Collaboration in Civic Spheres

WA Auditor: New finance IT system could cut waste

by May 9th, 2013

By rustling up $172 million for a badly needed, contemporary enterprise-wide financial management system Washington state government could reap benefits approaching or perhaps exceeding $228 million in saved effort and improved processes, as awkward computer software workarounds, laborious redundancies and other workaday inefficiencies tied to musty legacy software finally get a proper burial. That’s the conclusion of a new 200-plus page performance audit released Wednesday by Washington State Auditor Troy Kelley.

Working for Kelley’s office, the public sector enterprise IT solution consultant Information Services Group looked at 140 representative financial management systems used by the state and 12 key agencies and contrasted their costs and benefits with “a modern, full-featured Enterprise Resource Planning (ERP) System.” The improvements calculated were used to develop a projection for enterprise-wide savings and efficiencies.

Public sector ERP systems usually cover at least 10 core areas in an integrated manner across the entire operation, according to the audit. Those areas are general ledger, accounts payable and receivable, grant and project management , cost accounting, management of assets and cash, procurement, developing of budgets, and federal transportation aid billing.

Time spent on finance management could be cut by one quarter and cost savings achieved in a range of ways, say the state consultants. Standardized commodity codes not widely available could be employed to make cheaper, multi-agency bulk purchases more often. Obstacles to sharing inventory data could be obliterated, cutting costs from purchasing and storing goods in excess of current needs. Duplication of data entry, manual handling of data, and excess time spent chasing down documents could all be reduced. Accounts receivable balances could be collected sooner and debt collection costs lowered.

Public Data Ferret’s Washington State+Management archive

The report adds, “Besides the inefficiencies previously discussed, the nearly 150 interfaces between centralized state systems and individual agency systems increase the risk of systemic failure…It is also increasingly difficult to hire IT staff capable of maintaining systems based on outmoded technology. In addition, the dated programming languages used by these systems make conforming to new security requirements more difficult.”

The recommended approach, of implementing a so-called ERP – or more holistic and integrated – approach to management of the state’s finances, has been implemented or project planning is underway in nearly two-thirds of U.S. states according to the audit. (See map below).

From Creating a 21st-century Financial Management System in Washington, Washington State Auditor's Office, May 8, 2013

While Washington is currently categorized as one of the laggard states, the audit notes that Gov. Jay Inslee’s 2013-15 budget request and the state House and Senate budget proposals for the biennium include $2.4 million to get the planning effort rolling.

The performance audit contains a 24-page summary including state agency responses, followed by a 204-page technical report.

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