September 30, 2010 By David Raths
Another unconventional approach is sharing ERP services between two public-sector organizations. Such an experiment is under way in Ohio’s higher-education field between the University of Akron (UA) and Lorain County Community College (LCCC).
“We are trying to prove the viability of creating a shared administrative services center so each university and college doesn’t have to have its own,” explained Jim Sage, the UA’s CIO. “One of the keys to that is a shared ERP system. We believe we can eliminate a lot of duplication on the administrative side.”
The organizations completed the project’s first phase by installing a common Oracle PeopleSoft application for both schools. PeopleSoft was already in use at the UA, and Sage said it had the best architecture to handle multiple legal entities.
“Other ERP systems weren’t designed to support multiple legal entities in terms of software licensing,” he added. The LCCC had been using Jenzabar software and was in the process of looking at other ERP systems when the shared services deal was struck.
The next step will combine select business functions at the UA and LCCC to prove that combined administrative units can adequately serve multiple institutions. The ultimate goal is to create a stand-alone nonprofit organization and move the management of administrative functions to it.
Earlier attempts to develop shared services failed due to a lack of trust between schools, Sage admitted. “Once one school tried to control the project, others would disengage. I convinced our president it could not be controlled by one school but had to be managed by an outside organization.”
City and county government officials are becoming savvier about what goes into a successful ERP implementation, said Adam Rujan, a partner with Plante and Moran, a Southfield, Mich.-based certified public accounting and business advisory firm.
“They are becoming better consumers of ERP,” he said. “They are recognizing they may not need the larger Tier 1 ERP system and are devolving to smaller Tier 2 systems, which have lower maintenance costs.”
Cities and counties also are developing more robust IT governance models, which often are in reaction to an ERP implementation, Rujan added. “These systems are pervasive, and they realize that operating on a common system requires the organization to get more involved in IT decision-making.”
After looking for ERP options that were less expensive and time-consuming, Roger Rick, IT manager for the Redevelopment Authority of the City of Milwaukee, switched to a software-as-a-service version of 4gov from the agency’s ERP software vendor the Customer-Driven Co. (CDC) Software. The authority now pays a fixed monthly subscription fee that includes system maintenance, backups, security upgrades and disaster recovery.
“It does offer savings in the sense that there is no software to maintain, no servers, storage or backup,” Rick said. “We can have one less IT support person on staff.”
Another benefit, he said, is that the implementation of upgrades is almost immediate. “They can work on changes and tweak them until they are satisfied and then turn them on overnight without disrupting us,” he noted. “The challenge is that the vendor has to be responsive to your needs, because you don’t have your hands on anything. You could really be left hanging if they don’t meet your needs. My experience with [CDC] is that they are responsive and knowledgeable.”
As cities look to upgrade from outdated systems, they also look for systems that require less IT support and allow users flexibility in creating their own reports. The budget-crunch in Nevada cities such as Sparks (population 88,602) meant more full-featured ERP solutions from Oracle or SAP would be too expensive to support. City employees looked at several offerings and chose Agresso Business World, a mid-market ERP solution from Unit4 Business Software, a European company whose U.S. subsidiary is based in Dallas.
The first motivation was that the city’s previous software was 18 years old and both the software and hardware it was running on would no longer be supported, explained Sherri Flynn, Sparks’ systems development administrator.
Recent work force cutbacks mean that she and a staff of just two other people have to support Agresso and 60 other city software applications. “Mainly we wanted our users to be able to create reports and work with it themselves without a systems administrator’s help all the time,” Flynn said.
With Agresso, users are becoming more self-sufficient because they can create their own inquiries and export results into Microsoft Excel files. “Some ERP implementations require the dedicated support of 10 people,” she said. “The fact that we were downsizing makes Agresso a godsend.”
Despite the trepidation about doing ERP implementations, Gartner’s Sood stressed that there’s still tremendous need in state and local government for the true functions of an ERP system. “Especially with the budgetary problems they are experiencing, there is a need to have deep insight into how revenue is being spent and the management of finances,” he said.
And with federal stimulus funds, it’s important to have good oversight of grants management functionality that ERP systems can provide. “In contrast to other vertical markets, there is opportunity in the public sector for growth in ERP,” Sood said, “and these new business models that are still emerging will become more prevalent.”
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