Government ERPs: When will we stop accepting bad?

Previous articles have mentioned the hundreds of millions of dollars that Federal Government agencies are about to commit to replace or upgrade their finance, payroll and HR systems: their enterprise resource planning - ERP - systems. The decisions that are about to be made will set the core business platforms for agencies for the next 25 years.

Observations of these strategic decisions over the past 5 to 10 years is that there has been limited choice or vendor competition in the Federal Government marketplace, and agencies have rolled up their sleeves and got on with the job using workarounds and accepting what has been on offer is "good enough". Without considering the worldwide market for ERPs, in particular newer entrants that have been founded on the latest digital technological platforms, agency personnel have ended up not knowing what good looks like.

So, the question we ask is: When will we stop accepting bad?

We have worked in CFO functions across Federal Government agencies for close to three decades and have felt first-hand the impacts of poor ERP implementations and inability to invest. The effort to meet even core compliance requirements, let alone provide value-add strategic insights, has made it increasingly difficult to attract and retain talent and provide timely information to support decision-making.

The new APS ERP strategic direction has opened the market, providing an amazing opportunity to transform the way Government operates and to realise a significant return on investment. However, this can be daunting as agencies now have to navigate their own path with all its associated complexity and challenges.

To do that requires an understanding of what, in today's age, good looks like. In this article we have outlined the major features and characteristics that agencies should bake into their ERP replacement projects.

Select a Strategic Partner Not an ERP

If you are leading an ERP Program within your agency you may think that your job is to acquire and implement an ERP system. While this will no doubt consume most of your waking hours, resources and funding we would encourage you and your executive to take a step back and consider what the real outcomes of your project will be.

1. You will be setting the underlying technology platform and operating models for your agency's core business systems for the next few decades.
2. You will be forming a strategic partnership with a vendor and systems integrator (SI) that will also need to endure the test of time.

We would argue that your selection decision and tender evaluation plans should place significant weighting towards these factors, assessing:

• The vendor and SI organisations' origins, culture, management structure and commitment
• Which organisations will be able to take you on a multi-year transformation journey and ensure you are able to take full advantage of technology advancements over the coming decades; and
• The underlying technical architecture of the systems (cloud, Software as a Service (SaaS), single data models, etc - more on this later).

Agencies should expect more from their vendors and strategic advisors looking to form a long-term strategic partnership that doesn't just replace one ERP platform with another but puts your agency on a path to become a world-class public sector administrator

True Native SaaS

All the major players in the market have strong sales teams and marketing materials. This can make it difficult to fully differentiate offerings and what this means for how you can maximise the return on investment in your ERP. For example, an improvement in compliance, better capture, accessibility and use of data, enhancement of your employee value proposition, financial sustainability of the solution and greater adaptability to change.

Most ERP solutions will now be in the cloud and offer SaaS solutions. There is, however, a significant difference between products that have their origins as SaaS / cloud solutions (native SaaS) and those that have been designed for an on-premise solution and then shifted to the cloud.

We would suggest that most ERP agency personnel have not experienced native SaaS solutions and therefore do not know what good looks like. Native SaaS solutions represent a totally different operating mode that includes:

• Monthly pay-per-use charges verses one-off perpetual licence / annual maintenance fees
• Reductions in ongoing internal technical support costs by up to 75%
• Continuous deployment (weekly) of product enhancements and patches that require very little client technical involvement
• Your product being on the vendor's continuous improvement path with the ability for users to choose when to deploy new features without costly and time-consuming upgrade projects
• Increased ability to configure solutions without having to customise to meet unique requirements (more on this below)
• Movement of control and responsibility for your ERP operations and system improvements to business areas and out of IT.

These fundamental operating model changes will deliver much greater value for money over a ten plus year total cost of ownership (TCO) evaluation and set the platform for future transformation of your business functions.

Configuration v Custimosation (not Adopt v Adapt)

Most agencies have lived the costly drama of having customised their ERP products, making upgrades difficult, risk and expensive. You have heard many vendors' solution to this, encouraging you to "adopt not adapt" their products. To utilise the standard business processes and data structures that come with their product and not to customise it to meet unique requirements. The problem with this philosophy is:

• What if you have some mandatory requirements?
• What if, in your agency, there is a more efficient process that doesn't match the standard?
• What if the solution provided has not been extensively tested so it doesn't meet core government requirements.

In true native SaaS solutions, you should be able to "configure" the product to meet your unique requirements without impacting the base system supported and maintained by the ERP SaaS vendor. Hence, our proposition is to find a system that can meet your requirements via configuration but no customisation.

This will ensure you can put your agency on a continuous improvement path, adopting new innovations and features as they are rolled out without significantly increasing ongoing support costs or being forced into lengthy and expensive upgrades. Again, major factors in your long term TCO.

Ongoing Support Operating Model

We have mentioned above that true native SaaS solutions will introduce a totally different ERP operating model driven primarily by business users and with dramatically less internal technical support required. Once this is understood it will raise questions about how an agency will structure and resource the ongoing support of their ERP solution

The obvious and often first option considered is to train / hire internal personnel to support the ERP solution. Experience in the past has show that this leads to competition between agencies for access to these scarce and highly trained resources and we believe these are benefits to be gained by considering managed service support options.

A managed service option has the benefits of:

• Reducing key person risks and enhancing technical staff retention
• Having access to part-time specialist expertise covering the full range of functional and technical capabilities required
• Ability to train junior technical staff and reduce the reliance on high priced individual contractors
• Ability to share IP and costs of future business improvements
• Allowing focus on core agency outcomes
• Greater flexibility to be able to resource future projects (for example transformations, Machinery of Government changes, etc)

These manged service options may be considered at a portfolio level or through forming a grouping of agencies using the same ERP SaaS solution.

Implementation Considerations

Being ready as you head into your ERP project will help to reduce timeframes and costs of the implementation stage. The most valuable readiness activities are around your change management, governance and understanding your ERP data needs. It is not necessary to prepare detailed requirements or current state business process mapping but rather to understand why you complete certain processes and what is unique for your agency.

An ERP project touches every facet of the business, and the implementation project often uncovers a range of long-term practices that may not be optimal or compliant. It is important that your change and communications process starts early and is driven from the top to ensure the required level of resourcing, engagement and openness to the project. This will also need to be supported by a well-understood decision-making framework that caters for the level of decisions being strategic, tactical or operational.

Regardless of the ERP selected, the underlying master data is key to ensuring you capture the data required to support strategic decision making, efficient and effective resource management and your legislative requirements. Understanding your data requirements, establishing clear principles and governance around this, and pre-engaging with business around what should be captured in an ERP system and granularity of this will help to streamline the implementation stage. This will also help to avoid some of the common errors made in current ERP systems where data is captured at too low a level and duplicated across systems or modules.

Once your data needs are identified it will be essential to test the quality of existing data before it is transferred to your new ERP. The saying garbage in garbage out comes out to mind and if you take garbage data in your new ERP you will be living with that garbage for a long time. Hence, it is almost inevitable that you will need to undertake an extensive data cleansing exercise (which can take several months) before going live.

Multi-Phase, Agile Transformation Journey

The native SaaS / cloud solutions, configured not customised, present an opportunity to rethink the implementation journey. Gone are the days of having to map in excruciating detail your current state, design a future state and get one big bang shot at implementing this. History is littered with high-cost failures and underwhelmed users of this approach.

Solutions that can be easily configured. and reconfigured, present an opportunity to start with a pre-delivered best-practice process, to ask yourself 'why not' and then to amend only when you have a genuine reason why this doesn't work for you. Gone are the days where you can't see the system in action with a sample of your agency data until late (often too late) in the project following a lengthy build stage.

This easy configurability also enables you to have a multi-phased, multi-year transformation journey where you implement the core product offering and then continue to add offerings or adopt new innovative features when your organisation is ready for them. Aligning your software licensing arrangements with this maturity journey will also avoid you paying for functionality that won't be used immediately.

Conclusion

As you prepare to undertake what will b eone of the defining projects for your agency - replacement of your ERP systems - our strongest recommendations to assist you are:

• Select a strategic partner, not a piece of software
• Ensure it is true native SaaS / cloud solution
• Ensure your unique requirements are met through configuration not customisation
• Learn from past implementation projects and resource data cleansing, change management and client-side subject matter experts to support business user decision-makers
• Adopt a multi-phase, multi-year transformation journey aligned to your organisation's maturity ensuring you don't treat your ERP implementation as a set and forget
• Continue to utilise future innovations provided by your vendor.

Adoption of these fundamental factors will allow agencies to fully embrace the new world of ERP opportunities, stop accepting bad, and open their eyes to what good really looks like.