According to our 2014 ERP Report, nearly one in five respondents (16%) indicate that their organization’s ERP project was a failure. That is a lot of good intentions gone wrong, not to mention millions of dollars and thousands of man hours. With failure rates this high, many organizations shy away from ERP implementations and actively decide that manual entries, paper spreadsheets stored in three-ring binders and legacy software from 1995 are preferable to starting an ERP selection and implementation.
I won’t lie. ERP selection and implementation seems overwhelming at first and I’ve often heard the excuse, “But it’s hard,” from top-level management as their number one reason for not starting an ERP implementation. However, sometimes we just have to put on our big-boy and big-girl pants and solider on.
One of the best ways to help alleviate some of the “but it’s hard” syndrome is to hire an outside Project Management Office (PMO) to provide project management oversight. In a nutshell, a PMO is a small group of people who standardize and follow project management policies, processes and methods to ensure a project is on time, within scope and on budget. Most PMO Managers are certified in PMBOK (Project Management Body of Knowledge) or PRINCE2 (Project in Controlled Environments). These certifications are consistent with several standards such as ISO9000, U.S. Sarbanes-Oxley (SOX) and CMMI.
In my biased opinion, an outside PMO can make an ERP implementation a success and can also snatch a failing ERP implementation from the jaws of defeat. Here are a few reasons why:
A PMO’s sole job is to ensure project success. In most organizations, an ERP implementation is among an array of tasks on an employee’s to-do list. Employees have their day-to-day duties to perform before they can contribute to any side-projects like an ERP implementation. All of the tasks on a PMOs to-do list all relate to project success. A PMO that cannot make a project successful will not last long in the industry.
A PMO has seen all of the scenarios play out before. The best PMOs have many years of experience in a given industry. They have worked with large organizations, small organizations and those that fall somewhere in between. These PMOs can tell great war stories about how they turned a project around, made a strong personality stand down and walked uphill in a snowstorm both ways on a sprained ankle carrying three laptops to meet a deadline. Because they have seen it all before, they know how to mitigate a situation and even prevent an issue from becoming a serious situation.
A PMO can both pull rank and ignore rank. Because the PMO generally reports directly to the uppermost management, PMOs are given wide latitude in whom they can talk to and what they can request. Although PMOs strive to foster strong relationships among the workgroups, at times, they have to be the bad guys to get work done. This means that they don’t have to (and shouldn’t) work through the layers of management and office politics to accomplish tasks. The PMO can go straight to the source of information to get what they need, and if an employee won’t comply, the PMO will have upper management’s backing to persuade the employee to reconsider. Rarely do internal employees, even internal PMOs, have this type of leverage to get work done because they usually must play the within the parameters of organizational politics to keep their boss(es) happy.
Every organization, especially those in the public sector, should hire an experienced PMO who is focused on ERP success. To learn more, visit our Project Management Oversight page.
A few weeks ago I had an experience with the local DMV which has led me to believe that their current systems are less effective than a Viking battle helmet with the horns on the inside. The dealership told me to go to the DMV, promising that all of the appropriate paper work had already been transferred there. I walk into the dreaded building of sorrow and deceit, hoping everything goes smoothly. When I explain my situation to the clerk, she tells me the dealership never sent over the paperwork. My palm goes straight to my face. DMV: 1 David: 0.
Turns out, the paperwork had been sent to the central DMV office but was then sent to the wrong branch, lost and was never entered into the system. The clerk spent over four hours hunting it down and manually reentering everything. As I stood there waiting, I realized I was “that guy;” the guy no one likes because he’s holding up the line. The whole situation could have been an episode straight out of Seinfeld.
Why doesn’t the DMV have an online portal where the dealership enters the data in order to alleviate some – or most – of the hassle for the citizen? Why doesn’t the DMV track incoming documents so there is less chance of losing them? Why does a process that should take 15 minutes take 15 days?
The answer is technology and selecting the right system to provide a positive return on citizenship (ROC). In addition to functional fit, a system’s ability to increase ROC is an important criterion for your agency to consider when selecting software. If the DMV was to a launch an e-Government initiative, everyone’s DMV experience could be comparable to sitting on the beach, drinking a Piña colada out of a pineapple. While this may be a bit of an exaggeration, it is no exaggeration to say that citizens demand a lot from their government.
Selecting and implementing new technology in the public sector is extremely difficult as most government agencies are comprised of more departments than Costco Wholesale, each with a variety of requirements. With this in mind, here are three crucial steps to selecting the right software for your organization:
1. Requirements gathering: A successful project manager should collaborate with representatives from each department to gather a list of specific requirements. Then they must organize those requirements to determine a list of “must haves” that are essential to achieving a positive ROC.
2. Request for proposal development: The RFP process ensures that your agency is being transparent while gathering bids from ERP vendors. An RFP should be brief and to–the-point. It is designed to identify the most important requirements and to weed out ERP systems that would require extensive amounts of customization. Ideally, the selected system will require minimal customization.
3. Analyze the options: Your agency should narrow down the RFP responses to two or three vendors by conducting follow-up meetings. Have the short-listed vendors provide software demos to show how their system will support your agency’s e-Government initiative, and in turn, how it will help you serve citizens.
While the public sector’s technology budget isn’t exactly a facsimile of Warren Buffet’s investment portfolio, agencies have to do the best with what they have because citizens’ expectations are high, and the possibility of a highly-publicized ERP failure is always a dark cloud hovering over project managers.
The right technology can have a significant impact on citizens’ interaction with their government. Many agencies recognize the importance of a thorough software selection. Engaging an independent and innovative consultant to help your agency with its selection and implementation will ensure ERP success and a positive return on citizenship.
Written by David Ovitsky, Associate Business Analyst at Panorama Consulting Solutions.
Learn more by downloading our new Public Sector white paper, The Need for Public Sector Innovation: Facing the Challenges Posed by Public Sector IT Initiatives.
Recovering from a failing project is an incredibly difficult process. It can require a change in project scope, a hard look at requirements, an introduction of new methodologies and clear project controls. In some extreme situations, the project team and consultants may need to be replaced.
After a sobering, no holds barred assessment; the following actions must be taken.
1. Reexamine the ERP Software. Determining if the ERP software was originally a good fit for the organization is the first step to recovery. The recovery team must determine if the project team evaluated the ERP options appropriately or chose specific software based on invalid assumptions. While the software is often the immediate culprit, often times it is merely a symptom of the real failure issues: failure to provide adequate change management and/or clinging to outdated processes.
2. Reorganize the ERP Project with the Experts. A failing ERP implementation shares many characteristics of bankruptcy. Reorganization, refocus and accountability are necessary actions to begin the road to recovery. An independent set of eyes can avoid the blamestorming game, move the project into results-oriented brainstorming and ultimately get back on track.
3. Identify, Educate and Provide the Resources to Move Forward. While it is tempting to throw the failure out the back window, walking away does not solve issues that required an ERP implementation in the first place. In fact, simply trying to erase the ERP system will do nothing but derail future effectiveness, agility and return on citizenship (ROC) that are still required by the government. The right resources are likely inside the organization and can be refocused on the revived ERP implementation with the right mix of leadership, change management and backing. One thing seems abundantly clear: there are still a great deal of ERP and other software projects running off the rails. Blaming and rebooting ERP vendors is only one fix in a broader ecosystem that includes the government customers and the system integrators. Solving this problem requires close coordination and an independent catalyst to keep them on track, on time and on budget.
Project Management Oversight and IV&V can help you with staying away from a failure for your organization, check out our on demand webinar, The Importance of Independent Verification and Validation and Project Management Oversight to find out how independent consultants can help.
Written by Rich Farrell, Senior Manager of Client Services at Panorama Consulting Solutions.
While nonprofit organizations are designed to help others, it is ironic that they sometimes are not able to help themselves. Nonprofits are confronted with challenges and difficult tasks when it comes to providing services to those in need. Unfortunately, that can be a tall order if the organization lacks the tools, budget, resources and time needed to properly manage all of their obligations. In an era of shrinking budgets, nonprofits must find a way to streamline activities and provide a positive return on citizenship.
ERP software can help achieve this goal if the organization selects the right technology. Throughout the selection process, nonprofits need to focus on financial transparency, process optimization and keeping pace with grants and donors – if they do not seek guidance for this, they will fail their constituency. Nonprofits also need to be able to respond efficiently to changing compliance and regulatory requirements no matter how complex the requirements. Your organization should create a detailed report of grant expenditures that are tied to restricted grants in order to increase transparency with donors and funding agents, and satisfy reporting requirements.
It seems so easy in the beginning. The nonprofit goes through the process of interviewing several software vendors without the help of a consulting firm and without the goal of minimalizing the total cost. Implementing software is not as easy as advertised, and often the software is not the problem – it is the organization. The nonprofit selects a relatively inexpensive software that is supposed to work “out-of-the-box.” The vendor implements the software, provides training and then leaves. When all is said and done, the ERP system becomes a constraint instead of an asset. Like secondhand clothes, they never fit as well as a tailored suit.
However, it is never too late to engage an ERP project recovery team to guide you through a tried-and-true process that will determine if you should invest more money into configuring the current system or invest in new software that would be a better fit for your organization.
Public sector ERP consultants can help nonprofits select and implement a fully-integrated ERP system specifically designed for dynamic organizations. They ensure that processes continue to run smoothly despite the disruption of new software. By selecting the correct software from the beginning, nonprofits have the framework to quickly respond to evolving requirements and increasing scrutiny. ERP consultants can carefully select the right ERP system for your organization while minimizing cost and operational disruption.
It is critical for nonprofits to have the right resources at the right time to help them provide critical services to their community. Let us help you provide that return on citizenship and turn a non sequitur into a no-brainer ERP implementation.
Learn more by registering for our on-demand webinar, Organizational Change Management in Public Sector ERP Implementations.
Written by Rich Farrell, Senior Manager of Client Services at Panorama Consulting Solutions.
Earlier this year, the state of New South Wales (NSW) in Australia announced that it had successfully implemented SAP Business Suite powered by SAP HANA for its emergency service agencies. In 2013, the Fire & Rescue New South Wales (FRNSW) agency reported more than 130,000 emergencies – ranging from fires and natural disasters to industrial accidents and counterterrorism measures – making it one of the largest emergency response agencies in the world. Innovative thinking and a comprehensive implementation plan allowed NSW to improve its service to citizens in very tangible ways.
During the implementation process, FRNSW, NSW State Emergency Service and NSW Rural Fire were brought under one roof and now use a single instance of SAP Business Suite. SAP HANA provides real-time data analysis and modelling that will be used throughout the NSW emergency services network. By bringing these different agencies together, they have been able to streamline and improve organizational processes, and at the same time, more efficiently collaborate across agencies.
As NSW’s population continues to grow, the number and severity of natural and man-made disasters will increase the need for disaster services. SAP HANA coupled with the ‘Project Minder’ system helps FRNSW manage its large firefighting and rescue asset base that includes half a million assets, equipment and vehicles. Project Minder enables NSW to curtail disasters by analyzing real-time data that makes disaster predictions up to a week in advance by recommending resource utilization to address disasters. Using modeling software, FRNSW will be able to put boots on the ground to prevent man-made disasters from occurring. According to Richard Host, CIO of FRNSW, modeling software has revealed that arson tends to occur under a combination of locality, weather and time of year.
So how was Host able to successfully execute a project of this size when so many other government implementations have failed? In 2013, Host reflected on his lessons learned. As he told The Australian, ”One of the biggest challenges is to not do too much too fast . . . We just need to be conscious of how much change the organization can handle.”
His lessons learned proved fruitful, and in early 2014, the project successfully launched. So far, NSW has seen a sharp increase in return on citizenship (ROC), most importantly in the form of injuries prevented and lives saved.
For more lessons learned, register for our webinar this Thursday, How to Spot Warning Signs and Integrate Quality Assurance Into Your Project.
Written by Annalyn Evenstad, Associate General Counsel & Contracting Department at Panorama Consulting Solutions.
Over the past few months we have posted a couple of blogs comparing ERP successes and failures to Subway sandwiches (the most recent article can be read here). What type of Subway sandwich represents your company’s ERP project? Take a moment to vote in our poll and then check back to review the overall results.
In the past six months, I have noticed a trend in government RFPs for ERP solutions that place a significant amount of power in the hands of the RFP respondents. Several RFPs have only been providing a minimum amount of requirements and information, such as existing hardware, number of users and general functionality requirements (e.g., HR, payroll and time management). Some of these RFPs have been as short as six pages. ERP respondents are free to offer whatever products they have that will meet this low bar (and whatever will produce the most profit).
While I appreciate brevity and the absence of micromanagement in many business practices, an RFP for ERP software is not the place to be short and sweet. Before pen ever hits paper, an organization must make a roadmap for its ERP initiative. It should ask itself four guiding questions:
1. What is the organizational purpose for wanting to acquire ERP software? The organization must answer this question to begin setting its goals and expectation for the ERP software. Is the organization expecting cost savings, more efficiency or more functionality? Is this purchase mandated? Knowing these answers, the organization can begin building the business case for this purchase.
2. How critical will the ERP software be to the organization?Not all ERP modules have the same level of importance for an organization. For example, if a customer bill pay function fails on the organization’s website, this could have a greater impact on the organization (and more negative publicity) than if an internal function fails. By understanding the level of criticality, an organization will know what levels of service and remedies to request from vendors.
3. What is the budget for the ERP initiative? Most organizations plan for the year that the ERP software is purchased but fail to look past the first year. Not only does an organization need to plan for the purchase itself but they also need to plan for hardware upgrades, implementation, training and service and maintenance agreements. One area rarely discussed is how much the service and maintenance agreements cost after the first year and what is an acceptable rate of increase. Many ERP vendors tie service and maintenance increases to CPI or a fixed percentage. Organizations have the best leverage when negotiating service and maintenance agreements upfront. After the initial contract is signed and the software is installed, organizations have very little negotiation power over long-term service and maintenance agreements.
4. How long will the ERP implementation take? Most organizations do not research the average implementation times for ERP software. A well-run implementation takes time and average times vary greatly by ERP solution. Organizations can better plan and budget for overrun, project management and staffing when they have realistic timelines upfront.
By discussing and answering these four questions, the organization will have a roadmap to guide the subsequent in-depth research and requirements gathering that is vital to draft a comprehensive RFP for ERP procurement.
I had the pleasure of speaking at the Financial Management Institute’s PD Week 2013, “Transformation Through Innovation,” which was an appropriate theme for Canada as financial managers across all levels of government in Canada are embarking on a journey to implement the largest agency-wide ERP system in history.
I admire the leaders behind this initiative because they are looking at their overall initiative as a government transformation initiative and rethinking what they do and how they do it in order to innovate. Their key mission is to drive government to become efficient, act more like an enterprise by reducing costs, and achieve “value-for-money” from financial management. These leaders in the Office of the Comptroller General are truly thinking about new ways of doing business that yield the best results for Canadians.
Another example of innovation is an e-Government solution like the ‘Smart City’ initiative in Cape Town, South Africa, which have allowed municipalities to efficiently manage resources, streamline tax collection and help create a citizen-focused environment. Smart City uses a dual approach – an ‘external’ dimension vastly enhances the ability of citizens to access and harness ICT for self-development, while internal initiatives involve standardization of IT services and related ICT capacity building within the city administration.
In Kenya, an e-Government service in six towns includes an Internet-based tool that allows citizens to anonymously report instances of corruption. The service is part of the country’s Electronic Graft Management (EGM) project. A survey conducted in two municipalities as part of the project showed the following:
- 80% of respondents felt that computerization had improved financial transparency.
- 82% of respondents felt municipal financial management had become more effective.
- 80% of respondents felt e-Government services improved accountability, as they could now track business permit licenses and monitor all payments handled by city councilors.
Chile is another country with big innovation ambitions; the Chilean government declared 2013 to be its year of innovation under the headline, “Imagina Chile” (imagine Chile). The Economist named Santiago the “Chilecon Valley” (the Silicon Valley of Latin America), much thanks to programs like “Startup Chile,” the friendly entrepreneurial ecosystem established by the Chilean government to promote private sector participation and help government innovate.
Finally, Peru announces their “modernization project” which aims to modernize the country’s infrastructure and government management through the deployment of technology.
More and more, we are seeing governments in both developed and developing countries evolve and strive to act like an enterprise in order to be efficient and streamlined and provide citizen-focused services. If you happen to be an agency or government that refuses to change or evolve with the public demand, chances are that the citizens will demand better service and force you to change and innovate like the rest of the world.
Return on citizenship (ROC) is about evolving, innovating and providing services to citizens. The demand for innovative consultants to partner with innovative leaders is becoming much more important to society. The need for government to allow and open the doors to innovation is crucial to the growth of every society and economy.
The transformation of government, its business processes and its management processes will be enabled through the proper deployment of enterprise-wide systems that strive to provide e-Government for the internal and external interaction with its citizens and employees. Innovation does not come easy. Changes in the system and the soul of the agency need to happen first but as illustrated, the evolution and revolution is already happening and change is imminent.
Panorama Government Solutions’ mission statement: Become the global leader in innovative management and technology in the public sector by enabling government to better serve its citizens.
Government organizations rooted in social objectives often become atrophied by process orientation overtime. As a result, employees respond more to process changes than the overall objective of the organization. In order to drive transformation, government organizations must change that paradigm.
Operating with a system where careers are deemed safe creates an employee who feels protected from external forces and has no need to be responsive or involved in process or organizational changes because there is no direct financial measurement of success or perceived incentive for the individual. It is then important to recall the social purpose of the organization.
Government transformation is driven by two forces: the needs of society for better services and the demanding citizen who is now expecting more of government than ever before – that will truly be the catalyst for government to change. The social pressure will then drive accountability and transparency because the public does not want to see their money being wasted. Decreasing costs and increasing citizens’ return on citizenship (ROC) will be the key drivers of change.
Social accountability relies on civic engagement. In a public sector context, social accountability refers to a broad range of actions and mechanisms that citizens, communities, independent media and civil society organizations can use to hold public officials and public servants accountable. These include participatory budgeting, public expenditure tracking, monitoring of public service delivery, investigative journalism, public commissions and citizen advisory boards. These citizen-driven accountability measures complement and reinforce conventional mechanisms of accountability such as political checks and balances, accounting and auditing systems, administrative rules and legal procedures.
Therefore, a good organizational change management (OCM) program considers internal as well as external dynamics. The communication plan serves the purpose of communicating with citizens so that they are fully aware of the services they will be receiving and how their tax dollars will be deployed to serve them more efficiently. This message should be delivered internally to evoke pride in the organization’s general mission and get the staff engaged with the overall process.
The focus of the OCM communications plan becomes mission critical to the ERP implementation initiative since it drives accountability and puts government employees under pressure to perform. Since there is a universal ethos and a subliminal patriotic theme, the government employee becomes more involved in the success of the ERP implementation since he or she is now directly involved in the betterment of society (of which he or she is also a member and citizen).
Once you have created motivation and engagement with public accountability, you are now ready to deploy your motivated and engaged staff to become part of the “think tank” that will collectively be innovative. Innovation usually comes from within and from the soul of the organization and this can only be nurtured by innovative ERP consultants who understand citizens’ ever-changing needs.
Follow us on Twitter and Facebook for Part III and enter your comments on how we can promote innovative thinking and transform government! Our ROC Awards will be coming soon to recognize innovative leaders in the public sector.
Having been involved in many project recoveries and expert witness work around the globe, Panorama has found one common theme: a flawed RFP process that rewards lowest bidders with same old failed methodologies and lack of accountability.
With the increased ERP implementation failures and public scrutiny, one must wonder what is wrong with the system. Research shows that 78% of public sector ERP implementations are over budget and over schedule and 35% simply fail! Reporters covering high-profile ERP implementation failures across the U.S. have asked us about this trend and we normally point to three common themes when evaluating what went wrong:
- Flawed RFP process
- Lack of ERP implementation experience and change management experience in the public sector
- Lack of accountability
The RFP process not only rewards the lowest bidder but also hinders innovative thinking. The vendor chosen normally is forced to cut corners in multiple ways:
- Uses old templates from past projects and calls them “best practice” models.
- Uses their “G” team – often referred as to the “government team” or the cheapest resources in the company – or hires retired government employees for the project teams.
- Moves important tasks to non-qualified subs in order to meet certain RFP requirements.
Congratulations! You have just instructed your vendor to put the D-Squad together for your multi-million dollar ERP project because the only way the contract could be awarded is by delivering a cheap product and we all know that you get what you pay for. The project team is not qualified to deliver these projects to specs on time and under budget. Because they are inexperienced, they end up submitting multiple change orders just to fix what they got wrong in the first place and the project then is delayed and over budget. The agency does not want to bring the failure to light because of public outrage. Have you heard of Healthcare.gov? The bid was won in 2011 for $93M, the project ended up costing over $600M and the darn thing still does not work! Who let this happen? Who is held accountable?
Another reason for ERP failure in the public sector is that nobody (at least nobody who is qualified to oversee a multi-million dollar ERP implementation) manages the vendor and the project with the contract and project plan in hand. With proper management oversight and quality assurance measures, these projects would never go over budget but oftentimes there is not enough budget for quality assurance and project oversight tasks.
These failure points illustrate why projects fail but the root cause goes far beyond this. Innovation is the only way to truly achieve ERP success and increase return on citizenship (ROC). This is essential for keeping up with the times and the current citizen demand from a socioeconomic standpoint.
Hiring ERP consultants who use an innovative methodology ensures that your ERP implementation is properly managed and your government agency achieves a high ROC. We have been fortunate enough to work with valiant leaders that recognize that this effort is a collaborative effort between vendor and government, with the common goal of serving citizens. Innovative leaders need to get out of the vicious cycle of using the same vendors who keep relying on the same failed implementation methodologies. I laugh when I hear the term “best practices” because such practices have a 78% failure rate, which by pure statistical definition, would actually be considered “worst practices.” So, in essence, the public sector continuously hires the same consulting firms who use stale methodologies and old templates from past failed ERP implementation engagements.
Return on citizenship and innovation in government is truly intertwined and if you want to increase the social return on investment, you have to change the game.
If you’re ready to change the game, be sure to register for our 2014 ERP Boot Camp and Vendor Showdown, designed to help your government organization serve citizens and make a positive socioeconomic impact.
Follow us on Twitter and Facebook for Part II and Part III and enter your comments on how we can promote innovative thinking and transform government! Our ROC Awards will be coming soon to recognize innovative leaders in the public sector.
What happens when project managers with high job security are put in charge of an ERP implementation with an inherently high chance of failure? In light of the recent Obamacare IT failure, this is a question that seems to have been answered.
However, I think the question that was answered was more along the lines of, “What happens when project managers with limited knowledge of best practices are put in charge of an ERP implementation? “
For government agencies implementing ERP software, the latter question is the question that they should ponder. The first question fails to get at the real issue. While a low threat of job loss and low motivation don’t help matters, it’s certainly not the only problem that derails implementations.
There are many other factors that contribute to poor project management and thus ERP failure. While I can’t say whether or not the Obamacare IT failure was a result of low motivation, it’s safe to assume that it was largely a result of limited project management experience and expertise. We can blame high job security all we want but accountability is only part of the equation for success – in-depth knowledge and “in-the-trenches” experience is the other part.
Following are five tips for finding a project manager with the right expertise to oversee your public sector ERP implementation:
1. Project managers shouldn’t be afraid to point out problems even if it slows the implementation. It’s better to fix problems and mitigate risks sooner rather than later.
2. Project managers should clearly communicate expectations to the ERP project team. Throughout implementation, they should regularly asses milestones and measure results.
3. Test, test, test! Project managers should thoroughly test ERP software before going live. Conference room pilots are a project manager’s best friend.
4. Project managers should develop an ERP implementation plan that addresses project timeline, scope and resources.
5. Project managers should not go it alone. Even if your internal project manager has years of experience and “enough time” to devote to the ERP implementation, hiring an outside resource can ensure that “enough time to do the job” translates into “enough time to do the job right.”
While there are a number of factors that can contribute to ERP failure, government agencies should focus on the factors most within their control. Organizations that hire outside resources, such as Panorama, to manage their implementation will benefit from the knowledge and best practices that lead to ERP success.
Panorama’s work is focused on empowering leaders to implement integrated technology solutions that deliver effective service to their citizens – a concept Panorama has termed “ROC” or “return on citizenship.”
In today’s society, citizens expect the same level of service and responsiveness from corporate and government agencies alike, so there is much more pressure for government institutions to react quickly and change for the better so they can efficiently provide the services tax payers are paying for.
With that said, return on citizenship (ROC) can best be described as a measurement of success similar to return on investment or (ROI) but in the private sector. When all is said and done, citizens pay income taxes, FICA, sales taxes and all sorts of local taxes that go to support all public services so the return on this money is the benefits it provides citizens.
The amount and quality of services that are received in exchange for tax dollars can be referred to as a citizen’s ROC. Citizens have come to expect the same high levels of service and responsiveness from the government that they do from private entities. When citizens do not feel that their ROC is high enough, they may elect new officials, pass referendums and, in some extreme cases, leave their tax district for another. This shift in power has put the onus on government institutions not only to be more proactive than reactive but to create effective dialogue with constituents and increase responsiveness.
The recent glitch with the federal government’s Obamacare exchange website is a perfect example of misalignment between contractor-government-citizen. The glitch has hindered millions of citizens from determining an accurate price for their healthcare because the federal software that determines whether customers are eligible for federal subsidies under Medicaid or the Affordable Care Act still isn’t functioning properly. Millions are receiving error messages and the site still has glitches. Worse yet, taxpayers overpaid for the site.
The cost to build Healthcare.gov, according to U.S. Government records, appears to have been $634M, which we paid to CGI Federal. The company originally won the contract back in 2011 but at that time, the cost was expected to run “up to” $93.7 million.
Just to provide some context, Facebook, with over a billion users, spent $600 million in website expenses for a four-year period and similarly, Twitter, with over 215 million active users, operated its website for $360.17 million over a five-year period. So why can’t the government operate as efficiently as the private sector?
Accountability is a key factor in being able to serve citizens and, due to the nature of government, the pursuit of profits is not what holds governments accountable but rather the service to the citizens. Any contractor, individual or vendor providing services to the government must share in the principle in order to be congruent with the overall success of lining up tax payer dollars with key government initiatives.
For the public sector to achieve its goal of providing a high ROC, it must do two things well: continually transform itself to improve services while reducing costs and continually engage with its constituents in a real and meaningful way. An ERP implementation is an opportunity to accomplish both of these goals. But transformation comes at a price. And engagement creates accountability.
Panorama Government Solutions has developed teams of independent government consulting experts who pride themselves with partnering with foreign and domestic governments to catalyze societal change and improve the quality of life of people throughout the world. In addition to delivering improvements to the environment and infrastructure, the firm’s consulting engagements support economic and social reform, wealth creation, good governance and the rule of law.
While selecting public sector ERP software is similar to selecting private sector ERP software, there are a few key differences of which to be aware. If you are a technology, finance or procurement officer of a government or nonprofit agency and have received budget approval for new technology then these differences are essential for you and your organization to understand before proceeding with the selection and procurement process.
Public sector agencies face a unique set of challenges when preparing for software selection. Because they are often composed of many diverse departments, it can be difficult for an ERP project team to prioritize each department’s various needs, goals and requirements. Another challenge is public scrutiny. Government agencies and nonprofits alike must be transparent in their spending and the cost of new technology must be clearly justified by the benefits it will deliver to constituents on a whole. While benefits realization is important in the private sector, it is arguably even more so in the public sector so agencies need to be able to select software that can deliver measurable benefits.
Following are three crucial steps for agencies beginning the software selection process:
1. Conduct a needs assessment. A strong project leader should work with representatives from each department to gather a list of organizational requirements. These requirements should be prioritized to arrive at a list of “must have” requirements that are most important to the organization.
2. Write a request for proposal (RFP). The RFP process ensures that public sector agencies are being fair and open in collecting bids from vendors. An RFP should be brief and to the point and should identify only the most important requirements in order to attract only the appropriate vendors.
3. Evaluate the options. Once an RFP generates responses, agencies should contact vendors that meet their requirements to ask further questions. These follow-up calls should narrow the list to two or three most viable vendors that can present scripted demonstrations specifically addressing an agency’s requirements.
If you find that at any point during software selection your agency needs the support and guidance of an independent third-party, you are in good company. Many government agencies find that they have a scarcity of time, resources and expertise necessary to conduct a thorough software selection. Panorama’s independent consultants have successfully helped a number of private and public sector organizations overcome this scarcity and select software that delivers benefits to the stakeholders organizations need to please most.
Learn more by visiting our System Selection, Procurement & Acquisition page. Also, be sure to download our on-demand webinar, Tips for Selecting the Right ERP Software for Your Organization.
Denver, COLO – To successfully implement enterprise resource planning (ERP) software, government organizations must incorporate targeted organizational change management activities into their project strategy, according to the Organizational Change Management in Public Sector ERP Implementations white paper released today by Panorama Government Solutions, an independent ERP consulting firm in Denver. The paper posits that public sector agencies should focus on determining risk exposure and developing mitigation tactics for the specific change management challenges that they face.
“Through our work with government agencies as well as our independent research into ERP failures, Panorama has seen time and again the profoundly negative effects that inadequate organizational change management can have on ERP implementations,” said Z. Vanessa Giacoman, Managing Member of Panorama Government Solutions. “There is no way around it: government agencies must overcome the eight key organizational change management challenges I discuss in the white paper to successfully implement any large-scale program or system.”
The white paper also details the five pillars that Panorama’s own PERFECT Change™ organizational change management methodology is built upon, including communication and organizational alignment, contextual training and benefits realization frameworks.
To offer further insight into the role of organizational change management in public sector ERP implementations, Giacoman will present a free webinar on Thursday, September 26 at 1 p.m. EST. Registration is open at http://go.panorama-consulting.com/Organizational-Change-Management-in-Public-Sector-ERP-Implementations_RegistrationPage.html.
Organizational Change Management in Public Sector ERP Implementations is available for download at http://go.panorama-consulting.com/OCM-in-Public-Sector-ERP-Implementations_Download.html.
About Panorama Government Solutions
Panorama Government Solutions is the leading independent global management and technology consulting firm serving the public sector. Headquartered in Denver, our integrated government management consulting methodologies, enterprise resource planning (ERP) software expertise and technology-agnostic approach provides government and public sector clients worldwide with the evaluations, analyses and strategies necessary to achieve effectiveness and successfully deliver better services to their citizens.
More information can be found on its website, Panorama-Government.com and Twitter feed, Twitter.com/PanoramaGovSol.
Who: IBM and the State of Pennsylvania
- Pennsylvania has terminated a contract with IBM to provide new software for the state’s unemployment compensation system
- 42 months behind schedule
- $60 million cost overrun, based on an original budget of $106.9 million
When: August 9, 2013
Why: Significant delays and cost overruns led to a huge IT failure that illustrates the problems that arise when customer and system integrator do not fulfill their responsibilities and obligations.
How: Different expectations and understanding about the planning
Over the years Panorama has been conducting its independent research, such as our 2013 ERP Report, and we have found that more often than not, ERP implementation costs and durations exceed organizations’ expectations. To add insult, all of the extra cost and time spent to implement the systems does not seem to have a positive impact on the amount of benefits organizations receive.
The recent contract termination between the State of Pennsylvania and IBM highlights this rising trend that ERP implementation cost and durations, more often than not, are higher than expected. The reason? IBM and Pennsylvania both failed to take the time upfront to develop a strong, solid ERP strategy and plan that would have mitigated risk. The result was a failed software implementation that by the time of cancellation, the state’s new unemployment compensation system was 42 months behind schedule, with a $60 million cost overrun, based on an original budget of $106.9 million.
An independent study conducted by Carnegie Mellon University’s Software Engineering Institute made clear that the reason this project failed was due to both sides failing to fulfill their responsibilities. Faults included lack of sufficient testing and quality assurance, as well as both parties failing to set realistic expectations and understandings about the project. Cases such as this raise a red flag that there needs to be a strong relationship among enterprise buyers, software vendors and system integrators.
In the situation of Pennsylvania, their project management team did not have sufficient expertise to put together a strong, solid request for proposal. Without the proper information about the project, IBM may have bid too low on the project, hoping to win the contract and later creating more expensive change orders further down the road. These two factors created a recipe for disaster that led to the software vendor’s sales people suggesting a product that did not adequately fit with Pennsylvania’s needs.
Following are four tips to help prepare for the potential disaster of a failed ERP implementation:
- Define your corporate strategy and set realistic expectations from the start. In order to help gain a deep understanding of end-user and executive expectations, concerns and anxieties regarding the ERP project, determine where you want your organization to be in five years, ten years, etc.
- Define your organization’s current and future state business processes to assess possible risks and measure the success of risk mitigation activities.
- Train end-users. Well-executed training covers both technology as well as processes and helps facilitate employee buy-in and overcome resistance to change.
- During implementation, ERP software should be configured to the needs of the business, instead of the business being configured to the needs of the software. This ensures alignment with corporate strategy.
To avoid ERP failure, your organization’s business strategy should drive your ERP project. To learn more, download our 2013 ERP Report.
Written by Daniel Rivero-DeAguilar, Business Development Assistant at Panorama Consulting Solutions.
Many industry pundits have been predicting the death of ERP systems for quite some time now. Back in 2001, the TechRepublic web-site conducted a survey to determine respondent’s expected lifecycle of ERP software. Perhaps not surprisingly, the poll – essentially a loaded question – revealed that 78% of respondents expected ERP systems to be obsolete in 10 years or less.
These expectations are not surprising for a number of reasons. First of all, ERP implementations are challenging, which would suggest that the industry can’t continue as it has for the last few decades. Second, cloud and SaaS ERP systems are changing the paradigm by giving organizations faster, more flexible, and often times, more cost-effective deployment solutions, which has already threatened the traditional establishment of ERP vendors. Third, and as outlined in our 2013 ERP Report, most ERP implementations cost more than expected, take longer than expected and fail to deliver expected business results, so it is reasonable to assume that CIOs and other executives want something less complicated, costly and risky than current ERP systems.
While it is probably safe to assume that something needs to change in the industry, it is also not likely that ERP systems are going anywhere anytime soon. Not only did the detractors have it wrong back in 2001, but those that think traditional ERP systems are going to die anytime soon are misinformed as well. Here are a just a few reasons why ERP isn’t and won’t be dead anytime soon:
Emerging markets and startups will always provide a robust pipeline of potential ERP customers in the future. While it is widely recognized that most Fortune 500 companies in North America and Western Europe have already adopted ERP systems – leaving few “new” ERP customers in this relatively small group – there are hundreds of thousands of smaller organizations and startups that will someday need ERP systems to scale their organizations. In addition, emerging economies are investing heavily in their business and government infrastructure, which often translates to more investments in ERP software. These two trends will likely create potential ERP customers for years to come as these emerging organizations invest in enterprise systems to scale for growth.
Businesses are constantly changing. Businesses are constantly changing, growing, acquiring, being acquired and entering new markets, but ERP systems rarely keep up with these rapidly changing business environments. As illustrated in the graphic below, most organizations do not proactively invest in their existing ERP systems to keep them aligned with never-ending business changes, which inevitably leads to the need (or want) to invest in new ERP systems down the road as the systems become too misaligned with the business to be effective. While the “real” answer is for companies to keep better alignment and get more mileage out of their ERP investments, we have yet to see a meaningful percentage of organizations do so.
ERP systems are constantly changing. Even if organizations were to keep their ERP systems perfectly aligned with evolving business needs, enterprise technology is going through rapid change as well. Think about the ERP of 10 years ago: SaaS wasn’t nearly as widespread as it is now, user interfaces weren’t built to emulate social media platforms as many are now, and sophisticated configuration and integration tools were few and far between. Add the fact that vendors can only support so many back versions of the software and you have a recipe for a perpetual cycle of ERP software upgrades and purchases. While it is safe to assume that ERP is going to continue changing significantly in the next 10 years, it is also fair to say that systems that are cutting-edge today are likely to become obsolete and lacking in vendor support in the future.
ERP vendors are always consolidating on one hand and satisfying niches on the other. There are some that think the vendors of the future are Salesforce, Netsuite, Workday and other niche, SaaS ERP vendors. This may or may not be true, but longer-term, there will always be a pendulum swing between consolidation and industry niches. In other words, while larger ERP vendors like Oracle and Infor grow and acquire other companies in an attempt to essentially be everything to everyone, smaller niche players will pop up and fill the voids in specific industry or functional niches. As more companies leverage these niche providers, these same companies will eventually need the standardization and consolidation afforded by single, “big” ERP systems. Although the pendulum will always swing back and forth between large ERP vendors and niche providers, ERP as we know it is not likely to completely die as a result.
Government regulation creates even more change for global enterprises. For better or for worse, the world’s governments will continue to add regulations, red tape and complexities to organizations across the globe. In the process, they will determine exactly how for-profit and government entities need to operate and report, which will inevitably increase demand for ERP systems that can help provide this compliance. Unless organizations decide that they want to reinvent the wheel by creating their own custom systems to handle these complexities rather than leveraging off-the-shelf software, ERP systems are going to provide the answer for many organizations for many years to come.
The only constant that can be predicted with 100% certainty is change. Each of the above points underscores the degree of change that enterprises experience now and in the future – and change is perhaps the single most important indicator of an organization’s likelihood of implementing a new ERP system. The flavor of the week may change – right now, SaaS, business intelligence and mobility are the big buzzwords – but ERP systems are not going to die anytime soon. If anything, these changing trends and buzzwords create a perpetual market of ERP customers in the future.
Learn more by downloading our free, on-demand webinar, What the Emergence of SaaS and Cloud ERP Technology Really Means for Your Organization . . . and Your Job.
Government and public sector organizations have many unique challenges when it comes to implementing ERP software. Tight budgets, high expectations and the possibility of a publicized ERP failure add a layer of anxiety that most non-government organizations (NGOs) have not experienced.
We recently launched a website for Panorama Government Solutions, a leading independent consulting firm serving government and public sector clients. On this site you will find a variety of resources on management and technology consulting as it relates to government ERP software. And don’t forget that there are also many resources to explore on the Panorama Consulting site. Following is a list of five blog posts addressing government and public sector ERP implementations and the ever-present threat of failure:
Here are some additional resources on government ERP software:
Many government organizations find independent assessments helpful for ensuring their ERP implementations are on track to realize expected benefits. Panorama’s independent ERP consultants are skilled at providing independent verification and validation (IV&V) to private and public sector organizations hoping to mitigate risk and achieve ERP success. Contact us to learn more.
In December we wrote about the inadequate leadership and mismanagement that led to the $1B U.S. Air Force ERP failure. Surely, poor communication and dishonesty were at fault but what else can be said about this IT disaster?
As with any ERP failure, disaster can be traced back to a number of early warning signs. The Air Force’s business process reengineering (BPR) efforts, in particular, lacked the acumen and decisiveness that leads to benefits realization and high ROI.
Seven years ago, when the Air Force began the Expeditionary Combat Support System (ECSS) program, it had business process management on the mind and hoped to streamline the process of collecting and analyzing logistics data and thus improve weapons systems availability. Unfortunately, ECSS has provided no improved military capability to date.
Following are three business process reengineering errors that led the ECSS project team astray quite early in the implementation process:
1. Failing to integrate disconnected business processes across multiple locations. Business processes evolve over time to meet the unique needs of individual departments and locations. Eventually, these processes can become inefficient to the enterprise as a whole. When optimizing its business processes, the Air Force should have focused on how processes could work together to make the entire enterprise fully functional and efficient.
2. Assuming technology automatically enables business process changes. Implementing a new ERP system without first defining and optimizing business processes almost always leads to poor ERP ROI and, in the worst cases, can cause ERP failure. The Air Force assumed that software best practices would lead to process changes suitable for the entire organization. This assumption caused the Air Force to overlook the proven approaches of the defense industry on a whole and ultimately derail the project.
3. Diffusing responsibility for business process reengineering. A single entity should be responsible for defining business processes because when something goes awry or there are questions about customization, it will be able to provide answers. Senior leadership should also be held accountable for errors in business process definition. Unfortunately, the Air Force’s senior leadership team was seemingly unwilling to push business process changes or take responsibility for poor documentation.
If the Air Force had been quick enough to recognize these errors before the project became unsalvageable, their financial losses might not have been as steep. Moving forward, however, the Air Force would be wise to document and optimize business processes before placing their hope in new technology.
Learn more by downloading our white paper, Lessons Learned From a Government ERP Failure and stay tuned for more ERP failure and success analysis in our 2013 ERP Report (to be released on February 20)!
The U.S. Air Force has finally made the long anticipated decision to completely scrap a major ERP software project after spending more than $1B over the last seven years. When Oracle won the contract in 2005, securing the deal over rivals such as SAP, the price tag was $88.5M.
The project was intended to replace 240 systems with one fully-integrated ERP solution. After three restructurings of the project in the last three years, systems integrator, CSC, was terminated in March, according to Defense World.
Dubbed the Expeditionary Combat Support System (ECSS), the project is estimated to require an additional $1.1B for even a quarter of the original scope to continue and fielding results would not be available until 2020. The Air Force deemed this timeline unacceptable and decided the ECSS is no longer a viable option for meeting the FY17 Financial Improvement and Audit Readiness (FIAR) statutory requirement. Instead, the Air Force will use its “existing and modified Logistics systems for 2017 Audit Compliance”, an Air Force spokesman said in an email statement in mid-November.
Why, you might ask, didn’t the U.S. Air Force leadership take action to keep ECSS from turning into a billion dollar debacle? The reasons are explained well in the 2011 Institute for Defense Analysis Report. The report explains why Department of Defense (Dod) ERP projects are routinely “over budget, behind schedule, and have not met performance expectations.”
The Institute for Defense Analyses (IDA) states that on these projects, “Program managers are unable to deliver a completely factual version of their status to leadership if it contains any element that could be considered significantly negative. To do so is perceived as weakness in execution even though the root causes may be out of the control of the program manager. Program managers fear that an honest delivery of program status will result in cancellation. As a result of this, leadership is unable to be effective in removing obstacles to program success.”
Put another way, nobody in the DoD leadership chain wants to hear bad news. The IDA report further noted that bringing up bad news required “courage,” which apparently is in short supply in DoD ERP projects. This is a systemic organizational change management problem that all organizations have to face on some level and the United States military is not immune.
From the highest ranks, permeates a culture that promotes selective truth telling and a shell game of information instead of a transparent chain of command that enables issues and risks to reach the right ears. Important issues should be communicated to a single accountable leader who has the span of control to define, implement and executive the end-to-end business processes that the IT investment intended to support. In the case of the Air Force, it is apparent that there was no “executive buy-in” at the highest ranks which bestowed that power onto a single accountable leader.
It always starts at the top, and the top of the Air Force failed in the most epic fashion. This, unfortunately, is true in many government organizations that Panorama has engaged with over the years. In many cases, an executive ERP Boot Camp is the first step in the education process which eventually promotes buy-in at the highest level. Only then can an organization, public or private, create a structure and culture for a successful ERP implementation.
Written by Jason Henritze-Hoye, Senior ERP Consultant at Panorama Consulting Solutions.
ERP implementations are always difficult, and often times even more so for government organizations. An interesting recent Computer World article discusses how the Government Accountability Agency (GAO) recently uncovered the sad state of some of the US military’s ERP implementation projects. The agency issued a report that found “Many of the [ERP] projects are years behind schedule and significantly over budget, including one that is expected to rack up nearly 10 times its initial cost . . .”
Unfortunately, the U.S. Military isn’t alone. Recent articles in the IT press have outlined other failed ERP implementations, including at the City of New York and other high-profile government organizations. We regularly work with our government clients to provide independent validation and verification (IV&V) and expert witness services to their large, high-risk ERP implementations, and failures like these underscore the need for government organizations to ensure they have the right ERP implementation experience, methodologies and independent counsel to help manage a successful implementation.
Although there are general best practices that organizations should implement, regardless of whether they are in the public or commercial sectors, there are some pitfalls that Panorama’s experience with government and public-sector entities tells us are more common in those sectors. Here are three common reasons why we’ve seen federal, state and local government entities struggle with their ERP software initiatives:
1. Too much focus on minimizing short-term costs. Unfortunately, the purchasing and procurements processes in the public sector are, at times, overly driven by the desire to minimize short-term costs. Government entities and government contractors often put a very heavy weighting in their Request for Proposal (RFP) processes, much more so than the commercial sector. As a result, system integrators, ERP integrators and ERP consultants will typically lowball their proposals and cost estimates to these entities – often by compromising scope and/or quality – all in the name of providing the lowest-cost solution to their government clients. In the end, this approach inevitably results in corners being cut, lower-quality processes and minimal efforts to complete the implementation, which (ironically) increases total cost of ownership of these ERP systems in the long-term.
2. Contract structures that set up implementations for failure. Our government and public-sector clients are much more likely than their commercial counterparts to negotiate fixed-cost or not-to-exceed contract structures with their ERP vendors. Little do they realize, however, that these contract structures create perverse and unintended incentives to cut corners, minimize focus on high-value activities such as organizational change management and business process management, and rush the organization to implement before they’re ready. Fixed-cost contracts, while appealing on the surface, can be the root cause for the very ERP failures, cost overruns and lack of benefits realization that they are intended to mitigate. In addition, purchasing or procurement managers who don’t know much about successful ERP system implementations often miss the fine print in contracts and statements of work that put the onus on the government entities to handle some of the ERP critical success factors, thus increasing overall costs.
3. Inadequate attention to organizational change management. Because government entities typically change at a slower pace and have ERP systems that affect more employees than most commercial organizations, organizational change management is even more imperative. However, government entity executives often don’t have the ERP experience to understand the necessity of organizational change management and, just as importantly, what exactly organizational change management means. Providing comprehensive organizational change management goes beyond simple end-user training at the end of the implementation; it also includes organizational readiness, organizational impact assessments, business process-based training, and targeted employee communications, all of which can be perceived to increase short-term implementation costs.
While no ERP implementation is ever easy and risks can’t ever be completely avoided, avoiding the above pitfalls can be the first step to helping government ERP system initiatives to get back on track.
Learn more about how we help government entities manage their ERP implementations more effectively by reading our Government ERP Case Study and our Lessons Learned From a Government ERP Failure white paper. Feel free to contact us at 720-515-1377 if you have any specific questions about how Panorama can be of assistance in your government ERP initiative.