How to build future-facing ERP

The keys to a successful enterprise resource planning (ERP) overhaul are planning, communication and change management, former city and county officials said during a webinar.

Before starting an ERP replacement, agencies should ask questions that will inform the business case for the project, said Christine Binnicker, director of state and local government technology at Guidehouse and a former deputy chief information officer for the city and county of Denver. She spoke about lessons learned from leading an ERP project in 2017 during a Feb. 22 webinar titled “Executive Perspectives on Preparing for an ERP Replacement Project” and hosted by the National Association of Counties and Guidehouse.

First, agencies should detail the problems with the existing ERP. The complex infrastructure and custom code in Denver’s legacy system meant that changing one thing often broke something else, causing productivity-hurting outages. “We used to call ourselves arsonists by day and firefighters by night,” Binnicker said.

Second, is determining if the ERP software is current and/or patched to the latest level. That can affect cybersecurity. Third, understanding how the IT and business teams work together is critical. In Denver, Binnicker said, the Technology Services department was known for saying no to upgrade requests, but that was often because of a lack of resources. It was so busy “trying to keep the lights on,” she said, there was no time for enhancements to improve business services.

The fourth set of questions relate to the engagement of the IT workforce. In Denver, many workers had outdated skills and had no opportunity to learn new ones. After replacing the ERP, however, Technology Services was able to reallocate 75% of employees to higher-value work, such as implementing a licensing and permitting application, Binnicker said.

A fifth consideration is how city, county or state workers use the ERP. For instance, before its revamp, some Denver employees never touched the ERP and it was inaccessible on a mobile device, leaving most business processes paper-based. The new ERP cut paper use by about 75%, she said.

Two other questions are about budget: Are expenditures predictable and how much money goes toward “shelfware,” or license costs for products not in use? For instance, Denver was spending $300,000 on software it wasn’t using.

Lastly, agencies should ask if the ERP provides real-time data to inform decision-makers. “One of the benefits of moving to the modern ERP was that … our reporting team went away,” Binnicker said. “The business [team] was able to generate their own reports, write their own reports, do their own analytics … create dashboards, see things in real time and really get to the point where they could make those data-driven decisions.”

Wyatt Sterusky, former human resources information systems and data analytics manager for Maricopa County, Arizona, said he made many mistakes while replacing legacy HR applications with a Workday solution in September 2022. For example, he said the team didn’t know what an HR system could do beyond core functions such as payroll and benefits signups. If you want something transformational, he advised agencies to learn what’s available and make those features part of their goals. Today, many agencies are looking for automation and tools for monitoring diversity, equity, inclusion and accessibility, he added.

Another misstep was creating a request for proposals with what he called a “buffet of wants.” Instead agencies should “focus on the critical things you need,” said Sterusky, now the engagement director and chief HR officer adviser at Guidehouse.

Something the county did well, he added, was inventorying what it had and creating a brief, elevator pitch-style whitepaper that explained the existing system, why it was outdated and the goals and estimated costs for a future system. 

“We took inventory of everything we had: How much are we processing in payroll? And that really ended up being quite a large number with 14,000 employees. So when we start looking at that and saying, ‘This little payroll system is putting out close to $1 billion in payroll a year—oh, wow! That’s quite a bit of our budget.’ It makes it real,” Sterusky said. “It really built the justification [for replacement] in there and the impact of our HR system.”

Ray Elwell, government strategic director at Guidehouse and former deputy chief financial officer for Orlando, Florida, emphasized the importance of change management. His rule of thumb is that 10% of employees will be excited about the revamp, so it’s important to empower them as evangelists to get the others on board.

Additionally, officials must understand who the implementation partners will be and ensure that they are building for the future, not reconstructing the past. 

“The way you’ve always done it is great, but there’s probably a better way to do it,” Elwell said. “A lot of folks look at the ERP process—issuing the RFP and going through the evaluations—as the salve that’s going to solve all wounds, and the reality of that is it’s not. There’s a lot of prep that’s required for folks to be able to get to the RFP process, a lot of research, a lot of salesmanship, if you will, to be able to do a replacement project.”

Stephanie Kanowitz is a freelance writer based in northern Virginia.