Oregon SAP project wracked by leadership woes

The SAP project's costs are now $47 million, nearly triple the original $14 million budget, the city's auditor says

An SAP implementation conducted by the city government of Portland, Oregon, went badly awry due to planning and project leadership problems, resulting in skyrocketing costs and a protracted time line, according to a report released Tuesday by the city's auditor.

The project to replace Portland's existing software with SAP started with a planning phase in 2004 and was originally budgeted at US$14 million, the report states. But while the project has now achieved its primary goal, the implementation ended up costing more than $47 million and took longer than 30 months, instead of an expected 14.

That tab does not include other costs, such as payroll and benefits for many full- and part-time city workers who participated in the project.

SAP and its software did not come under fire in the report.

"The issues that have appeared pre-dated SAP's involvement in this project," said SAP spokesman Andy Kendzie. "To my knowledge, the project is under control and moving forward. They are a very valued customer."

Indeed, the relationship between SAP and Portland appears sound. City officials participated in an SAP case study on the project, and also put out a press release last year extolling the new system's initial benefits.

Instead, the report points to inadequacies on the part of city officials and the project's initial systems integrator.

For example, city officials had based the original budget on an independent estimate that did not factor in costs such as new hardware needed to run the system. In addition, city officials later added more functionality to the project plan.

Meanwhile, the project's contractor, Ariston Consulting and Technologies, "was not always able to identify standardized ways of incorporating these additional items," resulting in higher costs, according to the report.

Ariston also failed to finish project documents on time and had staffing difficulties, it adds.

Portland ultimately terminated its contract with Ariston in 2008 and inked a new deal with SAP's Public Services arm to finish the project, the report adds.

The San Diego systems integrator was acquired by Black & Veatch last year. A representative for the company could not immediately be reached.

Overall, the 14-month planned time line was "too aggressive," and the city went against advice from outside sources, according to the report. One recommendation called for a project schedule of up to four years.

Other issues exacerbated the project's woes as well, such as poorly defined city business processes and the municipal government's decentralized structure, which tied up decision-making in layers of red tape.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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