Minnesota Cities Magazine
More from Jul-Aug 2017 issue

A Must-Do Project: Financial Software Update

By Mary Jane Smetanka
Several pairs of hands, showing people gathered around a computer

Until recently, the City of Prior Lake’s financial software came from an era when computers still used floppy disks and the only windows people talked about were made of glass.

At 30 years old, the software still worked, but it wasn’t meeting the city’s 21st-century needs. Its capabilities were limited, and only the Finance Department had access to the program. Only one person knew how to maintain the system.

So, the city hired a consultant and in 2014, after 18 months of work, launched a new financial software program. Transitioning to the new system was a big job—it won’t be entirely phased in until later this year.

“We wanted other departments to have access to look up information, run reports, have more electronic approvals for purchase orders and invoices, and to automate processes more,” says Jerilyn Erickson, former Prior Lake finance director, who initiated the upgrade project.

Not easy, but it’s worth it
Updating financial software isn’t sexy, fun, easy, or cheap. But it can streamline city operations, make planning easier, and make interacting with others in the city smoother for employees and residents.

“Cities want information at their fingertips,” says Jon Bishop, owner of the management and technology consulting company JVL, LLC. “These systems are much more able to produce real-time, actionable data. If you’re working on a 25-year-old system, you likely have someone who has worked with you for 25 years and can produce data, but [that person is] the only one who can do that.”

There are increasing public expectations, too.

“It doesn’t matter if you live in New York City or Winona, that user expectation is much higher than it used to be,” Bishop says. “If someone calls and asks, ‘Where’s my lien waver?’ and you say, ‘I’ll ask Gus and get back to you,’ that’s just not acceptable anymore.”

Finance Department employees for the City of HopkinsHe says cities that delay buying new software risk a system collapse because old systems can’t handle the increasing amount of data cities now use. Even finding someone to maintain an obsolete system can be difficult because people aren’t trained in the technology anymore.

What to consider
Bishop helped the City of Hopkins select its new financial software. Besides cost and capability, he says cities should look at how the system is supported, whether it’s based on old or new technology, and even cultural questions like whether the software company fits with a city’s organizational culture.

The cost of new systems ranges from perhaps $100,000 for a simple program for small cities to several million dollars for sophisticated systems for larger municipalities, Bishop says. Both Hopkins (population 19,227) and Prior Lake (population 25,049) paid just over $200,000 for their new systems.

For cities, those large expenditures mean planning ahead.

“You have to balance your capital needs,” says Cathy Erickson, Prior Lake accounting manager. “Is your priority buying a firetruck, or a snowplow, or a new accounting system?”

A long process
Until recently, Hopkins was using old financial software that had last been updated in 2005.

“Fast forward 10 years and there had been lots of changes in software, how it operates, and how it integrates,” says Christine Harkess, Hopkins director of finance. “It was not Windows-based. We couldn’t do things we wanted to do. It was difficult to pull reports ... and some queries we wanted to do were not available. It was time to replace it.”

The city formed a focus group of highend users of the finance software, working to define what was wrong with the old software and what they wanted in a new program. Then they formed a focus group of low-end users to see what they needed in a new system. Through it all, the city was working with Bishop, who made a list of the city’s needs and put together a request for proposals (RFP).

Five or six vendors responded to Hopkins’ RFP. Bishop put their information in a spreadsheet, and the city narrowed the group to three, having them come in to demonstrate their software for people who would use it to make sure everyone was on board with a choice, Harkess says.

“You have to know what you want,” she says. “No software is perfect.”

Hopkins had to hire someone to take data from the old system and format it for the new system. The city has been doing a phased rollout for a year, running processes simultaneously on both systems to double-check that everything matches. When the two systems jibed, the function was moved to the new system, which should be fully functional by this summer.

When problems arose, they sometimes were created by something as simple as not checking a box.

“We would input utility billing, run a billing cycle, and realize something wasn’t right,” Harkess says. “Then you check the calculations, do the proofing, and the only way to do that is to mirror it with the legacy system. We ran both for a month, because you do not go live until your systems match.”

Every corner of the city
The new system reaches every corner of city operations, from financial reporting and payroll to business licenses, buildng permits, and licenses to sell alcohol and tobacco. The system has created efficiencies like automated time keep- ing for employees. Once paper-based with forms shuffled from department to department, employees now submit everything electronically.

The employee who handles payroll for the city’s roughly 225 full-time and seasonal employees now spends less than a day on that duty, Harkess says. Employees can check their vacations, sick time, and other details online.

And Hopkins residents can pay their utility bills online, request a new garbage or recycling container, sign up for e-billing or arrange for automatic withdrawal to pay their bill.

“I think it’s worked out quite well,” Harkess says. “We’ve been really happy with the increased efficiencies. We’re still learning; there is so much more this software can do.”

Clear advantages
Prior Lake is seeing increased efficiencies, too. Purchase orders now flow through the system electronically for approval, with all the required attachments. DataFinance Department employees for the City of Prior Lake is more current. Department heads, who could not use the old system because access was limited to the Finance Department, can now do their own checks to see how their expenses compare to their budget. Officials can check on how much the city has spent on things like street maintenance, and will soon be able to use the software’s forecasting tools.

Prior Lake residents soon will be able to get a permit online and pay for it elec- tronically, a procedure that must now be done in person.

“Our use of paper has dropped,” says Accounting Manager Erickson. “The access to information and built-in approval workflow within the system is definitely more efficient.”

The importance of outside expertise
Both cities said it was important to have expert help with the selection process. Harkess says hiring a consultant is a must if cities don’t have in-house expertise. Prior Lake paid its consultant $142,000; Hopkins’ contract with Bishop called for costs not to exceed $47,600.

Consultants “do not come cheap, but you have to weigh the pros and cons of what the benefit is,” Harkess says. “We knew we did not have the time or expertise to do this.”

Bishop says he has no allegiance to any particular software company. “I am the translator between the consumer and the software company,” he says. “I don’t care who wins the deal because I don’t have any monetary reason to sell one software or another. It’s my job to find the best fit in a reasonable budget range.”

He warns that settling on a new system is complicated. “It’s not like going to Best Buy and picking up a computer game, installing it, and you’re ready to roll,” he says. “Customers need to have their eyes open and be ready for what they’re biting off here. It’s a pretty involved process.”

Advice on getting started
Prior Lake’s Cathy Erickson says cities need to figure out exactly what functions they want in new software and look at whether there’s a better or different way to do things with a new system. There’s no harm in questioning long-standing practices, she says.

Harkess advises planning well ahead of time, putting money in the budget, and talking to peer cities about their experiences. Involve employees at all levels to make sure everyone has a buy-in on the product.

“Things you don’t think of, employees will,” she says. And because training employees to use a new system takes time, cities need to build that into their schedule to make sure employees know the system and it can be tested thoroughly before it is used.

Jerilyn Erickson, who was at Prior Lake during their upgrade and is now Lakeville’s finance director, has updated financial systems in three cities during her career. She says cities can get guidance from the Minnesota Government Finance Officers Association, which usually offers roundtable discussions on the issue at its annual meeting in September, as well as the National Government Finance Officers Association, which offers training courses on financial software selection and implementation.

To make a stressful process less stressful, Jerilyn Erickson urges cities to make sure everyone supports the project.

“It’s critical to have buy-in from the top—from the council and city administrator or manager—that they dedicate the necessary resources to make this happen and that they’re supportive,” she says. “Implementation is a significant commitment of time and money and you want to make sure you’ve got that support.”

Mary Jane Smetanka is a Minneapolis-based freelance writer.

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