ERP guides government growth
In the past, governments may have lagged behind in their adoption of complex business applications, but with more demands for government efficiency and integrated services, more and more government entities are turning to wide-scale ERP deployments to drive performance
Large enterprises were among the first organisations to embrace business applications such as Enterprise Resource Planning (ERP), which offer insight and control over financial and business processes. While government may have lagged behind in the initial adoption of such solutions, the benefits of better control and transparency soon became attractive to the government sector. By the late 1990s, many government organisations in developed economies were investing in basic ERP solutions, with an eye on integrating and updating standalone systems like accounting packages, and streamlining reporting processes.
The adoption of such systems has been mirrored in the Middle East region, albeit somewhat inconsistently, with some organisations still operating siloed deployments of more basic systems, while others are pushing more advanced solutions that integrate multiple functions across multiple departments or entities.
Jerry Mechling, research VP, Gartner, said that adoption of more advanced solutions has opened up more possibilities for government ERP deployments: “ERP systems have a long history in governments, starting with their precursors as accounting systems oriented to financial planning, budgeting, and financial accountability. As analytic capabilities increased, and as costs and flexibility improved, applications oriented to individual governments evolved to more standardised approaches applicable to many governments. This captured economies of scale and reduced the unit costs for those governments willing to adapt to the newly standardized approaches. In addition as financial accounting was augmented with performance indicators, the applicability of the systems to broader management planning and accountability was possible. Governments have often been slower than the private sector to follow and adapt these modifications, but ERP has been the core to management planning and operations in many governments throughout the world.”
At the most basic level, Government ERP, sometimes referred to as Government Resource Planning (GRP), delivers the same functionality of ERP packages — accounting, reporting, financial planning and perhaps some HR functions. For more advanced solutions however, the different aims of government mean that there are some fundamental differences in requirements.
Hichem Maya, Head of Business Transformation Services, SAP EMEA, commented: “Governments do differ from corporations in that governments enable smart living and citizen safety as their main goals. Governments are not driven by profit like the private sector — they are driven by improving the quality of life for citizens.”
The drive to improve quality of life for citizens manifests in many different areas, according to Saravanan V, vice president – E-Governance, Ramco Systems Limited. ERP solutions can help deliver good governance, accountability and transparency of processes. Government organisations may also be looking to cut operational expenditure and improve service delivery as part of their duty to citizens.
“Governments, worldwide, are embracing innovation in technology to ensure good governance. Good governance undoubtedly expects that governments are accountable, transparent, effective, efficient, participatory, consensus oriented and more,” Saravanan V said. “Considering the growing citizen expectations, governments are trying to leverage the power of technology, as a business transformation tool, to effectively and efficiently manage all kinds of resources, in order to provide high quality services on time and deliver accurate decisions.”
Meeting the different requirements of the sector drive the make up of government-focused ERP solutions. Such solutions may require government-specific financial and budgeting components, that meet specific standards or more advanced human resource and human capital management capabilities.
Rami A Khoury, regional manager, Public Sector ME, Infor explained: “Government and corporate organisations are fundamentally different, and as such, cannot be considered collectively when discussing enterprise software solutions. Needs in government extend beyond the bottom line, with a focus on public safety, community health and wellness, fiscal responsibility, and community services. Government must be able to effectively manage all of these areas, as citizen expectations are higher today, more than ever. Similarly, government often times has different accounting requirements, reporting standards, and other unique requirements that make retrofitting a corporate focused solution to government difficult, expensive, and time-consuming.”
Examples of specific components that are required from government ERP include more advanced budgeting, Khoury added, as well as components that go beyond typical back office functions to manage other areas of the organisation’s operations, including asset management, community development and regulation, and emergency response planning. There may be other features that are also required, such as digital signatures, embedded workflow, or the ability to audit data changes.
When it comes to ERP deployments, organisations in the government sector usually face a higher level of scrutiny and accountability, due to the fact that they are publicly-funded, said Anish Kanaran, Channel Director, Epicor Middle East, Africa & India. This usually means that government organisations have to be more aware of the need to reduce financial waste, and avoid building unresponsive bureaucracies. Initial costs and ongoing maintenance costs of solutions becomes more important.
Keith Fenner, director and Head of Sage Middle East agreed that government ERP typically trades off the need for profitability with the demand for greater transparency, enhanced planning and reporting capabilities.
“Perhaps the major differentiating factor of ERP solutions for governments is that they are not required to manage profitability but need to have world class cost control and reporting,” Fenner said. “The typical elements of a Sage Financial Resource Planning system would be financials, asset management, procurement, reporting, budgeting and human capital management. There is typically very strong focus on budgets, cost centres and data saturation reporting.”