AN ENTERPRISE RESOURCE PLANNING SYSTEM

FOR THE CITY OF EL PASO 1/

Adriano O. Solis, Ph.D.

Academic Advisor, NAPM-El Paso

Background

With a population of approximately 700,000, the City of El Paso is the fourth largest city in Texas and among the 25 largest cities in the United States 2/. However, it ranked only 312th in per capita income among all U.S. metropolitan areas in 2000 3/. The Director of its Office of Management and Budget reports El Paso’s operating expense budget to be only 155th among all U.S. cities. Its operating budget for the current fiscal year (September 1, 2001 to August 31, 2002) is about $540 million, based on all funding sources.

Until August 2001, the City of El Paso and the County of El Paso shared a mainframe-based computer information system via an “inter-local” agreement under which an agency called Consolidated Data Processing was formed. The system, originally introduced by a third party provider in the early 1980s and utilizing mainframe technology, consisted of four major subsystems:

Financial and Management Information System [FAMIS] – financial information database, including general ledger, fixed assets, accounts receivable, and accounts payable;

Personnel Management Information System [PERMIS] – handling personnel concerns including staffing, testing, evaluation, personnel records, and payroll;

Advanced Purchasing Information System [ADPICS] – handling purchasing concerns including purchase requisitions, vendor information, and purchase orders; and

Budget Preparation System [BPREP] – involving budget preparation and control, interfaced into FAMIS.

In 1998, the City of El Paso issued a request for proposal [RFP] to acquire a new computer information system to replace the antiquated system. However, it ended up awarding a contract to the original software provider to upgrade the existing system. The upgraded system reportedly led to a multitude of problems. Delayed and/or inaccurate recording of revenues and expenditures led to the month-end financial reports being usually made available only by the middle of the succeeding month, with figures not being fully reliable. Time lags in reporting overtime work, vacation and sick leaves, and special compensation resulted in month-end reports that constantly required adjustments. Accordingly, reports forwarded to the city’s senior management and the City Council invariably included disclaimers as to the accuracy or validity of the information.

An Executive Committee consisting of key senior managers (the Chief Financial Officer, the Executive Assistant to the Mayor, the Purchasing Director, the Office of Management & Budget Director, the Comptroller, and the Human Resources Director) was formed to assess the situation and recommend corrective action. A recommendation was made to do away with the Consolidated Data Processing agreement with the County of El Paso. The City of El Paso was to seek a new computer information system that would specifically address its financial management and human resources requirements in a timely, effective, and efficient manner. In addition, an Application Service Provider [ASP] arrangement was decided upon. This arrangement was designed to avoid difficulties in staffing associated with low salary levels in local government service being far from competitive in the market for information technology personnel. Moreover, the computer hardware would be owned, operated, and maintained by the ASP entity. Furthermore, the city was to appoint a Chief Information Officer [CIO] who would take overall responsibility for the development, management, and continuous improvement of the information system. Under the ASP arrangement, the CIO would not have to contend with staffing and hardware acquisition and maintenance concerns, and accordingly would be able to focus on information system development and process improvement/refinement.

Enterprise Resource Planning System 4/

The City of El Paso issued in September 2000 a RFP for a financial and human resources information system, as well as one for the ASP arrangement. There was no specific reference in the RFP to an Enterprise Resource Planning [ERP] system. The intent was to explore the marketplace for a system that would effectively and efficiently address the city’s financial and human resources information requirements. While cost was an important factor due to the city’s limited financial resources, it was not the principal criterion for evaluation of proposals. System capability and flexibility carried more weight than the cost.

After reviewing seventeen responses to the RFP, narrowing the selection process down to three vendors (PeopleSoft, J.D. Edwards, and SAP AG), listening to and evaluating presentations/software demonstrations, and undertaking site visits to vendors’ existing installations, city officials awarded in March 2001 a contract to PeopleSoft for its ERP solution to the city’s financial and human resources management information requirements. The ASP contract was likewise awarded to PeopleSoft, with network communication and data storage facilities at a site located in California. Contracts for Kronos (a time management reporting system) and CORE (a cash management system) were also awarded. Moreover, Everge, a Dallas-based firm that has worked with PeopleSoft on a number of other projects, was selected to oversee system implementation. Total project cost, outside of new computer hardware for ERP system users, is approximately $6 million.

System Implementation Plans

The ERP system was targeted to be operational by September 1, 2001—the start of the city’s fiscal year. Original implementation plans indicated that, as of that date, the following ERP modules would be up and running: general ledger, accounts payable, accounts receivable, purchasing, fixed assets, inventory control, grants accounting, projects accounting, human resources, payroll, and benefits management. Also planned to be operational by that date was the CORE cash management system. On the other hand, the Kronos time management system was expected to be in place by December 31, 2001, and the budgeting module by February 1, 2002. In particular, the budgeting module has been planned for initial use in preparing the budget for the next fiscal year (September 1, 2002 – August 31, 2003).

An Information Technology Director (the city decided to use this in place of the original CIO title) has been on board as of May 2001. While Everge is tasked with overseeing the ERP system implementation, a core team of city officials representing key business process areas was constituted in preparation for system implementation. Members of the core team (or steering committee) chair subcommittees assigned to review and modify/improve current business practices in their particular areas of competence. Subcommittees for human resources, budgeting, benefits, purchasing, and finance were created. Furthermore, a full-time Project Leader—who is in the Office of Management and Budget (and had previously worked in the Purchasing Office)—was designated to head an in-house project team that directly interfaces with the Everge system implementation team.

Planned introduction of the Kronos time management system was eventually moved up to September 1, 2001.

Implementation Status

The ERP system has been operational as of September 4, 2001. There have been problems with the payroll module, specifically in its interface with the Kronos time management system. Accordingly, a parallel run of the payroll subsystem [using PERMIS] is in operation. As of September 12, 2001, the CORE cash management system was awaiting implementation within a matter of days.

Planned for further implementation (under a “second phase” covering the period October 2001 through February 2002) are: (i) the payroll module running alongside a fully operational Kronos time management system; (ii) reporting of revenues and expenses by district; and (iii) a cost-benefit analysis module. While project team members and other city personnel have undergone training in preparation for the system’s “going live,” training of system users is ongoing and even more significant training is expected throughout the second phase.

Notes:

  1. An ongoing study evaluating the City of El Paso’s ERP system implementation is being undertaken by Drs. Adriano O. Solis, Karl B. Putnam, and Leopoldo A. Gemoets (professors in the Department of Information and Decision Sciences and the Department of Accounting, College of Business Administration, the University of Texas at El Paso) and Mr. David Almonte (Director, Office of Management and Budget, City of El Paso). The study aims to identify issues and problems associated with ERP project planning and implementation, particularly in a local government setting, and accordingly provide insights for managing future projects.
  1. See The Official Visitors Guide to El Paso, Summer 2001 (El Paso Convention and Visitors Bureau).
  1. See Business Opportunity Index, 2000: Detailed Economic Information for all States and Metropolitan Areas by C.P. Zlatkovich and K.B. Putnam (Westerner Press, El Paso, Texas).
  1. Refer to the article on “Enterprise Resource Planning and Enterprise Application Integration in Supply Chain Management” by A.O. Solis (The Criterion, September 2001) for a brief discussion of ERP systems.

1

Article in The Criterion, October 2001

[Newsletter of the El Paso affiliate of the National Association of Purchasing Management]