Outsourcing an ERP System

Outsourcing an ERP System

Fulton County (Ga.) School System
 

Managing the operation of the Fulton County (Ga.) School System, the 47th-largest school district in the country, is a mammoth task. Making matters more difficult, in recent years the district has experienced significant growth, and yet until recently it still depended on an administrative computer system based on two different software programs from 1987. Important paperwork was scattered across 93 facilities, many administrative forms were redundant and unnecessary, and too many tasks were done inefficiently. "If the board had a fiancial question, for example, it would take us weeks to answer it," recalls Charles Sipos, executive director of information technology. "We knew better systems existed, and that we needed an entirely new and efficient way to do business."

Enterprise Resource Planning

Like an increasing number of districts, FCSS realized that an Enterprise Resource Planning (ERP) system could resolve its administrative challenges. As huge business software programs, ERPs consolidate all of the tasks of an organization, everything from accounting and payroll to purchasing and facilities, into a single multi-tiered software program, rather than a multitude of different programs from different companies. The district also made the decision to outsource for the implementation of an ERP. "We didn't have the depth of resources or the expertise for such a massive project," says Sipos. "There was no way we could do this without expert firms."

The first step was for FCSS to carefully develop a detailed proposal, beginning with the hiring of research firm Gartner to compile a list of more than 3,500 specifications. Using these specifications, the district compared ERP software from a number of companies, including Oracle and CGI, and eventually decided upon the German company SAP (Systems applications and Products in Data Processing), the largest business software company in the world. "We chose SAP because it provided the best value, not the lowest price," says Sipos. "Their system, unlike many others, addressed 100 percent of our needs." With outsourcing consultancy giant CIBER Inc. overseeing as prime contractor, design of the new system, dubbed the "A+ Project," began in late 2006.

Reconsolidation and Installation

The SAP software reconsolidated all the administrative tasks of the district into five "modules": Financial, Human Capital, Pension, Logistics and Technical. More modules can be easily added in the future to provide for new growth. Installation was divided into two phases to allow time for new training. While learning to navigate SAP has been challenging, the district has found it has been ultimately easier than the prior system, as there is now a single program for administrators to learn. Furthermore, the redundant and unnecessary paperwork is being dramatically reduced, since forms are now stored electronically, saving paper, postage, and even reducing the need for filing cabinets and printers.

The first phase of the installation went live Oct. 1, 2007, on time and under budget, and the final phase should be up and running by the fall of 2008. "The first couple of days were a bit brutal, and we corrected some very minor problems. Overall, the installation has gone very smoothly," says Sipos. "In the past it was so difficult to get accurate financial information from our software programs, but now we are able to see our 'true costs,' so financial decisions are easier to make. We have also been able to tighten up many processes, and people are no longer handing in the same forms multiple times. The difference so far has been substantial, and we have only installed the first phase."

 

Buyer Beware

While growing numbers of large school districts like FCSS are taking advantage of ERP systems to operate their administrative technology, there are a number of factors that can determine if an ERP is an appropriate choice. The most obvious concern is the purchase price, which is beyond the reach of many district budgets. The total cost of ownership for FCSS, for example, including software, hardware, training and outsourcing costs, was $28.5 million. While smaller and less expensive systems can be designed, any district will need a number of technology personnel for implementation and maintenance and will need to allow enough time for training, which could last months or more than a year. If an ERP will indeed be purchased, outsourcing for the immense and complex installation is almost certainly required. And in order to do so, districts will also most likely need to outsource the important task of creating a detailed proposal outlining their needs, to determine which ERP software is most appropriate. Adequate testing of the software prior to implementation is also very important. The size and complexity of ERPs increase the chances that something could go wrong, as illustrated in a number of recent high-profile district ERP debacles. The Los Angeles Unified School District, for example, soon after implementing a comprehensive ERP system in early 2007, had disastrous problems with its new payroll program, which printed incorrect paychecks for tens of thousands of teachers. Sorting out the confusion went on for months, and the costs to LAUSD ballooned to over $130 million, $46 million over budget. Administrators placed most of the blame on the outsourced installation contractor and not on the software, demonstrating some of the potential risks involved in outsourcing. "We looked at Los Angeles to learn from their mistakes," says Sipos. "For example, we saw that their contractor had tested just 10 percent of the district payroll in the new software before activating it, so we made sure to test 100 percent."

Educational use of ERPs is still in its early stages. Like many new technologies, they are currently only a luxury for those who can aff ord them, but in the future such systems may become increasingly common in a wide variety of districts.

Kurt O. Dyrli is a contributing writer for DISTRICT ADMINISTRATION.


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