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

Overview

ERP Advisory Council Members

Victor Gonzalez
Director of Innovation and Technology
Texas Comptroller of Public Accounts
Phillip Ashley
Director of Fiscal Management
Texas Comptroller of Public Accounts
Dustin Lanier
Director, Council of Competitive Government
Texas Council on Competitive Government
Brian Rawson
Executive Director
Texas Department of Information Resources
Anna Presley-Burnham
Program Manager
Texas Department of Information Resources
Ron Weiss
Director, Enterprise Support Systems
Texas Health and Human Services Commission
Gordon Taylor
Chief Financial Officer
Department of Aging and Disability Services
Texas Health and Human Services
Commission Representative
Ramesh Kannappan
Project Director,
Enterprise Information Systems
Texas A & M University System
Scott Kelley
Executive Vice Chancellor for Business Affairs University of Texas System
Kay Rhodes
Associate Vice Chancellor and System Chief Information Officer
Texas Tech University System
Gary Gibbs
Executive Director
Texas Commission on the Arts
Kenny Zajicek
Fiscal Officer
Texas State Soil and Water Conservation Board

State Agency Chief Executive Officers

(excluding those listed above as council members)

We support the work conducted by the council and believe that the recommendations related to our respective state agencies are appropriate.

Albert Hawkins
Executive Commissioner
Texas Health and Human Services Commission
Rex Isom
Executive Director
Texas State Soil and Water Conservation Board

Letter from University Chancellors

We want to thank Comptroller Combs for her leadership on this important issue and for the opportunity she has afforded higher education to participate in the process. We are supportive of the work conducted by the Council and believe that the recommendations related to higher education are appropriate.

Kenneth I. Shine, M.D.
Chancellor ad interim
The University of Texas System
Michael D. McKinney, M.D.
Chancellor
Texas A&M University System
Kent Hance
Chancellor
Texas Tech University System

A Quick Overview

ERP: A Single Set of Books

  • Enterprise Resource Planning is a business/ technology term for an information system based on a common database and common software tools that allow real-time information to be accessed, shared and compared easily and immediately across organizations, agencies, divisions or departments.
  • For Texas state agencies and institutions of higher education, ERP would provide a “single set of books” for financial and human resources-related transactions.
  • ERP uses a single “language” for financial data. At present, state agencies and institutions of higher employ multiple financial data languages.
  • A successful ERP system would ultimately provide the tools needed to shine the brightest light on the state’s finances; give decision-makers seamless access to state data; and allow the state to make better use of the data at its fingertips.

The ERP Advisory Council

  • House Bill 3106, passed in the 2007 legislative session, called for the formation of the ERP Advisory Council under the leadership of the Comptroller’s office, based on:
    • a desire for transparency in state government.
    • the need for state agencies and institutions of higher education to “speak the same language” while compiling and comparing data.
  • Under House Bill 3106, the council’s tasks include:
    • providing a clear definition and scope of ERP for Texas.
    • initiate statewide planning for ERP with participants representing both state agencies and institutions of higher education.
    • researching and developing a plan for implementing a single set of state books.
    • providing a progress report each biennium on the plan’s implementation.

Benefits of a Single Set of Books

A successful ERP system will:

  • give state decision-makers a single source for reliable, real-time information that can be compared across agencies.
  • provide easy, direct access to the state’s vast array of financial and human resources information.
  • eliminate data conflicts often encountered when using financial accounting programs that do not interconnect or when double sets of books are kept and cannot be reconciled.
  • provide better tracking and standardization of financial information, such as:
  • method of finance – the state could identify the funding source used to pay for any good or service (e.g., appropriated receipts, federal funds, grants, interagency contracts, etc.).
  • appropriations/budgets/expenditures – every state dollar could be tracked from the initial appropriation to a state agency budget and ending with the final expenditure.
  • state assets and budget planning – state assets could be tracked to improve budget planning and accountability.
  • real-time transparency – would allow the Legislature and citizens to “follow each dollar” and know how agencies and institutions are spending the funds they receive throughout the year.
  • allow its users to estimate carry-forward or lapsing federal funds or grants. This is a difficult and problematic exercise at the statewide level today. With an ERP system, decision-makers could track and monitor expected federal receipts and compare them against actual usage across agencies and institutions of higher education.

Current Problems

The greatest justifications for a statewide ERP system are the shortcomings of existing statewide administrative systems and the “workarounds” required by user agencies to address these deficiencies:

  • Texas ID Number System (TINS)
    • a 19-year-old state-developed system that could break down, creating a situation in which the state would be unable to write checks or send direct deposit funds to vendors.
    • the current system does not provide a fail-proof method to identify all vendors who owe money to the state and therefore should not be receiving payments from the state.
  • State Property Accounting (SPA)
    • this 15-year-old state-developed system was built as an inventory system and does not support accounting standards enacted since its inception. It requires time-consuming, expensive and inefficient manual reconciliation and reworking.
    • the State Auditor’s Office has expressed concern that SPA’s internal controls to maintain the integrity of transaction data are inadequate. Audit findings may affect the state’s bond rating.
  • Payroll Systems (SPRS, HRIS, USPS)
    • state agencies and institutions employ more than 20 human resources/payroll systems and three statewide payroll and personnel reporting systems, the oldest of which is 19 years old. The payroll/personnel systems entail significant redundancies and could be consolidated to reduce the complexity of the reporting function and cut the cost of operating and maintaining the state’s data platforms.
    • consolidation also would drastically improve higher education payroll data and improve statutory compliance for reporting employee benefits.
  • Other Issues Resolved
    • intensive manual effort must be expended to reconcile, update and adjust state data across various systems and interfaces. This effort represents a significant cost to the state and dramatically reduces the efficiency and effectiveness of its business processes.
    • a single set of books could eliminate the use of the Social Security numbers (SSNs). SSNs serve as the primary identifier of state employees and some payees and have been cited as a primary piece of information enabling the growing problem of identity theft.
    • agencies would have real-time data to determine how much cash is available in each category at any given time. This would help them avoid having payment requests denied due to a lack of funds

Summary: The Business Case for ERP

  • Many existing state systems are 10 to 20 years old and several are no longer supported by outside vendors. The state would have to spend about $121 million to fix critical issues in these existing systems.
  • Current systems do not share common data languages that would allow for better information access, tracking and comparison.
  • The estimated cost for the ERP implementation plan is only $35.4 million more than the $1.3 billion the state estimates will be spent on current system upgrades and purchases over the next 11 years (the $1.3 billion includes $121 million to address critical issues for existing systems).

Acknowledgments

The ERP Advisory Council members would like to thank their respective agencies and institutions of higher education as well as the Comptroller’s office for the opportunity to contribute to this most important statewide initiative.

We would also like to acknowledge the hard work and dedication of the Enterprise Resource Planning (ERP) workgroups that provided us with high-quality and timely recommendations for topic areas relevant to our plan. Each workgroup was led by a seasoned state professional who volunteered time to perform this important role. The workgroups and their leads were as follows:

Accounts Payable (E-Travel Voucher)
Machelle Pharr
Texas Department of State Health Services
Statewide Considerations (Unique Texas Business Identifier)
Kay Rhodes Texas
Tech University System
Global Data Standardization
Dr. Clair Goldsmith
University of Texas System
Asset Management and Inventory
Duane Sullivan
Texas Department of Transportation
Vehicle Fleet Management
Don Lewis Texas
Department of Transportation

A large number of subject-matter experts from various state agencies and institutions participated in each of these workgroups. We are grateful for their willingness to share their time and knowledge.

Finally, we wish to acknowledge the work performed by the independent consulting firm of Salvaggio Teal & Associates (STA). Some sections of this document rely on data and findings presented in their September 17, 2008 report, Report on Business Case Analysis for a Statewide ERP System.