update on enterprise resource planning system
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- Barnard Burke
- 7 years ago
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1 1. Introduction UNRWA is in the process of implementing a new Enterprise Resource Planning (ERP) system, to provide an integrated information system that will: fully support the growing needs of the Agency; enable the effective management of human, financial and physical resources; and increase operational efficiency by establishing consistent and reliable processes across the fields and reduce the Agency s reliance on manual and paper-based data in key areas (e.g. distribution logistics, project reporting, grant management). The need for an ERP system was clearly stated in the Organizational Development (OD) plan and the reasons identified then are still true today. Current information systems can barely satisfy the Agency s day-to-day basic data and information processing needs and they do not provide the necessary platform for Agency s ongoing and planned management reforms. In addition to the need expressed in the OD plan, the obsolescence level of the current information system is such that an extensive revamping is urgently needed even to continue the current level of support to the daily activities of the agency. The realization of the ERP system will address both of these needs, by providing a strong platform to sustain the reform process and by avoiding the risk of lack of support to the Agency s ongoing operations. Not having a modern ERP system is a major factor currently inhibiting the Agency s ability to move forward, and, in the future, will have an increasingly limiting effect on the development of the organization. It will affect the successful completion of Agency reforms, such as: results-based management and activitybased costing for finance; classification, compensation and performance management for HR; and contracts management for procurement. Implementation of a new ERP will allow UNRWA to bring these reforms into one environment and expand their scope and potential, and at the same time improve the quality, accuracy and scope of the data on which they rely. In a similar way, the lack of functionality in the current system restricts the Agency s ability for comprehensive monitoring and oversight. At present, substantial amounts of critical data, such as service contracts and project data, reside in spreadsheets and paper documents, which increases financial and operational risks and results in poor reporting of enterprise-wide information. Furthermore, even though UNRWA s legacy ERP system, RAMCO, supports basic finance, procurement and HR operational processes, it is obsolete, both technically and functionally, and the application vendor has indicated that it will not provide any technical support after This specific situation calls UNRWA to urgent action in order to prevent the failure of current information system and create the necessary platform to support the Agency s operations after Given the risk presented by the dependence of the Agency on its outdated and inadequate current system, UNRWA requires a new ERP solution to support its core business and operational needs, and to provide a suitable platform to move forward in terms of Agency reforms, business needs, and reporting requirements. UNRWA has opted to partner with a sister UN Agency, the World Food Programme (WFP), and to implement an ERP based on their current SAP system, WINGS II, which covers the core business areas of finance, HR, procurement and logistics, grants management, funds management, and project management. Since signing the partnership MOU with WFP UNRWA has engaged the services of WFP s system integrator and completed the first phase of substantive project work, the fit/gap analysis. This phase 1
2 focused on assessing how well UNRWA s business fits to the WINGSII system and to assess additional features needed to maintain the current level of support provided by RAMCO (UNRWA s current information system). A series of workshops were held in support of this activity covering the core business streams of Finance, HR, Procurement, Projects and Grants. The output from these workshops has been reviewed and approved by key stakeholders and work is currently focused on the Blueprinting phase, which began in September. This phase details the design of the solution to be implemented and is being supported with involvement of staff from across the Agency. 2. Costing of reforms Attached in Annex 1 is a detailed budget plan for the project covering 2013 and 2014 with a total projection of almost USD 21.5 million needed to complete the project. As stated earlier UNRWA has decided to adopt a more prolonged approached to implementation in order to support a more viable resource mobilisation strategy. Expenditure to date in 2012 is USD1.09 million with the expectation that an additional USD 4.5 million will be expended by the end of The ERP is considered an extra-budgetary project. As such, the Agency is seeking project funding from traditional donors, emerging markets and through private partnerships to support this initiative. However, given the critical importance of the ERP to the Agency s ongoing operations and the expected benefit, a shortfall in the ERP budget will be assumed by the General Fund. 3. Efficiencies and effectiveness of reform Specifically the ERP will realize the following benefits: Greater efficiency through: consistent and reliable processes established across all of UNRWA s operations; greater effectiveness of operations through streamlined processes 1 ; stronger portfolio management and better funds utilization 2 ; stronger financial controls, embedded, supporting reduction in overall processing times for transactions; and reallocation of staff resources away from manual/paper based processes and to more strategic tasks supporting service delivery to beneficiaries Enhanced data reliability and integrity supporting: a reduction in staff time and costs spent on manual data reconciliation tasks 3 ; more comprehensive and accurate reporting; increased capacity for strategic planning; visibility of activities across the full programmatic portfolio supporting better decision making; easier and more timely internal and external reporting; stronger decision-making across the Agency; improved procurement visibility and oversight facilitating potential cost savings; improved inventory management reducing waste 4 ; and 1 WFP saw a 10% reduction in payment delays and 25 % reduction in invoice errors through the implementation of WINGS II system 2 UNDP estimated 1% of total portfolio was saved because of efficiency gains by implementing the Atlas ERP 3 WFP saw a 40% reduction in manual effort of report production through the WINGS II implementation 4 WFP saw a 30% reduction in the number of discrepancies between physical stock and system stock through WINGS II Implementation 2
3 improved funds management enabling better funds matching with Agency needs and reducing unspent balances 5. Quality improvements to stakeholders resulting from: more comprehensive reporting to donors and hosts; greater transparency in reporting through single source of information; stronger monitoring and oversight through visibility and transparency of transactions; stronger operational support for programme activities; stronger planning capabilities to across the Agency supporting better programmatic prioritization; increased visibility of contribution data (expiry dates, key conditions) will support better prioritization and utilization of funds; and improved project management facilitating delivery on time and within budget. The ERP team is preparing, and will complete by February 2013, a comprehensive business-case for the initiative. The document will clearly and comprehensively identify the qualitative benefits to internal and external stakeholders. Additionally, the document will quantify the expected savings of the ERP in the short, medium and long term. 4. Inter-linkages with other reforms Implementing a modern ERP system is critical to the success of the Agency in achieving several of its key reform initiatives, such as results-based management and activity-based costing. Current tools do not offer the scope of functionality to support the Agency s basic needs and, if left as is, will have an increasingly limiting effect on the development of the organization in the future. The implementation of a system to cover the core business areas of grants management, funds management and project management will allow the Agency to review and manage its financial resources, within one system, from contribution pledging to end reporting. This will support strategic planning and the effective use of resources, underpinning service improvement. The availability of reliable data will support better decision-making and planning across the Agency. For the first time Agency management will have a complete picture of all activities across all fields. This improvement coupled with stronger accuracy in forecasting contributions will allow the Agency to more successfully prioritize operational needs against actual contributions, supporting better service delivery to end beneficiaries. Additionally the availability of more reliable data will support more timely and current reporting to donors, hosts and other external parties. Implementation will align and embed key reforms in day-to-day operations and systems supporting the Medium Term Strategy (MTS) plan , and will improve information management throughout the Agency. UNRWA will adopt best practices throughout the organization streamlining processes and workflow, promoting consistency and transparency in the application of rules and operating procedures throughout the Agency. Additionally, the system will substantiate ongoing financial initiatives, such as IPSAS, RBM, and activity-based costing, and provide a platform to support crucial reforms under Sustaining Change. UNRWA will also see gains for its programmatic initiatives and obtain operational benefits. Stronger and more accurate operational support will create improvements in areas such as budget forecasting, planning, 5 WFP saw a 25% improvement in the accuracy of contribution forecasts in relation to actual contributions through the WINGS II implementation 3
4 procurement, monitoring, and end reporting. A new ERP system will improve the monitoring of programmatic, project, and operational indicators, establishing strong internal controls to support the Agency in achieving oversight and accountability objectives. Also real time data distribution and reporting will reduce the need of resources currently involved in the production of ad hoc reports and enabling faster and distributed decision making. Additionally, the quality, reliability, and inclusiveness of data will improve stand-alone program initiatives that rely on corporate information, such as e-health and the Agency s current results-based management (RBM) system. 5. Prioritization of elements of reform in next 12 months Currently the project is in the final days of the blueprinting phase, which will produce a complete detailed design of the to be solution. Production of this document will give UNRWA a much clearer picture of the final functional scope of the to be system and will allow the ERP project to refine and finalise work and implementation plans for 2013 and The Agency anticipates that 2013 will be focused on the realization phase, when the actual system to be implemented will be built, configured and tested. UNRWA plans to tender for system integrator services for this stage of the project using the design document that will be delivered at the end of the blueprinting phase as the substantive portion of the RFP. This will support the Agency s desire to keep costs as low as possible and within budget. Focus in 2013 will also be on end user testing to ensure staff readiness for a 2014 implementation. The Agency anticipates that the system will be implemented in waves throughout This will allow for a more controlled roll out and also will support a more sustainable approach to resource mobilization. Below is a current high level plan for the next 12 to 18 months: 4
5 Annex 1: Detailed Budget Plan for 2013 and 2014 Acc Desc System Integration & Services Description Budget Needs TOTAL 3,893,040 3,407,495 7,138,365 ERP Software 2,316,265 2,246,400 4,628,806 Staff Cost (project staff; backfill; WFP) All project staff; Secondees; WFP resources; backfill 3,222,342 2,513,482 5,678,185 Network Upgrade 600, ,000 Infrastructure Change Mgt & Org Alignment Operations/Logistics/ Administrative Cost Hosting 560, ,000 Network Support - service desk (staff) 40, , , ,192 1,540,575 office space 235, , ,000 travel 300, , ,368 other contr. Services (hotel, etc) 160, ,488 Data Migration staff costs 365, , ,000 TOTAL 12,365,000 9,123,253 21,488,252 5
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