Houston schools spell management success 'ERP'

When the Houston Independent School District wanted to decentralize its

operations and create shared decision-making among its 288 schools, officials

turned to enterprise resource planning software.

ERP is multimodule application software designed to help people manage

core business operations, such as accounting and finance, human resources,

parts purchasing, customer service, supplier interactions and inventory

maintenance.

Less than eight months after beginning its ERP project, HISD was using

11 ERP modules to support 2,000 users at 400 remote sites — and the modules

were tied to legacy applications and an existing ERP system from another

vendor.

Although eight months may seem like a decade in Internet time, it is

light speed for ERP technology, which historically has been plagued with

integration and business process re-engineering problems that forced many

organizations to abandon projects after years of work.

Although household names like Whirlpool Corp. and Hershey Foods Corp.

have faced problems integrating the technology, HISD officials attribute

their success to treating their ERP deadline — Sept. 1, 1998 — as an immovable

target, like the Year 2000 rollover date. In addition, the district focused

squarely on the people factor, investing its best employees in configuring

the processes into the new system and dedicating substantial resources and

time for change management to ease the transition. For the school district,

the first step toward molding each campus into its own operational unit

was to put into place a technology infrastructure to support the vision

for decentralized operations.

In 1996, HISD replaced its IBM Corp. mainframes with a client/ server

architecture, then in 1997 set about looking for an ERP vendor to support

all of the business operations for the district, which operates under a

$1.2 billion annual budget.

The district tapped SAP Public Sector and Education Inc. because its

architecture was robust and its functional offerings fit best with the district's

operations, said Melinda Garrett, HISD comptroller and SAP chairwoman for

the school district. In addition, the package's maintenance requirements

were minimal, she said.

In January 1998, HISD began implementing 11 SAP ERP modules, including

finance, funds management, asset management, cash management, plant maintenance

and inventory management. They went live with all the systems at once eight

months later. The system already has shown a 42 percent return on investment

and has lowered inventory by $1 million, Garrett said.

The most critical factor was tapping the best people from each involved

department, Garrett said.

"This system is integrated — decisions you make can affect everyone

on the team. We had to put our best people on this job," she said. "We actually

took them out of their positions [and] put them in a different building.

They were almost in a think tank situation. We wanted to use our best "out

of the box' thinkers."

The implementation team did all configuration and workflow with consultation

from end users. Philosophies included cutting out inefficient processes

while safeguarding internal controls.

For example, before launching the ERP system, the manual requisition

process could require as many as eight approvals. Now the district has a

two-step approval process in SAP.

As part of this re-engineering, the team only minimally changed the

code of the SAP package. Changing the system leads to expensive upgrades

in the future because the modifications have to be reprogrammed and tested

in the upgraded system, Garrett said.

"SAP has the best business practices built into it," she said. "You've

got to be willing to step back and look at yourself. This is a good opportunity

for a company to re-examine their work processes and see if there is a better

practice."

As the implementation team was working to mold new processes to fit

the new system, they were working under a deadline that they knew could

not be moved, Garrett said. "You have to be able to say, "No,'" she said.

"We will go live on Sept. 1. You've got to drill it into people's heads

that there's no alternative. You have to do it."

Once officials completed the business process re-engineering, they turned

their attention to the technology itself, with a focus on integrating legacy

systems and an existing PeopleSoft Inc. ERP human resources and payroll

module with the new SAP system. As part of the installation, the team developed

an interface between the legacy ERP application and the new SAP system,

Garrett said.

"The specifications were fairly easy to write. However, it takes lots

of time to identify all the legacy files that must be mapped over in the

interface and to clean up your legacy data to the best extent possible,"

she said. "The best advice I can give is to start early and test a lot."

The interface has two components. On the front end, all of the authorized

labor distribution charges are sent nightly from SAP to PeopleSoft to update

the budget accounts on the PeopleSoft system. On the back end, PeopleSoft

sends data to SAP to book the charges. Although officials expected the interface

between the systems to present more problems, it has been easier than they

expected, Garrett said.

Pushing an integrated system down to the campus level created efficiency

for the district, but it also created some security and access- control

problems.

Before the new system was launched, only 50 users had access to financial

data, and now as many as 2,000 could have access control if not regulated.

HISD officials did not spend enough time on the front end building security

into the system, Garrett said. As a result, going back and creating access

profiles and building in authentication was "the mother of all bears," she

said.

The district now uses SAP and Microsoft Corp.'s Windows NT for security

and authentication to control which users can access what particular information.

— Harreld is a freelance writer based in Cary, N.C.