Since 2005, YouTube has gone from launching its first website to serving up more than 100,000 years’ worth of video content every day. During the same period, the State of California has gone from the idea of adopting a single ERP, HCM, and procurement platform to getting nearly all of its departments on board – although there are still a few stragglers.
In 2021, 16 years after the implementation was first proposed, the final functionality was deployed to FI$Cal, the statewide finance system. The following year, the legislature judged that all the project’s objectives had been met. Just why it took the same time as a startup like YouTube to achieve world domination tells us a lot about enterprise software, and especially its role in government: it’s harder than it looks.
FI$Cal – short for Financial Information System for California – combines financial planning, accounting, budgeting, cash management, and procurement. Its builders believe that it is one of the largest public-sector IT systems in the world. Given that most national governments would rely on separate departmental systems, and that California is the world’s fourth-largest economy, the claim may not be so far-fetched.
Based on PeopleSoft, acquired by Oracle for $10.3 billion in January 2005, and Hyperion, which Oracle bought for $3.3 billion in 2007, FI$Cal supports approximately 16,000 end users in 151 departments that use the system to pay their bills and balance their budgets every day. It processed $453 billion in spending in fiscal 2023-2024 while the State Treasurer’s Office system functionality handled more than $2.9 trillion in state government banking transactions in the same period.
Although the rollout is officially complete, new challenges continue to arise. As well as finding the right time for six deferred departments to adopt the system, the team must manage the Department of Justice’s plan to go live in 2027 and the California Department of Transportation (Caltrans) project to adopt the system in 2028.
The California Government Code Section 11865 determines future developments in FI$Cal – specifically, onboarding deferred departments, continuing technical optimization, and maintaining system security. It is also set to support the transition of the accounting book of record for the State of California to the FI$Cal system by the July 2026 statutory deadline.
FI$Cal, also the name of the department that manages the system, is developing and implementing an onboarding schedule for each deferred department including tasks, training, analysis, and touchpoints to prepare the department and transition them to the “new” system. This process includes an analysis in the early stages in the form of a fit/gap report and a master departmental workplan.
FI$Cal works with departments before, during, and after the onboarding process. It anticipates a learning curve of around three years for all newly onboarded departments, throughout which it supports these departments.
The idea of the FI$Cal system was first proposed when the Department of Finance needed to replace its budgeting system, which originated in 1984 and ran on IBM Power8 servers using the IBM iSeries operating system. After the 2005 feasibility report, the California government expanded the project to modernize the state’s entire financial management processes into a single financial management system. Seven years after the project was first proposed, in 2012, a systems integrator was brought onboard and implementation work started in earnest (see timeline for more detail).
According to FI$Cal, a cloud-first policy is now in place. This means it considers cloud solutions before making any new investments. It aims to take advantage of cloud technology to help with resilience and flexibility. Using a phased approach, it has been replacing system infrastructure with cloud services for the past few years. During its first phase, it implemented a cloud-based disaster recovery environment for the FI$Cal system and migrated back-office systems and services to the cloud. It is currently in the second phase and is working to migrate the main FI$Cal system to cloud-based infrastructure.
“Our goal is to complete this migration before we have to upgrade the current hardware, avoiding significant capital expenses to replace our hardware,” FI$Cal said in a statement to The Register. “We are already using cloud-based infrastructure to support onboarding new departments and to test new functionalities. The last phase in our journey to the cloud will be to determine a feasible and cost-effective strategy to transition our core software to a cloud software-as-a-service model, where such a model would provide benefits to the state.”
California is not alone in facing the challenge of moving from PeopleSoft to a SaaS application for HR, finance, and payroll.
Akshara Naik Lopez, a senior analyst at Forrester, said that in the late 1990s and early 2000s, PeopleSoft was a popular system for so-called SLED entities in the United States. These State, Local, and Education government organizations – of which there are around 90,000 – often took the opportunity to add customizations on top of the vanilla solution to suit their specialized requirements.
“If they’re using the entire HCM, including payroll, they are more than likely to customize it. Some are also using time and labor applications, which can be very complex. The more complex ones are not easy to undo and figure out how to do it in a SaaS product,” she said.
“What’s happening with a lot of SLED entities is they’ve done the traditional cycle right every three to five years of setting budget aside and doing an upgrade project. What we are seeing is a lot of these SLED entiti