Information management in Enterprise Resource Planning systems February 26, 2014

Finance systemMany agencies have consolidated Finance, HR and other systems to Enterprise Resource Planning systems such as SAP and Oracle, or are currently planning such a consolidation.

State Records is often asked about the implications of this under the State Records Act. Here are the sorts of things we talk about.

Has this shift replaced a legacy system? What is now happening with that system’s data?

Most system migrations do not bring forward all the existing data. There are often good reasons for this. However, while focusing on the immediate goal of implementing the new system as smoothly as possible, agencies may not do the planning that is needed to ensure information management problems don’t arise.

We have talked to a wide range of government officers working in a number of specialist areas about the implications of orphaned data. Concerns include the ability to manage the organisations’ obligations to current and former employees, which require long term data retention, and the shorter term but very strict financial regulations requiring the retention of financial information.

A number of agencies have also been stuck with the responsibility of paying for software licensing even though the system is no longer in current use, as they are unable to determine whether they still require the data which was not migrated.

How have roles and responsibilities been assigned?

ERP implementations often involve consolidation of a number of legacy systems across a cluster of agencies.  The Treasury’s accounting policy states that in most cases, individual entities within a cluster are still responsible for their financial reporting:

“At a minimum, under the Public Finance and Audit Act 1983 (PFAA), each department and statutory body listed in Schedule 2 and 3 must prepare a separate financial report.

Except in limited circumstances, a cluster does not constitute a separate reporting entity.  A cluster represents a strategic alignment of entities.  A cluster typically includes a mixture of departments and statutory bodies listed in Schedules 2 and 3 to the PFAA including entities that are not subsidiaries.”
http://www.treasury.nsw.gov.au/Accounting_Policy/ap_faq

Each organisation needs to establish whether their specific reporting obligations create defined accountabilities for information stored in a cluster’s ERP.

Have reengineered business processes caused staff to stop capturing information that they previously captured?

Implementing new systems gives organisations the opportunity to rethink their business processes, and often processes are simplified and streamlined. However, this can mean that information which had an important use beyond the immediate needs of the business process may no longer be captured in the same way, if it all. This may be a necessary trade off, but nonetheless one that should be made with a full understanding of the implications.

Can the new system control the proliferation of duplicated and unnecessary information?

Many organisations have had challenges with the proliferation of duplicate data. We have heard about information being stored in multiple places, the emergence of unofficial parallel processes, and continued retention of paper documents despite automated digital processes to manage documents.

In many cases these concerns can be rectified by clear system governance, which in the case of outsourced arrangements should include setting and managing service agreements which include information management obligations. Effective change management and training is also required to ensure that the skills to maintain a good organisational culture which values information management.

Can the new system purge information when it is no longer required?

Systems are usually implemented with enough capacity to manage expected processes volumes, but not with large excess capacity, which can be expensive and undermine a system’s value for money. To maintain system performance over time, however, the system needs to be able to purge information which is no longer required under applicable regulations and legislation.

In summary…

There are many examples internationally of systems which were implemented to process information quickly and efficiently becoming quickly encumbered with huge volumes of data. Such systems have come to resemble the inefficient legacy systems they replaced.

We would welcome discussions with government organisations who are dealing with information management issues relating to ERP implementation.

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