It's all in the numbers in South Carolina

In 2000, South Carolina began a project to implement the SAP Enterprise Resource Planning Software system for financial, procurement, personnel, budget, inventory control, and grants and project management with fully integrated document management and workflow software. This Master Agreement would be implemented at one state agency as a pilot project with other state agencies to follow, based on the outcome of the pilot.

In 2002, a Business Case Study was prepared by Bearing Point, a consultant hired by SAP to work on the project and focused on five objectives. One of the primary objectives of the project was “[to] determine the costs and benefits associated with implementing a common SAP business infrastructure statewide.” These costs would include software licenses, implementation services, training, network and hardware upgrades, time and expense for agency staff involved in implementation, and ongoing maintenance and support of the installed systems. The anticipated benefits include “more efficient and effective business processes, better cash-management capabilities, stronger integration of business systems and a reduction in the cost of operating and maintaining the state's many fragmented management information systems.”

One of the benefits of more efficient and effective business processes and better cash management is the standardization of commodity identification through a common numbering system. The state has been using the five-digit NIGP Code in some form since the inception of the Code. In the beginning, as commodity codes needed to be added, the state created its own code using the three-digit class and adding its own two-digit item number if it needed a new commodity code. Over time, the codes did not keep up with the master coding system through NIGP. In 2002, the state entered into a license agreement with Periscope Holdings, Inc., the custodian of the NIGP Code, on behalf of National Institute of Governmental Purchasing (NIGP). The state then required all state agencies to use the NIGP Code for reporting purposes and in its online procurement systems. Some agencies complied while other agencies did not.

During the 2002-2005 timeframe, Bearing Point began the blueprinting of the Finance and Procurement modules of the system. At the time of blueprinting, I was the director of procurement for the SC Department of Transportation, served on the Executive Committee of NIGP as a vice president and had been working in state government for about 30 years (2005). My knowledge of commodity code usage was extensive since I had worked at four state agencies in procurement during my 30 years. I had been involved with many different accounting/finance and procurement systems during this time as well. Each system used some form of the NIGP Code - some were using the 11-digit code, some were using the five-digit code, and some were using the five-digit code with their own four-digit inventory classification system tied to it (SCDOT).

I was involved in the initial conversations about the best way to migrate all agencies into one enterprise resource system using one coding system for procurement, inventory and accounting. At issue was the proper length of the numbers. During initial discussions, Bearing Point favored using the full 11-digit NIGP Commodity Code. After months of discussion with the chief procurement officers for the state and other state agency representatives, it was decided that the state would implement the five-digit code in the new ERP system.

The project officially became South Carolina Enterprise Information System (SCEIS). The project launched Phase 1A on November 5, 2007, and eight agencies went live; the Materials Management Office was one of the first. Phase 1B was implemented on April 7, 2008, bringing on board an additional 11 agencies. On November 3, 2008, the next Phase - Functional Fit - was rolled out, and another 13 agencies went live on the system. There are 36 agencies scheduled to go live on November 2, 2009, and the remaining four agencies - some of the largest agencies in the state - will go live on May 3, 2010.

As data was being collected and more users were coming onto the system, there was talk among the SCEIS team members and consultants they had hired to continue the project about the use of commodity codes. The request was to shorten all commodity codes to the three-digit class only because the perception was that 8,366 codes were too many to manage, that we did not need or use the majority of the numbers and that individuals coming onto the system would not choose the correct commodity codes because there would be too many from which to choose.

There was also a problem with the current users not being able to find statewide term contracts, which are identified in the system by their commodity codes. The perception was that if there were fewer numbers to search through, users would be able to find statewide term contracts more easily. When creating a “shopping cart” (or requisition in the procurement world), the system is set up to automatically pull in the contract items that are on statewide term contracts by correctly identifying and selecting the commodity code number for the commodity being purchased.