By Mark Harvey and Anthony Von Bergan.
Technology continues its rapid advance making systems progressively obsolete. People also change and managers who have grown up with yesterday’s systems are starting to retire in large numbers. The authors argue that now is the time to stand back and see how the public sector ICT landscape is changing and how new developments can be used to bring much needed efficiency.
For many public sector organisations, 2010 will mark a turning point in what executives expect from their enterprise systems. With falling government funding, new carbon accounting requirements, and the need to do more with less, senior management must look at adopting new technologies if they are to maximise the full potential of their investment in systems. To understand this, and the way that management must now look to engage with their software suppliers, we first must understand how we have reached this point.
The path of development
In the lead up to the millennium, changes in technology were both rapid and exciting, and were spurred by two major catalysts. The first was the worldwide investment in new ‘Y2K compliant’ systems, which brought about a new way of working, while the second was the mass adoption of the internet, which caused the dotcom boom. Both caused artificial buying cycles, which resulted in artificial recessions, and allowed a number of companies to benefit.
As the millennium drew closer, IT vendors such as the JBOPS (JDE, BAAN, Oracle, Peoplesoft and SAP), partnered with consulting houses to create new systems. The development and commercialisation of the internet also saw phrases such as the ‘information super-highway’ develop, which research analyst firm, Gartner, advised organisations to join using systems the JBOPS were providing, or risk be left behind. The JBOPS vendors began providing systems to public sector organisations using technologies originally designed to service the manufacturing and distribution sector. Gartner then realised the need for all organisations to implement more than simple transactional systems, and so information and customer facing solutions were developed. The ERP system had evolved.
Bolting the new on the old
Many ERP systems implemented in the lead up to the millennium are still in use today, although the JBOPS have rationalised to “SO” (SAP & Oracle). Yet few vendors have incorporated new technologies into their offering to provide a fully integrated system that will meet the needs of rapidly changing and increasingly demanding stakeholders. In fact, many vendors simply built on top of their original manufacturing and distribution solutions, which resulted in cumbersome technology that is difficult to retrieve information from.
Business Intelligence is an excellent example. No one wanted to miss out on the new technology, so data warehouses were bolted onto old ERP systems, and customers were told they would now be able to access their data to make strategic decisions. Yet these systems were still based on a chain of transaction processes, and despite the new modules and BI tools, many projects failed because they were cumbersome and difficult to use. As recently as last year, KPMG, in conjunction with Cambridge University, reported that more than 50% of BI projects fail, and that executives fail to get the right information to make decisions. Business Intelligence is being used as a reporting tool, rather than fulfilling its immense potential.
Yet some enterprise solutions vendors designed systems specifically for asset and service intensive industries, such as government, education and health, and built them around a financial core. This fundamental design allows multi-dimensional analysis of programmes and projects through multiple ledgers, meaning users can drill down into core documents quickly and easily, and use Business Intelligence systems to make meaningful decisions, which in turn drive efficiencies.
Doing more with less
Publicly funded bodies are already being forced to do more with less, and with every major political party in the UK recognising that budgets must be severely cut, this need will only increase. This presents the challenge of creating efficiencies across already stretched resources, and answering the demands of financial, environmental, resource, and infrastructure sustainability. As central government shifts costs to local areas without a corresponding increase in resources, many organisations are fighting a losing battle.
Perhaps unusually, demographics also has a part to play. From 2011, the Baby Boomers will start to retire en masse, create an aging population, resulting in two major issues. First, a lower revenue base at all levels of government, and second, a demand for high service levels. Yet increasing the revenue base through different forms of taxation to meet this demand is not politically viable. The resulting skills shortage will also drive organisations to do more with less.
But there is a positive side to this generation shift. The Baby Boomers have occupied positions at decision-making levels since ERP systems were developed, and while they played an important role in the rise of new technology, they were neither early adopters nor risk takers. As Generations X and Y fill senior management positions, a new mood is emerging; there is a demand for more efficient systems, improved integration, and better reporting.
If demographic changes were not enough, added to these difficulties is the climate change issue, and pressure to address it. This places further cost pressures on public sector organisations, both in terms of implementing the reporting requirements and the reduction of carbon output.
New tech-savvy and adaptable managers will not accept ERP systems based on distribution and manufacturing models that cannot efficiently embrace all the new technologies available. Yet they will also recognise that it is often not possible to simply replace older systems with newer ones. So what is the next step?
A route to change
The advent of Loosely Coupled Architecture, which allows parts of an ERP system to be upgraded individually, is the first step. With this technology, organisations can implement new systems and capabilities gradually, minimising disruption to the business and spreading costs, yet at the same time improving reporting and information retrieval to ensure sound business decisions.
The first step to take could be to obtain better metrics from existing systems to focus on strategic and operational planning, monitoring those plans, and implementing initiatives to provide efficiencies. For many organisations, however, this process is complicated because the required information is held in a variety of systems. Products from multiple vendors generally feature little or no integration between systems, which makes it difficult to retrieve information and report across a number of areas. Disparate systems also mean that captured data is not in a form that can be used to improve operations and performance.
Business Intelligence can, however, overlay an organisation’s existing disparate systems to extract data, combine it in an easy to understand and attractive format, and provide a view of the organisation in various forms, including dashboards, analysis enquiries and reports. This delivers the metrics needed for a confident and informed view of an organisation’s position.
As further systems replacement becomes viable, organisations can move away from disparate software to a fully integrated enterprise suite that allows access and retrieval of core documents from a Business Intelligence dashboard. With improved metrics, public sector organisations can take the next step and start to capture financial and non-financial information, which can be used to measure success and outcomes through KPIs to drive efficiencies throughout the organisation.
The IT landscape within the public sector is changing. The advent of new technologies, combined with the rise of a new generation of management, will transform public sector organisations and help them do more with less. This will require truly integrated fit of purpose software that provides the right information and metrics. A new wave of Business Intelligence tools offering these features will most likely lead the way. It is only the vendors that can provide these solutions that will emerge as the new market leaders and drive IT towards the 2020s.
Mark Harvey and Anthony Von Bergan are Directors of TechnologyOne UK