E-Retailing.gov

In 1994, the Mint, a unit of the Treasury Department, was in the Dark Ages, Mitchell says. It had settled for merely trying to ship 50 percent of its product orders within eight weeks. The agency had never had a strategic plan, and had become so insular that only a few people controlled corporate data. The agency's information technology architecture, Mitchell says, was Byzantine.

The Mint needed to take a good long look at itself. It is one of the largest metal stamping manufacturers in the world. It is a major competitor in the mar-ket for collectibles and other products. On top of that, it makes the money that fills the nation's pockets. In 1998, Philip Diehl, then the Mint's director, described the state of the agency in the early 1990s: "We argued over reliability of information rather than over business decisions. We would spend an enormous amount of time trying to nail down the facts. When things went wrong, it was hard to learn from mistakes. It's very hard to be a learning organization when no one can agree on the facts."

Murky Crossroads

The Mint was at a crossroads where neither path was well-trodden. In one direction lay the year 2000 crisis and the prospect of spending millions remediating legacy systems that were better suited for the scrap yard. In the other direction lay a daunting option: installing a suite of brand new Y2K-compliant technologies and reengineering the Mint accordingly.

Facing an October 1998 Y2K compliance deadline, the Mint took the bold step of installing what still is the most complete enterprise resource planning (ERP) package in the federal government. The agency contracted with PeopleSoft Inc., an e-business software provider, to create a new, $40 million Consolidated Information System (COINS). With their backs to the Y2K wall, the Mint and PeopleSoft embarked on a plan to put in place 15 new applications in 12 months.

"The Mint leadership said to us that if they were going to fix their Y2K problem, they also intended on getting a return on their investment," says Ron Sullivan, the head of PeopleSoft's federal group.

The new system dramatically changed the way the Mint operates. For example, PeopleSoft installed a new financial management system that streamlined operations and accounting methods. Before COINS, Sullivan says, "it was taking the Mint 60 days to close their books. Now it takes one."

The system also processes orders that come in on the Web. Before COINS, Mint employees manually processed all coin orders. Now orders that come in over the Web are processed automatically. But only by adapting their business practices to take advantage of the wide range of applications in the PeopleSoft software was the Mint able to fully transform its operations. ERP systems work best when they change agency operations, not when agencies try to modify ERP software to fit their existing practices. "COINS provides us more timely and accurate data," says Jackie Fletcher, the Mint's chief information officer. "Before we implemented COINS we had accurate data. But it took a long time to get to. Before COINS we had to input data from multiple systems. COINS is much more efficient." That data ranged from inventory lists that revealed how much manufacturing stock the Mint had at a given time to tallies of what kinds of collectible coins were selling well. The fact that it took so long to generate reports, Mitchell says, was crippling for an organization that depends on timely information to make decisions. It was especially difficult for an organization that had been trying to reinvent itself.

"We wanted to do the kind of reengineering that a healthy, robust ERP can provide," Mitchell says. "We began a whole series of reengineering projects to change what was a very territorial and fortress-type mentality."

The reinvention work the Mint had started before its COINS implementation was not wasted. In 1993, Mint leaders began to identify organizations within the agency that were "chomping at bit to take a new approach," Mitchell says. That new approach involved everything from streamlining business practices to improving customer service to developing a new way to reach potential buyers over the Web.

The leadership attempted to create an environment where employees were encouraged to put forth new and innovative ideas. The Mint hired new workers and went through a painful phase of "early-outs and buyouts to bring in new leadership," Mitchell says.

The Mint refocused itself on the guiding light of all reinventions: the customer. "We had to realize that the only reason we exist is to serve our customers," Mitchell says. "In the last seven years we have transformed the entire Mint. We have taken an organization that was not customer-focused and turned it into one that is." The newly restructured Mint has focused on developing new product lines, such as the highly successful 50-state quarter series and the rebirth of the dollar coin. In the process, it has helped turn the business of serving coin hobbyists into a highly profitable enterprise. The agency returned $2.6 billion to the treasury in fiscal 2000.

E-Government Savings

"Moving to an ERP system drove cultural change," Mitchell says. "We went from a mainframe mentality, where one or two people controlled who got data and when, to a staff that gets its data online, real-time whenever they need it."

One of the reasons many agencies are attracted to e-business technologies is the promise of significant savings. The Mint already is realizing those savings from its e-government initiatives. The Mint expects an $80 million return on its $40 million investment in COINS over 10 years. "That's a healthy 2-to-1 ratio," Mitchell says. And the Mint is passing along its savings. For example, the Mint provides free shipping and handling for Web orders. "We have never thought of shipping and handling as a profit-maker for the Mint," Mitchell says. We can now pass those savings on to the customer, because we were able to reduce the processing costs for orders…entered directly into our e-retailing systems. Customers receive their orders in a week to 10 days maximum. A large percentage of Web orders get to the customers [in] a day or two."

The Mint continues to install technologies with the aim of transforming the way it does business. Fletcher says a Web site with more features is on the way. "Customers will be able to do self-service on the site," Fletcher says. "Customers will be able to look at the status of all their orders online." The Mint debuted an upgraded version of COINS late last year and has been working with PeopleSoft to implement its human resources software as part of a Treasury-wide program.

The Mint has also decided to outsource its payroll processing to the Veterans Affairs Department. Initially, the arrangement will be a Mint-only pilot program. However, if the test is successful, Treasury may have the VA do payroll processing at all of its agencies.

Does the Mint's success mean every agency seeking a successful e-government strategy should implement ERP? Mitchell doesn't think so. "An ERP implementation is not something you go lightly into," he says. "Many agencies would be wise to go with a smaller solution." Mitchell advises agencies looking into ERP to approach their requirements critically and attempt to match the benefits of an ERP solution to those requirements. Choose a large and expensive software package only when it matches your agency requirements, he advises.

Mitchell and Sullivan say the Mint's ERP implementation went so smoothly for two reasons. First, the agency defined its requirements and matched them to the software package that best met its needs. Second, Mint leadership was willing to reengineer practices in accordance with the PeopleSoft product. The agency "made a grand total of six modifications on the whole PeopleSoft package," Mitchell says.