A Plan for the Implementation of Enterprise Resource Planning (ERP) for the State of Texas

Current Environment

This section is to provide a high-level understanding of the state’s current administrative systems environment and key findings related to those systems that were documented in the Study. The specific statewide systems are explained followed by a high-level diagram of the current administrative systems environment of state agencies and institutions of higher education.

Statewide Environment

In 1987, the 70th Legislature enacted legislation that required the Comptroller’s Office to make uniform the collection and reporting of statewide accounting, payroll and personnel data. Through this legislation, the Uniform Statewide Accounting System (USAS) was established. Since 1987, the USAS effort has grown to include the following systems or planned projects:

1 = Currently utilized by higher education only

2 = Currently utilized by state agencies and institutions of higher education

3 = Currently utilized by state agencies only

The state spends approximately $9 million per year to maintain and operate the existing statewide administrative systems such as USAS, TINS, SPA, etc. Additionally, the Comptroller and the state agencies/institutions should spend approximately $121 million to “rewrite” critical components of the statewide administrative systems and deploy these new systems across Texas government over the next few years. These rewrites are intended to address major system deficiencies, address risks associated with the current use of Social Security numbers, and lack of compliance with Section 508 of the Americans with Disabilities Act regarding accessibility.

Human Resource Information System (HRIS)

The Human Resource Information System (HRIS) is a custom-developed, in-house system implemented in 1989 as part of the first phase of the overall Uniform Statewide Accounting System (USAS) implementation. HRIS operates on a mainframe platform and was designed to automate payroll and personnel reporting, and to serve as a central repository for all state agency and institutions of higher education personnel and payroll data. Currently, only higher education report to HRIS, with 59 institutions reporting from their internal payroll/personnel systems. Institutions are responsible for processing and calculating their own payrolls and reporting the resulting data into HRIS. This data is then used to roll up payroll and personnel information at the statewide level. In addition to ad-hoc requests, statewide information is used to prepare required reports for oversight agencies.

Texas Identification Number System (TINS)

The Texas Identification Number System (TINS) is an in-house system that was implemented in 1989 and provides vendor/payee information to other critical statewide systems. TINS captures information on individuals and entities that have received or may receive payments from the state of Texas, including state employees, state agencies, and other governmental entities. System functionality includes payment inquiry, warrant print, payment distribution and banking network processing. Additionally, TINS captures information on individuals and entities that are indebted to the state and facilitates the withholding of payments until their obligations to the state are met. Currently, all state agencies and institutions of higher education report to TINS.

Uniform Statewide Accounting System (USAS)

USAS was implemented in 1993 using a modified version of the R*STARS mainframe software product. USAS was established to provide State agencies and institutions of higher education with financial accounting software including General Ledger, accounts payable and limited accounts receivable, grant accounting, project accounting, and contract tracking functionality. USAS provides both Generally Accepted Accounting Principles (GAAP) and cash-basis accounting, performs budgetary and encumbrance accounting, cost allocation, payment processing and document tracking, and satisfies statewide accounting requirements. Currently, 80 state agencies use USAS as their internal accounting system, and 102 state agencies and institutions of higher education report to USAS from their internal accounting systems. USAS data is also used to roll up financial information at the statewide level. In addition to ad-hoc requests, statewide information is used to prepare required reports for oversight agencies.

State Property Accounting System (SPA)

The State Property Accounting (SPA) system is a custom-developed, in-house application that was implemented in 1993 to track capital and controlled assets. SPA contains the capital asset balances for the state of Texas. In addition to ad-hoc requests, this data is used in the Comprehensive Annual Financial Report (ACFR) to prepare the Capital Asset Note to the Financial Systems. The total balance for Capital Assets for the state according to the 2006 ACFR was $97.8 billion, which was 54 percent of the state’s total assets. The SPA system is also used to withhold from state agency and higher education appropriations an amount equivalent to 50 percent of the value of lost property, as prescribed by Article IX, Section 12.04 of the General Appropriations Act. Currently, all state agencies and institutions of higher education use SPA as their internal fixed-asset system or report to SPA from other internal fixed asset systems.

Uniform Statewide Payroll/Personnel System (USPS)

The Uniform Statewide Payroll/Personnel System (USPS) was implemented in 1994 using a modified version of the GEAC Human Resources mainframe software product. USPS was established to process personnel and payroll transactions, utilizing a standardized payroll calculation. Currently, USPS is the internal payroll/personnel system for 113 State agencies and approximately 56,000 employees. This data is also used to roll up payroll and personnel information at the statewide level. In addition to ad-hoc requests, statewide information is used to prepare required reports for oversight agencies.

Standardized Payroll/Personnel Reporting System (SPRS)

The Standardized Payroll/Personnel Reporting System (SPRS) is a custom-developed, in-house application implemented in 2002 for state agencies that elected to implement either a commercial, off-the-shelf payroll/personnel software application or design their own internal payroll/ personnel processing system, rather than using USPS as their internal payroll/personnel system. SPRS agencies are responsible for processing and calculating their own payrolls and reporting the resulting data into SPRS. Currently, eight state agencies report to SPRS from their internal payroll/personnel systems. Combined, these agencies have approximately 94,000 employees. SPRS data is used to roll up payroll and personnel information at the statewide level. In addition to ad-hoc requests, statewide information is used to prepare required reports for oversight agencies.

Agencies and Higher Education Environment

Eighty agencies use USAS as their primary accounting system, and no interfaces are required. One hundred and two agencies and institutions have been designated as reporting agencies, and 102 interfaces have been developed from agency and institution-specific solutions to USAS. Agencies and institutions also must report personnel and payroll information into statewide reporting systems, including USPS, SPRS and HRIS. The following diagram depicts the state of Texas’ main applications and the relevant integration/interface points for the various systems across the state. The diagram does not reflect the numerous additional administrative systems and associated integration/interface “touch points” that must be maintained to provide the complete range of functionality needed by State agencies and institutions of higher education.

The following diagram that follows documents the “high-level” integration points between state agency/institutions of higher education systems and the various statewide administrative systems.

Key Findings

• Because the current statewide administrative systems do not meet many of the state’s business needs, the state’s administrative business processes are less efficient and effective than they could be. For example, the state is unable to track detailed sources of funding (e.g., federal funds), resulting in a significant information gap regarding what money was used and in what ways. To address critical unmet needs, agencies have spent significant amounts of money on their own ERP and/or “best-of-breed” systems. Instead, these funds could be spent toward implementing a statewide ERP system benefitting all agencies. The following are a result of these deficiencies:
  • A total of 1,220 administrative system functional modules (General Ledger, Accounts Payable, etc.) are currently used to address the functional areas addressed in HB 3106. More than 20 human resources/payroll systems are in operation across the state, and three statewide payroll and personnel reporting systems are in existence for validation and reporting (USPS, SPRS, HRIS). There are significant redundancies in functionality and capabilities of these systems that could be consolidated to reduce the complexity of the reporting function and significantly reduce the cost of operating and maintaining the platforms.
  • Of the total number of functional modules in operation across the state, roughly a third are custom developed solutions and roughly a quarter are the Comptroller’s statewide modules. The remaining systems are a mixture of various commercial off-the-shelf systems (COTS) and somewhat evenly spread across Oracle/PeopleSoft, SunGard/Banner and Sage/MIP (software vendors/products) with the “Other” leading all categories at 13 percent.
  • Each agency and institution (except those utilizing the USAS and USPS platforms as their processing system) must interface their systems into the existing statewide systems, resulting in more than 250 interfaces in operation that must be managed, maintained, and reconciled across the state at both the statewide and agency/institutional levels.
  • Data is fragmented across a wide array of systems and platforms, which makes it difficult to generate management information on a timely and accurate basis due to differences in formats, cycle times, and controls across all systems, which leads to manual, labor intensive processes when preparing reports. This effort represents a significant cost to the state and dramatically reduces the efficiency and effectiveness of the state’s business processes.
  • Each of these systems has its own ongoing operating and maintenance costs for hardware, software and infrastructure which, in the aggregate, could represent significant potential savings through consolidation and standardization.
• The state does not utilize a statewide procurement system at this time, which causes the following deficiencies:
  • Other than the agencies that already use ERP systems, the majority of other agencies follow manually-intensive business processes or maintain “stand-alone” systems or spreadsheets to address their procurement needs. Manually-intensive processes and redundant data entry tend to be slow, error-prone and costly;
  • Lack of integration of procurement function with financial accounting and other administrative systems;
  • Most purchasing organizations lack the transaction data (at the proper commodity-code level) required to effectively negotiate with suppliers; and
  • Most procurement managers spend much of their time “chasing paperwork” rather than managing their supplier base or negotiating better prices.

In light of these deficiencies, the Comptroller initiated a recent project to develop an Online Ordering System (OOS). The OOS is intended to enhance the online ordering process by providing an online ordering portal that will provide a centralized procurement method for qualified purchasing entities. However, it is anticipated that the ERP’s purchasing module will serve as the basis for procurement data and integration with the other ERP modules.

• The existing statewide administrative systems were developed and implemented based on user and state business requirements that are now more than 15 years old. As new state and federal requirements have emerged, the state continues to patch or rewrite the systems to meet or comply with the new, point-in-time requirements. The cost of maintaining these systems continues to escalate due to the difficulty of locating skilled personnel to make the changes, as well as the overall limitations of the original system architecture (e.g., often changes must be made to the actual computer code instead of simply changing data-table entries to make the changes).
• Most systems are not compliant with Section 508 of the Americans with Disabilities Act regarding accessibility. The state’s existing administrative systems do not provide for such accessibility, therefore, physically impaired workers cannot use these systems at this time. The state has considerable exposure to lawsuits initiated by physically impaired workers. Two states, Pennsylvania and Arkansas, have already incurred such litigation.
• Much of the state’s financial, personnel and other administrative data originates and resides in various ERP and “stand-alone” systems that are not updated across systems in a “real-time” mode. Maintaining data in independent databases or shadow systems can produce inconsistent information. This fragmented environment also results in a lack of data standardization and agencies and central authorities not “speaking the same language.”
• Because the data is fragmented, it is also difficult to generate management information in a timely and accurate manner. The existing administrative systems have insufficient reporting tools to facilitate ad hoc reporting. The end result is that report requests from state leadership and the Legislature often require a considerable amount of time to develop. Additionally, system users often need to access multiple statewide systems or make requests to the agencies and institutions to obtain the necessary data. Because of these multiple sources, reports typically require notes explaining the timing and accuracy of the data.
• The state’s administrative systems are costly to maintain and operate (e.g., data must be reconciled among the various systems, and numerous interfaces must be maintained). Additionally, the Comptroller and the state agencies/institutions need to spend approximately $121,102,000 combined to “rewrite” TINS, SPA, SPRS for institutions of higher education and USPS, and deploy these new systems across Texas government over the next few years. These “rewrites” are intended to address major system deficiencies, eliminate the need for HRIS, address risks associated with the current use of Social Security number, and lack of compliance with Section 508 of the Americans with Disabilities Act regarding accessibility.
• The existing statewide administrative systems are difficult to use because they lack the modern, Web-based, common user interfaces that system users are accustomed to using (e.g., e-mail, office applications, Internet browsing). Often state employees must work with several of these systems, and each system has its own unique “look and feel.”
• The current travel expense reimbursement process is manual for most agencies. This process is slow, and traveler, is unable to determine the statuses of their reimbursement requests. As a result, considerable time is spent responding to phone calls and e-mail messages regarding the status of travel reimbursements. The existing automated systems were designed to meet individual agency needs and may not be flexible enough to accommodate varying requirements of agencies and institutions of higher education.