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

Why ERP?

Before explaining “Why” ERP it is important that the reader clearly understand “What” ERP is. An ERP system is a suite of fully integrated software applications that are used to perform administrative business functions such as financial accounting, procurement, and personnel administration. What distinguishes ERP systems from “stand-alone” best-of-breed administrative software solutions is the integration that allows for more efficient processing and eliminates redundant data entry and reconciliation tasks. The functionality provided by ERP systems is usually provided in major groupings or modules. These modules typically address the major administrative functions within state government: financial accounting and management, human resources and payroll administration, procurement and logistics and budget development. Additionally, certain features such as automated workflow and electronic approvals, security, reporting/data warehousing and the development toolset, cross all functional modules.

In addition to the existence of a viable statewide approach to ERP as contained in BCA 3 recommendation of the Business Case Analysis, there are two major classifications of drivers that we believe support the implementation of a Texas statewide ERP system. They are elimination of legacy system deficiencies and technology enablers.

Elimination of Legacy System Deficiencies

The greatest justifications for implementing a statewide ERP system are attributable to the shortcomings of the existing statewide administrative systems and the “work-arounds” required by user agencies to address these deficiencies.

A fully-integrated ERP system will address the deficiencies noted in Section 2 by providing for the following:

  • Replace the state’s existing statewide ERP systems over a 7-year period and eventually eliminate many of the “shadow” systems currently maintained by agencies because the existing statewide systems do not meet their functional needs. This action would eliminate much of the fragmentation found under the current environment.
  • System-wide integration of the various ERP modules offers integration that has been built by, and will be maintained by, the software vendor. Continued vendor upgrades increase functionality in an ERP environment at a faster pace than with legacy systems.
  • Offering individual agencies a viable alternative to purchasing a new accounting system or upgrading their existing system to meet internal accounting and reporting needs.
  • Standardized business processes built on “best practices” that are inherent in ERP systems for the public sector.
  • Provides for data standardization to support a “single source of the truth” and taxpayer transparency.
  • Establishes a common language for reporting expenditures through use of commodity codes for procurement spending analysis and chart of accounts for financial reporting purposes, which provides for consistent reporting and better analysis of how the State’s money is spent.
  • A statewide procurement system that will be fully integrated with the financial accounting, asset management and inventory management modules.
    • Reduce cost of goods and services through the following: increased competition for the State’s business; enabling strategic sourcing benefits; lowering inventory costs for the State; reducing printing and mailing costs
    • Improve process efficiencies for the state through the following: reduced procurement cycle times; reduced time and effort required to complete purchasing activities; improved monitoring of the procurement process; leveling of the “playing field”
    • Leverage the benefits of the OOS while identifying the capabilities of procurement functionality available within the ERP solution and determine if an OOS bolt-on as currently defined is necessary long-term
  • More efficient processing and control of documents through automated workflow, reviews, approvals, and inquiries on document status and the elimination of possible “bottlenecks” in approval process.
  • Elimination of duplicate data entry as pertinent data is entered once and then carried throughout the system.
  • Reduction of data integrity concerns and the effort required to reconcile duplicate data in multiple databases.
  • Consistent and complete statewide federal funds analysis and management for more effective draw-down of federal dollars, including the ability to estimate carry-forward or lapsing federal funds; monitor, coordinate and establish the priorities for the use of federal funds statewide; and review agencies’ federal funds budgets, expenditures and transfers on an ongoing basis.
  • More efficient and accurate research capabilities through enhanced ad hoc reporting and inquiry functionality associated with new technologies.
  • Elimination of the use of Social Security numbers (SSN) as the primary identifier in the statewide administrative systems, thus helping to reduce identity theft opportunities and the related legal risks and costs associated with incident response, investigation and public relations.
  • Compliance with Section 508 of the Americans with Disabilities Act regarding accessibility.
  • Better tracking of the state’s assets, thus helping agencies and the Legislature in budget planning by identifying replacement costs and schedules.

Technology Enablers

Besides correcting deficiencies associated with the State’s existing administrative systems, the most compelling reason for implementing an ERP system lies within the technology enablers that support the system. A more detailed discussion of key technology enablers can be found in the Report on Business Case Analysis for a Statewide ERP System. Key technology enablers found in ERP software include:

  • Integration with a Common Database – The most distinguishing factor of an ERP system is its integration across all system modules. Integration in an ERP system is supported by a single database across all functions (or at least a single database for human resource/payroll functions and another for financial management/procurement functions). In this way, data elements (e.g., account codes) are not duplicated when used for more than one purpose. With no duplication, every function has access to the most recent information, and once any change is made, it is immediately available to all functions. Reports are generated using a single, up-to-date data source that helps to provide the State’s leadership with a “single source of the truth.”
  • Real-Time Processing – Many of the current administrative systems perform a majority of their transaction processing via batch jobs that process only a few times a day or during a nightly batch run. This limitation results in delays between the time an action is entered into the system and when the data is available for use by the end user. In contrast, ERP systems use real-time (or near real-time) processing, so transaction results are immediately available to all system modules.
  • Increased Functionality / Best Business Practices – Today’s ERP systems provide a considerable amount of functionality to meet governmental financial management, procurement, asset management, human resources/payroll, and other administrative business needs. The application modules that often comprise ERP systems have been designed in accordance with industry-standard best business practices. While best practices have not been defined by any governing body or research firm for the private or public sector, such practices have evolved over time with each new software release and have been validated with each ERP implementation. Best practices, together with the flexibility provided by other technology enablers inherent in ERP software today, allow governments to conduct their administrative business processes in a more efficient and effective manner. Best practices promote standardization of business processes across government, and it is critical that the State embrace these practices in order to implement the ERP software with minimal customization.
  • Web-Based / Open Architecture – Today’s leading ERP solutions are designed to be accessed via Web browsers. Vendor products are transitioning to a “pure Web-based” architecture whereby no code resides on the client other than the web browser. Web-based ERP solutions result in easier deployment and lower costs of IT infrastructure, network administration and information access. A Web-based system facilitates providing wider access at a lesser cost to the state. End users can gain access to the ERP system at anytime as long as they have access to a Web browser and the proper security authorizations. Another advantage of Web browsers is the ability to use accessibility tools to obtain compliance with Section 508 of the Americans with Disabilities Act. The leading ERP systems also comply with open architecture standards. Open architecture provides a means whereby the ERP system can be linked to specific “best-of-breed” software if the need arises (e.g., possibly to meet fleet management requirements). Open architecture also provides the ability to interface the ERP system to common desktop “office-suite” applications (see Desktop Software Integration below).
  • Scalability – Scalability allows the state to size its system components to meet the everchanging business needs. Increased capacity can be added, upgraded or removed as computing needs change, without substantial changes to the application. Scalability considerations include increasing memory, adding additional processors, and installing additional disk storage.
  • Portability – Portability provides the flexibility for application software systems to run on multiple hardware platforms or provides built-in capabilities for switching between platforms without requiring reinstallation or additional customization, thus allowing the State to adapt the system to the technical landscape as it changes over time.
  • Graphical User Interface – ERP systems utilize a graphical user interface (GUI) that provides user-friendly features similar to other office functions on the user’s desktop, such as intuitive icons, pull-down menus, point-and-click navigation, pop-up windows, scroll bars, radio buttons, the use of color for clarity and emphasis, and tool bars to assist in the user’s learning and ongoing use of the system. They also provide online help menus and online documentation, as well as screens that can be customizable to user roles to enhance the end user experience.
  • Efficient Modification Where Necessary – Assuming that an open architecture is used, the business rules associated with the system are separated from the rest of the architecture, thus, it is easier to change the business rules (a common occurrence in government) than if they were included in the user interface or the database design.
  • Extensive Development Toolset – ERP systems provide for a single (often proprietary) toolset to support software configuration, customization, and ongoing administration of the system. Although use of the toolset requires specialized training and technical knowledge, the development toolset is typically integrated with the functional ERP software and is supported by the vendor. The development tools are also utilized in establishing workflow, managing security and in implementing a software upgrade.
  • Application Modularity – An ERP system consists of a series of application modules (e.g., general ledger, accounts payable, purchasing, asset management, payroll). These application modules are designed to be “stand-alone” if necessary, though some modules require that others be in place to fully utilize the functionality provided. This modular approach allows governments to selectively implement ERP functionality based on functional need, priorities, funding availability and staff availability to implement and support the system. The entire ERP solution may be built on a piecemeal basis. Additionally, the government can substitute a third party solution in lieu of the ERP module if necessary to meet a specific business need.
  • Advanced Reporting Tools – ERP systems typically provide a suite of ad hoc reporting/query tools to allow properly trained end users to develop their own custom reports. Electronic report routing capabilities are often provided with some of the systems.
  • Security – ERP systems provide a robust security function across all ERP modules, including role-based security, screen- and field-level security. With this robust functionality comes a new culture around security set up, approvals and administration, as well as staffing resources.
  • Automated Workflow and Approvals – ERP systems provide automated workflow capabilities that support electronic document routing, review and approval, provide for inquiries on document status and provide an efficient document filing and retrieval process. Automated workflow also facilitates the implementation of a “paperless” environment, eliminates “paper document shuffling,” and often reduces the layers of approval.
  • Drill-Down Capability – ERP “drill-down” capabilities allow an end user to drill down on a field on a screen or report through successively lower levels of detail all the way to the initial entry source document.
  • Comprehensive Audit Trail – ERP systems provide online access to a comprehensive history of all changes made to a record in the system.
  • Flexible Chart of Accounts – The flexibility provided by the chart of accounts is the greatest factor in determining the usefulness of a financial system. ERP systems provide for a flexible and customizable chart of accounts structure that is supported by relational database technology, sophisticated ad hoc reporting tools to improve financial and budgetary reporting, and minimize the proliferation of “shadow” systems across state government.
  • Desktop Software Integration – ERP systems provide the ability to easily extract data from the ERP system into common desktop “office-suite” applications such as Microsoft Office for data manipulation and analysis. Most ERP software also supports the import and export of data to/from the ERP system, which can facilitate the uploading and downloading of information from different systems or sources.