Best practices for ERP system procurement
Local governments are reinvigorating their investment in technology by either purchasing an enterprise resource planning (ERP) system for the first time, or looking to replace their current ERP system. At the most basic level, ERP systems provide an integrated environment to process finance, procurement, and human resources/payroll transactions. Many systems also offer full integration with modules such as work orders, inventory, treasury management, utility billing, and community development. Extended functionality can include e-services such as online billing and citizen requests (e.g.., pothole and traffic light repairs). When a local government procures an ERP system that provides the functionality their organization needs, it can greatly increase efficiencies, enhance reporting capabilities, and provide increased e-government capabilities for citizens.
Procuring a new ERP system is a large investment, both monetarily and personnel-wise, and can prove daunting to many local governments. A first step your organization can take is to conduct a needs assessment. This process consists of taking stock of the current systems you use and where they fall short of your business needs. For example, you may currently export financial data into an Excel spreadsheet, manipulate it and then produce summary reports for all of your department directors. What your organization really may need is for department directors to have on demand access to summary financial information for their department, through the use of dashboards. Once you have identified all of the gaps between your current system(s) functionality and your business needs, you will have a clear justification for investing in an ERP system. Once your organization has decided to move forward with procuring an ERP, there are several best practices your organization can employ to ensure a successful procurement:
- Identify a project steering committee that takes ownership of moving the project forward and “selling” it throughout the organization
- Ensure everyone in the organization is aware of the project and understands what an ERP is and how it can benefit them
- Develop a report that expresses the value of the project so that top management understands the need for a new system
- Establish project goals/business drivers so that the strategy for the project is clearly defined (i.e., how will this system support the organization’s strategic objectives for the next 5-10 years)
- Meet with key individuals regularly to develop your business needs/system requirements; end users understand their daily activities better than anyone else in the organization so their input is critical to project success
- Identify any processes that can be improved prior to ERP system selection—this will ensure the organization fully utilizes any new system that is purchased
- Develop a strong RFP which covers topics such as the vendor’s background, implementation plan, training plan, and references for similar sized governments
- Conduct vendor demonstrations with top vendors and invite end users and other key personnel to rate each system
An ERP system can lay the foundation to move from being a tactical organization focused on completing processes to being a strategic organization focused on using data to improve processes and enhance organizational efficiency. Employing the best practices discussed in this article will help an organization procure the ERP system that is best suited to meet their business needs and support the organization’s strategic objectives.
For more information on this topic, or to learn how Baker Tilly public sector specialists can help, contact our team.
