Disruptive by Design: Harnessing the Benefits Of Modern Enterprise Resource Planning Systems
For decades, private companies have implemented enterprise resource planning (ERP) systems to improve their businesses. However, for all the promises of efficiencies behind the demanding approach, a majority of ERP system implementations fail. Even so, the U.S. government wants to pursue ERP systems.
Regardless of the bad press these systems have received, there is an emerging public-sector market interested in them—and for good reason. ERP systems offer the only holistic alternative to the inefficient legacy systems plaguing the federal government.
Legacy systems are unreliable, costly to sustain and pose a security risk to organizations. They also lack consistently accurate, real-time data for performance assessment and decision making. A 2014 article in the international business journal Competitiveness Review described legacy systems as inflexible and rigid, eating up 70 percent of some organizations’ information technology budgets.
When implemented correctly, ERP systems may help leaders reduce costs and apply the savings toward customer services. If resources are not tied up in managing antiquated legacy systems, organizations can redirect money to research and development, conservation, community services and many other arguably more productive areas of operations.
ERP systems provide integrated real-time data for better management and analysis, thereby affecting multiple areas of operations in novel ways. They generate greater transparency, data accuracy and trust. This means that the public not only could have increased access to government accounting data, for example, but also more confidence in the accuracy of that information.
ERP systems also facilitate the success of accounting information systems by combining business management and information technology. When organizations successfully implement and use ERP systems, they maximize the goods and services rendered to stakeholders. The systems are more than software packages—they provide the essential infrastructure affecting the ways people work inside and outside of organizations.
Typically, environmental pressure fuels ERP system implementations. System sales have soared into the billions of dollars, and some argue that it is the most popular new business software to hit the market in 15 years. Governments have taken notice, but their risk-adverse culture means managers are wading in carefully. Globally, governments are transitioning from encumbered bureaucracy and slow administrative processes to digital systems—also called e-government—to provide citizens with greater access to information, communications and means for interaction. ERP systems also could provide solutions for the demands of cost and compliance initiatives. It is logical that stewards of taxpayer dollars would seek to transition to these systems to better manage costs and address the needs of residents, visitors and other constituents. ERP systems can be innovative, cost-effective means of compliance.
In the 1990s, federal statutes and policies drove some agencies to transition to ERP systems for audit purposes. A few were successful but now require upgrades. ERP systems can provide risk and quality control as well as fraud detection and allow for fewer errors. Audits cost money, and findings of substandard operations cause turmoil. Additional audits conducted because of poor system-generated data cause concern and are not acceptable to organizations or customers.
Some organizations have opted for ERP systems to achieve the goals of the Financial Improvement and Audit Readiness mission, which stem from the Chief Financial Officers Act of 1990 and subsequent National Defense Authorization acts. Others refer to ERP systems as data warehouses leveraged for fulfillment of requests from both auditors and Congress.
Organizations might have many reasons to pursue an ERP system despite the failure risk. A few include efficiencies that result in tangible and intangible benefits; data-related advantages; environmental pressures; and cost management and legal compliance. Plus, decades of lessons learned help current and future implementation efforts excel.
Jennifer A. Miller, a member of AFCEA’s Northern Virginia Chapter, is a cost analyst and a deputy branch chief in the Resource Management Oversight Division of the National Guard Bureau’s Joint Staff. The views expressed here are hers alone.