It is an incredible time of change for the city and regional governments where every strategic activity – especially in these globally challenging times – presents a significant opportunity for transformation. To continue to meet the changing needs of the communities they serve, every modern city government’s technology story is a work in progress. While this is the mantra for successful continuous improvement it also describes the best strategic approach for how municipalities should manage their corporate application replacement programs.
Unfortunately, significant systems upgrade and replacement programs are regularly approached as complex, multi-tasking activities that have a hard start, a defined program, and a date-stamped end. In taking this traditional project implementation approach, intuitively, many organisations believe that doing as much as possible, in as quick a time as possible, ultimately helps to achieve twice as much within the same time. The result is more likely to be half as much, and at lower levels of quality and enjoyment for all involved. This manifests as project scope creep and budget overruns.
Aside from these big bang approaches, thanks to large implementation costs and stringent regulatory oversight, local governments are also forced to think upfront about the potential future value created by a significant core system technology change. The pressure of moving at high speed, and with a dominant technology focus, can obscure both the true organisational cost and ultimate value of the program. This mentality prevails even when it is acknowledged that activities associated with a transformation program will eventually usher in a period of significant change – that is not limited to the changing core corporate applications environment itself.
The 4-Part ERP Transformation Trap is All Too Common in City Government
An over-reliance on technology to deliver business transformation outcomes. Local governments everywhere continue to pursue strategic plans that are either wholly defined or implicitly reliant on world-class customer experience (CX), employee experience (EX), and digital transformation (DX) capabilities. Despite these being business-oriented strategies, organisations then pursue an over-reliance on technology – usually winner-take-all ERP led procurements – to achieve them.
Choosing an industry solution focused on the wrong business model. The chance of achieving these digital transformation outcomes is further obscured when the customer is not central to the data model. The core corporate application technology underpinning the sector’s leading ERP programs is largely based on a property-centric model – where the customer is a subordinate attribute of a property, and the property asset defines the business process and individual. It is a challenge for any council to deliver contemporary customer-first digital transformation with a property-centric approach. To realise customer and employee-centric outcomes, councils must therefore rethink their project’s business methodology and ask themselves, “what is our primary focus here?”. This is never more important than when replacing legacy systems.
Inability to realise that a winner-take-all ERP solution is not an architectural choice. ERP is important but it is not everything. The traditional council ERP is just one important part of an overall capability that allows authorities to longitudinally manage the impacts and opportunities of change across their organisation, communities, and stakeholder ecosystems. Having chosen a sector specific ERP solution, city governments realise too late that no single technology vendor has a best-of-breed solution to achieve the desired DX outcomes. That requires a more sophisticated architectural approach.
Failure to acknowledge there is no finish line to transformation. Like many worthwhile activities, the prize in DX is in the journey, not in the cup. While there can be an end to “project scope”, there should be no “end point” for an ERP transformation program. Only once these challenges are acknowledged and accepted, can transformation be assimilated into the organisation to ensure the council is technically capable of delivering the implicit outcome for the organisation. This could simply be defined as ‘a contemporary business approach to managing the money, the assets, the community, the customers, and the staff of regional government.’
A Better Way: Re-Architecting for Project Success
Where opportunities to meet increasing CX and EX demands arise, especially through ERP and corporate application renewal programs, successful projects in contemporary councils require a service-oriented architecture not found in contemporary or legacy ERP systems alone.
Beyond the property-centric challenges already outlined, even contemporary systems and suppliers can be among the least flexible to the changing data management requirements of many organisations which call for significantly more robust data, integration and application friendly infrastructure management environments.
Customer centricity, data management, integration and software infrastructure capabilities must take precedent over an aging view of single-vendor dominance in the city government sector, especially in middle- and back-office functions, which are typically void of true differentiation opportunities and prone to confining organisations to technology-led and locked projects.
Rather than tendering for a single software provider or platform, contemporary city governments must ditch the old approach to procuring a winning ERP vendor and take steps to establish the following Big 5 platform capabilities (Figure 1). And then foster the contemporary workforce to support them.
For several decades now many organisations have attempted to short-circuit the city government ERP challenge. Fundamentally, technology transformation is not possible without technology change. A non-negotiable part of that change is a shift away from the psychology of brand-based procurement towards a new architectural approach which, like all businesses, is adaptable to change over a long period of time.
ERP serves as an important component that connects various business operations and verticals in an organisation. As a part of digital strategy, many organisations have started adopting digital tools and technologies where an Enterprise Resource Planning (ERP) solution is one of the primary components. ERP was originally applied to manufacturing systems, but today it describes the software at the core of an organisation’s business, without which it could not function.
ERP software has evolved significantly since it first came into widespread existence in the 1980s. Major vendors like SAP and Oracle offer sophisticated suites of software that integrate several functions. Other vendors offer ‘best-of-breed’ applications optimised for a particular purpose or market segment. The implementation, maintenance and efficient management of ERP software is a large industry in its own right. ERP services companies are a major part of the global ICT industry.
Enterprise applications are core to the business
All enterprises run core application software essential to their business. These include financial software and applications like human resources/human capital management (HR/HCM) and customer relationship management (CRM). They also typically run mission-critical applications like manufacturing, distribution and logistics and others, depending on their vertical market sector. ERP better integrates various business units and data flowing in departments such as backend office operations, accounting, inventory management and finance management throughout an organisation.
Some of the industries benefitting from ERP include banks and insurance companies that run vast client databases, manufacturers running sophisticated production and asset management systems, retailers, government agencies, educational institutions, transport companies – organisations in every market sector – run specialised applications that enable them to efficiently run and manage their operations.
Cloud transforming ERP
Like all applications, ERP systems are increasingly becoming cloud-based, or use cloud infrastructure for much of their functionality. Today, almost all the major vendors are migrating their product offerings to the cloud, using the SaaS (Software-as-a-Service) model.
As ERP migrates to the cloud it is changing the business models of both vendors and user organisations. It is also affecting the ERP services market. The global Ecosystm study on Cloud ERP Solutions – Best Practices and Vendor Selection finds that organisations which are planning to use Cloud ERP solutions prioritise industry expertise and local presence of data centres as a significant selection criterion for vendors.
Cloud computing encourages a pay-per-use subscription model for ERP and other applications which are changing the structure of the industry. Users are moving their budgets from the CapEx (capital expenditure) to the OpEx (operational expenditure) model, where outgoings are better able to be varied according to use.
A giant, mission-critical matrix
ERP is referred to as ‘mission-critical’ applications for a very good reason. An organisation’s core business functions are non-negotiable and without them, the organisation will cease to function. In addition, they need to be robust and flexible and capable of meeting the demands of changing technologies, economics and business conditions.
In this increasingly connected world, ERP extends beyond the enterprise. Modern ERP systems are interconnected in a giant business matrix that enables a world of global commerce. ERP systems support multiple interfaces and act as a modular system to any organisations demands. Their importance to the global business should not be underestimated.