State’s ERP project inspires public value approach

Pennsylvania system used as a case study to assess impact of IT on citizen services

An enterprise resource planning project in Pennsylvania may inspire future government technology initiatives that deliver what some university researchers call a public return on investment.

The state’s Integrated Enterprise System, which spans 53 agencies, was one of five case studies highlighted as part of a research project at the State University of New York at Albany. That effort, led by the school’s Center for Technology in Government with funding and guidance from software vendor SAP, focuses on the public value of information technology as opposed to traditional ROI measures. CTG and SAP officials unveiled the case study and an accompanying white paper in October.

The paper outlines a nonproprietary methodology for assessing the impact of an IT project on public domain stakeholders. The methodology targets specific measures that document public value. Examples of public value include boosting financial management efficiency, which was the case in Pennsylvania.

The state’s project helped shape that methodology, which other agencies will soon use to guide projects, said Russ LeFevre, director of public-sector solutions marketing at SAP.

CTG interviewed Pennsylvania officials and those at the four other case study locations. The lessons learned derived from the case studies drove the development of the methodology, LeFevre said.

Starting in January, SAP and CTG will seek to apply that methodology to a handful of government locations.

“We are looking for a good cross-representation of state, federal and local governments,” LeFevre said, adding that some sites may be outside the United States. The methodology will begin with two to three governments, he added.

Anthony Cresswell, CTG’s deputy director, said the governments he has studied don’t always use the term public value, but the concept is central to their technology investment approaches. “They may not put it in those words, but that’s what they are about,” he said.

ERP deployment
CTG’s Pennsylvania case study shows how public value can accrue over time.

Pennsylvania launched the Integrated Enterprise System in 1999 as the Imagine PA project. The objective was to integrate older business systems into an ERP solution that included accounting, budgeting, human resources, payroll and procurement systems.

The state selected SAP to provide the company’s mySAP.com software and hired KPMG Consulting — now known as BearingPoint — as its systems integrator. Pennsylvania awarded the contracts in 2000. They are worth about $51 million. The contractors implemented the five business functions from 2001 to mid-2004. In 2004, the state began to transform its Imagine PA project office into a management entity that would maintain the ERP system. Now the state’s Bureau of Integrated Enterprise System manages the ERP program.

The Integrated Enterprise System has generated public value through enhanced efficiency in agencies that perform core administrative functions, CTG’s Pennsylvania case study states. The study specifically reported that the system’s electronic paycheck distribution feature — the state previously mailed paychecks — saved the state $500,000. The report also cited other benefits, such as faster distribution of 2005 income tax forms.

Such investment returns are indirect, according to the CTG public ROI methodology, because they don’t directly affect citizens. But they do improve “the value of government itself from the perspective of citizens,” CTG said.

Pennsylvania is beginning to generate ROI that directly benefits citizens, the report states. The CTG study identifies two areas in which the state could identify and measure additional public returns: a supplier relationship management (SRM) system and a plant maintenance system. Both systems stem from the core SAP ERP installation.

The SRM component extends the enterprise to touch the vendor, said Andy McIntyre, chief of policy, standards and strategic planning at Pennsylvania’s Bureau of Integrated Enterprise System.

SRM automates sourcing functions such as supplier qualification.

The state uses SAP’s SRM Version 4.0, LeFevre said, and will adopt SRM 5.0. That version offers more capabilities, such as catalog content management.

SAP’s plant maintenance module will help the state manage bridge and highway maintenance and the vehicles that support those two functions, McIntyre said. The state expects plant maintenance to become productive in early July.

“This client understood that ERP is not the end — it is just the beginning,” said Rodger Cerritelli, a vice president and public-sector ERP national solutions leader at BearingPoint, noting the continuing evolution of the state’s program.
ERP governanceIndustry consultants often say sustained management support is critical to the success of an enterprise resource planning deployment.

Pennsylvania’s ERP project had to maintain that support through three state administrations. Former Gov. Tom Ridge kicked off the ERP implementation but left in 2001 to become director of the new Office of Homeland Security. Ridge’s lieutenant governor, Mark Schweiker, succeeded him. In 2002, Pennsylvania elected Edward Rendell governor.

Andy McIntyre, chief of policy, standards and strategic planning at the state’s Bureau of Integrated Enterprise System, said the first transition marked a natural progression because Schweiker was Imagine PA’s executive sponsor as lieutenant governor. “He was intimately aware of the vision,” he said. Imagine PA was the original name for the Integrated Enterprise System.

Rendell’s arrival, however, represented a change in leadership and political party. To smooth the transition, the Integrated Enterprise System team created a transition book to brief the incoming administration on the ERP initiative. The book took the new administration back to the project’s original impetus, described the deployment method and provided a status update, McIntyre said.

Don Edmiston, senior government adviser at BearingPoint’s solutions group and former Imagine PA project director, said support and sponsorship also permeated the state legislature. For example, the ERP system involved a new method for deducting local income tax from state employees, and that approach required a change in state law. Edmiston said multiple sponsors stepped forward to promote the necessary bill, and the legislature passed the law before the state activated a new payroll module.

McIntyre also mentioned the staying power of state employees as a major contributor to the project’s continuity. McIntyre cited “the ability to motivate people to work beyond the standard work week here,” which, he added, “no one has seen since the beginning” of the ERP task.

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