ongoing litigation & legislative activities stretch resources Nearing capacity for main office will require new space or major refurb if we require growth Aging building presents maintenance challenges Environmental

32 Exhibit 5 IT Implications from Organizational Goals Assure the financial soundness of the system IT needs to provide reliable and actionable data to organization IT needs to be good stewards of finances Run IT as a business Achieve high levels of customer satisfaction IT should strive to deliver best-inclass service to all stakeholders New technologies should enhance user productivity and experience Be a great place to work with an emphasis on learning, growth and diversity IT needs to invest as heavily in people as it does technologies and processes Develop and sustain efficient, responsive, high-quality internal processes, tools and technology IT needs to be able to move at the speed of business IT needs to deliver highly available, highly secure and highly trustworthy services, applications and data Protect member assets and information through sound risk management and ethical practices Information Security needs to be a core competency of the IT organization IT needs to draft, adhere to, and enforce stringent compliance policies when applicable

33 Current State of IT Exhibit 5

34 Exhibit 5 Current IT ORG Chart Chief Technology Officer Jefferey Saiger Dir. Of AppDev & Research Doug Steele Dir. Of IT Infrastructure & Operations Cindy Gones Manager of Support Services Dawn Blissard Chief Engineer Dave Scott Project Manager Leslie Pouilliard T. Childress C. Galva J. Heaton A. Idom M. Ingrum M. Nagele M. Mockus K. Oliger M. Ricketts K. Silvey T. Smith T. Kerber M. Sebens Jim Cagle Jon Cagle M. Brewer B. Campbell A. Jordan D. Kalk B. Ormond D. Rascher K. Meis Vacant H Silver M Davenport R Epsteen

35 IT SWOT Analysis (Strengths, Weaknesses, Opportunities, & Threats) Strengths Customer Service/Support Experienced and Dedicated Staff Flexibility Technical expertise in core platform Virtualization of server footprint Stability of infrastructure Problem Solving Skills and Resourcefulness Strong compliance posture Modern Disaster Recovery (DR) solution Contemporary technology portfolio for infrastructure Own the building, so we can proceed as necessary on renovations, changes or improvements Weaknesses Demands on staff often exceed capacity to execute Lack of formalized governance framework, such as ITIL Lack of Service Level Agreements (SLAs) Communication amongst IT teams and organization Bureaucracy Lack of formal training & development program Audio/Visual Capabilities Lack of organizational metrics & dashboards (no single pane of truth for performance or financials) Lack of skill diversity Informal Project Management Ongoing Maintenance of building due to age and ownership Fast Changing and Complex Technical Infrastructure Exceedingly manual and paper-based processes Lack of separation of duties in Application Development (Developers are all working as project leads, business analysts, and quality assurance analysts in addition to core responsibilities) Brain-drain due to recent retirements Exhibit 5 Opportunities Cloud Computing Consolidation of systems Utilization of Intranet We have many relationships with vendors that could be turned into partnerships Quantifying IT value to the organization Process improvements & governance Successful Financial Information System (FIS) replacement Successful Human Capital Management (HCM) implementation Review sourcing strategy Mobile engagement of membership Business Intelligence competency Threats Ever-changing & increasingly hostile security environment Budget constraints Procurement codes misaligned to IT purchasing best practices Delivering core services while adapting to new demands for the changing environment Finding resources to maintain current application stack External factors requiring immediate shifts of focus and resources Civil Service hiring constraints Large number of Technical Support staff are retirement eligible Facility loss due to catastrophic event

36 IT Process Maturity Analysis Exhibit Current Maturity Level 3-Year Target Maturity Level

37 Common Themes from Business Stakeholder Conversations Exhibit 5 Themes Detail Efficiency Decreasing the time to execute initiatives Reducing the amount of time spent doing routine tasks Better partnership to foster better adoption of new technologies and processes Focus on what matters most, not new and shiny Growth Focus on processes, technologies and physical workspace that supports SURS as it continues to grow to meet changing legislative demands Data integrity and reporting Data integrity and security is of utmost importance to organization Need better and faster reporting putting it in the hands of the end user would be ideal Technology as a business driver Process automation The increased use of effective technology can improve productivity Technology can be used to engage & educate members Technology could foster better collaboration and communication Data reporting to aid member decisions and real-time organization activity Increase adoption of critical technology services training and engagement Electronic time tracking, communication among employees, elimination of manual data entry or migration, reduction in paper documents, etc. Automation of workflow and hand-off between systems Training of employees on how to use systems and technology to streamline processes Quality Assurance Ensure development work has been thoroughly tested prior to getting to end user testing A common process used for all testing would be beneficial; standardize the QA experience and expectation Adding efficiencies to QA process would help with time allocation issues Standardization of project management practices Current processes are informal and not standardized No formal project management tools or reporting dashboards are in use Formal Project Management competency would help with more consistent & successful execution of key initiatives

38 Current IT State Assessment Exhibit 5 Currently, the IT organization is assessed to be a Trusted Operator in its role due to having a stable infrastructure, functional core applications and reliable data quality. Innovator - Transforms the Business Reliable Technology Innovation Business Partner - Expands the Business Effective Execution on Business Projects, Strategic Use of Analytics and Customer Technology Trusted Operator - Optimizes the Business Effective Fulfillment of Work Orders, Functional Business Applications, and Reliable Data Quality Firefighter - Supports the Business Reliable Infrastructure and IT Service Desk Unstable - Struggles to Support Inability to Provide Reliable Business Services

39 Target State of IT Exhibit 5

40 Exhibit 5 SURS IT s Biggest Opportunities Formalize a Project Management Competency The IT organization has an opportunity to address several areas of concern amongst both departmental staff as well as business stakeholders by implementing a formalized project management competency. Having a project management center of excellence would encompass business analysis, quality assurance and project management functions. This would allow developers and business users to better focus on their core responsibilities, as well as afford SURS a consistent experience when pursuing new initiatives. Process Automation Based on interviews with organizational stakeholders, many processes are manual, inefficient due to too many handoffs, and paper-intensive. Immediate areas for improvement are HR and Accounting. Currently, routine operational tasks such as time tracking, talent management, budgeting, forecasting and reporting are manually performed. Pursuing a comprehensive enterprise application that encompasses both Human Capital Management (HCM) and Financial Information Systems (FIS) will greatly improve the efficiency of the entire organization, as well as afford real-time insight into key areas of SURS. Utilization of the SMAC Stack The IT organization is in a position to revolutionize the manner in which SURS serves our membership and conducts its work. By leveraging the SMAC (Social, Mobile, Analytics, Cloud) stack, IT can provide instant access to realtime data, provide elasticity of operations and engage membership in a manner consistent with the other facets of their day-to-day lives. Utilizing the SMAC stack effectively could also help drive down long-term costs, provide better resiliency to the organization, and provide a key recruiting advantage.

41 3-Year IT Target State Exhibit 5 By the end of Fiscal Year 2021, the target state for the IT organization would be that of a high performing Business Partner, on the cusp of being an Innovator. This will be accomplished through consolidating platforms, improving processes and collaborating fully with key stakeholders throughout SURS. Innovator - Transforms the Business Reliable Technology Innovation Business Partner - Expands the Business Effective Execution on Business Projects, Strategic Use of Analytics and Customer Technology Trusted Operator - Optimizes the Business Effective Fulfillment of Work Orders, Functional Business Applications, and Reliable Data Quality Firefighter - Supports the Business Reliable Infrastructure and IT Service Desk Unstable - Struggles to Support Inability to Provide Reliable Business Services

42 Exhibit 5 3-Year Proposed IT ORG Chart Chief Technology Officer Jefferey Saiger Manager of Enterprise Application Dev. & Support Manager of DevOps Dir. Of IT Infrastructure & Operations Cindy Gones Manager of Support Services Dawn Blissard Chief Engineer Dave Scott Project Manager Leslie Pouilliard Project Manager TBD : Allocation of current staff TBD : Allocation of current staff Jim Cagle Jon Cagle M. Brewer B. Campbell A. Jordan D. Kalk B. Ormond D. Rascher K. Meis Vacant H Silver M Davenport QA Analyst QA Analyst R Epsteen BA Specialist BA Specialist Positions highlighted in green would represent net-new roles for the organization. This model would be achieved through role changes due to attrition, reassignments of current staff as well as new additions to the organization.

43 Exhibit 5 IT Project Budget Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FY 2016 FY2017 FY2018 Proposed FY2019 Need To Productivity/Efficiency Strategic ROI Vast majority of historical budget allocations have focused on buildingrelated initiatives. Historical trends have resulted in the current state of business operations; highly manual, little automation and stagnation in parts of the technology portfolio. Next 2-3 budget proposals will focus on opportunities for enhancing Productivity/Efficiency or supporting Strategic initiatives. As the organization gets into a more mature stature and project execution becomes consistent, the focus should shift to look for opportunities for projects that have returns on investment (ROI).

44 Exhibit 5 IT Strategic Goals The following four goals have been developed to guide IT s journey to its target end state while also supporting and enabling the broader organization. 1 Be the trusted technology partner to the organization 2 Run IT like a business 3 Treat the organization s data and resources as if they were our own (because they are) 4 Invest in talent like we do technology; smartly and with the goal of creating the best workplace possible

45 Exhibit 5 Goals Alignment Each IT strategic goal supports at least one of the SURS organizational goals. Assure the financial soundness of the system Achieve high levels of customer satisfaction Be a great place to work with an emphasis on learning, growth and diversity Develop and sustain efficient, responsive, highquality internal processes, tools and technology Protect member assets and information through sound risk management and ethical practices Be the trusted technology partner to the organization Run IT like a business Treat the organization s data and resources as if they were our own (because they are) Invest in people like we do technology; smartly and with the goal of creating the best workplace possible

46 Mapping IT Goals to Capabilities Exhibit 5 Be the trusted technology partner to the organization Run IT like a business Treat the organization s data and resources as if they were our own (because they are) Invest in people like we do technology; smartly and with the goal of creating the best workplace possible Service level management Toolset rationalization Information security management Career planning & progression Quality assurance Analytics based decision making Vendor management Training & development Project portfolio management Service portfolio standardization Real-time financial management Human capital management Change management Cadence of accountability Governance, risk and compliance mgmt. Coaching & mentoring

47 IT Guiding Principles Exhibit 5 IT Guiding Principle Name IT Guiding Principle Statement 1. Customer service oriented We deliver the best experience possible to our stakeholders. 2. Financial value focus We aim to maximize ROI, optimize TCO and mitigate risks. 3. Fit for purpose 4. Data management 5. Enterprise architecture governance We manage capability levels and produce solutions that are fit for purpose and scalable without over-engineering them. We handle data creation, modification, and usage in compliance with our data governance policy. We control the variety of technology platforms we use & support. 6. Managed security We manage security enterprise-wide in compliance with our security governance policy. 7. Compliance to laws and regulations 8. Simplicity 9. Strategic Sourcing 10. Innovation We operate in compliance with all applicable laws and regulations. We will choose the simplest solutions possible with the aim of reducing operational complexity in the enterprise. We maximize reuse of existing assets. If we can t reuse, we will determine whether building or buying fits best into long-term plans. We seek innovative ways to leverage technology to enhance organizational productivity and efficiency.

48 IT Initiatives to Organizational Goals Mapping Exhibit 5 Strategy Alignment Framework Business Initiatives Enhance Business Capabilities Enable Business Goals Support Support Support IT Initiatives Enhance IT Capabilities Enable IT Goals

49 Execution Exhibit 5