11 Ways to Leave Your Legacy Systems Behind—Far Behind
With enterprise resource planning (ERP) systems becoming increasingly commonplace, public-sector entities are certainly no strangers to technology. In fact, many government organizations are in the midst of planning Web-based projects that promise to streamline and automate business processes and system operations. In so doing, they hope to serve their agencies and ultimately, their constituents, more effectively.
New software alone, however, will not solve all of the problems and challenges associated with legacy procurement and disbursement processes. In fact, it can compound them. While new software does provide built-in best practices for procurement and accounts payable functions, end-to-end processes— specifically those processes beyond the software’s reach—often go overlooked. This may result in an agency’s questioning why it did not realize all of the benefits promised by the software vendor when the system was initially purchased. Failure to address end-toend processes results in many inefficiencies and shadow systems that remain in place long after an implementation is complete.
Because much of the public sector still functions under disparate legacy and manual processes, government agencies are faced with a fragmented approach to their purchasing and disbursement processes. This, in turn, means slower, less efficient service for the communities they serve. Moreover, the public sector at all levels faces a common set of challenges: rising citizen expectations for service delivery, new government mandates, and continuous pressure to produce results. At the same time, public-sector infrastructure continues to age. Continually, governments are being asked to do more with less.
Process redesign offers the greatest potential for entities to meet service goals and increase their return on investment (ROI). Redesigning procurement and disbursement functions can help the public sector maximize its investment in current or proposed technologies, as well as improve the efficiency of its employees. Newly redesigned processes that incorporate best practices can lower the cost of performing day-to-day operations, improve cycle times, increase accuracy, and put an organization in a position to acquire goods and services at lower costs.
Public-sector organizations often suffer from antiquated and convoluted processes that consume substantial amounts of time and effort. The benefits of any newly implemented system will be minimized unless the inefficient, end-to-end process is addressed.
Following are guidelines on how to transform procurement and disbursement functions, streamline processes, and eliminate paper in order to get the most out of a new system.
1. Unify Procurement and Accounts Payable Processes
Procurement and accounts payable are interrelated and, therefore, need to be redesigned simultaneously. In order to improve access to purchasing data, for example, account coding and data entry into the system may need to change, directly impacting the accounts payable department. Viewing procurement and accounts payable as a single process can significantly enhance the benefits that an integrated solution provides, including improved data accuracy and relevancy.
2. Shun Shadow Processes
Feeling caught between the shortcomings of legacy systems and their mistrust of new systems, users often create shadow processes in the form of databases, spreadsheets, index cards, etc., to do their jobs. If the re-design or implementation team is not careful, these duplicative processes will remain in place long after new processes and/or systems are up and running. Typically, the result is extra work rather then a reduction in activities. A project plan should provide adequate time and resources to identify and eliminate shadow processes and systems.
3. Automate High-Volume, Low-Dollar Transactions
Many procurement and disbursement functions experience a high number of transactions that only account for a small percentage of an organization’s total spending. A recent procurement redesign project at one county government, for example, found that purchases of less than $500 accounted for 40 percent of administrative time but amounted to less then three percent of total dollars spent.
The county’s planned implementation of procurement cards and use of electronic ordering and vendor payments will free up critical time, allowing the staff to focus on value-added processes that lead to better vendor pricing.
4. Challenge Management to Embrace Helpful Change
Use the project as the catalyst to challenge internal taboos. During a time of change, senior management is often open to new ideas that would not ordinarily be considered. Projects that involve significant change often open the door to a broader mindset. Don’t let the opportunity pass by.
5. Reduce the Use of Paper
While it is difficult to completely eliminate the use of paper, many projects are not even successful in making reductions. This may be caused by a new system not meeting users’ needs or process owners sticking to old habits. Best practices that result in the reduction of paper include: eliminating the use of purchase orders for non-strategic, low dollar purchases, consolidating high-volume vendor invoices, utilizing electronic payments to vendors, using online catalogs, and automating the travel reimbursement process. Simply measure the amount of paper in the procurement process and establish aggressive goals to reduce it.
Failure to address end-to-end processes results in many inefficiencies and shadow systems that remain in place long after an implementation is complete.
6. Provide Appropriate, Professional Training
Organizations often overlook the significant role training has in facilitating the success of an implementation. Training should be delivered in stages by a process expert. It should follow a methodical approach, which is tailored to the organization’s and end-users’ way of doing business. Users not only need to understand how the system works but how it can help them do their jobs. A comprehensive training program can develop end user trust in the system and help facilitate the elimination of shadow systems.
7. Establish Realistic, Reasonable Timelines
Implementation plans are often created with optimistic timelines or have fixed “go-live” dates that force project teams to make concessions. Inevitably, the project team identifies an unanticipated process issue that needs to be addressed, but gets no time to make the change. Thus, the team knowingly implements an inefficient process. An effective project plan should budget sufficient time and dollars to address the inevitable process issue.
8. Set and Monitor Progress of Project Goals
Implementation of project goals should focus on process improvements, with the new system being one of the tools to get the job done. The project’s goals and objectives should reflect sizeable potential benefits to the organization, such as userfriendly processes, lower costs, reduced cycle times, fewer errors, and improved access to data. While some of the goals may be hard to measure (e.g. install a more user-friendly system), many of them can be measured and should be monitored on an ongoing basis (e.g. reduce data input by 50 percent, improve purchase order cycle time by 60 percent). These goals should represent a combination of process improvements and system enablers.
9. Empower Users With a Sense of Project Ownership
Often, the IT department assumes the driver’s seat during an implementation, leaving users feeling a lack of ownership of the system. While input from all affected departments is needed for a system to be effective, helping users feel that it’s their project creates a sense of “buy-in” and will result in a more successful implementation.
10. Iron Out Process Issues Before Implementation
Prior to a new system implementation, it is critical to assess and re-design the procedures currently in place. Even though ERP systems provide built-in procurement and accounts payable best practices, don’t assume that these practices are necessarily the best fit for the organization or that the entity is ready to use them.
One common assumption is that cumbersome, ineffective processes will be addressed once the implementation is complete. In reality, these issues often never get resolved because there is just enough funding for the project to go “live.” Therefore, process redesign should be addressed before implementation begins so that a fit-gap analysis can compare future requirements with what the software will actually deliver.
11. Include Internal Auditors
Internal auditors are usually concerned that a new process will reduce or eliminate controls. Rather than have them challenge a proposed new process, include them on the project team that is developing it. This will allow them to buy into the process and become strong advocates for the team’s recommendations. Often, the task of streamlining the approval process for voucher payments or purchase orders can be contentious. Having internal auditors’ support for a project team’s recommendations can help reduce pushback.
To effectively change procurement and disbursement processes, an endto-end approach must be taken. Transforming individual processes or simply hoping that software will provide all of the answers results in a less than optimal solution. Organizations that achieve breakthrough results are those that view the entire process, challenge current thinking, and apply best practices to create end-to-end solutions.
Significant improvements within an organization are there for the taking if agencies are willing to make the effort. Is your entity up to the challenge?
Editor’s Note: Tom Sonde is Director of Management Consulting at Cherry Road Technologies. A Certified Public Accountant (CPA) with more than 20 years of experience, Sonde works with state and local governments to improve their finance processes.
Cherry Road Technologies, Parsippany, NJ. Visit: www.cherryroad.com, or call 973-402-7802.