Should government be run like a business?

This seemingly common-sense idea permeates the 24/7 news cycle, and often is amplified in election years. Without debating the politics of the statement, one can examine the pragmatic reality that there are valid reasons why such an approach is not always feasible or appropriate.

Although it makes for compelling stump speeches and news panel discussions, the reality is that fundamental differences exist between the objectives of public and private sector organizations. Not only do primary objectives differ significantly, but so do the mechanisms used to manage, monitor and report on those objectives.

  • For businesses, the objective is to maximize profit by managing voluntary capital investment, and publicly held companies must keep shareholders informed by filing periodic reports and other materials.

  • For government entities (including public authorities, agencies and school districts), the objective is to deliver essential services through compelled investment by means of mandated tax revenue, while providing transparency and accountability of operations to constituents.

These oversimplified differences help illustrate why enterprise resource planning (ERP) solutions used to manage an organization’s financial health cannot be one-size-fits-all for business and government. Since government is not intended to generate a financial return on investment, but rather deliver services in an efficient and effective manner, supporting technology should enable execution of political mandates natively, without the need for bolt-on processes or customizations that add complexity and are costly to support and manage.

The DNA of public sector ERP solutions should be embedded with government best practices and mandated Governmental Accounting Standards Board (GASB) compliance. Yet, “commercial first” ERP solutions often overlay these attributes in an extension layer or as a customization on top of the baseline. The nuances of a wealth-generation focus as compared to a public service focus require operational distinctions that should be inherent in the ERP architecture and underlying accounting models.

A truly built-for-government ERP solution is essential to providing the most cost-effective, efficient and accurate solution to meet the needs of public sector entities