A New Role For ERP

Agencies at all levels of government are using enterprise resource planning applications to simplify a variety of activities.

by / July 17, 2001
Pay a visit to the Chicago Park District Web site and at first glance it appears to be a typical government effort at online services. Theres a long list of activities available to Chicagoans, and the information seems to go on and on. But scroll back to the top and click on the words "online registration is available now." If you keep drilling down and choose an activity, say gymnastics, you will find a list of day camps. Along with the obligatory information on where the camp is located, how many openings are currently available and the cost, youll also find that familiar shopping cart icon usually seen on retail Web sites.

Thats right. You can shop your way through the Chicago Park Districts vast array of nearly 1,000 classes, courses, activities and events, picking your favorites and paying for them with a credit card when done. The new online site is a great benefit to customers used to driving around Chicago, visiting the parks during daytime hours and trying to sign up for an activity. But thats not the big deal here. The Park Districts online storefront is tied to its enterprise financial software application. Unlike most front-end Web services in government that look good but actually do little to change the process thats wrapped inside the application, this one is fully integrated with financial, human resources and payroll services.

"Government customers are no longer looking for core foundation applications in ERP [enterprise resource planning], they want completely integrated applications," said David Natelson, vice president of state and local government applications at Oracle Corp., the company that built the Park Districts storefront Web site and its back-end ERP system.

Once focused on implementing individual human resource, payroll, procurement or financial ERP systems and separate customer service applications, governments now see the value in having one system that covers all these services. "This approach lowers overall cost and avoids the problem of dealing with different versions of software with different vendors," Natelson explained.

Putting ERP to Work

From California to New York, from Arvada, Colo., to Las Vegas, Nev., state and local governments are investing in ERP systems specifically designed for the public sector that can maximize the potential for e-government through the Internet. The appeal of ERP is obvious to anyone who deals with information in an organization. The software integrates data, functions and departments across an entire organization. In addition, ERP automates manual tasks, allows users to produce and access information in realtime, and shares business practices throughout the enterprise.

ERP vendors, such as Oracle, J.D. Edwards, SAP America and Peoplesoft, have seen a surge in orders recently as
governments snap up new systems to replace old ones left over from the Y2K crisis. States and localities also are buying ERP to meet policy objectives that require out-dated, bureaucratic processes to be reengineered around an enterprise business model. Finally, ongoing demand for customer services at the front counter and over the Internet has pushed governments to do a more effective job of serving citizens, not just find new ways to spend fewer tax dollars.

"Theres a greater emphasis on effectiveness in government, instead of a better process," said Jon Gearhart, public-sector-industry director of Peoplesoft. "Im also seeing less emphasis on trying to simply spend money effectively and more emphasis on the core mission of the organization."

That may explain why two states have launched full-scale assaults on their information silos, using ERP as the weapon for breaching the walls. Arkansas is spending $30 million to create a statewide system for financial and human resource information (see "Making a Titanic Transition," March 2001). In Pennsylvania, the state has launched a three-year, $51.8 million project to upgrade software for the accounting, budgeting, payroll, personnel and purchasing functions of 52 state agencies. A similar project is under way in Delaware.

Not only are these projects significant for their size, they also are being deployed more quickly. "Three- to five-year government projects just dont fly anymore," said Tom Shirk, president of SAP Public Services Inc. "State and local governments need deliverable milestones in three-, six- or nine-month periods." Arkansas ERP project will go directly from testing to implementation and is expected to be completed within 18 months. Pennsylvania will take 24 months to complete its project, but expects to have the first phase, budgeting, up in 18 months.

Beyond Bread and Butter

ERPs bread and butter in the public sector still is managing essential applications, such as finance and human resources. With 80 percent to 90 percent of every government budget tied up in salaries and wages, officials need powerful software systems that can deliver payrolls, help balance budgets and ledger books, keep track of benefits and schedule the working hours of firefighters to meet fair labor standards, to name just a few applications.

But the boom in government-to-business Web applications, such as procurement catalog services and customer relationship management (CRM) systems, has generated demand for integrated ERP systems that run on the Web. Gearhart calls this trend Web-based transparency. The public sector wants applications that allow customers to interact securely and on a more personal basis. For example, an ERP accounting system linked to CRM software and a portal can allow an individual to check on his or her child-support payments while a similar system using a government-to-business application lets a vendor track an invoice and find out when its going to be paid.

"This level of openness makes government more responsive and it empowers those people in ways that werent available to them before," said Gearhart. "It also allows government workers to perform more as analysts and less as clerks."

To maximize this potential, Peoplesofts latest software release eliminates the need to put any ERP software code on the client computer. All transactions take place through the Web browser. This not only reduces implementation time and costs, it simplifies the task of putting decision-making, analytical software in the hands of more workers.

SAPs Shirk sees the same trend occurring. "Governments are taking a more holistic approach with B2B and CRM together with human resources, finance, supply chain and so on," he said. Helping this trend along is the move toward a common architecture and open standards in government. More agencies and governments are adopting XML and HTML and opening themselves up in a way not thought possible before. As a result, transactions can now occur across boundaries, whether they exist within an agency, within an entire government or between state and local governments.

The push for more Web-based services and software is relentless, said Oracles Natelson. "Were on the third release of our Web-enabled applications," he pointed out. "Web-enabled ERP allows employees on the inside and the public on the outside to use these systems to their benefit. It used to be only the finance and accounting people who touched these systems."

Canceling Mission Creep

If theres an Achilles heel to using ERP in the public sector, it comes at the point when governments must decide which is more important: changing business processes to take advantage of the software or changing the software to fit existing processes. To Natelson, changing the software has major consequences. "The risk with large-system development isnt with the system, but with the amount of customization that is forced on the system by consultants," he said. "Customization may give you better technology, but it doesnt give you better functionality."

ERP vendors recommend that customers take the time to understand how their product works before they try and fit a solution around it. Call it mission creep, or the changing goal line, but governments have shown intolerance for adopting significant change and, because of that, have let slip the chance to gain the most benefit from large-system software solutions.

To counter that inclination, ERP vendors believe state and local CIOs can be catalysts for change. "CIOs can have a positive impact by getting the individual IT directors to work together on a single project," said Natelson. "You need a general in the field, someone who is empowered across all agencies from the start."
Tod Newcombe Features Editor