If you are about to embark on an ERP programme, you’re likely to be thinking about different configurations before deciding which is right for you.
In this blog our Principal Consultant and ERP expert, Phil Pursglove, shared his key insights to help you shape your decision, which are the result of working with over 35 councils across the UK on their ERP journeys.
What are your ERP options?
Firstly, before we look at the options we must recognise that local government organisations need line of business (LOB) systems to manage their different activities, due to the variety and specialised nature of the services provided. Any future ERP solution selected, must work within this landscape.
With this in mind, essentially you have three options;
‘Full’ ERP scope
In reality this is an unlikely scenario – councils tend not to cover all aspects finance, procurement, HR and payroll with a single system, even where the core process coverage is good. This is influenced by the organisation’s existing landscape, and the number of processes/systems that might be in scope. So, in practice the choice is usually between the following two alternatives:
‘Majority’ ERP scope
This uses a single ERP solution for the majority of process and activities, but some of the more specialised activities may still use 3rd party ‘point solutions’ – e.g. Recruitment, Treasury, Sourcing/Contract Management. Vendors include Microsoft, Oracle, SAP, Unit4 and Workday.
Best of Breed
Here even the core activities are split over multiple systems – usually seen as a two-system configuration – (i) Finance/Procurement, and (ii) HR/Payroll – but could theoretically be more.
There are a number of dedicated offerings on the market, for example; Advanced E5 (Finance), MHR iTrent (HCM/Payroll), Microsoft Dynamics 365 (Finance/Procurement), Civica (both).
Key considerations when making the decision
Cost is likely to figure high in your decision making process, but that should not be the deciding factor. There are a number of important considerations to think about; functionality and degree of fit, thinking about the system history specific to your organisation, is key for example.
Also, think about the need for integrations. By selecting Best of Breed, you’ll need to consider synchronisation of shared data, how automated cloud system updates will work if they are coming in from more than one vendor for example.
And there is much more to consider. Below, the factors needing the most review are listed.
|Considerations||ERP||Best of Breed|
|Functionality/degree of ‘Fit’||Very wide coverage of processes (and increasing) – but view that is unlikely to be ‘best of breed’ in every area. Instead seeks to provide a solid and consistent solution over a broad scope.||Products focused on specific areas of functionality – perhaps in more depth than some ERP offerings.|
|A consistent view||The major selling point for ERP – all the data is in one database, reporting, and cross-functional data flows.||Any cross-functional reporting or process will be dependent upon the success of the synchronisation (see below) put in place.|
|Integrations||None needed to make the ERP internally consistent – single database, with shared master data and processes.||Will need a mechanism to keep key shared master data synchronised across components – in practice this normally amounts to Account coding info (COA), and Person Information to facilitate procurement spend and approval.|
|System updates||Cloud ERPs will ‘push’ system updates and new functionality to a published schedule.||Multiple components may update with different calendars.|
|Implementing planning||Might be seen to lend itself more easily to a ‘big bang’ approach, although phased approached also possible. Design is able to leverage the common structures, data formats and processes.||Might be more difficult to orchestrate a coincident Go-Live – two separate Go-Lives might be more appropriate. Design needs to work harder to consider dependencies in both systems – risk to compromise both sides.|
|Procurement process||Single go-to-market exercise for ERP, and a single vendor to contract with.||Likely to need separate tender exercises for each component, unless aiming for consortium offer (may be framework dependent); multiple vendors/contractors to work with.|
|Risk of takeover||Major ERP players unlikely to be targeted for takeover in the short term.||Potentially a risk that at an unspecified time in the future, a smaller software vendor might be purchased by a larger organisation (as with Peoplesoft, Cognos, GEMMS, Hyperion).|
Cost is unlikely to be a clear differentiator. Certainly it is not easy to predict whether one approach will be cheaper than the other – there is more to consider than the software licenses. Implementation costs (internal, system integrator), procurement exercise costs, support arrangements. It would be unwise to make this the prime differentiator.
Making the decision
It may sound straightforward, but in making the decision you need to understand which factors carry the most weight for your organisation. That will be the crux of the decision and needs careful review.
It’s important that all of the stakeholders are involved in this initial decision; the board, advisors, process owners and senior stakeholders should all be involved in the decision. Getting consensus and buy-in early on will help the programme’s success. And making this decision well in advance of going out to market will make the procurement exercise run more smoothly.
There are a few simple questions you can ask, to help determine the right solution for you;
- What are you most worried about?
- Functional richness?
- Complexity of implementation?
- Integrity of data, and ease of reporting?
- Consistency of user experience?
- Is there already a high-level view within the council?
You should make sure you understand the vendors in the market for both options. Take time to fully understand what different systems do – don’t just work off perceptions.
A good starting point to answer these questions is to discuss these points as a Programme Board group.
Only you can answer all of the questions, to decide the best solution that fits your own organisation. You are the experts on what you have and what you want to achieve and by considering these key points you will reach the right decision.
However it is a critical decision. You have got to select a solution that is agreed by all, and thought through properly. A solution which is the least risky for implementation, from a delivery and commercial point of view.
A consultancy partner, like Socitm Advisory, can support along the way, with vendor and solution agnostic advice. To help you understand the current application and process landscapes. Whether you need to replace a current system or update it. To share market and sector information, showcase best practice and demonstrate the art of the possible, through an options appraisal for example.