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March 8, 2011 > A leap forward

A leap forward

Enterprise Resource Planning system to improve efficiency

By Simon Wong

The City of Hayward's Technology Strategic Plan, approved by Council in 2008, identifies the need for an Enterprise Resource Planning (ERP) System as a priority to replace the existing financial system. The latter is obsolete and no longer meets the city's needs; reporting and data analysis are inflexible nor does it support the flows of data to and from the city's other software systems. ERP integrates the data and processes of an organization into a single cohesive system even if it comprises different software and hardware components.

Work is already underway on the two-phase project which began on January 11, 2011. Technology Services Department has completed a preliminary inventory of all technology data collection processes; Finance Department is identifying all finance-related systems and city staff is evaluating available technologies. Of the project's $3.5M budget, $2.5M of funding has been identified.

In the past, software was configured to match manual processes. Modern-day software limits customization. ERP is process-driven and will necessitate changes in working practices and re-engineering of business processes. Manual processes are often automated with real-time flows of electronic data, instead of movements of paper documents, between parties. What are the most efficient processes? Implicit is the need to manage change, or re-train staff, effectively so the organization continues to function. Similarly, rather than rely entirely on Finance Department to produce statistical reports, more staff across the organization will have access to, and many more perspectives of, data which they will need to interpret correctly.

The Government Finance Officers Association (GFOA) has been retained as a consultant. Needs assessment and process mapping are in progress. Detailed requirements will be developed before issuing a Request for Proposals (RFP) in June/July. The GFOA will assist in the selection of an ERP software vendor and, with the city's project team, will devise a change-management strategy to ensure successful implementation.

"We had anticipated taking a year to build and issue an RFP, obtain responses, complete due diligence, select a vendor and seek Council's approval for the City Manager to enter into negotiations with the vendor and sign a contract but it is preferable to do so sooner. Hopefully, we'll have a signed contract by the beginning of October. November and December are lost to the Holidays," explained City of Hayward Technology Services Director Clancy Priest. "We'll use the last two months of 2011 to review and fine tune our implementation schedule so that we're fully prepared to start the implementation in January 2012 without delay. This is a long overdue project, just like the redesign of the city's website. It's an opportunity to re-invent ourselves in the way we do business. Many of our processes are manual or semi-automated; we're scrutinizing everything we do and considering how to do it more efficiently."

"There might be concern about the timing of this project, given its $3.5M budget, but we're examining the core operating system for the city organization to help us work more effectively. Our current system is cumbersome. Staff still uses paper time cards whose information is entered manually into the HR system. The project will also nurture an analytical mindset to consider how future processes can be engineered most efficiently," stated Assistant City Manager Kelly Morariu.

"Most organizations go through this process every 20-30 years. The return on investment will be astronomical. The GFOA has never seen an organization so eager to proceed with such a project. Personally, I've never seen staff so accepting of major change. Inevitably, there will be problems along the way but they will be minimal. Change management is key; rather than create and impose processes on staff, the project team is asking users what they need, and want, to be able to do their jobs more effectively. Empowering everyone will facilitate the transition process from where we are now to where we want to be," concluded Priest.

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Enterprise Resource Planning (ERP) System
ERPs are identified by tier, up to four levels. The most common comparison is between a Tier 1 and Tier 2 system.

A Tier 1 ERP is software for a large enterprise, such as multi-site, multi-national corporations. Typically, the Tier 1 customer is a company with several sites, geographically dispersed on a global basis and organized into multiple companies. A Tier 2 ERP is designed for mid-sized companies which usually operate from either one or just a few localized sites.

Critical factors when selecting one of these ERP tiers include the level of complexity and breadth of organization operations. Many cities use a Tier 2 ERP but some larger cities have deployed a Tier 1 system.

The City of Hayward will focus on Tier 2 level ERP systems.

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