Never too late to improve ERP

Gone is the enterprise resource planning (ERP) gold rush of a few years ago, when agencies raced toward the dream of centralized back-office systems and spent large amounts of money to update older software in areas such as human resources, finance and asset management. Now, the name of the game is maximizing ERP investments already in place.

Once a driving force in the industry, ERP hit some speed bumps when the software occasionally proved more difficult and expensive to deploy than expected. Since then, the market has had major consolidation. ERP pioneers PeopleSoft and JD Edwards, for example, were enveloped by Oracle, though SAP and other vendors specializing in ERP remain.

Despite hard times, ERP is alive and well in government agencies, which continue to grapple with duplicative administrative systems. Many agency officials decided long ago that ERP is the answer, and they are adamant that early investments must not go to waste.

"It is now a matter of consolidation and simplification vs. replacement," said David Hebert, information technology practice leader at the Hackett Group, a market research and business advisory group. "There are a lot more users trying to deal with what they've got and make sense of it."

Federal officials, especially those at the Office of Management and Budget, are pressuring agencies to make ERP efforts work, said Tom Park, the Transportation Department's deputy chief financial officer and head of the agency's Enterprise Services Center, a designated OMB Center of Excellence.

OMB officials are demanding many business process changes that coincide with ERP, such as a streamlined supply chain and better financial accountability. Plus, ERP may ease relationships among agencies and OMB because many of the performance measures OMB officials critique in annual agency performance report cards relate to these cross-enterprise systems.

Whether federal executives seek to appease OMB or invigorate their ERP initiatives, they could gain a lot of ground by taking advantage of existing infrastructures and investments. To help achieve their goals, executives might want to consider some of the following advice.

Don't look back

Even if your agency selected an ERP vendor years ago, don't worry that you're working with the wrong one.

Among major ERP solutions, differences in capabilities are slight, according to Hackett officials. The group polled major corporations last spring on their ERP investments. "While new incremental features appear with each major upgrade from package vendors, they are quickly replicated by competitors," Hackett analysts wrote in the report.

Given the level of maturity among ERP packages, don't waste time comparing insignificant differences between what your agency has and what's available now. Instead, plan your agency's future in terms of business process improvements.

"If you look at federal ERP, there are certain vendors that approach things like accounting or databases differently," said Lisa Mascolo, managing partner in Accenture's government client group. "But at the end of the day, federal finance is still finance."

Standards are your new friend

Governmentwide standards are helping level the playing field among ERP vendors. The most influential standards are those requirements emanating from the Joint Financial Management Improvement Program (JFMIP). Spearheaded by officials at OMB, the Treasury Department, the Government Accountability Office and the Office of Personnel Management, JFMIP is a federal effort to improve finance systems.

"Since ERP software has to be JFMIP-compliant, the guts of the packages are really the same," Mascolo said. "It comes down to understanding how to use the software and knowing what business processes you want to impact."

If JFMIP and other standards are a fact of life, why not embrace them and do everything possible to make the requirements work to your agency's advantage? On a practical level, this means putting the onus on the vendors.

"We've had federal customers say to us, 'Here is the new Treasury Department requirement. What are you going to do about getting this into your new release?' " said Wayne Bobby, vice president of finance and administration solutions for Oracle's public sector.

When several agencies ask those tough questions together, they tend to get the answers they want from vendors. Maximize the collective influence of "your fellow agencies by finding others that are using the same products," Park said. "A vendor will listen to five large agencies more than they will listen to just one."

Confront your issues

Technical strategies, governmentwide standards and industry knowledge can be helpful, but the biggest benefits typically come because officials tighten the links between an agency's mission and an ERP system.

The first step in this process is a thorough assessment of an ERP system's ability to support and improve administrative efficiency. "It is important to have a good snapshot — to understand what has gone well and where you might want to go in terms of returns on investment," said Steve Peck, president of SAP Public Services.

Set specific goals, he added, citing the U.S. Army Medical Materiel Agency as an example. Agency officials decided that ERP would be central to a major mission-related goal: to drastically reduce the time necessary to set up a mobile Army surgical hospital (MASH).

Before the agency's ERP system was in place, each MASH unit took anywhere from 12 to 18 months to assemble. Now, it takes about 57 days, according to the agency officials. The ERP system helped reduce installation time by improving business processes, including reducing the time for shipping surgical and other supplies.

The agency's goal is better aid to warfighters. But tracking progress toward this goal is also important. "The intent should be to look at how efficiently the technology is being managed to achieve a business process," Hebert said.

If your agency manages to fix long-standing business problems and save resources, consider spending some savings to bolster your ERP infrastructure.

"Today, you have a lot of people in government who are focused on transaction processing," Mascolo said. "With ERP, many of these people could be redeployed to do things like analysis across the system."

Search and delete

For agencies to realize savings, however, officials must have a sound transition plan between an initial ERP and returns on investment. That plan must start with an inventory of existing applications. Next, executives should try to project how many applications are expendable in reaching business goals.

"A thorough and comprehensive analysis of the current processes must be conducted," said Barry Morrissey, a spokesman for the Customs and Border Protection agency. "Identify strengths and weaknesses and re-engineer where needed."

Get specific here. "For instance, after inventorying applications, you may determine that you have 830 applications needed to support a particular business process," Hebert said. "Of these 830 applications, you may decide that 400 are strategic to the agency's vision and that you want to decommission another 430."

Start sorting through those applications. Which ones will the agency keep and which will it retire? More importantly, how will you get rid of the ones you don't want? "You have got to create a transition plan wherein you have an inventory vs. an end objective that explains how you will go from 830 applications to 400," Hebert said.

Jones is a freelance writer based in Vienna, Va.

Individuality is fine for fashion

Federal officials say agencies would be making a big mistake to start an enterprise resource planning (ERP) initiative with the attitude that they only need to update software that doesn't match agency operations. Instead, they should identify desired functions and then push vendors to include those functions in the next release of their software.

"Generally, the chosen ERP should meet between 70 [percent] and 80 percent — or better — of the required functionality as is," said Barry Morrissey, a spokesman for the Customs and Border Protection agency. Morrissey said that although an ERP system must be flexible, agency officials must be wary of runaway customization, which can be costly to make and maintain.

Tom Park, the Transportation Department's deputy chief financial officer and head of the agency's Enterprise Services Center, said he attributes DOT's success in installing a large-scale financial management system largely to an anticustomization policy.

"The inclination to change has been tempting as our lines of business have changed," Park said. "But we decided that we just could not do that. We limited ourselves to the upgrades."

However, DOT officials allow managers to ask for features on the wish list they send to Oracle, the department's ERP vendor. They have pressed hard to influence the changes the vendor makes in each new release of its software.

"You have to press your vendor to provide the functionality and features you need," Park said.

— Jennifer Jones

Give it up

Maximizing enterprise resource planning (ERP) benefits for some agencies might mean minimizing related in-house operations. Officials at smaller agencies in particular may want to consider handing some ERP-like functions over to an outside party.

It's a move the Office of Management and Budget is promoting through its Centers of Excellence initiative. Major processing centers such as the Interior Department's National Business Center and the Treasury Department's Administrative Resources Center are prepared to process payroll and assist with financial management.

"OMB is saying to agencies, 'Either you need to modernize your systems and become more efficient or you need to turn to another agency that can take your workload,' " said Tom Park, deputy chief financial officer and head of the Transportation Department's Enterprise Services Center, which is providing central financial management services for smaller agencies, such as the National Endowment for the Arts (NEA).

Michael Burke, NEA's chief information officer, encouraged agencies to scour the landscape. "Today's constrained budgets, as well as normal fiscal prudence, demand an examination of all available options," he said.

NEA decided to tap DOT for central administrative processing services because it had the strongest core competencies. "Not only is it cost effective, but the range and depth of skilled resources available makes tasks such as software implementation, operation and upgrade simpler and faster," Burke said.

Overseeing an ERP system can be tough for any agency, Park said. "Staying current on the latest release of this software is job No. 1," he said. "It requires a lot of effort to take advantage of new functionalities and apply new releases. The tendency after big projects are done is to be so glad you've reached the destination that you forget not to stay there."

— Jennifer Jones

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