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dispersed in victim restitutions in 2013 by California prisons
Tracking assets and personnel across 37 institutions is a monumental undertaking. CDCR needs to maintain buildings and supplies as well as pay 47,000 staff members and equip them with tools. SAP ERP solves the challenge by providing real-time data so that CDCR managers, armed with information sooner, can now make faster and more informed decisions.
California Department of Corrections and Rehabilitation (CDCR)
Sacramento, California, USA
$US9.1 billion Operating Budget
Asset Management, Finance
SAP Enterprise Resource Planning
In 1851, California activated its first state-run institutions. This institution was a 268-ton wooden ship named "The Waban," and was anchored in the San Francisco Bay. The prison ship housed 30 inmates who subsequently constructed the San Quentin State Prison, which opened in 1852 with approximately 68 inmates.
Since 1852, the Department has activated thirty-one prisons across the state. CDCR's history dates back to 1912 when the agency was called California State Detentions Bureau. In 1951 it was renamed California Department of Corrections. In 2004 it was renamed California Department of Corrections and Rehabilitation (CDCR).
One of the largest state departments in the United States, CDCR operates the prison, parole, and rehabilitation systems in the state of California. The department employs approximately 47,000 people at 37 different institutions and is responsible for the safety and security of more than 125,000 inmates and juvenile wards. Each institution operates just like a small city—with restaurants, accommodations, a transport fleet, and medical centers.
CDCR manages a budget of more than $9.1 billion and tens of thousands of staff. Without clear insight into its vast operations or an efficient means of controlling spending, the department struggled to track assets and properly manage its budget—subjecting CDCR to regulatory penalties and raising the threat of cost overruns.
When managing such a budget and tens of thousands of employees across dozens of different institutions, keeping track of resources to ensure effective allocation is almost impossible. CDCR lacked timely, accurate insight into operations and tight control over vast resources—leaving the department unable to ensure its multi-billion dollar budget was properly allocated.
When it came to choosing an ERP platform to take on this challenge, CDCR searched for a single, unified solution covering all the functional areas to integrate and automate—budgeting and accounting, capital management and human resources. SAP ERP delivered on this requirement, providing all of the functionality on a centralized platform. To deploy the solution, CDCR partnered with IBM Global Business Services and created a vision of replacing thousands of standalone systems with SAP ERP, which would streamline information-access and enable new controls over assets.
CDCR and IBM collaborated on the largest enterprise resource planning implementation in California’s public sector—replacing thousands of standalone systems with an integrated SAP solution. The applications, including SAP ERP Financials, SAP ERP Human Capital Management, and SAP Supply Chain Management, are currently accessed by more than 7,800 users across 37 institutions.
As the implementation progressed, CDCR also standardized business processes, which each institution previously performed in different ways. Manual operations are now automated and integrated, which streamlines procurement, inventory and financial reporting. As each functional area entered production, legacy solutions were retired.
The SAP ERP project has already delivered substantial operational cost-savings for CDCR, which anticipates further, on-going savings through improved efficiencies and better financial controls. With rapid insight into organizational data and quicker reporting, they can process payments and financial statements in a timelier manner, which significantly reduces late-payment penalties and audits.
Since implementing SAP ERP, CDCR dramatically reduced the time to process invoice payments, which means they no longer miss deadlines set by the state controller’s office. This reduced late payment penalties from more than $2.6 million in 2008 to $681,000 in 2011— an 80 percent drop in three years. Many departments now pay invoices so quickly, they benefit from early payment discounts, which helps drive costs down even further.
By leveraging their new improved insights from SAP ERP, CDCR now spends funds much more strategically. Better resource and inventory management and centralizing functions allows them to make larger consolidated purchases and distribute resources efficiently throughout 37 institutions. This also reduces freight costs and ensures inventory is allocated properly to eliminate shortfalls and surpluses.
Cuts purchasing process
by retiring a single legacy
time required to
Time to create backup
reports of procurement activities
now spent on routine system
saved in system access
and maintenance costs
The deployment of SAP ERP has taught CDCR just how effectively their staff can operate with advanced technology. Previously, 28 staff members required two months to complete and submit year-end statements to the state controller. For the 2011 financial year, SAP ERP enabled just five staff members to complete and submit these reports in only one month—the first time in 10 years that year-end statements were submitted on time.
SAP ERP is deployed and fully-operational in 37 CDCR institutions and accessed by more than 7,800 users that generate thousands of transactions each day. In all, more than 500,000 purchase orders, 46 million financial accounting entries and 325,000 human resource transactions have been processed since initial go-live activities began in 2008.
For the first time, CDCR can also take advantage of real-time financial reporting. While in the past, they suffered from as much as a 60-day lag between gathering and reporting on information, the new platform allows users to access financial data instantly.
CDCR continues to extend and improve the new SAP ERP system by adding functionality, such as introducing a time-and-shift scheduling application any day now. The scheduling component is provided by a third-party niche product that seamlessly integrates with the SAP ERP time-management module.
When fully operational, the time-and-shift application will track 35,000 custody and nursing staff 24/7, providing accurate staffing and overtime/leave usage reports. This will enable CDCR to better identify expenditure trends as well as ensure safety and security are maintained across all institutions.