Best Practices in Integration of Procurement and Financial Management Data
October 25, 2016
Prepared by the NECCC Financial/Procurement Data Integration Work Group
This work group paper is intended to inform finance, procurement, and information technology professionals about how to more effectively integrate financial and procurement systems. The scope of the project grew from a narrower focus on just data integration to a broader objective of identifying best practices designed to promote successful integration of financial and procurement data.
The central thesis of this paper is that procurement and financial data should be given equal attention. Unfortunately, when enterprise information systems are deployed, procurement functionality tends to be an afterthought. Organizations that fail to look more broadly at opportunities to integrate financial and procurement data lose the ability to create efficiencies that can be achieved by entering data once and reusing it in transactions. More importantly, they lose the ability to leverage the integrated information to better see spending trends, identify strategic opportunities to aggregate requirements, and then realize savings in the future. If planning is not done collaboratively upfront, there will be adverse affects on the implementation in terms of schedule or cost. Failure to engage stakeholders early on and use the best practices identified in this paper may put the integration vision at risk entirely.
This work group paper looks at best practices in integration efforts that meet the needs of all internal customers. The paper is agnostic to vendors and products and is based on the recent experiences of public entities in migrating to new systems or integrating separate ones. The best practices identified here are based on research, the collective experiences of members of the work group, and interviews of persons having recent experience.
While this paper is organized in planning, procurement, and contract administration sections, it all serves as a roadmap for planning. The work group thought that providing advice on practical issues arising during the life cycle of an integration project was the best way to organize the presentation. This paper begins with strategic questions. It is important to build a common understanding of terms, beginning with the role of information and data, and how the data supports the primary business objectives of organizations in terms of finance and procurement. The paper introduces a fundamental distinction between migration of data to new or upgraded systems – the legacy system problem – and the integration of data between coexisting systems. There are problems unique to each.
Another theme of this paper is the need for early establishment of a cross-functional planning and governance structure that includes senior leadership as well as functional experts in the use of information and data.
From a planning perspective, the paper will describe common data elements needed in financial and procurement systems, and cover in some detail special problems with data integration inherent in the objectives of reporting and analysis, on one hand, and workflow or production efficiencies on the other.
Next, the paper will turn to considerations that arise relative to procurement strategies. Included in this section is advice on market research, what to include in solicitations, and phasing. Achieving a common understanding between the government and vendor of the expectations, costs (including government resources) and schedule associated with the project is a key issue raised by those interviewed by the work group.
Then the paper will cover some issues from the perspective of implementation. The preparation of a data conversion plan is an early part of the post-award phase. And while the prospects of a project being on- budget and on-time are better when the best practices outlined in this paper are followed, these implementations are complex – one can expect changes to be needed. Consequently, a change control system must be developed that balances costs against functionality. During contract performance, as change proposals are evaluated, the data integration/migration choices will have impacts on cost, schedule, and functionality, as well as resource requirements for the government entity supporting the project. The implementation stage is when the realism of government agency resource estimates is generally called into question. This paper advocates for the establishment of cost contingencies in these projects.
The appendix to this paper includes a checklist of topics and issues, arranged to coincide with the procurement phases. The paper identifies resources found valuable by the work group, including previous NECCC work group papers that offer insight into the issues.
As a side note, the lessons and best practices set forth in this paper are also relevant to other integration projects, for example budgeting and human resources system integrations. For the sake of brevity, though, the scope of the paper has been limited to the issues involved in financial system and procurement system integration.