NIH prepares for ERP solution

When the National Institutes of Health awards a contract this month for an assessment of its administrative systems needs, it will become the latest agency to step into the market for enterprise resource planning software.

Agencies throughout the government are looking to ERP as they replace aging financial, personnel and management systems, with the goal of integrating these applications, or at least the data they use in common.

"There is a growing recognition of the need to have integrated financial and administrative systems," said Patrick Smith, executive director of the General Services Administration's new Financial Management Systems Services Center.

NIH is planning what it calls the New Business System, which would replace a set of procurement, property management, travel and financial accounting systems used throughout the agency. These systems, collectively called the Administrative Database, are "now in the early stages of deteriorating operability, maintainability and reliability," according to a statement of work issued to potential bidders in June.

A modern ERP system, which also would supplant NIH's Central Accounting System, would be easier to manage than the existing systems, which are more than two decades old and have been modified numerous times. "We're not in the business of administration; we're in the business of research," said Anthony Itteilag, the agency's deputy director for management.

The agency also has a policy to share more applications among its 24 research institutes and centers. "One of our challenges here is to prove to the scientific management of NIH is that this is a worthwhile investment of scarce resources," Itteilag said.

NIH is in good company. The Department of Veterans Affairs, GSA, the Naval Air Systems Command, the U.S. Agency for International Development and the National Credit Union Administration are purchasing and deploying ERP systems. The U.S. Mint rolled out an ERP application last year, and the Environmental Protection Agency is mulling whether it should buy one to replace its decade-old financial systems.

"I think there are a lot of organizations in the government that are interested in integration," said Russ Goodrich, director of federal sales with SAP Public Sector, one vendor of ERP software, although he described the overall market as "soft." He added that "government in general takes a look at what ERP vendors offer. If it meets their immediate concerns...then they look at where the agency will be in two or three years" and plan to add other applications later.

Goodrich said SAP has been demonstrating its financial and project management applications to NIH for more than a year, but he was not familiar with the New Business System initiative.

ERP systems are a collection of software applications for managing a variety of administrative functions, including human resources, accounting, inventory, purchasing and travel. Some customers opt for modules from a single vendor, while others take a "best of breed" approach, integrating products from different companies.

In general, "agencies are reluctant to turn it over to one vendor," Smith said. "They'd rather have multiple vendors involved. Many are approaching it modularly where they have plans to buy a broader system."

Smith's group is offering agencies a place to get advice about buying ERP systems and vehicles for making purchases when they decide what they want. "What we're hearing is the agency saying 'I need personnel systems,' or 'I need payroll systems,' or 'I need accounting systems.' We're trying to show an agency that perhaps their needs are greater than just a [single] system."

NIH has not settled on its product strategy, although it appears to be leaning toward a single-vendor solution. The consulting firm that the agency hires this month will be tasked with proposing at least three commercial products that could meet users' needs.

Itteilag said NIH probably will select a single accounting system for the agency because NIH has only one now, but "it's less clear that would be the case" for other applications.

He said there is not a specific timetable for completion of the project, adding that its cost would be determined when the agency decides what it wants to buy.


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