In June, I blogged about Marin County, California decision to sue consulting company Deloitte Consulting LLP for $30 million along with unspecified punitive damages over what it claims is a botched SAP ERP implementation.The county had originally procured the system in 2005 for $12 million, but it has so far spent over $30 million trying to get it to meet the county's original specifications.
In early August, a country review of the ERP system recommended that a new ERP system be procured, the Contra Costa Timesreported. The review's report, the Times article says, stated that:
"For about the same amount of investment needed to fix SAP, we could move to a new system and have significantly lower ongoing operating costs... The reduced operating costs of a new system would save at least $8 million over the next 10 years. We would still use SAP for the next three years."
The report also states:
"Although SAP is getting the basics done, we are still doing work-arounds and using up significant staff time because of the poor initial implementation... Almost one-third of the functionality that was promised has never been met."
The Times article says that the county's Department of Information Services and Technology director estimates that it would cost about $5 million to "fix and enhance" the current ERP system, but only $2.5 million to purchase an ERP system today that can be tailored to meet the county needs (with maintenance costs only half as much as the current system as well).
Hmm... that still seems a wee bit optimistic to me.
Not to worry, though. The county has learned all the lessons from its currently botched ERP effort. This time the county will roll-out the new system in phases over the next two to four years, increase the training of its internal staff on the new system, and even closely monitor the project's progress!
Sounds like lessons from IT project management 101, but at least the county is saying the right things. It probably also needs to think about applying some aggressive risk management, especially concerning the myriad of risks (and costs) involved in operating parallel IT systems for awhile.
One area where lessons apparently don't need to be learned, however, involves the process used under which the original system was procured. The county continues to insist it made a good business decision back in 2005.
Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.