Businessman Builds a Tower

A safer approach to ERP procurement

In their efforts to eliminate risks from ERP procurement, local governments often end up with systems that are outdated before they are fully implemented. Although most local governments have made major investments in their enterprise systems over the past decade, the fact is that the underlying technology stack of these systems is 20 (or more) years old. In many cases, this is due to a procurement process that is more focused on purchasing software that is “proven” than on the actual value delivered by the solution.

The typical procurement process usually involves selecting a reputable consulting firm to execute the following process:

  1. Review functional requirements
  2. Issue RFP to “qualified” vendors
  3. Attending scripted demonstrations
  4. Visiting selected installations
  5. Negotiating contracts

In this model, the selection process can easily take 18-24 months and the implementation of the solution from 1-3 years in addition to any delays due to vendor availability. In all, it could easily take 5 years for a government ERP system to be fully operational. This means anyone purchasing a “proven” system (installed in more than 100 sites) is probably getting a technology stack that was assembled in the 1990’s. In order to make these systems appear modern, they have been augmented with numerous add-ons for user interface, data access, and archiving. It all adds up to a maintenance nightmare that is typically more expensive than the system being replaced. While it is not controversial to follow this common approach, there is a better way.

Organizations that want real value from their enterprise systems should be willing to undertake ERP replacement in phases and begin each phase with a small pilot project. This approach is beneficial for a number of reasons. First, it reduces risk. With an all or nothing approach, the stakes are much higher. Second, it is less disruptive to the organization because the scope of the change is reduced. Third, it improves the organization’s ability to manage the project and change. During each phase, the project team (and organization as a whole) has the opportunity to adjust the project scope and implementation approach based upon their experience.

Web service integration between all components should be a fundamental requirement for any solution considered by the organization. Well-designed, modern systems incorporate web services that allow them to seamlessly exchange information with any other system. This means that the General Ledger system from one vendor should function well with the Payroll/HR system from another vendor. Additionally, they provide a means to achieve integration between new and old components in a phased approach and “future proof” the solution by ensuring that modules can be swapped out if needs change in the future.

Using this approach, you can have “best of breed” functionality and great integration while reducing cost and risk. The organization is able to address immediate their needs with a solution that is built on a modern technology stack.

An enterprise system made from modern component parts built on new technology is better than a legacy system built from corporate acquisitions. It is also the best way to avoid getting stuck with a system that’s out of date before the ink is dry on its multi-million dollar contract, while providing freedom from oppressive maintenance practices of the “proven” vendors.