Microsoft and GFOA Consulting Survey Reports Public Sector Best Practices Around Enterprise Resource Planning

CHICAGO — June 11, 2012 — Today at the 2012 Government Finance Officers Association (GFOA) Annual Conference, Microsoft Corp., in coordination with GFOA Consulting, released the results of “The Real Impact of ERP Systems in the Public Sector,” a survey examining current public sector organization attitudes, approaches, lessons learned and best practices for enterprise resource planning (ERP) implementation. Microsoft also announced a number of public sector organizations that have chosen to move their ERP platforms to Microsoft Dynamics AX. These include the Oregon State Lottery, Illinois State Police and the Port of Long Beach, Calif.

Surveying State and Local Governments on ERP

The Microsoft and GFOA Consulting survey, which collected feedback from 268 GFOA members, found that public sector financial leaders identified a number of factors for success and reasons for concern when implementing ERP systems. This survey of the GFOA membership was conducted to determine public sector organization experiences and expectations of ERP system modernization costs, ability to achieve ERP benefits, and implementation lessons learned to provide insight on the state of the industry.

A number of best practices were identified as playing a role in ERP implementation success:

• Size does matter, as smaller implementations experienced less ERP deployment challenges than larger, more complex implementations, which affected the timing of projects and the nature of problems encountered.

• Planning, due diligence and setup done upfront drastically increased the success of migration and implementation, regardless of the size of the project. Proper planning also allowed for much greater alignment of cost expectations with financial and staffing resources.

• Management endorsement from the top of the organization positively motivated implementation efforts and was important to ensuring appropriate levels of staffing.

• Vendor and implementer partners being committed and forthright was a key factor in an organization’s satisfaction with its ERP solution.

• Technology expertise played a key role because smaller government organizations with less specific expertise faced bigger challenges in final implementation and recognized the need to rely on outside vendors for more assistance.

• Human nature and resistance took hold during those implementations that showed the least amount of success, due to confusion related to learning a new, overly complex system. Without executive leadership setting vision and expectations, cultural changes were hard to overcome.

One significant takeaway showed that many organizations felt existing ERP systems had not met expectations and cited difficulties related to the ERP implementation process. Most respondents also reported challenges in measuring the benefits of their ERP solutions. The results show that those organizations that have not modernized in the past decade are unaware of the cost of modernizing, and those organizations that have modernized are challenged with accurately achieving the intended benefits of an ERP system.

These results portray the public sector reality today: Organizations are working with scarce funding and limited resources and, as a result, choose to extend the life of their current ERP system because of functional gaps, user resistance and adoption issues, the complexity of the implementation process, and an inability to measure the benefits.

“For too long, public sector organizations have had to rely on inflexible ERP systems that hinder their ability to support transparency, open government, compliance and fiscal accountability requirements,” said Charlie Johnson, Microsoft Dynamics Government ERP managing director. “Just as today’s citizens have higher expectations for the services they receive, so should public sector organizations from their solution vendors.”

These findings indicate the need for software companies and system integrators to be more transparent in articulating what modern ERP systems can and cannot accomplish while working with public sector organizations to improve operations and advance organizational capabilities.

A Fresh Yet Comprehensive Approach: Microsoft Dynamics AX 2012

Amid the ongoing challenges of implementing new and complex systems, several public sector organizations are taking a fresh look at new offerings on the market, such as Microsoft Dynamics AX, which can help reduce complexity and costs and ensure faster ROI. The following organizations have adopted Microsoft Dynamics AX to maximize the benefits received from their ERP systems:

• The City of Redmond, Wash., is home to approximately 54,000 residents and 5,500 businesses to which it provides a full range of services. City leadership aimed to build a more efficient, transparent and responsive public sector organization that could take Redmond into the future, with enabling technology playing a strategic role. With Microsoft Dynamics AX, the City of Redmond is able to achieve greater strategic value from financial management while enabling elected officials to be more responsive to citizens.

• The Oregon State Lottery was established to generate revenues for state programs such as education and workforce development through the sale of lottery games. Because it is one of the state’s few revenue-producing government entities, the lottery must consistently achieve financial success in the short and long term. To do so, it must have a reliable, effective and modern back-office system to support all business functions. The Oregon State Lottery modernized with Microsoft Dynamics AX to provide better services and higher revenue for the state. The lottery is now experiencing the benefits of an ERP platform that combines finance, human resources, supply chain management and other similar systems for a more unified approach to business operations. Through the flexible and easy-to-use solution, the lottery is able to address the needs of each department.

• The Port of Long Beach is one of the world’s premier seaports and a trailblazer in goods movement and environmental stewardship. Trade valued annually at more than $155 billion moves through Long Beach, making it the second-busiest seaport in the United States. It generates about $16 billion in annual trade-related wages across California. The Port of Long Beach needed a revenue tracking system that would overcome several shortcomings: aging technology, a manual and paper-intensive revenue-tracking process, and duplicative data entry. Microsoft Dynamics AX gives the Port of Long Beach faster access to revenue information, increased process efficiencies and improved reporting of information.

• The Illinois State Police fosters a reputation of integrity, service and pride. The Bureau of Identification (BOI) is the state’s central repository for criminal records residing under the Illinois State Police. To better fulfill its mission, the Illinois State Police turned to Microsoft Dynamics AX to improve the effectiveness and efficiency of the BOI. Shrinking staff size and increasing numbers of requests has forced the BOI to improve automation and reduce internal processing time by focusing on eliminating nonvalue prep time and overcharges. Microsoft Dynamics AX has also helped improve the accuracy and timeliness of information sent to BOI customers by reducing the number of days required to process customer statements and improving the audit capabilities when processing transactions.

“We offer a solution that builds upon Microsoft technology that most governments already own to rapidly deliver ERP solutions that are easy to use, powerful enough to address their unique business requirements, and agile enough to respond quickly to legislative mandates and constituent needs,” Johnson said. “Microsoft is committed to providing technology solutions that help improve the operations of government and the delivery of citizen services in the most cost-efficient manner.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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