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SAP, Oracle make public services push

Many municipalities are seeking to standardize their IT systems to run more efficiently. In response, Oracle and SAP are entering bidding wars to get license wins.

With more than 5,000 residents migrating to Clark County, Nevada, each month, the burgeoning Las Vegas area community...

was putting too much stress on municipal IT systems.

The trend we're seeing is that they're realizing that more is not always better ... If something goes bad for government, it's bad for SAP.
Tim McCormick,
vice president of state and local governmentSAP Public Services Inc.

Court case management systems began to break down, causing a back log in the county's court system. Services that normally could be handled routinely, such as paying a parking fine or registering a dog, became a source of frustration for residents, whose concerns were not being addressed in a timely manner.

A $38 million IT system overhaul that will result in standardizing on mySAP ERP is expected to change all that. The project, being conducted over two years, is expected to be completed later this year.

"We knew we need to simplify, standardize and integrate our systems," said Clark County CIO Rod Massey. "Our hands were tied and we were at the end of the line."

Clark County isn't alone. Across the United States, municipalities are seeking to standardize their IT systems to run more efficiently. In response, Oracle and SAP are seen entering bidding wars to get license wins. Size doesn't matter, but the larger cities and universities are where SAP and other software vendors see the most lucrative growth.

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But according to Massey, the project doesn't always go to the lowest bidder. A partnership with systems integrator, IBM helped seal the deal for SAP in Clark County. Oracle may have underbid, but it couldn't prove it had the expertise to handle the various integration issues with multiple county agencies, Massey said.

"Agencies were running separate financial systems, so we wanted something proven to minimize the risk of the project," he said.

In fact, many communities have multiple systems that could be streamlined and replaced with one ERP system depending on their goals, said Tim McCormick, vice president of state and local government for SAP Public Services Inc. The municipalities with the most IT talent and savvy business analysts are moving forward with project plans.

"There are differences in personalities, in the city agendas and goals, but the IT systems are what stand out as the common thread," McCormick said.

The city of Houston, which isn't experiencing rapid growth, saw an opportunity to save tax dollars by streamlining its systems. Officials there recently approved a $23.7 million project to implement mySAP ERP, starting with financial and procurement applications, which will go live in July, and HR and payroll going online in 2007.

Wins like Houston help bolster SAP's image and foster new wins. Public services was among the fastest growing sectors for SAP in 2005, but it hasn't been all roses for towns pursuing ERP implementations. Issues can and do cloud municipal ERP projects.

"The trend we're seeing is that they're realizing that more is not always better," McCormick said. "If something goes bad for government, it's bad for SAP."

Utility billing problems and employee complaints were attributed to SAP woes in Tacoma, Wash. A massive ERP installation there included several cost overruns that some experts believe could have been avoided. City officials and consultants on the project have said the implementation has been successful overall, but end users have complained about problems with payroll and billing operations, resulting in slower than usual customer service.

Similar issues have been reported in Richmond, Calif., where past financial irregularities were attributed by officials to their new SAP system.

"There are times where there are policies and things critical to municipalities where SAP might have to adjust," said Rich Beggs, a strategic consulting engagement manager for SAP Public Services.

As SAP, Oracle and other ERP vendors sweep into towns and cities for business, municipal officials need to take a thorough analysis before making a decision to move forward, Beggs said.

"They have to make sure all the appropriate business owners are at the table and engaged, and that's what makes the biggest difference," he said.

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