Next summer, Fresno, Calif., will throw the switch on a comprehensive financial, payroll and human resources system designed to beat the millennium bug and provide a new level of decision-making data. The state's fifth-largest city, Fresno intends to roll out the integrated client-server applications to more than 1,000 users throughout the municipality, replacing its 15-year-old mainframe financial and payroll systems.
Not only will the system provide quick access to financial information for both staff and residents, it's key to drawing high-tech industry into the region, according to city officials. And, in a situation familiar to state and local government organizations throughout the nation, Fresno's technology upgrade also is being spurred by the rapidly approaching year 2000.
"Our current system is not [Y2K] compliant, and we literally would not be able to run the city financial operations as of July 1, 1999," said Fresno CIO Hap Cluff. "We could push the payroll system out to the end of the year, but on January 1, 2000, we would not be able to produce W-2s or 1099s or paychecks."
Neither the existing IBM mainframe computer nor its COBOL-based financial and human resources applications will handle the date change. Moreover, Fresno does not own the application source code or have access to the hardware code, making any attempt to fix its old systems a risky proposition, Cluff said. Instead, the city is installing PeopleSoft's enterprise financial, human resources and payroll applications.
"We just took a proactive approach," Cluff said. "We said, 'Let's do it right. We've got one shot, and we're going to have to spend X amount of dollars anyway.'"
Fresno finds itself among a growing number of state and local government organizations installing enterprise resource planning (ERP) software packages, which evolved in the private sector to provide a common, integrated software foundation for managing finances, manufacturing, purchasing, planning, payroll and other essential functions.
Public-sector ERP systems offer integrated packages of financial and human resources applications tailored to the unique needs of government. On the financial side, they may provide general ledger, accounts payable and receivable, and various specialized accounting functions. For human resources, they may track employees and handle payroll, benefits and pensions.
What's more, ERP packages also support emerging industry-standard functions like automated online workflow, electronic data interface, interactive voice response, and electronic catalogs and forms.
The ability of these systems to provide nearly instant access to a wide range of integrated decision-making data -- as well as their year-2000 compliance -- has triggered strong interest among both government agencies and private companies. In fact, AMR Research, a market-analysis firm specializing in ERP software, foresees the overall market for enterprise systems growing by nearly 40 percent over the next five years.
That broad trend is reflected in the public sector as well, according to Robert Salvucci, president of SAP Public Sector. Salvucci expects his company, a relative newcomer to the government market but a subsidiary of the leading ERP supplier to the private sector, to more than double its government customer base this year.
"The market is definitely there," he said. "[Agencies] have to do more, and they have to do it with fewer people. They have to be more efficient. So that's driving them to look for ways to integrate the enterprise.
"Government sees what its counterparts in industry are doing," Salvucci added. "They know what's going on in the Fortune 500; they see the efficiencies and they hear about the savings."
Indeed, not only are more agencies implementing ERP solutions, he said, but the number of users at current ERP installations is climbing as agencies provide new functions to their staffs.
No Pain, No Gain
However, reaping the benefits of integrated ERP software does not come without a few challenges, according to several public agencies that have installed or are installing such systems.
In Fresno's case, implementing an ERP solution meant widespread replacement of existing PCs and significant updating of the city's network infrastructure. "We had machines all over the place, and they weren't connected," Cluff said. "And if they did connect, people didn't trust the network because it wouldn't stay up."
Therefore, the city spent a year upgrading end-user PCs, installing new cable in buildings and running T1 connections between facilities before actually beginning its PeopleSoft implementation in August.
"You can't do anything in a systematic enterprise operation unless you've got everybody at a certain level," Cluff said. "So we have approximately 1,500 desktops, and 1,000 of them are brand-new Pentium-based systems. They all have sound cards, CDs, and we're buying 17-inch monitors for everybody."
The city is committed to owning no computer equipment that is more than 3 years old, Cluff added. "You can't span too much of a distance, otherwise you can't upgrade to the next level because the machines at the lower end won't handle it."
Bigger is Better
Hardware also was an issue for Boulder County, Colo., which installed Oracle enterprise financial applications last year to improve reporting capabilities and eliminate a $35,000-per-month licensing fee on its mainframe operating system.
Boulder Financial Systems Administrator Bob Lamb said the county upgraded PCs for 30 to 40 of the new system's 104 users. While the minimum configuration for the software was a 486 processor, Boulder found it to be inadequate for frequent users, he said.
"If you were going to be using the PC all day on Oracle Financials, you didn't want a 486; you wanted a 586," Lamb said. "Secondly, we found out that there's a certain amount of hard-drive space required for Financials to run. So we had to upgrade some of the hard drives.
"Monitor size made a big difference as well," he added. "The little 14-inch monitors really didn't display enough of the screen. So we ended up buying 17-inch monitors for our heavy users."
But while the Boulder project did involve some hardware upgrading, Lamb said the biggest challenge was preparing the county's information services staff to deal with completely new technology.
"We had a number of people who knew how to code COBOL and some other things, and suddenly they had to learn SQL and relational databases," Lamb said. "For instance, we brought over our old general ledger numbers into our new financials, and it took several tries for them to learn how the interfaces worked. But, eventually, they came up to speed."
In fact, inexperience led to a brief false start for the project when staff members incorrectly installed the software, forcing them to start over. "The second go-around, we had the consultant there working hand-in-hand with our people -- that's probably the best way to go," Lamb said. "You want somebody that's done at least one install previously. Our folks are good people, but they were still in training."
Still, the misstep did little to hinder installation of the project, which was completed some 30 percent under budget, according to the county. The key, said Lamb, was resisting the urge to do too much too fast.
While the software package offers the ability to implement online requisitions and other cutting-edge features, Boulder's initial installation stuck to the basics.
"We came to the point where we said, 'We're not going to try to expand the project into gaining all of this new functionality from day one. After we get the system up and live, we'll begin rolling out new functionality,'" he explained. "That helped keep the project from getting out of hand."
The challenges of ERP installation at Revenue Canada come on a different scale. The 45,000-employee tax-collection department, Canada's largest government agency, is implementing SAP integrated financial and human resources applications that will be accessed by some 8,500 users throughout the country.
One the biggest hurdles for the mammoth project is funding, said Bruce Gale, Revenue Canada's director of corporate administrative systems.
He said the comprehensive nature of ERP software can make the price tag hard for decision-makers to swallow. Senior managers may be willing to spend $25 million on a financial system and $25 million on a human resources system, he said. But they tend to balk at $50 million for an enterprise financial and human resources package.
"If you come in and say, 'I want $50 million to put in a global enterprise system,' they look at you and say, 'You must be out of your mind,'" Gale explained.
Gale said he entered his project with a budget he knew was in the ballpark, but probably a bit low.
"Now I'm having a hell of a time, because the IT numbers are coming in," he said. "The funding is really difficult. And yet, had I gone in with those numbers on day one, we wouldn't be doing this project, [and] I know that the payoffs are going to be immense."
The huge installation project, scheduled for completion in April 1999, also will test the agency's Windows NT network architecture, Gale added. "We're pushing the envelope, but our NT guys are saying that by the time we're into this a year or so, NT is going to be stronger and the hardware is going to be bigger."
And, like other enterprise software customers, Revenue Canada also expects to upgrade a significant number of end-user machines. Gale said he has charged the agency's IT department with building a consistent desktop and infrastructure standard throughout the large department.
"My message to the field is that if you don't have a standard, you don't get an administrative system. It's as plain as that," he said.
In addition, the agency will mount a widespread training effort as part of its enterprise installation. Gale said the agency has identified 60 separate employee roles, which are now being used to develop both user-authorization profiles and Internet-based training modules. Employees must complete the training modules appropriate for their roles before using the new system.
Online training will be a long-term offering, added Gale. "We'll probably be training 1,000 people a year based on attrition."
Meeting the Demand
Despite the challenge of spreading comprehensive administrative software across a large, widely dispersed agency, Gale expects the benefits of Revenue Canada's ERP system to far outweigh any installation difficulties.
Indeed, Gale intends to maximize the benefits of enterprise software by choosing financial and human-resources applications from a single vendor rather than taking a best-of-breed approach. While acknowledging that the financial and human-resources pieces of each vendor's enterprise offering may have individual weaknesses, Gale said the efficiency gains of having a single, integrated system far outweigh any loss of functionality.
Like a growing number of public agencies, Revenue Canada is looking to integrated enterprise software not only to eliminate year-2000 conflicts in its current systems, but also to deliver significant improvements in operational efficiency.
"We have some 30 corporate systems that we're replacing with SAP, as well as hundreds and hundreds of 'black book' systems," he said. "Government's expected to do more with less -- or at least more with the same. So it's incumbent upon us to streamline our administrative processes to meet that demand, and SAP should do that for us."
Steve Towns is the editor of Government Technology Reseller.
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