August 26, 2010Doug Hadden
Another report of a failed Enterprise Resource Planning (EFP) system in government. This one going to the courts. The facts appear to be: ERP solution couldn’t easily adapt to meet government requirements and consulting company was not able to adapt to meet government requirements. The ERP and system integration vendors are well-known. Successful and profitable. Large. “No one gets fired for buying this solution” magnitude large.
What causes a government customer to believe that the Commercial-Off-the-Shelf solution needs to be re-architected and redesigned?
Or Patrick Marshall from a June GCN story to conclude that “many government entities have had horrendous ERP experiences?“
Or Michael Fauscette of IDC to suggest that government “agencies aremoving away from ERPs to software as a service and multiple vendors for specific functionalities”.
FreeBalance products are often categorized as ERP. We cover the financial, budget, human resources, procurement, revenue and performance management application sprectrum. But, we don’t sell to “enterprises”, only governments. Strictly speaking, we provide Government Resource Planning (GRP) software.
What goes wrong?
This most recent story does identify two systemic problems associated with ERP implementation in government. Government organizations should be forewarned to manage risk.
- ERP was orginally developed for “enterprises“, not government. Top Tier ERP packages use a customization approach to meet public sector needs. Government organizations should recognize this when decided to acquire ERP or the alternative: software designed specifically for government or “GRP”. There are legitimate reasons why governments should consider top tier ERPs that we have talked about in the past. (I was asked to present on the subject and I spoke about the ERP value proposition in government.)
- Generic methodologies for software implementation using experts in the software, rather than experts in the domain tend to be risky. Explaining the government domain to good consulting firms can be time consuming and suffer from consultants not asking the “right” questions resulting in something that appears to meet the terms and conditions of the contract but doesn’t meet government customer requirements.
Government organizations looking to migrate from current solutions to an ERP need to manage risk by:
- Ensuring that the ERP solution has been successfully implemented in peer organizations = same level of government, similar level of sophistication in financial management, similar standards etc. (For example, the success of a post office ERP implementation in a European government doesn’t mean anything to a county government in the United States looking to implement public financial management or an African government looking at human resources.)
- Check the references, but check customers that the vendor does not present. A lot can be learned at public financial management conferences.
- Ensure that vendor evaluation includes the Total Cost of Ownership – all licenses, hardware, power consumption, training, certification, maintenance, support, upgrades etc. Even if you are acquiring some of these products and services from other vendors.
- Ensure that the winning professional services firms is providing experts in public financial management. It is often better to have PFM experts than experts in the ERP application.
- Seeing is not believing. In other words, the quality of the demonstration may not indicate the quality of the vendor. Demonstrations can be slick. Test the vendor by asking domain questions: like “how do your other customers manage multi-year charts of accounts and commitments?” and “how do your other customers ensure that salary budgets are properly forecasted to prevent overspending?”
- None of this matters if the government is not governing and steering the implementation. Don’t wait for the integrator to communicate. Don’t be satisfied with how the integrator’s methodology functions – they don’t have to use the stuff!