NASCIO AWARD NOMINATION FOR DIGITAL GOVERNMENT: GOVERNMENT TO BUSINESS (G TO B) PENSION SYSTEM RESUMPTION (PSR) RECOVERY PLAN PROJECT CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM INITIATED MARCH 2010 COMPLETED SEPTEMBER 2011 DALE JABLONSKY ASSISTANT EXECUTIVE OFFICER KAREN RUIZ PROJECT DIRECTOR
2 EXECUTIVE SUMMARY Health and retirement benefits cannot be paid until the information in a government employee s account is accurate. Yet regulations fostered an environment between state employers and business providers where more than 109 different systems were required to record and coordinate benefit information for California state workers. Different data was sent to each system. Data discrepancies were common, requiring business partners to undertake onerous reviews before benefits could be paid. To address these problems, the California Public Employees Retirement System (CalPERS or PERS ) initiated the Pension System Resumption (PSR) Project to provide a consolidated information exchange that would integrate all participant information in PERS pension programs from state employer to benefit provider. However, challenges with size, scope, and a traditional implementation approach caused the project to stall. In December 2009, PERS executives and Board elected to continue the effort, but directed the adoption of a new approach. In March 2010, PERS initiated the PSR Recovery Plan project with an innovative, holistic approach which included embedding collaboration and communications in every phase, streamlining governance, using a metrics-driven methodology to measure performance, assess readiness, and rapidly recover problem areas. More than 3,000 employers and 125 business providers came together to form a more collaborative business partner community. Additionally, over 550 vendor and PERS staff located in California and India learned to work closely together to build a solution to meet the needs of the entire community. Key metrics following the implementation of my CalPERS on September 19, 2011 illustrate the significant success of this turnaround effort: All health and retirement benefits have been paid on time. Over $6 billion has been paid in benefits to nearly 500,000 state and public agency workers. More than $10 billion in contributions and 10 million transactions have been processed. Over 460,000 page views are accessed each day with an average response time of 2 seconds across the exchange. Since launch, only 2 hours of unplanned downtime have occurred. By December, 2011, 93% of the 3,000 state and public agency employers, and 100% of the 125 business providers used my CalPERS to manage benefits. Business partners workload for data clean-up and reconciliation has been reduced by more than 85% while the integrated platform has reduced the time to implement changes by 83%. The PSR Recovery Plan rescued a very large, high-risk project by developing a holistic, collaborative, agile, metrics-driven approach. Its methodologies can be scaled and applied to any project, especially those designed to manage business community partnerships. This modernization initiative now allows more than 3,000 employers and 125 benefits providers to immediately reconcile 1.6 million member accounts from origin to completion, resulting in faster, more efficient service across the community. 1 CalPERS PSR Recovery Plan
3 BUSINESS PROBLEM AND SOLUTION DESCRIPTION Problem: Recovering an Enormous, Failing Project California s Public Employee Retirement System (CalPERS or PERS ) coordinates benefits among more than 3,125 business partners (public employers and private providers) on behalf of more than 1.6 million California public employees, retirees, and their families. To manage benefits, PERS relied on 109 siloed, often antiquated systems that lacked centralized coordination or self-service for business partners or members. The lack of coordination between systems and error-prone reporting by business partners led to data gaps in retirees information and inaccuracies in PERS 3 billion records. These gaps required painstaking resolution to pay benefits. In addition, many of the 109 legacy systems could not meet upcoming privacy or health care regulations. Business partners and PERS members needed self-service options to efficiently access vital information. To address these issues and modernize its systems: In 1995, PERS initiated a project to address system issues. The task was much larger and more complex than expected. The project completed an initiative for Year 2000 processing before suspending activities for further planning. In 2006, PERS launched the Pension System Resumption (PSR) Project. PSR s objective was to consolidate PERS systems and connect more than 3,125 business partners into one exchange network serving CalPERS vast pension and health care programs. By mid-2009, the project was failing due to size, scope, and a traditional implementation approach that did not provide adequate collaboration between the business community, vendor and PERS staff. In December 2009, the PERS executives and Board directed the adoption of a recovery plan with a new approach and a hard implementation date of September 19, 2011. The recovery plan had a short timeframe to restart and implement a large, complex, highrisk project. The systems integrator agreed to waive further fees, while PERS, with nearly 80% of the $500 million total cost already encumbered, was determined to do whatever it took for the recovery effort to succeed. Solution Between January and March 2010, new project leadership for PERS and the integrator revised the entire project framework. This included re-scoping, re-chartering, and rebaselining the project and required functionality for go live. PERS and the integrator committed to the September 19 deadline, leaving 18 months to complete the system. The Recovery Plan was compounded by the size and scope of the change: my CalPERS was building an integrated system with a common look and feel across business processes for PERS employees and business partners. This involved retiring 200 interfaces, 90 databases, and 109 systems, plus outreach to the 3,125 business partners and 1,800 PERS staff to get input and prepare them for the change. The project involved over 550 staff on 50 sub-projects. The my CalPERS System included: A single platform with 3 billion records, 80 million document images, and 108 interface frameworks for storage and retrieval across all business programs. 2 CalPERS PSR Recovery Plan
A robust rules engine to provide process integrity and customer confidence. 24/7 service options for business partners at launch, expanding to beneficiaries. Data edits and pre-populated eforms to accept and process information electronically, eliminating dependency on paper documents. Over 64,000 artifacts, 45,000 modules, 640 screens, 1,605 tables, and nearly 1,000 forms implemented through 202 major system deliverables. Modifying more than 80% of the previously-developed code to resolve design gaps; the new code base was 2.3 million lines of code. Correcting over 3 million partner data anomalies to ensure valid data. Project leaders took an innovative, holistic approach as traditional approaches had not worked. Key areas included embedding collaboration in every phase, streamlining governance, and a metrics-driven approach to develop the project, test readiness, and rapidly recover any area that threatened the project s success. Empirical Metrics-driven Project Management: The September 19 deadline drove project managers to know exactly where sub-teams were at all times. This resulted in an interlinked performance measurement system with detailed goals for each activity as a common basis for status and measurement. Co-led blended teams defined unit-level goals by week and by day for requirements, designs, builds, test scripts, test executions, data corrections, data conversions/ validations, etc. The Project Management Office (PMO) tracked hourly and daily progress and recorded goals in the master schedule based on earned value (on time =1, 5% ahead =1.05, 5% behind=.95) that reinforced the importance of daily productivity to each member of the 550+ team. Decision points about priorities, resources, and tactics were reviewed twice weekly in tactical cross-team (SWAT) meetings, leading to early decisions, which mitigated risks and minimized delays. Detailed statistics combined with collaboration meant that teams ahead of schedule helped those that fell behind. The master schedule tracked more than 9,000 major activities. Monitors positioned throughout the organization displayed daily progress. Collaboration: The Recovery Plan required collaborative development with the system integrator and CalPERS staff working side by side to build requirements, system components, test scripts, conversion maps, and readiness preparations. Each of the 50 teams had a leader from both the integrator and PERS. The collaborative environment eliminated assumptions and communication gaps, helping to identify and resolve issues before they could delay the project. The Public Employer Readiness Team (PERT) outreach program involved all external business partners under a separate project focused on ensuring correct requirements, participation, and preparation of the external business partner community for the new system. PERT s focus on gathering input from business partners meant internal PSR staff could focus on designing, developing, testing and integrating the my CalPERS system. PERT engagement started in mid-2010 and continued past implementation. The Enterprise Transition Management (ETM) project focused on change management, 3 CalPERS PSR Recovery Plan
internal communications, and education for CalPERS employees. ETM trained over 1,800 CalPERS staff (99% of goal) between June and early September 2011. Communications: Sharing Progress and Direction: A comprehensive Communications Office fostered team dynamics and integrated internal and external messaging. Over 21,000 emails, 13,500 phone calls, and untold meetings, were held with business partners to keep them involved. Communications sharing included: Twice-weekly SWAT meetings to address performance or progress issues. Decision logs captured risks, issues, and resolutions for immediate notification. External communications included press releases and media coverage. PSR Portal was a tool for governance, collaboration, social medial or the Project Workbench to access working documents, deliverables, plans, and progress. Times Square style broadcasts continuously shared progress in critical areas. The Project Director issued monthly updates. The PERS CIO hosted milestone recognition events. The CEO provided monthly updates to all PERS staff. Streamlined Governance Improved and Accelerated Decisions: Project leaders streamlined governance to expedite key decisions, opening lines of communication through all levels of the organization that focused on expediting decisions. Having set direction in the recovery plan, project executives transitioned to make strategic-level project decisions such as external communication strategies, business policies, and cutover service freezes. The project Steering Committee transitioned to make workinglevel project decisions. A project advisory committee, transitioned from business advisors to advising on working-level project decisions. Implementation and Testing: The Recovery Plan Reviewed over 50,000 pages of high-level and PSR detailed-design documentation, and developed efficient approaches to developing, testing, and implementing the my CalPERS system. Testing included: 1,200 business scenarios averaging 75 steps per scenario for Customer Acceptance Testing. Inviting 600 business partners to validation testing. Detecting 61,000 errors and correcting all high-severity errors before launch. Privacy, Security, and Accessibility: Ensuring members information remains secure, and accessibility for people with disabilities was built into the Recovery Plan. In addition to 128 bit SSL transmission encryption and data file-level encryption, staff ran 80,000 security tests along with over 25,000 Americans with Disabilities Act (ADA) tests, to ensure privacy and accessibility for all users. Cost: The PSR project cost $500 million in total. The PSR Recovery Plan portion cost $70 million, covering the period from March 2010 through post-implementation support December 2011. The ETM and PERT teams were separately funded at approximately $12 million and $7 million, respectively, during this period. The systems integrator paid its own costs during the Recovery Plan and did not provide a cost estimate. 4 CalPERS PSR Recovery Plan
Innovative Characteristics: The PSR Recovery Plan project includes innovations in system development methodology and system function that make the my CalPERS system unique among state pension systems. System Implementation Innovations include: Blended project teams meant system integrator and CalPERS staff sat side by side with a shared commitment to success but with fewer impediments. The comprehensive performance management system had goals for each activity that were empirically measured, with daily updates and reviews. Streamlined governance management accelerated decisions. Testing aligned with the new business model from origin to completion. Holistic change management and communications strategy included separately chartered outreach campaigns for 3,125 business partners and 1,800 PERS staff to incorporate the customers voice from requirements beyond implementation. my CalPERS System Usability Innovations include: Business partners frequent activities are cloned, to carry forward recurrent data and report only changes, reducing labor and improving data accuracy. Each business partner receives their own home page to access and optimize their working space to their culture and style. Leverage and Transferability: The PSR Recovery Plan project approach, or pieces of it, can be adopted by any project. The transferable elements include engaging all stakeholders as partners to increase collaborative outcomes and continuously measuring and sharing progress to reach a new level of agile project management. California agencies already use lessons from PERS conversion of 3 billion records. 4 SIGNIFICANCE After traditional approaches twice foundered, the PSR Recovery Plan succeeded by integrating communication, collaboration, and metrics driven status into the DNA of the project. Key areas of significance to government include: Using collaboration to convince the thousands of business partners to participate in the development of an integrated benefits information exchange. Empirically measuring daily progress to identify issues, engender responsibility and enthusiasm, and ensure success. Adopting agile blended team techniques to accelerate design, development and testing while reducing rework and errors. Communications programs to build commitment, excitement, and mitigate press. By December, 2011, 93% of the 3,000 public employers, and 100% of the 125 business providers used my CalPERS daily to report and manage benefits. The transferability and scalability of the PSR Recovery Plan s agile project management approach can be adapted to other projects. Alignment: The PSR Recovery Plan project s goals are directly aligned with Governor Brown s priorities of reducing state costs and improving state efficiencies. The project directly supports and aligns with: 5 CalPERS PSR Recovery Plan
Goal 3 of the Statewide IT Strategic Plan: Efficient, Consolidated, and Reliable Infrastructure and Services; and Goal 4 of the Statewide IT Strategic Plan: Information is an Asset The PSR Recovery Plan directly supports NASCIO s priorities of consolidation/ optimization, cost control, improving health care services, and security. 5 BENEFIT OF THE PROJECT Improving Outcomes for Business Partners and Giving Back to Public Employees The PSR Recovery Plan used collaborative, data-driven methodologies to rescue a failing project and complete a consolidated health and retirement benefits information exchange to better serve 1.6 million members and over 3125 business partners. Cost Avoidance of Delays or Failure: Without the PSR Recovery Plan project, the $500 million my CalPERS system would have failed. Replacement cost for a future effort would likely double the investment. A non-functioning system would have very little re-use. Alternatively, project delay costs in the event that the project schedule needed to be extended to the next available conversion window would have added another $35-50 million, excluding vendor costs, and $50-100 million if vendor costs were included. Less Maintenance: By moving from outdated, siloed systems to a single platform, PERS reduced consultant support and licensing costs by 25%. Actuarial changes that required six months now take only one (83% reduction). System efficiencies: my CalPERS has already reduced PERS and business partners workload for known data clean-up and reconciliation by more than 85%; my CalPERS eliminates paper through an analytical work environment and task automation. Business partners have 24/7 access to an integrated system that provides uniform retirement and health-related information across the community while addressing all partner and regulatory business requirements. Partner adoption: Business partners and PERS staff were ready for the significant my CalPERS changes due to extensive project communications and separate outreach programs focused solely on incorporating partners voice. Ensuring Compliance: Since launch, my CalPERS has paid over $6 billion in benefits to more than 500,000 public agency workers. Over $10 billion in new contributions and over 10 million transactions have been processed. my CalPERS uniform business rules ensure adherence to laws, regulations, and policies. In summary, the PSR Recovery Plan s holistic, collaborative, agile, metrics driven approach shows how a public agency can rescue a large, failing project. The PSR Recovery Plan is somewhat unique in achieving success after two problem projects but its methodologies can be scaled and applied to any project beginning at initiation. The my CalPERS system went live on September 19, 2011, as promised, providing an integrated information exchange system that improves how employers, providers, and PERS manage member benefits. This results in better, more efficient service to the 1.6 million members and 3,000+ employers in the CalPERS pension and health programs. 6 CalPERS PSR Recovery Plan