Investment decisions related to financial management systems are shaped in part by the associated economies of scale. It is reasonable that small and mid-size governments spend less--and usually get less--on financial system packages, because the scale of their operations does not justify a large investment. By pooling their technology investments, however, it is conceivable that two or more of these governments could gain access to a system that is far better than what any one of them could have obtained on their own.
Intergovernmental cooperation is not a new idea. For as long as there have been local governments, cities, counties, and special districts have jointly funded and/or performed services whereby each of the entities was better off. Cooperation in the areas of economic development, public safety, public buildings, roads, and internal services such as fleet management and copying are well known. But there are few examples of intergovernmental cooperation in the area of technology.
This article reviews the systematic process by which three Nebraska local governments collaborated to replace their existing financial systems with a new enterprise resource planning (ERP) system. The involvement of multiple governments significantly increased the complexity and degree of an already daunting task. However, through executive-level leadership, staff-level cooperation, and intergovernmental collaboration, participating governments achieved benefits that are easier to establish in theory than they are to achieve in practice.
Case for Action
Several years ago, officials from Douglas County and the City of Omaha met to discuss the possibility of a joint effort to procure and implement an integrated financial system. Until that time, both governments had used the same accounting system under a joint agreement with the vendor. Two separate databases for the accounting package resided on the county's mainframe system--one for each government, each with a different set of legacy systems feeding into the main accounting package (Exhibit 1). The software had been configured and customized to meet the unique requirements of both governments.
When the system was originally installed in the mid-1980s, the contract included a clause requiring that the vendor make the software Y2K compliant. However, because the county and the city had decided against upgrading to the client-server version of the accounting package and were the vendor's only customers still using an older operating system, the vendor decided not to extend its support of the system beyond Y2K compliance. This decision, combined with a common desire to replace the legacy system with a more integrated system that extended beyond traditional financial functions, prompted the governments to jointly pursue the procurement and implementation of an ERP system.
Achieving Intergovernmental Consensus
During initial discussions, officials concluded that they would need the assistance of consultants on several aspects of the project. Since both the county and the city engage the same auditing firm, this firm was commissioned to perform a high-level needs assessment and to present its findings in a joint session of the Douglas County Board of Commissioners and the Omaha City Council. A representative from the Mayor's Office also was resent at this session. The consultants presented enough information about the need for and the benefits of an integrated financial system to convince the Board, the Council, and the mayor to move forward with the project.
Representatives from both the county and the city agreed that the two governments lacked the in-house expertise to develop a comprehensive request for proposals (RFP) for an ERP system. Accordingly, the Board of Commissioners and the City Council entered into an interlocal agreement to contract with the Government Finance Officers Association (GFOA) to help develop the RFP and to assist in the evaluation of RFP responses, the selection of a software and services vendor, and the negotiation of the final contracts. …