Feds take hard look at use of enterprisewide systems

By Shruti Dat'

GCN Staff

Federal information technology chiefs are looking into enterprise resource planning systems as a way to manage multiple business processes across their agencies.

The first government implementers of ERP systems, such as the Energy Department's Strategic Petroleum Reserve and the Treasury Department's Mint [GCN, Dec. 14, 1998, Page 12], are just beginning to see the fruits of their labors.


The Strategic Petroleum Reserve in New Orleans took from October 1997 to March of this year to move completely to an ERP system. But there has been a big payoff: In the past few months, the agency has recouped 47 percent of its investment through savings in processing time and expenses. The agency has reported a 60 percent reduction in its procurement cycle.

But some federal officials said recently that agencies must overcome several obstacles to make ERP systems successful.

'I think the general answer as to why they are not implemented is that we are not as driven or motivated to find the next best solution to save the next dollar as private industry is. Therefore, we are slower to change these things,' said Marvin Langston, deputy chief information officer for the Defense Department and chairman of the CIO Council's Enterprise Interoperability and Emerging Information Technology Committee.

But tight budgets are forcing agencies to consider how ERP systems might help them achieve their missions with fewer dollars, said Brian Seagrave, former program manager of the Strategic Petroleum Reserve's ERP project.

Without a net

'The federal government is being forced by budget cuts to perform services smarter, faster and cheaper. They realized the commercial sector was doing more with less through ERP,' said Seagrave, now director of the public sector and education group of Nichols Holland Corp. The Jackson, Miss., company implements ERP systems using software from SAP AG of Germany.

To make ERP work, however, agencies will need to break down some turf barriers, Seagrave said. 'Federal agencies are still in silos where they are not sharing information. The human resources department would still own the human resources software,' for example, he said.

There is still a widespread lack of understanding within government about ERP, which is not solely for human resources, procurement or payroll, Seagrave said. Agencies often consider ERP systems only for limited parts of the enterprise, but the systems work best when they are used agencywide and connect all management systems, he said.

'My point is, use it for as many processes as you have. If you have them all in one system, the value increases tenfold,' Seagrave said.

Defense's Langston said another obstacle is the sheer volume of integration work required to move to an ERP system.

For DOD, off-the-shelf products often do not meet certain military requirements such as the ability to track personnel on deployments or the special payrolls of officers, he said.

Seagrave noted that 'vendors were concentrating on the commercial market up until now. But now all the Fortune 500 companies have been taken. They are turning to the federal government, which is just another market opening up.'

That factor will likely serve agencies fairly well, said Harold R. Metcalf, financial management systems director at the Veterans Affairs Department.

'Vendors are trying harder than before to figure out what agencies need,' he said. 'The vendors are doing a magnificent job of trying to deliver that in their systems.'

Metcalf is directing a plan to implement an enterprise systems approach for VA's financial management.

'We are in the early stages of the acquisition of an enterprise resource system,' he said.

The department wants to eliminate legacy systems, tap new business process improvements and add functionality easily through an enterprisewide approach, he said.

'ERP is very appealing for agencies with a lot of interfacing systems because it eliminates the interfaces and the reconciliation problems of those interfaces,' Metcalf said.

Most federal financial systems are not enterprise systems because they were designed to address specific functions and were not integrated with other systems supporting other business processes, Metcalf said. 'Only recently have they started to integrate.'

VA has been reviewing the ERP systems of several vendors and will issue a request for proposals early next year.

An ERP system's foundation is a common database accessed through a client-server environment, said John O'Brien, manager of information systems and technical services at Energy's Strategic Petroleum Reserve. To make an ERP system work across an agency, the system must provide access to data in real time and support standard methods for processing data, he said.

To achieve those goals, an agency implementing an ERP system must follow strict guidelines, O'Brien said. His agency ultimately selected SAP R/3 as the foundation for its ERP system.

To move its apps to a common database, the agency had to re-engineer all its business processes.

It also had to settle on a set of data definitions and work out the integration of processes among its various components before the SAP R/3 implementation began.

'We did our homework very well, and we saw huge advantages of the pre-integrated processes,' O'Brien said. 'We knew what we wanted, asked the right questions, found the right vehicle and pulled together the right project team.'