Recommendations of the Research Management Implementation Team

Recommendations of the Research Management Implementation Team November 28, 1997 Team Members

Jon Bartels - Materials Processing Center

Niki Borman - Technology Licensing Office

Agnes Chow - Center for Technology, Policy and Industrial Development

Joe Connolly * - Research Laboratory of Electronics

Bob Davine - Center for International Studies

Andrea Hatch - Brain and Cognitive Sciences

Jim Morgan - Office of the VP Finance and Treasurer

Charlene Placido - Office of the Provost

George Prendergast * - Office of Sponsored Programs

Carol Van Aken - Controller's Accounting Office

Resource Personnel

John Hynes Management Reporting and Financial Operations

Tim Keohan Management Reporting and Financial Operations

* Indicates Team Co-Captains

1. Implementation of SAP's funds availability feature of the funds management module should be made available as soon as possible.

Those who monitor accounts want to know two things:

1. The balance of funds in the whole account.

2. The balance of funds compared to budgets for specific line items.

We understand that SAP has the capability of performing line item funds availability checking but that this feature will not be activated until the redesign of the planning and budgeting process is completed. We recommend that line item funds availability checking be given high priority and implemented as soon as possible. We view funds availability checking as an important DLC management tool irrespective of sponsor requirements and should be maintained even if the federal government eliminates line item restrictions. DLCs should be able to reallocate the non-restricted line item budget figures after OSP has set up an account.

If a transaction will put an account or a line item over budget the user should be notified immediately via SAP email. DLCs should be able to have MIT email sent to designated persons informing them when an account's actual expenses plus commitments have reached either a specific percentage, or ladder of percentages, of its budget. 2. Overhead should be calculated at the point each transaction is entered.

This is the team's highest priority item

Real time calculation of the total cost of each transaction including the applicable indirect cost, employee benefits and lab allocation on salaries, operating expenses and commitments is an expectation of the community, including faculty.

Real-time calculation of overhead, benefits and allocations is essential because they are a significant portion of the cost of each transaction. In fact, they are more than half the total cost of transactions involving personnel. If users of SAP are to know how much money they have to spend at the moment they need to make a decision, then they need to be able to rely on the balance that SAP gives them. This will enhance the ability of DLCs to manage their budgets and projects because it should work with manual reservations as well as actual commitments.

Also, there will be many naive users who will not remember that the system has not calculated the entire cost of a transaction. It is important that SAP provide the transaction point posting of Employee Benefits and Overhead to support all users. Many mistakes are made because EB and OH are not considered when planning a transaction. 3. The Labor Distribution System (LDS) should be expanded into a complete proposal budget development system which will feed the Electronic Proposal System and have the additional capabilities of both downloading data to and receiving data from spreadsheets. However, it is important that DLCs be able to continue to use their spreadsheets to create budgets and upload their spreadsheets directly to EPS.

A commitment has been made to OSP that the Management Reporting Reengineering effort will deliver a full set of financials to the Electronic Proposal System. Since the LDS already includes most of the costs of proposal budgets it is the logical choice around which to build a complete system. 4. Responsibility for accounts should be distributed:

1. OSP should create the parent account and release it.

3. The classification feature of SAP which allows projects to be identified according to type of activity, for example, polymers, should be enabled. EPS should have the same information about proposals. It should be noted that the set of descriptors has yet to be formulated.

4. We recommend that OSP assemble a list of Institute wide classifications. 5. When an expense is charged to an invalid account it should be automatically debited to the DLC suspense account. DLC suspense accounts should be cleared monthly.

Transactions placed in suspense should include the original account charged so that DLCs can easily identify them. 6. The data in periodic Institute reports, such as the Institute-wide GL46 and GL53, sent to DLCs generated by ABAP should be stored in a data warehouse so DLCs and Assistant Deans can view it or download it to spreadsheets. This will save paper and processing time because many of these reports take hours to run and have hundreds of pages. It is not economical to print or process these reports on demand; they should be in a file where people can view and/or download them. A DLC's GL46 or GL53 should be available directly from SAP on demand.

7. The historical financial data in SUMMIT which goes back to 1978 should remain available indefinitely after the legacy accounting system is eliminated.

8. DLC Heads, and their designees, should have access to the accounting data they need to accomplish their business. Therefore, if a PI wants to draw on the resources of a DLC, that PI should be willing to allow the DLC head to have access to all of his or her other accounts across the Institute.

9. DLCs should be allowed to add profit center hierarchies.

This is an important feature enabling DLCs to aggregate data easily. For example, some DLCs have programs which have accounts from several different Pi's. The DLC might like to see aggregate expense information about the program. If all the accounts in the program are assigned to a profit center that information will be readily available. Alternatively, DLCs might want to know all the expenses for individual PI's. 10. Owing to the time lag between the day DACCAs are received, mailed to PI's, and returned by PI's, DLCs should have sixty days to certify distributions to accounts without explanation.

CAO and OSP need to provide DLCs with guidance on valid reasons for making changes beyond the normally allotted time. 11. MIT should work towards eliminating hard copy 001s by distributing them via a workflow program.

12. The team recommends eliminating approvals above DLC level on research proposals. Exceptions requiring higher level approval include, but are not limited to, proposals where: a contractual signature is required, there is a subcontract or space requirement, a potential conflict of interest has been identified, there is an underrecovery of overhead or a risk of non-payment, the proposal addresses rights in intellectual property, or non-PI status personnel are listed as PI's.

If extra-DLC approvals are eliminated, DLCs must be required to enter the proposal into the Electronic Proposal System prior to submitting the proposal to the sponsor.

Since two of the goals of Reengineering involve increasing accountability and streamlining MIT business processes, we believe this is a prudent recommendation towards those goals.

In researching the experience of other universities, we found that Cornell has been experimenting with this concept for several months. To date it has been so successful that the original pilot program is being expanded.

Recommendation 15 is particularly relevant to this recommendation. 13. The attached Appendix A is the minimum list of reports that should be available in SAP for Rollout. The team recommends identifying standard reports for DLCs for all types of information including financial, personnel and sponsored research. This could be done during the first months of usage by power users and users discussing ways in which MIT's utilization of SAP could be maximized.

This is only one of many post-implementation follow-up activities that need to be addressed. We think these might fall within the on-going charter of the Management Reporting resource group. 14. DLCs should be strongly encouraged to use the most appropriate object codes when charging expenses so that MIT will be able to do Institute-wide analyses of types of expenses such as postage.

15. Based on increased delegation of decisions to DLCs in the future, formal, on-going training programs in sponsored research management will be required. Our specific recommendations with respect to training for proposal review are contained in Appendix C.

Appendix A

MIT Research Management Team

Minimum List of Reports

The following were identified by the team as a minimum list of reports related to research management that should be available from SAP for Rollout. We strongly recommend that a high priority be placed on development of a complete list of needed reports during the pilot phase of Release 2, that they then be available for Rollout, and that DLC's have the capability of modifying standard reports or creating reports of their own if the centrally provided reports do not fully satisfy their needs.

Account level reporting:

1. GL-STMT and DTR: Standard monthly report of expenditures by account including current month, fiscal year to date and cumulative expenditures by object code within account with supporting detail available. On-line reports should have drill-down capability to the detail transaction level.

2. GL-44: Standard monthly report of expenditures by parent/child account grouping including a summary for the project by object code for current month, fiscal year to date and cumulative expenditures together with a separate listing by account of the total expenditures. On-line reports should have drill-down capability to the detail transaction level and then to the document. On-line reports should have the ability to combine accounts in ANY grouping in addition to parent/child.

These reports should be available for ANY accounting period and any fiscal year definition to facilitate analysis by grant/contract period (as can be done currently on-line for the last seven fiscal years).

DLC level reporting:

1. GL-46: Report by type of activity in the DLC for the current fiscal year: research, funds, general, and other. Prior year' s reports should continue to be available in the succeeding year. g

2. GL-12: Reports of projects expiring In the next three months.

3. GL-22: Overrun accounts in the DLC.

4. GL-52,53,56: Fund account analyses at the account and summary level by type of fund and type of accounting transaction: principal, income, and expenses at summary and detail levels.

5. GL-30 Account volume by department.

6. GL-72 and GL-73 (Brown Book): Research expenditures by project within department.

Institute level reporting (in addition to Institute summaries of all of the above reports):

1. GL-09: Trial Balance.

2. Financial Report (based on GL-61, GL-10, etc.): Reports of research volume and research base, e.g., comparison of this fiscal year to date vs. last year, by department and sponsor.

3. GL-61 and GL-25: Reports by sponsor of research volume and funding status, e.g., unbilled costs.

4. GL-10: Underrecovery of indirect costs by department/sponsor

All of the above reports are currently available in paper form and/or on-line. Future reporting should take advantage of SAP's capabilities including drill-down to the document level on transactions. We should also explore SAP's capability of alternative reporting, e.g., Profit Centers, Fund Centers and Profitability Analysis.

Appendix B

MIT Research Management Team

Outline of Training Needs for SAP

The attached training outline is for AO's and FO's in DLCs. The purpose of the training is to provide the AO's and FO's with the knowledge to operate SAP to provide the financial information needed to manage a DLC. Parts of the outline may be valuable to others who want to obtain an understanding of SAP.

The training program should supply an understanding of the individual modules of SAP as well as an understanding of how the modules tie together to provide management information. However, it should not cover all the detailed step by step instructions on how to process transactions in SAP. The details for transaction types will be taught in specific business process classes.

The Training classes should:

1. Be given early enough to provide time for individuals to learn and practice with SAP,

3. Provide options of training at nights and/or Saturdays should be investigated. This would enable individuals to work and train as well as provide flexibility,

4. Include instructions on downloading data with spreadsheets,

5. Show in detail how the Project System and Controlling can work together to help manage a cost center and/or project, I

6. Provide current real data that individuals can relate to in training, and

7. Provide time to practice with SAP.

TOPICS

Overview of SAP

The language of SAP compared to Classic MIT Financial Systems

SAP Architecture Training

Comparison of the Architecture of SAP to Classic

Using live MIT examples (Target the audience)

Demonstrate how SAP works

This will not be detailed instructions of how to operate SAP. The idea is to show transactions going through SAP and posting in SAP modules.

Showing how it is done in SAP

Equipment plus material and services = Requisition of items through payment

Travel = Processing of travel advances and expense reports

Payroll = Labor distribution

Journal vouchers = show posting

Revenues = Posting of revenue

Showing where the above transactions land in SAP while explaining each type of controlling object

Internal Orders

Cost Centers

Profit Centers

Fund Centers

Detailed discussion of the controlling module Cost Centers, Projects and Internal Orders. This section should discuss the activities taking place in OSP, CAO and DLC.

Master Data

Controlling

Change

Display

Closing

Matchcodes

Release Strategies

Roles/Profiles

Change

Display

Release Strategies

Purchase Orders

Receipts of goods

Processing

Labor Distribution

Roles/Profiles

Billing types

Display

Display customer master record

Display customer activity

Displaying Master Data and Activity (The create and change functions will be discussed but specific training will not be provided in this class. )

Internal Order

Profit Center

Cost Centers

Fund Centers

Reports

Projections/Actual

Programmed reports

Play time for AO and FO projects, orders and cost centers

Other Training

The training activity will be based on the specific requirements of the DLC. MIT will have training for each business process in SAP. This will be detailed How to Training that will be given to personnel as needed to perform the required function.

Appendix C

Addendum to Policy Team Comments

re: Recommendation #15

The Policy Team would like to recommend to the RM Team that they consider recommending what training will be required and (who determines) when the responsibility for continuing routine research proposals should be delegated to administrators.

Summary:

With correct training, particularly by focusing the training under development by the Financial Management Training Program, and procedures developed on a DLC basis, initiation of departmental approved and submitted proposals should occur.

Current Practices:

As the RM team reviews current operations it finds a wide range of "proposal development" and "proposal review" skills among the DLC administrative community. We find examples of DLC's already preparing proposals that don't need OSP review. Some DLC's have sophisticated procedures in place to mature and present proposals to OSP that consistently identify and address exceptional issues and are complete for submission, particularly to NIH and NSF. For these DLC's, OSP review can be perfunctory.

Other DLC's are involved, particularly with industrial sponsors, in the resolution of all licensing and contractual issues. The results of these negotiations, involving TLO and legal counsel, are presented as a finished proposal, along with the research agreement, to their OSP representative.

There are other DLC's, however, that consistently need OSP review and guidance to identify and resolve even minor issues in proposals and presenting a finished product to OSP.

We also find that there are some critical review categories (i.e. space change needs) that are not being highlighted during the proposal process. It can be expedient to overlook issues when they raise the possibility that the proposal will not be submitted in a timely fashion.

Training:

Proposal review involves, with detachment and distance, identifying conflicts by applying sponsoring agency and Institute rules and regulations to a body of paper representing an elaboration of a technical concept, a plan of action, a budget, and a statement of individual and institutional qualifications. For some proposals this can be quite complex. For some proposals this can be formalized and form driven. For other proposals this can be simple.

OSP, in training new staff, uses a combination of mentoring and written instruction to develop a skilled proposal reviewer. Consultation and learning with colleagues is an integral part of this training. Proposals are used and shared as case studies. Exceptions to policies are identified and resolved. All proposals are subject to a hierarchical, double review, first by the OSP staff member and then by OSP senior management.

All proposals are developed distant to OSP, thus preserving objectivity. Somehow this objectivity needs to be replaced in DLC review. Knowledge of changing policies, requirements, and procedures are centralized with OSP senior personnel and shared with the staff. Sharing of this information would have to extend to appropriate DLC reviewers.

Training to review Institute policies and procedures

The RM team feels that OSP can codify and present to the DLC community its procedures to insure proposal review for MIT institutional conformance. This should be done in the context of the Financial Management Training Program currently under development by the Controller and the MIT Performance Consulting and Training Team. Some of OSP's procedures are already shared. Historical context as well as current issues must be part of any training. DLC reviewers will need the skills to identify aspects of a proposal that represent exception and conflict as well as the skills to help resolve these kinds of issues.

Training to review Sponsor Policies and Procedures

The RM Team feels that through the use of agency specific web pages for current information and/or modularized training specific to agencies, DLC personnel can help provide a review that identifies all potential conflicts to the sponsoring agencies rules and regulations.

The team feels some provision needs to be made to provide DLC access to national conferences (NCURA, SRA) out of Institute or indirect cost recoverable funds as a mechanism to insure further training and skill enhancement.

Need for sufficient information flow into databases

Procedures will have to be developed to insure the integrity of Institute databases of outstanding proposals (COEUS) Consideration should be given to whether new procedures should be developed to those to those proposals submitted as "white papers" and other informal pre-proposals that are submitted directly by PI's or DLC's.

Procedures to delegate responsibilities to DLC

The RM team sees a three step procedure prior to delegation of proposal review responsibilities to a DLC individual. Delegation of responsibilities would be at the request of the department head, center or lab director to the Director of OSP. Since responsibility would be delegated, those authorized individuals would function as adjunct staff to OSP.

First would be an assured level of knowledge of Institute policies and procedures, through training.

Second would be specialized modular knowledge of sponsor requirements where DLC personnel could be certified as knowledgeable in sponsoring agency policies, procedures and application guides.

Third would be a period of several months of mentoring, where the DLC person would function as the primary proposal reviewer and an OSP staff member would provide secondary review.

Finally, the RM team recommends that the once responsibilities were delegated the DLC would put in place procedures where the person(s) preparing the proposal would differ from the person reviewing the proposal insuring objective, distance review.