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    FreeBalance Good Practice GRP and TCO

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    FreeBalanceGRP
    Developed country governments are increasingly adopting commercial-off-theshelf (COTS) software. A major impetus for recent COTS projects is to replace multiple applications within a government organization with one integrated solution. Government organizations can choose to acquire ERP software from large software firms whose software is used in multiple "vertical" markets.

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    FreeBalance Good Practice GRP and TCO

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    FreeBalanceGRP
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    Developed country governments are increasingly adopting commercial-off-theshelf (COTS) software. A major impetus for recent COTS projects is to replace multiple applications within a government organization with one integrated solution. Government organizations can choose to acquire ERP software from large software firms whose software is used in multiple "vertical" markets.

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    Developed country governments are increasingly adopting commercial-off-theshelf (COTS) software. A major impetus for recent COTS projects is to replace multiple applications within a government organization with one integrated solution. Government organizations can choose to acquire ERP software from large software firms whose software is used in multiple "vertical" markets.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views6 pages

    FreeBalance Good Practice GRP and TCO

    Uploaded by

    FreeBalanceGRP
    Developed country governments are increasingly adopting commercial-off-theshelf (COTS) software. A major impetus for recent COTS projects is to replace multiple applications within a government organization with one integrated solution. Government organizations can choose to acquire ERP software from large software firms whose software is used in multiple "vertical" markets.

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    FreeBalance

    Public Financial Management Good Practices

    PFMDomain GoodPractice Applicable

    GRPSUSTAINABILITY&TCO IMPLEMENTATIONGOODPRACTICES DEVELOPEDCOUNTRYGOVERNMENTS

    shouldgovernments considerERPorGRP?

    DevelopedcountrygovernmentsareincreasinglyadoptingCommercialOffthe Shelf(COTS)softwaretoreplacelegacyandcustomdevelopedsoftware applicationsforfinancial,budget,expenditure,tax,treasuryandcivilservice management. AmajorimpetusforrecentCOTSprojectsistoreplacemultipleapplications withinagovernmentorganizationwithoneintegratedsolutionortosupport numerousgovernmentorganizationswithahostedsharedserviceorprivate governmentcloud. GovernmentorganizationscanchosetoacquireEnterpriseResourcePlanning (ERP)softwarefromlargesoftwarefirmswhosesoftwareisusedinmultiple verticalmarketsorGovernmentResourcePlanning(GRP)softwaredesigned exclusivelyforgovernments.

    ReportsbytheUnitedStatesGovernmentAccountabilityOffice(GAO)andtheDepartmentofDefense (DoD)InspectorGeneral(IG)foundthat11of13ERPprojectswereoverbudgetcostingAmericantaxpayers BillionsofDollarswithoneERPprojectresultingin$1Blargelywastedandanotherprojectstoppedafter 7yearsand$1Binvestedwouldrequireanadditional$1.1Bforaboutaquarteroftheoriginalscope

    FreeBalance

    largeERPproject failuresin developedcountry governments

    MajorERPProjectFailureinDevelopedCountryGovernments AlargeERPsharedservicesprojectinFrancecountrywasestimatedtobe $200Moverbudgetbytheauditofficeandmorethan1yearlateandresultedin latepaymentsofover$2.2Btodefensecontractors NationalAuditOfficeintheUnitedKingdomfoundthattheuseofERPshared servicesaddedratherthanreducedcosts

    majordifficulties experiencedinERP implementationsin thepublicsectorin developed countries

    ERPfailuresandcostoverrunsinthepublicsectorhaveresultedindifficulties, contractcancelationsandlawsuits,althoughlawsuitsarerarebecausevendors wouldratherdowhatittakestomakethesituationrightthanfacepotentialpublic relationsdamagefromahighprofilelegalbattle: Australia:Stategovernmentministry Canada:nonprofit,city France:city Ireland:2projectswithinanimportantministry UnitedKingdom:university,councils(1)(2)(3)andgovernmentministries(1)(2) (3) UnitedStates:nonprofit,schooldistrict,universities(1)(2)(3)(4)(5),apolice department,cities(1)(2)(3)(4),counties(1)(2),stategovernment(1)(2)(3)(4), federalgovernment(1)(2)(3)(4)(5)(6) Between20%and35%ofallERPimplementationsfail 51%ofERPimplementersjudgedtheirimplementationasunsuccessful Nearly70%oflargeprojectswerefoundtobeimprobableofachievingproject success 41%ofERPprojectsachievedallorthemajorityofbenefits 40%ofERPprojectsfailedtomeetbusinesscasewithin1yearofgoinglive AverageforERPprojectswas50%ofintendedbenefits ERPprojectssawtheimplementationof59%ofintendedfunctionality 34%ofrespondentsverysatisfiedwithERPproject Fewerthan1/3ofdecisionmakersrecommendtheirERPvendor ERPvendorsachievedaD+inreturnoninvestment 75%oforganizationsexperiencedaproductivitydipafterimplementingERP 20%ofsurveyrespondentsterminatedERPprojects

    evidenceoflimited successrateswith ERP implementations acrossmultiple industries

    SuccessRates

    FreeBalance

    evidenceoftypical costandschedule overrunsofERP projectsacross multipleindustries

    Costs 40%ofallERPprojectswillexceedestimatesby50%ormore AverageERPcostvariancewas182%ofbudgets AverageERPcostvariancewas178%ofbudgets AverageERPimplementationcostwas40%overbudget AverageERPimplementationtakes23months,hasatotalcostofownershipof $15millionandwithanaveragenegativenetpresentvalueof$1.5million UsersofTier1ERPvendorswillexperiencehigherTotalCostofOwnership(TCO) thanusersofTier2vendors ERPupgradescostaboutthevalueoftheoriginallicensefeeand20%ofthe originalimplementationcosts Expertswarnthatorganizationsshouldexpecttopayasmuchas3timesthe originalERPsoftwarecosttoupgradetonewtechnology InterviewswithreferencecustomersofamajorERPvendorfoundthat57%did notachieveapositiveROI

    FreeBalance

    OntimeDelivery Averageimplementationtimefromthe2majorERPvendorsare17and18 monthswithaveragevarianceof2and4monthsoverschedule AveragevarianceforERPprojectswas230%ofschedule Upto80%ofERPexceedtimeandbudgetestimates 70%ofrespondentsstatedtheirERPprojecttimelinewasinadequate

    whydoesERPhave Diagnosis lowsuccessratesin ERPsoftwareisdesignedfortheprivatesectoracrossmanyindustriesthatrarely government? provideagoodvalueformoneytogovernments.LargescalepublicsectorERP implementationsrequireadditionaltimeduringtheanalysisanddesignphaseto focusonthegapbetweenthecommercialprocessandtherequiredprocess 1. ERPcostoverrunandthefailuretomeetschedulearebecauseERPsoftware requiressignificantsoftwarecomplexcodecustomization(BPMscripts,callouts &softwaredevelopment)tomeetgovernmentrequirementsthatextends implementationcycles.Theratioofservicestosoftwarecostinthepublicsector isestimatedtobethreetimethatintheprivatesectororupto15timesthecost ofsoftware. 2. Highmaintenancecostscomefrommaintainingcomplexcodethroughproblem troubleshooting,anddifficultupgradesthatincreasestheTotalCostof Ownership(TCO).Forexample,theGovernmentofCanadainternalsupportfor 15differentcustomizedversionsofamajorERPpackagereceivedanawardfor savingmorethan$12Mannuallyincostavoidance.Thisishardlyadefinition ofITsuccess. 3. ERPfunctionalityisoftencomplexandhardtouseintheprivateorpublic sector.46%ofERPimplementerscharacterizedthattheirorganizationswerenot abletounderstandhowtoleveragefeaturestoimprovethewaythattheydid business. whatisagood practiceapproach toCOTSbackoffice implementationin government? Conclusions 1. GRPsoftwareisdesignedforthegovernment.Itispossibletocreatesoftwarefor asingleverticalmarketthatdoesnotrequirecodecustomizationtosupport needsinmostcountriesacrossalllevelsofgovernment. 2. GovernmentscanconfigureGRPsoftwaretomeetuniquerequirementsthereby reducinglifecyclecostsandmorelikelymeetingimplementationschedulesand optimizingbenefits. 3. Softwaredesignedforgovernmenttendstobemoreintuitiveandeasiertolearn forPFMneeds.

    FreeBalance

    ThereareveryfewbestpracticesbutmanygoodpracticesinPublicFinancialManagement. FreeBalance,aglobalproviderofGovernmentResourcePlanning(GRP)softwareandservices sharesgoodpracticesfromexperiencewithdevelopedanddevelopingcountrygovernments aroundtheworld.

    www.freebalance.com

    FreeBalance

    www.freebalance.com

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