Government Technology

States and Localities Explore Alternatives to Big ERP

Anand Dubey, Alaska's director of enterprise technology services (right), created a homegrown ERP system for less than $100,00.

September 30, 2010 By

“The smallest ERP system known to man.” That is what Anand Dubey, Alaska’s director of enterprise technology, calls the homegrown alternative to an enterprise resource planning (ERP) application he created and dubbed the Virtual Manager.

ERP is often defined as an architecture that supports the distribution of enterprisewide information across all functional units of a business or service organization. Dubey is on a mission to get officials in his state to rethink the traditionally expensive and complicated ERP implementation in favor of a system he created for less than $100,000 to track his Enterprise Technology Services (ETS) Division’s service catalog and personnel costs.

“States can do $200 million ERP implementations and not know whether they are lowering their total cost of ownership or offering better service,” he said. “There is a real danger that you have acquired a monster asset that is bleeding you dry. What good does it do to automate if you aren’t necessarily providing better service or saving money? All you are doing is converting file clerks to programmers and IT support people.”

Dubey is not alone in seeking out alternatives to traditional ERP offerings. Even in the private sector, there’s a recognition that these deployments often fail to achieve their objectives. A 2010 survey by Denver-based Panorama Consulting Group found that 57 percent of ERP implementations take longer than expected; 54 percent go over budget; and 41 percent of organizations surveyed failed to realize at least half of the business benefits they expected from their ERP systems.

Squeezed by budget cuts, some public-sector officials are looking for cheaper, faster-to-implement and more customizable ERP solutions.

“With the budget issues they face, officials wonder how they can afford huge capital outlays and manage the risk of these deployments going awry over three or five years,” noted Rishi Sood, Gartner vice president and head of public-sector programs.

More states, cities and counties are becoming receptive to new ERP ideas. At the state level, Sood is seeing more interest in total application outsourcing. He points to a recent deal Maine announced that involves CGI Group Inc. hosting and maintaining the state’s AMS Advantage ERP implementation in CGI’s cloud environment, which Maine officials say offers the state a more predictable cost structure in the long term.

In smaller and mid-sized cities and counties, Sood expects to see increased use of software-as-a-service platforms, which are less customizable than the application outsourcing involving CGI and Maine, but provide economies of scale.

Also on the horizon are shared services through demand aggregation. For instance, the Canadian province of Ontario and several cities within it work with an ERP vendor on a combined solution. Smaller municipalities may also consider open source ERP solutions, which are starting to catch on in the manufacturing sector.

“For states and the largest counties and cities, the mission criticality of their ERP makes open source less attractive to them,” Sood added, “but there is always interest in open source, especially at smaller levels of government.”

Tracking IT Services in Alaska

When Dubey became Alaska’s ETS director almost three years ago, he wanted to know how much money his agency was spending on each of the services it provides. He was upset that it took the finance staff a week to get back to him with data from the old mainframe ERP system — and even then he still had difficulty discerning how his personnel spent their time.

Dubey set out to create a catalog of services and assets his agency provides. He then asked employees to dump their traditional time sheets and track all their work hours to specific service requests.

“For instance, Alaska owns a microwave telecommunications system,” he explained. “We get service requests to do things such as fix a tower. Now when employees track their time, they tie it to the service request and the asset, and using the Virtual Manager, I can see how much each is costing me.”

Business intelligence (BI) is another pet peeve. “People like to talk about the BI reports they get from traditional ERP systems,” Dubey said. “But when I ask them what they actually do with their favorite five reports, they don’t say much. They don’t know what they are going to do with them.”

With the Virtual Manager, Dubey produces simple pie charts that break down services by day, month, year and how much the agency is spending on each service.

“You can drill down in those right to the invoice and timecard level,” he said. “So I know what I am spending on telecom infrastructure. This system has become my eyes and ears.”

Dubey asks people to show him things they can do with a multimillion-dollar ERP program that he can’t do with his five-screen Virtual Manager. “If someone tells me something I can’t do, I think the program is agile enough that we could change it to be able to do it,” he said.

Dubey’s first goal was to gain acceptance of the tool within the ETS and then to proselytize other state agencies and CIOs around the country. But he admits that changing people’s minds about ERP is difficult. Perhaps ironically, his state currently is considering the procurement of a massive ERP system.

“I do have some input there,” he said, “and I wish the world were that simple that I could direct it. But there are directors of finance and bureaucrats who have been in state government for 25 years, and they just don’t believe you can do for $100,000 what other states are paying $200 million for. I tell them, ‘God didn’t create those systems; people did.’ And sometimes it takes someone new to come along and change the paradigm. I am that mad man on the mountain.”

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Pat Ferguson    |    Commented October 1, 2010

ERP Article

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