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  • Writer's pictureMark Johnson

The Federal ERP Evolution


During the late 1990’s and prior to Y2k, the U.S. Federal Government witnessed the introduction of commercial-off-the-shelf (COTS) software. COTS software, including Enterprise Resource Planning (ERP) solutions, experienced rapid transformation across the private sector during the 90’s. ERP software product offerings were engineered to be highly scalable, improve data sharing, and deliver standard, yet flexible processes that can support end to end business processes across an entire organization.

During the First Wave of Federal ERP, COTS software included the capability to service varying regulatory needs of Federal agencies for Human Capital, Financial, and Supply Chain Management business processes across Federal departments and agencies. ERP solutions were engineered to offer industry best practices for planning, forecasting, analysis, performance measurement, data validation, transaction management, and reporting activities. During this time, the largest enterprise software companies, including PeopleSoft, Oracle, and SAP, established significant footprints for Federal enterprise customers. Other Federal industry specific solutions including CGI Momentum for Federal Financial Management and a variety of e-procurement and acquisition related solutions were developed to simplify the unique, varying intricacies of government purchasing and competitive Federal Acquisition Regulations (FAR). COTS solutions played an instrumental role in solving many back-office functional and technical requirements across Federal Departments and agencies, who often vary in regulatory, compliance, and security requirements across the government enterprise.

While many Federal ERP program investments offered significant opportunities for process improvement and cost efficiencies across the government enterprise, significant operational, regulatory, mission, and funding related challenges impacted the ability to realize the same level of benefits being recognized across the private sector.

Industry Challenges:

Looking back over what we’ve learned over the years, it is clear many of these solutions were a positive step forward and made a significant impression in the Federal Marketplace. However, it is also true that many of the same software implementation efforts experienced significant challenges and costs. Elongated requirements definition activities, traditional Federal Acquisition Regulation (FAR) procedures, and the limited ability for the government to fund complete end-to-end ERP investments spanning multiple functional areas such as Finance, HR, and Supply Chain operations often resulted in multiple, separate software and systems integrator contracts.

Many of these investments were separately managed by different stakeholders, often the selection of COTS applications and products were based on specific contract or divisional level requirements rather than enterprise organizational level requirements. In many cases, Federal customers would invest in a different Human Resources Management product solution than Financial Management and Accounting solution, which added significant complexity and degraded many benefits that can be achieved by selecting a single, unified COTS ERP solution.

In addition, the lack of government-wide defined standards across the enterprise impacted the ability to achieve proper baselines during competitive procurement activities making it extremely difficult to hold software vendors and Federal systems integrators accountable for delivery of new features and functionality. That is, the better the government can define standards for business practices and processes, the better the software industry will respond to and keep capabilities current in their software offerings. It should be the goal for industry to be responsible to remain current with the latest standards, rules, regulations, and policies and not require agencies to build expensive customized solutions to fill functional and technical product gaps.

Federal processes, policies, and regulations codified into Federal law many years ago were not revisited to explore the ability to leverage new technology advancements available with the use of modern technology and application solution offerings. In many cases, COTS packages were heavily customized to replicate long standing data validation processes, reporting and standard forms (SF-52, for instance) generation, review, and approval activities. As a result of the extensive product customization, many large implementations took several years, experiencing major schedule delays and cost over-runs, resulting in higher operations and maintenance costs. Many of the implementation programs also experienced organizational change management issues met with varying degrees of acceptance. Many customers were known to say, “that’s not the way we do it here,” which resulted in software product changes and costly product customizations not anticipated when the project began.

Major Benefits:

Despite the learning curve, needed marketplace adjustments, and significant product customization, most Federal Agencies can now boast the ability to process and report on a variety of business-related transactions across the enterprise. In other words, while some of the processes within packaged solutions were not ideal, Federal Agencies found ways to make it work and achieve common objectives.  COTS ERP systems operating in the Government today provide significant operating benefits. A few examples include enhanced self-service capabilities for inquiries, user-defined support requests, and real-time data validations for better data quality. Finally, system defined and enforced business rules have reduced data entry errors and offer significant productivity benefits, supporting millions of personnel, finance/accounting, procurement, and other related transactions each year.

Successful deployment of COTS ERP systems enabled shared services to begin to flourish for multiple Federal Departments and Agencies, leveraging a single solution platform and infrastructure to support varying mission related activities. This enables the government to improve operating efficiency, saving significant money over time. The Federal HR Lines of Business is a great example of an initiative that can benefit from the successful deployment of ERP systems.

Significant information management, security safeguards, and reporting process improvements are now delivered “out of the box”. Advances include the ability for Federal employees to use role-based personalized dashboards, data marts, generate ad-hoc reports, and use a variety of enterprise reporting, security, and information management tools that offer significant process, cost, quality, and time efficiencies.

Looking Ahead:

The first wave of Federal COTS ERP solutions was mostly engineered to take advantage of improved data processing capabilities and better information exchanges. This wave offered a better, more flexible platform for tailoring to customer environmental needs, expanding self-service and reporting capabilities, and improving transparency and accountability. Many of these solutions used proprietary COTS application lifecycle management and development tools and were frequently hosted onsite in Government authorized data centers.

The Next Wave of Federal ERP has produced transformative improvements in software application features and application lifecycle maintenance. The next wave of offerings includes major innovations in cloud and mobile services, and a shift to a more data analytics centric and collaborative Software as a Service (SaaS) solution.

As a result of government efforts to define Federal enterprise architectures, business rules, data, technology, process, and security definitions, the government currently has a much better set of standards in place today, which will enable success for the next wave of COTS ERP implementations.  Quality Service Management Offices (QSMO’s) for Human Resources, Financial Management, and other key service areas have been established by the Government to facilitate creation of a standard marketplace of systems and services that will drive innovation, reduce overall costs, and increase compliance with federal policies, standards, and regulations. The end goal should always be to create more standardization and reduce the cost per transaction, enabling more funding to support the core mission.

Enabling the User Experience

From a user or functional perspective, many of the solutions available today are far more intuitive, offering much more appealing, made for mobile, highly collaborative, and interactive user experiences. For instance, in human capital management, latest product offerings include many more Federal-compliant features than the capture and processing of employee personnel records, time keeping, and leave requests for benefits and payroll. Today’s solutions offer much stronger native “off the shelf” features and capabilities to attract, recruit, hire, and on-board talent including regular full-time employees and contingent workforce personnel. Today’s SaaS offerings provide advanced talent management, succession planning, performance management, workforce engagement, and advanced learning management features and capabilities that far exceed what is available and in use today.

From a decision-support or reporting perspective, modern application and data centric designs for SaaS ERP solutions bring better capabilities to leverage responsible advances in the integration of artificial intelligence and machine learning (AI/ML) technologies. 

Technology Advancements

Many of today’s leading modern SaaS ERP applications have now transformed delivery approaches from traditional waterfall software development lifecycle management processes, leaning more on agile, componentized, micro-service friendly, interoperable, containerized, and standards compliant solutions. These shifts now offer more opportunity and flexibility for large Federal ERP solution portfolios, increasing the ability to leverage best in class “plug-and-play” applications, better use COTS vendor-maintained innovations, APIs, and industry standards-based integrations, all resulting in much smoother, transparent, less disruptive, and lower cost system updates and upgrades in the years ahead. These improvements include an entirely new and improved, mobile centric user experience (UX) that will satisfy many goals and objectives set forth in today’s Federal Agency strategic plans and digital transformation strategies. New ERP platforms can also serve as a springboard to facilitate increasing use of Shared Services across the Federal Government.

Underlying technology offered by latest COTS ERP solutions is made for the cloud and is far more mature than prior offerings. The ability to follow industry standards and achieve cleaner integrations with other mission-critical solutions is far more achievable today. These same software capabilities can now boast FedRAMP and Impact Level security accreditations that lend a new degree of confidence in this era of cyber security focus, increasing Zero-Trust mandates, and the increasing needs to protect and safeguard data. Finally, there are more solutions available to evaluate before determining what is right for your agency or department.  Workday, a global software leader in financial and human capital management has entered the Federal market and continues to build its presence across the Federal customer community. In addition, companies like Salesforce, ServiceNow and other SaaS providers now offer packaged solutions and toolsets that can quickly create and deploy new capabilities that never existed before for Federal agencies and departments. Unlike the initial wave of Federal ERP solutions, many of the newer SaaS ERP offerings have been designed with analytics tools, datasets, and other innovative features embedded into core product offerings. This has raised the bar and created a much stronger degree of competition in order to win the government’s business, especially in the years ahead.  The following chart describes the evolution of Federal ERP solutions, technologies, processes, and managed services from 1995 to the present. It also offers a sneak preview into new industry solution features planned for deployment across the Federal Community in the years ahead.

Major Opportunity for Federal Shared Services

Another dynamic that has grown and matured over time has been the capabilities and solutions offered by Federal Shared Services Centers.  Without naming them all, these centers have provided financial, procurement, human capital, payroll, grants, supply chain, and customer support services to agencies that would not have been able to handle cost effectively by themselves. The shared services model, which includes standardized solution platform and service offerings that can be configured to support the needs of other Federal Agencies, has demonstrated that we don’t need every Federal agency to acquire and implement its own individual ERP solution. Shared Services enables agencies to simply obtain the service for financial, procurement, human capital or supply chain management from an authorized shared service center that best aligns to agency specific requirements, processes, regulatory, and technology needs. 

Without question, Federal Shared Services will continue to evolve and mature as SaaS solutions continue to advance in efficiency, autonomy, and insight, while adding more features and functions available under FedRAMP and government authorized cloud service platforms. Recent announcements by the Office of Management and Budget (OMB) to scale the FedRAMP marketplace and create new authorization paths will dramatically increase the number of cloud product offerings available across the Federal Government. Quality Service Management Offices (QSMO’s) for Financial, Grants, and Human Resources Shared Services have been established in the Federal Government to help facilitate the creation of a shared services marketplace that will expand the use of common standard service offerings for Federal Agencies.

The next generation of solutions for Shared Services will continue to see increasing demands on user experience, mobile and interactive self-service capabilities. Modern Service Center Management tools will better capture, manage, and report on performance for service requests, creating visualizations and monitoring mechanisms that offer new opportunities for continual process improvement and service optimization. Made for cloud applications offer more interactive, journey driven and role-based user experiences with more machine generated actions, workflows, alerts, and communication notifications to pro-actively discover and process transactions, reducing the level of effort experienced in many of today’s shared services environments.

We can also expect a broader, responsible adoption of artificial intelligence and machine learning capabilities (AI/ML). AI/ML capabilities will continue to become more prominent and aligned in the next generations of COTS cloud ERP application offerings. Modern applications will offer more interactive, prompt driven, and mobile user experiences. They will enable users to ask appropriate questions and receive machine generated responses based on data, business rules, policies, and metrics available within the operating environment.  And, of course, all of this will be met with a greater sensitivity for data protection, supporting Zero Trust program requirements, cyber security, data, responsible AI (RAI), and other information protection policies and measures.

Shared services provide an outstanding opportunity for agencies and industry to evaluate how best to design, develop and offer comprehensive, cost-effective solutions that offer the greatest return on investment and best serve the department or agencies’ core mission.

How Catapult Growth Partners will make a difference

With over twenty partners and industry experts on staff who have access to thousands of industry professionals, Catapult is a Federally focused corporate growth advisory firm that empowers our innovative clients to best align and position for many business development and growth opportunities across the marketplace. Our cadre of experts in Enterprise Applications includes retired Senior Government executives, Partners, and Directors from leading Federal ERP contractors, top management consultancies, and Senior Software Industry Executives. Our team of experts bring deep understanding of government challenges and insight into the rapidly evolving COTS, SaaS, and Shared Services solutions marketplace. Our partners serve as thought leaders and offer the unique ability to deliver forward thinking recommendations for new innovations, products, processes, and investments that further increase government operating efficiencies. Simply put, Catapult Growth Partners offers the best overall combination of experience, knowledge, talent, and understanding of marketplace innovation that can help any company in pursuit of next-generation ERP solutions, large-scale modernization, and the transition to shared services.

Catapult is proud of our ability to service small, mid-size and large enterprise companies as they seek to better satisfy the needs of a growing customer base. The demands on the Federal government have never been greater than they are today. The U.S. continues to experience increased financial and mission related pressures at home and abroad. With less than ten percent of the Federal workforce under thirty years old today, the government will be looking to hire the next generation of Federal workers that will help preserve our past, better service our nation, and shape the future of government. The new wave of talent who will enter the Federal workforce now and the years ahead will be better prepared to use and benefit from modern ERP application and innovative technology features, resulting in significant operational advances and long-term cost and servicing efficiencies.

For many agencies, ERP applications in place today have helped to serve as a critical element in support of key mission objectives. These systems maintain the employee personnel records for civilian, defense and the intelligence community; they track agency program spending while adhering to strict financial regulations, policies, and accounting guidelines; and they safeguard the many critical assets that are so important to our country’s safety and security.  As we look ahead, Catapult has been called upon by leaders in government and industry to serve as thought leaders and sound advisors to help lead the way toward a more innovative future.  This future includes software solutions that enable the core mission of government agencies, provides information to make informed decisions, enables government and its citizens to act responsibly, and guards the data in a secure and confident manner.

Catapult Growth Partners offers our customers expert industry personnel who have made a career working in or serving the needs of the Federal government. This includes unrivaled expertise in developing product software, integrating COTS solutions, and providing consulting services for government business transformation programs critical to satisfying the Federal Government mission. Catapult welcomes the opportunity to stand beside your company as you define the way forward to grow your business throughout the US Federal government.

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