It wasn't ROI, but another three-letter acronym that drove the County of Sacramento to become the first government to use SAP a decade ago – Y2K.
The legacy systems that ran the California county were in danger of failing around the year 2000 when Sacramento decided to spend $19.5 million to standardize on SAP – a price tag that included software, about $2.5 million in hardware purchases, and implementation and consulting services.
Since it's been using SAP for the Public Sector, the County of Sacramento has noticed scores of improvements in its business processes. For example, the county has eliminated paper reports, which every four weeks used to take 80 hours and two full-time employees to distribute, and it has reduced the time it took to produce period reports from 10 days to immediately through workflow mail systems, according to its IT manager.
"SAP has transformed our business processes over the past 10 years," said Michael Connelly, IT manager for the County of Sacramento. "We have now positioned ourselves to focus our time and resources on functional improvements that benefit both employees and taxpayers."
The county, which has 15,000 employees and an annual budget of $2.7 billion, exemplifies how government's approach to IT has changed over the past decade, according to Rod Massey, a longtime government CIO who is now vice president of SAP's Global Public Sector. Instead of building and developing their own applications or purchasing best-of-breed ones, public entities are seeing the ROI in integration, Massey said. SAP now has 3,300 customers in this sector, according to a spokeswoman.
In fact, Massey said, the biggest challenge to IT in government right now is how it will continue to move the needle off legacy systems, because while there's pressure from the public to be more responsive, there's also pressure to save taxpayer money.
"Increasingly, what citizens are asking for, is increased transparency across government," Massey said. "It's a push-pull relationship. The IT challenge in that is balancing all those things and looking at how we increasingly transform our services delivery."
SAP upgrades and plans for NetWeaver
The County of Sacramento's year-and-a-half-long implementation included SAP financials, human resources, materials management and plant maintenance. When the SAP ERP system was launched in 1998, 1,000 employees used it. Now, between 1,600 and 1,700 are accessing the system.
Since the installation, the county has upgraded its system three times, Connelly said. The county performed a technical SAP upgrade from 3.1 to 4.0B in 1997 at the initial installation. It performed a technical and limited functional upgrade from 4.0B to 4.6C in April 2003. Last August, it completed a technical upgrade -- begun in November 2007 -- from 4.6C to ECC 6.0.
Connelly said they completed the most recent technical upgrade to stay on mainstream SAP support, which ends in 2009, and don't plan on taking advantage of the new capabilities provided by NetWeaver in the near future.
"The real business driver [for the upgrade] was we needed to stay up on the new release of SAP so we could stay on support," he said. "From what I understand about the capabilities of NetWeaver, it is primarily a tool that enables staff to write their own functionality that will run within the umbrella of SAP. Our focus will be on implementing new SAP functionality as provided by the vendor and enhancing the functionality that we already have."
That said, aside from the need to bring in some more people with Basis skills, it was by far the county's easiest SAP upgrade, Connelly said.
"The upgrade we did five years ago was very difficult for us. There were a lot of look-and-feel changes, a lot of change management," he said. "This upgrade … had very little impact on the user community."
The vast majority of customers in this sector, like most customers performing SAP upgrades, are opting for technical upgrades, Massey said. The major benefit is that now they're on infrastructure from which they can leverage SAP enhancement packs -- new, downloadable functionality available via the NetWeaver platform, he said. Governments will benefit particularly from Enhancement Pack 4, which includes improvements in tax and revenue management, and collections and disbursement.
"This is very, very transformational for the public sector," Massey said. "Because you're not going through a major upgrade, it reduces the risk for public organizations to adopt new functionality."
Getting ROI from SAP
A good rapport between the business community and IT people was the key to realizing ROI in SAP, Connelly said.
"The technical staff understand the SAP system and some of the business, while the business staff understand the business and business processes and a little of the technical," he said. "To successfully configure the system to meet the needs of the business … requires strong knowledge of the technical and business components."
Connelly couldn't measure ROI in terms of dollars, but he pointed to several areas where he's been able to measure ROI in terms of time, as well as public ROI.
Business processes take less time and fewer employees, he said. The hiring process was reduced by two weeks, and monthly closing of the books was shortened from five days to three. Fair Labor Standards Act calculations are now completed automatically, saving three people three full days a month -- just in the Public Works department.
Also, they're greener, Connelly said. They've cut their paper use every month from five pallets of green bar paper to less than one box of 8½ by 11 cut sheet paper per month.