Opening the discussion on the ERP interoperability study, the HLCM Chair indicated that the study was nearing conclusion and referred the Committee to the briefing note CEB/2015/HLCM/5. Noting that the topic was complex and multifaceted, she offered several observations, starting with a reference to the discussion currently underway to modify the UN system compensation package. The Chair pointed out that any changes to the package will almost inevitably entail modifications to the information systems that support compensation processing for all of UN organizations. In other words, should the compensation package change, so will the supporting ERP systems, offering an opportunity for agencies to explore ERP-related transformations within payroll applications, including optimizing existing systems in a collaborative fashion.
The Chair invited the representative of ITU, as lead agency for the ERP study, to introduce the topic. Since the study began late last year, he noted that the consulting company had conducted many consultations, visited field locations and ran a well-attended workshop in order to fully understand the issues and challenges surrounding this topic. During these consultations, the company arrived at a definition of interoperability as “two or more agencies interacting at the organizational, information, process or technological level with the goal of efficiency and/or effectiveness”. The representative of ITU also indicated that it was important for the Committee to understand that the reference point for the recommendations and business case prepared by the consultants will be based on the cluster of organizations participating in the study, and not necessarily reflect the entire UN system.
The representative of ITU pointed to the briefing note for this agenda item, which described the initial observations of the company, and noted that many of them revolved around a change in how organizations approached administrative processing. While technology can come as an enabler of change, true transformation of administrative services requires leadership, enablement and enforcement to truly reap the benefits, not only in terms of efficiency but also of effectiveness of the UN programmes. He pointed to one of the key preliminary findings: since ERPs are not designed as interoperable, to render them interoperable just for the sake of doing so would only add a layer of additional cost, making any savings more difficult to attain. Efficiency is attained by combining on a significant scale the operations of many agencies thus overcoming the natural barriers of individually implemented ERPs.
Several examples from the private sector were used to illustrate the ways in which these organizations are moving towards transformation. In one example, a large European health technology company recently consolidated 60 ERP systems into one and didn’t even attempt to make those 60 systems interoperable. In another example, one of the world’s largest shipping companies recently expressed regret for having implemented an ERP system to manage its more than 90,000 employees, preferring to purchase the administrative activities as a commodity service.
The Committee was informed that ERP sub-group of the ICT Network would meet in April 2015 to share experiences, and the study results would be a significant topic of discussion.
The representative of UNDP, as a member of the ERP Study Steering Committee, then suggested that a useful way to view the study was to consider interoperability in the absence of an information system; i.e. whether or not agencies can “interoperate” on paper, and if so, then the actual information system is not an obstacle to interoperability at any level. He offered the view that when exploring interoperability, it is useful to consider four aspects of administrative operations: people, processes, systems and reporting. In the example of the UN civil service, although all organizations share a common civil service with respect to salary scales and entitlements, UN staff members actually work for individual agencies. This distinction indicates that interoperability for “people” can prove challenging, regardless of the ERP system in place. The representative of UNDP went on to note that while progress has occurred in some areas, such as procurement, in other areas, such as audit, inter-agency recognition does not, or rarely, exist and therefore “interoperability” is very limited. He noted the need for a logic of reciprocity, that would take the UN system further than harmonization.
The representative of UNDP further pointed out that ERP systems themselves can, to some extent, support agency administrative interoperability. On a broader level, he noted that many UN entities utilize the International Aid Transparency Initiative (IATI), which imposes standards for publishing data, and this could be extended to provide a more standard reporting environment. He also noted the need for the UN system to make progress on interoperability as a transformational change, rather than incrementally, and reiterated the important role that member states play in supporting this type of change, noting that HLCM offers a key platform in facilitating a move towards a more harmonized environment.
In concluding his remarks, the representative of UNDP pointed out that while ERP implementations may have generated significant administrative savings and efficiencies, the UN system has reached the point where further savings can only be the result of administrative transformation.
Thanking both ITU and UNDP for their remarks, the Chair opened the discussion by noting the importance of establishing that interoperability refers not only to the technical aspects of ERP systems, but also an interoperability of people, processes and reporting. During the discussion, members of the Committee explored the relative differences between collaboration and harmonization, where the former may be easier to achieve in the short run, but the latter yielded greater benefits to the UN system over the longer term. Emphasizing this point, Committee members noted an increase in collaboration across organizations, particularly in the area of procurement, but the overwhelming sentiment amongst members was to strive for a greater degree of harmonization.
Members also stressed the importance of linking harmonization efforts to individual organizational and system-wide strategies, depending on the outcome of the study. In particular, it was noted that, with rapid advances in technology, many agencies were likely to update ERP implementations in coming years, and this would present organizations with opportunities to review existing ERP arrangements, and this would be an opportunity to explore more coherent approaches for administrative process. As an example, Committee members noted that harmonization efforts had begun to take root within country teams as a result of the implementation of business operations strategies. These initiatives, while currently limited in scope, would require support at the headquarters level to become more substantial, and the UN system should consider ways to support these efforts.
The Committee also emphasized some of the key messages contained in the briefing note. For instance, members noted that simply linking ERP systems would likely have the result of increasing ERP operational costs. Moreover, the UN system was already incurring costs associated to the need to aggregate data in order to support decision-making.
As the discussion concluded, members noted that organizations’ differences mostly depended on their different mandates, but many similarities existed in their administrative processes. Therefore, a transformational shift that would build on existing harmonization efforts and move the UN system towards a more harmonized approach to administrative processes is possible. Furthermore, a transformation around business processes at the global level could have a far greater impact than those carried out at country level, which ultimately can only be incremental. Members also recognized that any change will incur short-term costs, which will vary across agencies, although eventual savings across the entire system could be significant.
Welcomed the update of the activities of the ERP interoperability study and took note of the preliminary findings as presented in the briefing note.