SACRAMENTO, Calif. — An ERP overhaul for one of the world's largest economies is a monumental undertaking, by anyone's definition. California currently uses roughly 2,500 legacy financial management systems in its 124 departments. But that's about to change.

State officials told attendees at the annual GTC West Conference Tuesday, May 29, in Sacramento that they're confident that they will meet an aggressive implementation schedule for a new, unified financial management system. Full implementation is expected at the end of five years.

Fi$Cal, called "the Next Generation Financial Information System for California", aims to streamline disparate accounting, budgeting and procurement systems that now operate throughout state organizations. Officials believe Fi$cal will be a more unified system that’s able to provide a simplified view into state financial operations. The new system will introduce financial interoperability between departments, enable more sophisticated analysis and make it easier to share financial data with the public.

Phasing Out Disparate Programs

State officials charged with implementing this systemwide change describe a status quo that's ripe for improvement. For example, the state Legislature often requests specific financial information aggregated across the state. The Department of Finance then surveys individual state departments so it can gather needed data from the appropriate sources. Finance compiles all the information, in multiple formats and programs, and prepares it as one uniform report for legislative review.

Such a process, with its inherent inefficiencies, can span days or even weeks. One integrated system — managing all financial data statewide — could produce the same data in a single report in a matter of hours.

Project Executive Barbara Taylor explained that a new financial system also will provide many procurement opportunities to the state. Under the current infrastructure, which is highly manual and lacking uniform standards, officials have no way to track purchasing at a statewide level.

"Instead of buying single units, let's buy a pallet and share it," Taylor said. "We can then negotiate for a much better price."

Legislators are paying close attention to cost savings opportunities the new system will provide. Savings are anticipated from shelving legacy systems the new infrastructure renders obsolete, and others deemed unnecessary by evaluations Fi$Cal is engaged in with the approximately 13,000 end-users of the new system.

Revised Cost Estimates

A transformation of this magnitude usually brings a price tag to match. Initial estimates offered by Fi$Cal were $1.6 billion, a tough sell in the state's current fiscal environment. Leaders credit several criteria for bringing the price down by more than half to where it stands today: $617 million.

Advances in ERP technology over the past few years make it simpler to integrate the kinds of customizations California officials seek for their financial systems.

A unique two-stage procurement process played a major role as well. Over a period of nine months, selected bidders were onsite at state offices, participating in a detailed exchange with Fi$Cal officials, learning specific information about the state's needs. This process removed many of the contingencies normally accounted for in RFP responses, allowing for a more detailed, accurate estimate of actual project costs. Officials say this kind of knowledge-sharing is unprecedented, but critical to Fi$Cal, which they call the state's largest IT project.

The California state Legislature's mandatory 90-day review period of the proposed contract award to system integrator Accenture ends May 30. Contract signatures are expected shortly thereafter. Accenture brings experience with several large scale statewide ERP implementations, including recent projects in Kansas and Ohio.

For California, the first of five implementation phases is targeted for completion in April 2013. Likened to a pilot program, the initial phase will roll out in 10 departments, which represent roughly 10 percent of Fi$Cal's end-users. Subsequent phases will take advantage of best practices gleaned through this initial deployment.

The system has had its share of issues. An analysis from the Legislative Analyst's Office backed the financial system modernization despite its high cost. Since the project was conceived several years ago, concerns also have been raised about whether the state's many departments could be effectively brought into an enterprise system. A report from the state auditor earlier this year also disclosed that several of Fi$Cal’s top managers had left to pursue other jobs.

Now Hiring

In anticipation of legislative approval and budget appropriations for their first phase, Fi$Cal is staffing up, seeking qualified candidates to fill many positions, including technologists, project analysts, finance professionals, and change management specialists.

Fi$Cal Project Director Tamara Armstrong told Government Technology that the modernization comes at an opportune time, given the economic woes that continue to challenge state leaders. "We're just excited to see the state turn the corner in really bringing the financial management infrastructure to the stability and transparency that the state needs at this time."

Noelle Knell, Assistant Web Editor Noelle Knell  |  Managing Editor

Government Technology managing editor Noelle Knell has more than 15 years of marketing and communications experience, writing about public projects, transportation, business and technology. A California native, she graduated from the University of California, Davis, with majors in political science and American history. She can be reached via email and @GovTechNoelle on Twitter.