By Fulla, Shelley
Government Finance Review , Vol. 23, No. 2
Information technology (IT) and its devices (email, Internet, enterprise systems, etc.) are rapidly changing the way governmental operations flow as well as its efficiency and effectiveness. One source estimated spending on IT by state and local governments was $52.2 billion in 2003. (1) Much of this spending is focused on increasing efficiencies by reducing the amount of time employees spend completing extensive manual work. (2) One case study shows that a statewide department was able to reduce the amount of time needed for its audit by 50 percent with the implementation of enterprise resource planning (ERP) software. (3) With such powerful statistics on IT development in government, one must wonder whether and how governments are poised to ensure success of these initiatives so that maximum benefits can be achieved.
Consider this example: Agencies A and B both decide to procure an ERP system. They have similar sized governments, budgets, and number of people dedicated to managing the project. They both choose the same vendor for the software, have teams of comparable experience for implementation, and agency staff at both sites receive the exact same training. After 18 months of implementation, Agency B declares success and can quantify some of the operational savings it already has identified. Agency A, however, remains stuck in its implementation phase, is considering several change orders for customization of the system, and has gone over budget. What caused the success in one organization and failure in the other? Can governmental agencies identify these problems early in order to mitigate their risks? Most of the time, the answers to these questions can be found in how each agency handles change management. This article will review some of the strategies that can be undertaken in order to minimize risk and maximize rewards of an ERP project.
One way to ensure success is to understand from the outset that an ERP system is a means and not an end: merely implementing an ERP system will not increase the efficiency of the organization--it is a tool and a process for improving operations. Expecting the ERP system to solve all the organizational problems is akin to adopting performance measures but never checking on the progress of the measures. Project staff must identify critical business and process weaknesses at the outset of implementation in order to fully realize the benefits of the system. Top management must understand when implementing an ERP system that there are certain things that cannot be compromised when considering adoption.
Staff must actively manage the implementation of the ERP system and know what are the greatest project risks. Numerous reference articles describe quite clearly the top reasons for failure in ERP implementations. One researcher listed the top 10 categories of failure as:
* Strategic goals are not clearly defined
* Top management is not committed to the system
* Implementation project management is poor
* The organization is not committed to change
* A great implementation team is not selected
* Inadequate education and training results in users that are unable to satisfactorily run the system
* Data accuracy is not ensured
* Performance measures are not adapted to ensure that the organization changes
* Multi-site issues are not properly resolved
* Technical difficulties can lead to implementation failures (4)
It is interesting to note that most of these implementation failures are concerned with organizational, not technical issues. In order to mitigate the risks of these failures, governmental agencies must recognize that change management is critical to the success of the project. By focusing the ERP implementation on change management, an organization is better positioned to understand ahead of time the risks to project success and make appropriate adjustments to the organization or business processes to combat failure. …