Commercial- Off-The- Shelf Enterprise Resource Planning Software Implementations in the Public Sector: Practical Approaches for Improving Project Success
Thomas, Glenn A., Jajodia, Shyam, The Journal of Government Financial Management
COTS ERP systems are software packages offered by commercial vendors that support core administrative processes such as budgeting, accounting, procurement, performance and human resource management by integrating the data required for these processes in a single database. COTS ERP systems are based on the premise that the software vendor can support common business processes more effectively and efficiently than customer organizations. Because ERP software is maintained by the vendor and is based on a reference model of business processes defined by the vendor, total cost savings and return on the buyer's investment are predicated on the organization adopting the vendor's model. While ERP software supports limited customization through changes to configuration settings, unsupported modifications to the software only serve to increase maintenance costs, thereby reducing the overall return on the buyer's investment.
A growing number of federal, state and local government organizations are either implementing or planning to implement commercial-off-the-shelf (COTS) Enterprise Resource Planning (ERP) systems. These projects are undertaken to replace aging systems and to re-engineer operational processes for greater cost-effectiveness, efficiency and improved service to constituents.
* ERP Implementation Success
While the success of an ERP system should ultimately be measured by how it meets organizational objectivessuch as improved business operations-implementation success is generally defined by more tactical measures, such as whether the project was completed on time and within budget. Based on these measures it appears that success is difficult. In the literature, it has been reported that 90 percent of ERP implementations are late or over budget.1 Research attention has therefore focused on defining the critical success factors (CSFs) for ERP implementation projects. For example, a survey of chief information officer (CIO) perceptions identified 12 factors that contribute significantly to the overall success of ERP implementations.2
While the CSF approach identifies important areas for attention, it does not always suggest best practice in each area. Moreover, most research has thus far focused on implementations in the commercial sector. Although many of the CSFs in the commercial sector are, no doubt, applicable to success in the public sector, it is important to remember the differences between public sector entities and their commercial counterparts. Public sector entities tend to have multiple and complex competing organizational goals as opposed to the overarching wealth maximizing goals of private sector organizations. Besides, the acquisition and decision-making processes in the public sector require a very high degree of transparency, which results in decision-makers who are averse to risk. all these issues complicate the ERP project and make tactical success even harder to achieve.
In this article we examine the factors that significantly impact ERP implementations in the public sector from a practitioner's point of view and detail some successful approaches to meet these challenges.
* Focusing Implementation Methodology
In our experience, many public sector organizations try to adapt the system development life cycle (SDLC) methodologies designed to custom-build systems for COTS implementations. This is because public sector entities have traditionally designed and developed their information systems in-house, and COTS systems are relatively new in the public sector.
COTS ERP software provides a pre-defined system, which can be adapted to an organization's requirements by changing configuration settings in the software. Settings can be quickly changed and the effects tested immediately. Further, programming required for a modern web-based system is usually less than that required for older mainframe-based systems. This process is faster and less expensive than making changes to custom-built systems of similar complexity where each code change must be designed, specified, developed and tested in much greater detail. …