May 13, 2014Doug Hadden
Many observers would classify our software, the FreeBalance Accountability Suite, as Enterprise Resource Planning (ERP) for government. Some people are quite surprised that we do not consider our applications to be ERP. Yet, we doggedly persist in calling it Government Resource Planning (GRP). Our use of the GRP term is used as differentiation on one hand by invoking a familiar concept of “resource planning” yet with some differentiation. But, how ERPish is our software?
ERP systems have the following characteristics:
- Originated as private sector manufacturing systems and evolved to government & the name was created by Gartner.
- Assessment: FreeBalannce software was written for government and did not originate in the private sector. There are significant differences between public and private sector accounting.
- Running total: 0 out of 1
- Almost all ERP descriptions describe “enterprise” as related to the private sector. This is the most common understanding of the concept, although any “organization” could be considered an “enterprise” in some way. There is also an understanding of “enterprise-class” as related to larger organizations although there is an ERP mid-market and so-called ERP for SMEs. It is generally agreed that the ERP software footprint includes private sector business functionality.
- Assessment: FreeBalance software only includes public sector functionality although it scales from small government organizations to “enterprise-class” implementations, something that we call “whole of government”.
- Running Total: 0.5 out of 2
- Act as the system of record for financial transactions.
- Assessment: FreeBalance software operates as the system of record in government organizations.
- Running Total: 1.5 out of 3
- Was redefined ERP by Gartner in 2000 as ERP II to include front office functions such as CRM.
- Assessment: FreeBalance software includes front office functions particularly around government transparency.
- Running Total: 2.5 out of 4
- The need for ERP to be “web-based” to be ERP II
- Assessment: FreeBalance Version 7 software is 100% web native with no client/server code. (Curiously, major ERP manufacturers continue to use legacy client/server code that is web-enabled yet calls it “web-based”)
- Runnning Total: 3.5 out of 5
- There has been the introduction of a concept known as ERP III that adds social characteristics. “From this integration of the customer and vendor a constructive dialog and exchange of information is created to innovate, produce, and then sell / distribute better products or services.”
- Assessment: FreeBalance products enable citizen dialog, civil society outreach and transparency that enables governments to improve citizen services
- Running Total: 4.5 out of 6
- Consists of multiple functions such as financial managent, human capital management and supply chain management.
- Assessment: FreeBalance provides the entire budget cycle that includes financial and non-financial government functionality in financial, budget, human resources, receipts and expenditure management
- Running Total: 5.5 out of 7
- Operates in multiple vertical markets. Software that operates in a single vertical or horizontal market is known as “best-of-breed”.
- Assessment: FreeBalance operates in a single vertical – government. It could be argued that we are in a sub vertical of public sector or that PFM is a sub vertical of government because we do not support public safety, defence, courts, or library non-financial functionality. So, it’s “best-of-breed” by any definition.
- Running total: 5.5 out of 8
- ERP was never about “resource planing”. The “RP” came from the familiar category of Manufacturing Resource Planning. “Enterprise resource planning software, or ERP, doesn’t live up to its acronym. Forget about planning—it doesn’t do much of that—and forget about resource, a throwaway term. But remember the enterprise part. This is ERP’s true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs.”
- Assessment: Public Financial Management is all about resource planning. This is captured in the budget formulation process that includes public investment, capital, recurrent/operating, salary and development budgets. These budgets are used for expenditure controls. A government budget is a law. This differs from budget planning processes in the private sector where the resulting budget is a guideline.
- Running total: 6.5 out of 9
- Common look and feel withing an “integrated” suite.
- Assessment: FreeBalance Version 7 is fully integrated and has a common look and feel. (Curiously, many ERP manufacturers struggle with this because of acquisitions where the user interface is somewhat different among modules and where there is not unified management where integration needs to be augmented by metadata management.)
- Running Total: 7.5 out of 10
Does 3/4 ERP make our software ERP? My view is that the missing 1/4 is the critical factor – the software origins and intent – the “best-of-breed” nature of the FreeBalance Accountability Suite. The following video that describes a common scenario for ERP has nothing to do with government.