Why Governments Must Update Their Enterprise Resource Planning Technology

As the saying goes, "Out with the old and in with the new." This saying is true with technology for governments. It implies that mission objectives and strategic priorities evolve to service changing user experience expectations, regulatory mandates, and operational demands and so too must the technologies that enable the achievement of these objectives, strategies, and expectations.

Enterprise-wide technology modernization is necessary for public sector agencies to better serve their constituents and mitigate risk. Organizations that continue to operate on antiquated, legacy systems are susceptible to system outages, process inefficiencies, unpredictable IT operations, business intelligence inadequacies, and security threats. Governments should adopt an enterprise-wide technology modernization effort that shifts operations to the cloud and promotes an innovative experience that is delivered through the adoption of solutions that are technically feasible, business viable, and designed to address the concerns of users and stakeholders. It is at the nexus of these three considerations that innovation is delivered. This will allow governments to better satisfy heightened constituent user experience expectations, demonstrate stewardship, and build goodwill with the stakeholders they serve.

What Is Technology Modernization?

Technology modernization is the process of updating antiquated technology systems to a new solution that incorporates modern software, hardware, and programming. Encompassed within the idea of technology modernization are two components: digital transformation (otherwise known as digitization) and IT modernization. It is important to discern between the two as they yield different outputs. Digitization focuses on the adoption of new business and operating models, improving the value delivered to constituents and stakeholders, and improving user experiences through human-centered design. IT modernization, on the other hand, focuses on the replacement of depreciated technologies, mitigation of technical debt, and acquisition of new applications and platforms.

Modernization strategies, sometimes referred to as the 6Rs, include re-platforming, re-hosting, re-factoring, repurchasing, retaining, and retiring. In short, digitization is more than just a replacement of depreciated technology — it requires consideration of people and their problem experiences and the reimagining of business models and processes too.  

Why Does It Matter?

Organizations must modernize assets across their IT estates as a means of remaining responsive to shifting constituent expectations, changing regulatory requirements, evolving security threats, and increasing budget pressures in order to enable innovation, data-driven decision-making, adoption of streamlined operations, and improved connection with those they serve. Organizations that rely on legacy IT systems may have the ability to service basic constituent needs but are likely not prepared to address all challenges — including sophisticated nation-state-sponsored cyber-attacks and pandemic-driven workforce reorganizations — that exist within the environments that governments operate today. Opportunities to modernize IT estates exist across the public sector. For example, in May 2023, the General Accountability Office noted that “some of the federal government’s most critical legacy systems have outdated programming languages, unsupported hardware and software, and operate with known security vulnerabilities.”¹

The ability to successfully execute and predictably complete large-scale technology modernization initiatives and replace depreciated technology estates and antiquated operating models has become an operational necessity for many government organizations. Failure to do so may jeopardize some organization’s ability to effectively execute their mission. In January 2023, the U.S. Chamber of Commerce articulated the need for public sector organizations to prioritize modernization efforts, stating the “broader issue of outdated technology transpiring throughout the federal government in which a reliance on ‘antiquated’ or ‘legacy’ systems to fulfill complex and essential government functions has become an increasingly visible issue to the general public.”² One important technology domain that requires review is an organization’s enterprise resource planning (ERP) systems.

ERP Technology Modernization

ERP systems provide process automation for finance, procurement, human capital, and other functions that enable the management of the entire business. Legacy ERP legacy systems that were adopted decades ago are depreciated and, in many cases, are not performing with the desired efficiency. Advancing technologies and new constituent demands now place the onus to innovate on the organization. As a result, organizations must work to deploy modern ERP solutions that replace depreciated technologies and provide the ability to transform manually intensive functions, like accounting and financial analysis, to strategic ones, that enable the workforce to shift focus from processing paper and operational administration to operational improvements, like enhanced analytics and customer satisfaction.³ This involves migrating and transferring data from on-premises systems to the cloud, automating repetitive and manual operations and paper-based processes, and executing technology vendor service level agreements that mandate operational resilience and performance improvements, enhance system availability and reliability, and standardize and reduce issue resolution lead times.

Where to Start? 

First, conduct an internal review to prepare your organization for the incoming ERP implementation. Start by documenting the as-is technology landscape through a current-state assessment. Use this assessment to clearly understand your organization’s current technology estate and the architecture or workloads within this estate. This is a prerequisite for successfully planning modernization efforts and transition to future-state solutions. Utilize business analysts within the organization to lead the process of documenting business requirements necessary for procuring the new ERP technology. 

After determining the current state, conduct future-state visioning exercises to reimagine how an ERP system may optimally operate within the organization based on the pain points and opportunities identified. From there, achieve agreement on a future-state project plan and begin implementation next steps, which includes determining procurement methods, a project implementation timeline, and necessary change management measures.

Throughout the implementation and post-implementation of the project, establish data-driven management controls measuring what must be accomplished for ERP modernization, specifically metrics related to strategic project priorities, resource assignments, and performance. To complement the project metrics, design management reporting facilitates a shared sense of responsibility and commitment from project stakeholders. Assign accountability, measure results, and publish accomplishments. The project control information should be made available to stakeholders weekly and regularly communicated to executive management to ensure transparency and line-of-site.

When executing ERP modernizations, consider adopting leading practices, like those listed in the following table, to avoid pitfalls that might jeopardize transformation success or create cost and schedule risks. 

Technology Modernization Leading Practices

How Can Guidehouse Help

Guidehouse is uniquely capable, as it can leverage its deep experience in state and local consulting with its hands-on, results-oriented expertise and depth of knowledge in ERP technology modernization efforts, including Workday. Our experts work closely with various state and local governments to design and conduct technology modernization initiatives tailored to clients’ needs across a comprehensive set of project areas to help them achieve their ERP goals.

This article was written by Ryan Olson and Christine Binnicker.