Hope Network

Hope Network dedicates its U.S.$93 million annual budget to serving the social, mental, spiritual, physical, and emotional needs of Michigan residents who are disabled or disadvantaged. Rapid growth in the late 1990s produced an organization with more than 62 entities and a variety of accounting systems to manage. To maximize the resources devoted to its consumers, Hope Network wanted to streamline its operations, shorten its 30-day month-end closings and nine-month annual audits, and automate its reporting. To achieve those goals, it deployed Microsoft® Business Solutions–Solomon (now part of Microsoft Dynamics™). That move helped the organization to significantly reduce administrative costs, shorten month-end closing to 8.5 days, cut auditing costs in half, and gain more transparency between headquarters and its 42 affiliates.

Situation
Established in Grand Rapids, Michigan, in 1963, Hope Network is committed to enhancing the dignity and independence of people who have disabilities and/or disadvantages. It is a nonprofit network of 42 affiliates that provides an array of services to address social, mental, spiritual, physical, and emotional needs of that population. Today, Hope Network employs more than 2,200 people in more than 190 locations throughout Michigan and manages a U.S.$93 million budget.

Service providers from all over the state have joined Hope Network, in part, to take advantage of the integrated business solution that is available to all of its affiliates. The organization centralizes fundraising and many of the logistical, financial, payroll, purchasing, and administrative tasks associated with its affiliates’ services. In the late 1990’s, when many of the service providers joined Hope Network, they wanted to maintain their individuality, including keeping their own accounting systems. At one point, Hope Network had more than 62 entities, which could be anything from a housing duplex to a multimillion-dollar company. Those entities were using a variety of different accounting systems, ranging from paper ledgers to packages based on MS-DOS® and Microsoft® Windows® operating systems and an AS/400 system written in the early 1980s, which required several subcontracted AS/400 programmers to keep it going. The Hope Network IT staff of 12 had to maintain and troubleshoot all of the systems. In addition, because it would have been virtually impossible to integrate all of these systems, it took more than 70 accounting staffers to handle financial management tasks, and it was extremely labor-intensive to get any kind of centralized view of the nonprofit’s finances.

“It took 30 days to do month-end closings, and when we got done we ended up with three lines on a single sheet of paper that told us the gross revenue, the total expenses, and what was left over,” says Joanne Dwyer, Chief Financial Officer, Hope Network. “We had to present that information to the Board of Directors and had no ability to roll the multicompany structure into a consolidated balance sheet, statement of cash flows, ratios, or any detail to show what made up those revenues and expenses.”

This shortcoming not only made it difficult to produce reports for the Board of Directors, but also for the many government agencies to which Hope Network reports, such as Community Mental Health agencies, which provide much of the organization’s funding. “We also have to perform an annual audit to report to the federal government, and they want more detail than just our total revenue and  
total expenses,” says Dwyer. “At year end we were virtually tied to an auditor, because we had to use the auditor’s software to put in each individual company’s information so that the program would consolidate that data into an acceptable audit.” One year it took nearly nine months for Hope Network to complete its audit, which was very expensive because it required extensive professional accounting services.

As a nonprofit, funding for Hope Network is fairly constant from year to year. “We don’t get big increases in our reimbursements so we have to look for ways to stretch our dollars further every year to provide services,” Dwyer says. To accomplish that, the nonprofit focused on reducing administrative overhead by using technology.

Hope Network decided that the greatest savings would be produced by implementing an enterprisewide accounting platform that could be rolled out to all the affiliates. The goal was to enable each entity to track its own financials and also to roll up the data from all of the affiliates into a centralized view at Hope Network headquarters.

Solution

Hope Network received solution proposals from three accounting firms, each of which presented a solution based on Microsoft Business Solutions software. After reviewing the proposals, Hope Network selected Microsoft Business Solutions–Solomon software.

 The organization chose Microsoft Solomon because it:

 - Supports multicompany operations.
 - Integrates easily with its other applications, such as its medical billing and enterprisewide human resources (HR)/payroll applications.
- Offers capabilities beyond accounting—such as project management, purchasing, and inventory—that could serve additional requirements at a later date.

Hope Network initially implemented all of the Solomon Financial Management components except for payroll, which is processed by ADP.

Each of the entities within Hope Network- ranging from rehabilitation facilities to industrial operation- did business a little differently. Part of the process involved Hope Network rolling up some of the smaller entities as cost centers under one of the larger service providers. “To maintain separate records for a housing duplex just was not economically efficient,” says Dwyer. This reorganization reduced the number of entities to 42, including five large service corporations that provide a variety of services, including medical rehabilitation, counseling, employment and training services, residential programs, and transportation to adults and children with disabilities. It also has 18 single-asset HUD corporations, and 8 Michigan State Housing Development Authority (MSHDA) corporations.

In addition to implementing the financial management software, including Microsoft Business Solutions for Analytics–FRx® Professional, for month-end and year-end reports, Hope Network is using the Inventory software in Microsoft Solomon for one of its affiliates that has a small manufacturing operation. The nonprofit also has plans to implement Microsoft Business Solutions for

 
 "Authorized managers can download data from Microsoft Solomon into Excel, so that they can look at just the pieces and parts that they want to see, even down to the transaction level." - Joanne Dwyer,
Chief Financial Officer, Hope Network  
 
 
Analytics–Forecaster for organizationwide budgeting, and additional functionality from Microsoft Solomon to improve the efficiency of various affiliates. For example, an industrial operations affiliate that hires hourly workers for piecework projects, such as putting items in a bag or collating documents for mailing, plans to use Project Controller to track the job costs and use Order Management for billing and shipping.

Deploying Microsoft Solomon has helped Hope Network to implement a new medical billing system and set up an enterprisewide HR and payroll system, all of which transfer data automatically into Microsoft Solomon. “We look at Solomon as our centerpiece that everything needs to be able to integrate with,” says Dwyer.

In 2005, the Hope Network infrastructure consists of 46 servers running either Microsoft Windows 2000 Server or Windows Server™ 2003, the foundation of Windows Server System™ integrated server software. One server runs Microsoft Business Solutions–Solomon, eight servers run Microsoft Exchange Server version 5.5, and three servers run Microsoft SQL Server™ 2000. All of its 950 desktop computers are running Microsoft Windows 2000 Professional and Microsoft Office 2000 Professional.

Now that all Hope Network affiliates are running on one financial management system, the accounting team produces four standard monthly reports for each affiliate—balance sheet, income statement, statement of cash flow, and ratios—to be presented to the board. “An affiliate may have several programs that they want to see much greater detail on than what we present to the board, so we use Microsoft Solomon to produce a variety of management reports as well,” says Tom Stranz, Executive Vice President, Hope Network.

Benefits

By centralizing the financial management for its 42 affiliates and consolidating all of them onto Microsoft Solomon, Hope Network was able to significantly reduce administrative costs, reduce month-end closings from 30 days to 8.5, cut auditing costs by 50 percent, and provide more transparency between the headquarters and the individual affiliates.

Reduced Administrative Costs
By moving all of its affiliates to Microsoft Solomon, Hope Network was able to integrate its accounting services and reduce its accounting staff from over 70 to 44. As a result, the nonprofit was able to significantly reduce administrative costs for the fiscal year ending September 30, 2004. “Minimizing administrative costs helps us maximize the dollars going directly to consumer and client services and patient care,” says Stranz.

Expedited Financial Processes
One of the most dramatic improvements Hope Network realized from centralizing its financial management was shortening month-end closings by three weeks. “Instead of taking 30 days to close out the month for our 42 affiliates, we’re closed and finished in 8.5 days,” says Dwyer.

The time savings is even more dramatic when it comes to the year-end audit. “After we implemented Microsoft Solomon and FRx reporting, we could do the entire audit ourselves, including the year-end financial statement, and present it to the auditors for testing,” Dwyer says. “Now it takes only three-and–a-half weeks to do the annual audit, compared to nine months before.” This streamlined process reduces the cost of annual audits by 50 percent.

Integrated Information Across All Affiliates
Because Microsoft Solomon offers multicompany capabilities, it supports intercompany transactions, which means that each transaction has to balance between the companies involved. “When I get something from another company that I need to balance out with the opposite transaction in my system, I can look into the system to see what the other company did and enter the opposite transaction on my side to avoid an issue down the road,” says Dwyer.

In addition, seamless integration between Microsoft Solomon and the nonprofit’s AS/400 medical billing system and enterprisewide HR and payroll system provides a more consistent and accurate view of financial operations of all the affiliates. This consistent view, combined with flexible reporting, enables Hope Network to quickly produce the large volume of reports required by federal, state, and local government agencies.

Increased IT Productivity
Hope Network has maintained its 12-member IT staff at its same strength since implementing Microsoft Solomon. However, now, rather than spending all of their time supporting dozens of billing and accounting systems, the IT staff can focus on developing new solutions to make Hope Network even more efficient. Standardizing on a single financial system also eliminated many of the costs associated with outsourced AS/400 programmers.

“It’s much easier to support a single solution,” says Stranz. “Before, we were supporting many things in IT and not any of them really well. Now we have a first, second, and third level support for Solomon.”

Increased Transparency
In addition to the financial reports Hope Network affiliates receive monthly, the management at each affiliate is able to look at the cost centers within their organization in more depth. “Authorized managers can download data from Microsoft Solomon into Excel, so that they can look at just the pieces and parts that they want to see, even down to the transaction level,” says Dwyer. “That’s especially useful for Community Mental Health reporting. We can extract just the piece that they need and put it in Microsoft Word, .PDF, or Excel format and get that information to CMH very easily.”

Above all, having a clear and up-to-date picture of its financial situation enables Hope Network to better manage and allocate its resources and more efficiently serve those who need its services.

“Our reason for implementing Microsoft Solomon was to have quick access to up-to-date information on how we are doing so that we can make any adjustments that we need to make before it becomes a problem,” says Stranz.