Government and Legacy ERP: A Broken Model
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a s t r at eg y paper fr o m
Government and
Legacy ERP:
A Broken Model
flickr.com/pargon
Government and Legacy ERP:
A Broken Model
Technology is all about buzzwords. But for far too long, the biggest buzzwords surrounding enterprise resource
planning (ERP) systems have been antiquated, cumbersome and expensive.
Take, for example, a small city in budgets to work with and at the same Legacy Software:
New Hampshire that had been using time, aggressive mandates to change. A Breaking Point?
the same ERP system for 30 years. Most organizations can’t afford to con- On-premise, aging systems have
The legacy system workhorse for three tinue operating in the same way. Effi- reached the breaking point with many
decades was a broken-down mule — ciency and transparency are the name state and local government agencies.
and could not deliver status updates of the game. While there’s enormous These legacy systems are built on
and analysis that officials needed pressure on governments and private decades-old client/server and main-
to improve services. Or there’s the companies alike to limit non-essential frame technologies and have simply
agency in California that had hundreds spending, maintaining the status quo is become too expensive to maintain. It
of employees marking down hours creating more costs and headaches. is like continuing to repair a 15-year-
on Excel spreadsheets, with payroll It’s time to create a new buzzword old car: Where is the ROI in that? Large
departments entering information by within ERP: Cloud. This white paper amounts of money are spent on main-
hand to generate paychecks. will explain how finance and human tenance, but as soon as one problem is
Unfortunately, these examples are resources (HR) in the cloud can create fixed another one appears.
the rule, not the exception. According cost savings, provide a modern platform Legacy systems can also be risky,
to Government Technology magazine’s for government agencies and unlock especially if security updates take too
article, “CIOs Seek Ways to Improve data previously held hostage in silos. long to implement. Another problem is
Legacy Systems,” old systems are
found in all state governments, irre-
spective of geography. New Jersey’s Legacy systems are built on decades-old client/server
payroll system dates back to 1969, and mainframe technologies and have simply become
and the state’s Motor Vehicle Commis- too expensive to maintain. It is like continuing to repair a
sion uses a mainframe system that’s 15-year-old car: Where is the ROI in that? Large amounts
30 years old. Likewise, Arizona’s state of money are spent on maintenance, but as soon as one
financial system, which is used by 90 problem is fixed another one appears.
percent of the state’s agencies, is 25
years old.1
Too often, state and local govern-
ments are living in the dark ages when it
comes to their ERP systems. This is not
by design. Historically, it has been pro-
hibitively expensive to upgrade or move
to a new system and there often weren’t
enough perceived benefits of doing
so. Now, agencies have much smaller
2
3 Government and Legacy ERP
that the employees who know how to Can governments afford to wait?
work on these systems — the COBOL
$35.7 Billion Nearly 50% 11 YEARS OLD
programmers and C+ + developers —
are rapidly retiring and are difficult to
replace. In this world of legacy soft- Agencies are spending Nearly half of all A Colorado Financials Audit
ware, IT staff who must spend time half of their annual existing IT applications found that the average age
keeping applications up and running IT budgets, or $35.7 are based on legacy of state financial systems
have few additional hours to develop billion, maintaining technology in need of is 11 years (36 states). The
new services and enhancements for and supporting legacy modernization. oldest financial system is 29
clients and constituents. systems. years.
Even more critical is that the core
functionality of legacy ERP is failing
to keep up with modern demands. In
an era of government accountability,
these systems are poor conduits of
information. Agencies must typically
request reports from IT, which can
take days or weeks. Older systems
also aren’t keeping up with online
trends. Collaborative workspaces for
managing projects, approving expense
reports or sharing operational data
are commonplace, and help employ-
ees be productive from any location.
Governments need these Web-friendly
capabilities as much as their private
industry counterparts. applications, consumers and busi- Finally, the technologies of today
Since most of these legacy systems nesses conduct transactions and — smartphones, tablets, mobile apps
are built on older, inflexible technolo- consume information by touching or and Web email — have dramatically
gies, it means that making a change in clicking a few buttons. These open changed user expectations. The confus-
a process or workflow is costly or even architectures enable easy exchange of ing navigation and complicated features
impossible. Governments need agility data and small learning curves. Gov- of legacy applications may cause users
and flexibility with their information ernment organizations, like the private to walk away. They will use some-
systems, as employee and constituent sector, can reap significant benefits thing else, or develop a workaround
demands often fluctuate. from a self-service, consumer IT model that introduces security risks or snags
Legacy systems are also clunky to to support larger numbers of users and workflow.
use, in stark contrast to the intuitive the growth in online transactions, and The harsh reality is that old
user experience with today’s mobile to improve compliance and manage software technologies and outdated
and Web applications. In modern growing volumes of data. infrastructures are costing government
3
and taxpayers a bundle. Agencies are and additional staff. Cloud software and Nebraska Unifies HR
spending half of their annual IT budgets, cloud infrastructure companies amortize Processes to Focus on Talent
or $35.7 billion, maintaining and sup- the delivery of high-quality technology The state of Nebraska needed
porting legacy systems, and nearly half across many users, so that governments a simpler, more affordable way to
of all existing IT applications are based can provide new or better services with manage HR processes and its 18,000
on legacy technology in need of mod- fewer resources and less waste. employees spread across 80 agencies.
ernization, according to a 2011 survey2 Moving finance and HR to the The state’s legacy ERP system was
conducted by MeriTalk and Unisys. cloud can also empower government
A Colorado Financials Audit in 2011 to help its community survive tough
found that the average age of state times. The savings from cloud soft-
financial systems in the U.S. is 11 years ware help governments invest in more
(36 states). The oldest financial system is public-facing services. The cloud also
29 years old.3 Can governments afford to enables faster exchange of informa-
wait? Leaner and meaner is in demand not tion among government workers,
only due to shrinking government budgets, which in turn increases productivity
but also because of constituent demands and accountability.
for better operations and results. Moving Finance and HR in the cloud also
away from on-premise, legacy systems improve talent development programs
is a critical first step to help government and provide an array of easily acces-
organizations meet financial challenges sible self-service tools for employ-
and deliver on their promises. ees, such as comprehensive benefits
administration and online payroll and
There is Another Way: tax data. Flexible cloud software can Nebraska State Capitol
Finance and HR in the Cloud help automate hundreds of business
Bring Big Benefits processes so that an agency can oper-
ate more like a private enterprise but expensive to maintain, according to
“The flexibility available today without the overhead of maintaining Dovi Mueller, HR administrator for the
in private – and even public – and updating a sophisticated software state: “In times where economics play
clouds changes the question from package. Online financial management a big part in what you do, especially in
‘Why cloud?’ to ‘Why not cloud?’” helps track funding, spending, transac- the public sector, we’re always looking
tions, approvals and compliance initia- for ways to lower our cost and get a
– Todd Sander, Executive Director, tives more efficiently in one unified better product.” Employees didn’t like
Center for Digital Government
system that saves decision-makers the old system, and often complained
time and also enables sophisticated about it. ”They don’t understand it,”
business intelligence. she says. ”It’s difficult to use.”
In the span of just a few years, cloud State and local governments and In addition, employees had been
computing has come of age, chang- public institutions are moving to the unhappy with the features of a sepa-
ing the game for IT organizations cloud and realizing many qualita- rate self-service benefits enrollment
worldwide. Accessing applications and tive and quantitative benefits in the tool. The state decided to replace the
infrastructure online is transforming transition. Here are two examples that existing system with a more unified
and modernizing IT operations without demonstrate how this evolution is and comprehensive system for man-
requiring expensive software licenses taking place. aging and developing talent.
4
5 Government and Legacy ERP
After adopting HR in the cloud, Cornell University Goes
Nebraska employees are finding that Self-Service
the system is much easier to use, and Cornell University, an innovative Ivy
the IT department is no longer needed League university with 14,500 faculty
to create reports, since users can now and staff, experienced the same realiza-
run their own reports anytime from tion as did many organizations in late
within the system. “If you want to 2008: The market downturn was going
find out something to necessitate cost cutting across the
about yourself, board. Since then, Cornell, comprised
you go to the ‘All of seven undergraduate colleges and
About Me’ page,” three professional colleges on the
Mueller explains. Ithaca campus, hired a consultant to
“If you want to cre- help analyze areas for cost cutting. One
ate a new position, area was in IT, and specifically, HR. The
you put in ‘Create existing on-premise ERP system was
flickr.com/Rocketlass
Position.’ The ease difficult to maintain and upgrade, partly
of use is a big win due to customizations, and didn’t offer
for us.” easy access to data for decision-makers
From a technol- or employees. “We decided we could get
Cornell University
ogy perspective, a more efficient service by going to the
the new system is cloud,” says Mary Opperman, Cornell’s
saving time, money vice president of human resources and system has pre-built processes, it is
and hassles. safety services. designed to permit a great deal of flex-
The cloud model Cornell is in the process of transi- ibility in how those processes are used.
means no need for tioning from a third-party legacy ERP “The system is able to respond to the
capital expenses on hardware or other system to HR and payroll in the cloud. way we do things,” Opperman says.
infrastructure and staff has more time Managers will be able to get the data For IT, HR and payroll in the cloud will
to focus on strategic projects benefit- and reports they need at their desk- make life much easier, since all clients
ing the state. The automatic updates, tops through the manager self-service are on the same version and upgrades
which occur three times a year, are an application. Employees will also be able and maintenance are handled by the
enormous convenience. All employees to manage their benefits, view payroll vendor. Opperman is confident that
are using the most current version and receipts and change their payroll deduc- the system will also give time back to
the state has the latest innovations in tions, among other tasks from their managers in her department: “We want
ERP technology. computers. Managers will have informa- people to spend less time collecting and
Finally, the new system is help- tion they need to manage their teams, more time considering data.”
ing Nebraska operate more holistically, and can use the application for perfor- Opperman adds, “Whether here in
instead of as 80 disparate agencies, mance management, hiring and promo- HR or out in the colleges and units,
Mueller says. “We are now starting to tions, and organizational modeling. “It’s this system allows us to focus less
come together with one process for an incredibly dynamic tool for managers, time on process and more time on
recruiting, one process for employee as well as for HR,” Opperman says. why we are here in the first place —
learning and performance development, Another advantage is flexibility, serving and supporting our students,
and one process for open enrollment.”4 common with cloud software. While the faculty and staff.” 5
5
How Finance and HR in the use and more affordable. Instead of being Unlocking the data: On top of these
Cloud can Change Government on call 24/7 to troubleshoot application savings is a whole new way of working —
Moving to the cloud for a core IT issues, IT can now work on supporting smoother, Web 2.0 style features mean
system is not a simple decision. Despite strategic projects across the organization. that employees can extract and share
the proven economic benefits of Soft- Here are some of the other benefits: data and conduct analysis like never
ware-as-a-Service (SaaS), if an agency Cost savings for leaner government: before. Government can operate more
has been using a system for 15 or 20 First and foremost, cloud software can bring like a private business, with detailed
years, change doesn’t come easy. Yet savings of 25 to 50 percent, compared with reports available in minutes, which gives
cloud software offerings have matured maintaining an on-premise system. These employees real-time, actionable informa-
profoundly in the past few years, and savings come from the subscription model, tion on operations to make the best deci-
there is now a wealth of sophisticated which reduces the requirements for internal sions or to improve processes or services.
solutions that a government agency can infrastructure and staff to support the sys- The cloud also automatically creates a
afford. Without the hassle of purchasing tem. IT spends far less time training users, community of users all working from the
licenses, updating infrastructure, buying since the software is intuitive and consumer same version, so that people can share
more storage and servers, configuring and friendly. Best-in-class cloud software also best practices easily.
maintaining the software and operating includes comprehensive integration plat- Modern platform: Public cloud solu-
a help desk, once implemented, finance forms that make it easy to connect to other tions deliver the best economics and
and HR in the cloud can be much easier to third-party systems already installed. agility, due to the shared services delivery
Finance and HR in the Cloud: What Should I Look for in a Solution?
• True cloud: Public cloud, or SaaS, is most affordable for companies and organizations because it is based on shared
infrastructure versus private, dedicated servers. This delivery model brings benefits such as frequent, across-the-board
upgrades, rapid on-demand provisioning and optimal performance through dynamic server/resource allocation.
• Frequent updates: A significant advantage of the cloud is that SaaS providers can release and automatically distribute product
updates frequently, as much as three times yearly. Ensure that your SaaS partner is committed to this level of ongoing innovation.
• Actionable analytics: Finance and HR in the cloud should enable users to request data, and view metrics and reports from within
the system instead of needing to access a separate analytics source. The average user can create a report with a couple of clicks.
• Integration: Finance and HR in the cloud should provide out-of-the-box integration with common business systems, and tools
for custom integrations when needed so that integration is not costly or time consuming.
• Business process customization: Most organizations have a few unique processes or ones that frequently change, so finance
and HR in the cloud must offer the ability to easily configure and adapt workflows and processes as needed. A business
analyst or power user should be able to do the customization, without IT intervention.
• Organization management: Finance and HR in the cloud should support multiple organizational structures, reflecting the
diversity required for modern governments. This includes the ability to restructure organizational charts, reassign reporting
relationships and assign workers to multiple organizational types.
• Support for multiple mobile platforms: Managers and employees want and need access on the go from their own devices,
whether they are on tablets, smartphones, netbooks or laptops.
• User community: In the cloud, all users should be on the same version, which supports the sharing of best practices and
information among users from different organizations and agencies.
• Government requirements: The system should support unique government processes such as grant and fund management
and specific workplace regulations.
6
7 Government and Legacy ERPmodel. Organizations receive automatic minimal organizational change. The state help qualify vendors and agencies can
upgrades to the latest technology and all of Illinois has saved more than $2 million look for certifications, such as SAS70
the minor updates and security patches annually by migrating to a cloud-based Type II certification.
in between, with minimal effort. Since all email system.7 Another concern is reliability: In a
customers receive upgrades at the same Moving an entire business appli- shared services environment, will data
time, software companies can spend cation suite to a new platform takes and applications be subject to increased
more time supporting the latest version considerably more effort, even with a outages and regular periods of slow
and developing new features. This means cloud-based system. Replacing legacy performance? IT organizations should
that all customers benefit from more fre- ERP requires an organization to change ask vendors about their capabilities for
quent and valuable updates to improve outdated processes. Government enti- redundancy, failover and SLA guarantees.
efficiencies and knowledge within their ties operate underneath regulations Finally, preparing for the transition to
organizations. and unique requirements that can make finance and HR in the cloud entails strong
Organizational visibility and standard- change more arduous. business and IT alignment. While the
ization: Employees go to one place to view Governments may also be hung up cloud may seem “simple” it often requires
their benefits, retrieve operational data on nightmare legacy ERP deployments even closer relationships between IT and
and conduct transactions, instead of com- of the past: budget overruns, timeframes agency department heads. If a depart-
bining manual and automated processes. that extended from months into years, ment wants to add functionality or
From one place, senior leaders can view systems that, when finally deployed, were procure a new service, it should consult
organizational status in all departments unpopular or didn’t work as intended. IT with IT and not go off on its own to the
or drill down into a specific function. Man- directors may also worry about security, vendors. This helps manage risk, cost and
agers can update organizational charts, despite the fact that in some cases, a enables IT to influence the broader cloud
change workflows, search for skill sets cloud vendor may be able to deliver stron- strategy in the organization. Govern-
when a new project launches, monitor ger security than internal IT staff. ment employees need to understand
financial key performance indicators (KPIs) No matter the challenges, the ben- the benefits of moving to a new system;
or understand benefits usage across the efits of finance and HR in the cloud can IT can help clear up any concerns that
workforce. Holistic intelligence in turn outweigh any hesitations. Federal cloud users may have regarding access to data,
gives governments the means to under- initiatives are paving the way for state security or functionality.
stand their deficiencies and strengths at and local government cloud initiatives.
any time, and where improvements can The Department of Health and Human Endnotes
begin. That’s responsible government, Services is saving 60 percent by moving 1. ”CIOs Seek Ways to Replace Legacy Systems,” Government
Technology, November 15, 2011, www.govtech.com/policy-
with the help of the cloud. its back-office systems to the cloud.8 management/CIOs-Seek-Ways-to-Replace-Legacy-Systems.
A New Jersey public transportation html?page=2
Getting Started in the Cloud
2. www.meritalk.com/fedappmod
system decreased the average response 3. www.leg.state.co.us/OSA/coauditor1.nsf/All/9515594F6B9CF9A6
872578BD0053E752/$FILE/2152COFRSSustainReport.pdf
Organizations such as Cornell Univer- time to customer inquiries by more than 4. www.workday.com/Documents/pdf/case-studies/workday-
sity and the state of Nebraska are reaping 35 percent and increased productiv- state-of-nebraska-case-study.pdf
5. Center for Digital Government phone interview with Mary
the benefits of finance and HR in the ity by 31 percent after adopting a cloud Opperman, conducted on March 14, 2012.
6. www.amd.com/us/Documents/Cloud-Adoption-Approaches-
cloud, yet most government IT directors solution.9 and-Attitudes-Research-Report.pdf
are still waiting for this transition to occur. Understanding the real risks and tak- 7. Center for Digital Government issue brief, “E-mail in the Cloud:
Reducing Cost and Complexity,” www.govtech.com/library/papers/
Research shows that 36 percent of orga- ing care to select the right cloud partner E-mail-in-the-Cloud-Reducing-Cost-and-Complexity.html.
8. www.informationweek.com/news/government/cloud-
nizations are still investigating solutions.6 can help an agency move faster toward saas/229401471
Email in the cloud is usually a first step, a modern application environment. 9. ”Faster better stronger: government’s rapid ascension into the
cloud,” Feb. 20, 2012, http://gov.aol.com/2012/02/20/faster-
because it can provide rapid benefits with When it comes to security, auditors can better-stronger-governments-rapid-ascension-into-the/.
7Workday is the leader in enterprise-class, software-as-a-service (SaaS) solutions for managing organizations, combining a lower cost
of ownership with an innovative approach to business applications. Workday delivers unified Human Capital Management, Payroll, and
Financial Management solutions in the cloud.
www.workday.com
The Center for Digital Government, a division of e.Republic, is a national research and advisory institute on information technology policies and
best practices in state and local government. Through its diverse and dynamic programs and services, the Center provides public and private
sector leaders with decision support, knowledge and opportunities to help them effectively incorporate new technologies in the 21st century.
www.centerdigitalgov.com
Acknowledgements:
Polly Traylor is a writer and editor, specializing in business and technology coverage. She has written for a variety of
companies and websites, including Microsoft.com, AmericanExpress.com, IDG publications, MSN.com’s Business on Main
and Deliver Magazine. She has held senior editorial roles at national magazines including IDG’s The Industry Standard
in San Francisco, CIO and McGraw-Hill’s Healthcare Informatics. She holds an M.A. in Journalism from The American
University.
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