County seeking new software vendor to replace SAP system

Marin County will favor 'tier two' ERP vendors in the second go-round

Marin County, California, has begun the search for new ERP (enterprise resource planning) software to replace a troubled SAP implementation that generated an ugly legal battle between the county, SAP and systems integrator Deloitte.

County supervisors voted this week to approve an RFP (request for proposals) from vendors who want to take on the job. Officials are focused on "tier two" vendors, which are generally smaller and more focused, and especially ones that have experience in the public sector, said County Administrator Matthew Hymel during a meeting of the supervisory board, which was webcast.

"A big lesson learned [from the SAP project] was around fit for an organization our size and the business that we're in," Hymel said. Tier one ERP vendors such as SAP and Oracle offer "very complicated products that serve Fortune 500 companies," he added.

"Our employees were definitely impacted by our last implementation so they taking this very seriously," Hymel said. "We're all in agreement of the need to do this right."

Given the "pain" caused by implementing SAP, Marin County officials are taking a "belt-and-suspenders," or quite conservative, approach to the new project, he added.

For one thing, the project will stick to phased deadlines, based on readiness. "We're not going to go live unless we're ready," he said. More resources for training users, as well as improved efforts to take in user feedback, are also planned.

"We've really gone out of our way in many cases to ensure our users are heard," said county IT staffer Tim Flanagan, who also spoke at the meeting. "Every department has been involved and included."

Responses to the RFP are due in December and it's hoped that an approved contract will be signed by June.

Marin County wants to save money compared to what it cost to acquire and run SAP on an ongoing basis, and is also open to using products from multiple vendors, rather than trying to find one that says it can handle every functional area, according to Flanagan.

Supervisors offered Hymel and Flanagan praise for their efforts planning the second project.

"I think we've really laid out a good map," said District 1 Supervisor Susan Adams, as she paged through a thick binder containing the second project's details.

The supervisory board's good mood belied the acrimony stirred up by the county's now-settled lawsuit, which reportedly cost it US$5 million in legal fees but netted just $3.9 million in settlement payments.

Marin County has spent at least $30 million on the SAP project, which dates to 2006, and had at one point pursued $35 million in damages. It accused Deloitte of staffing the project with inexperienced consultants, leading to delays and cost overruns.

It also claimed Deloitte and SAP's alleged wrongdoing fell under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), which would have trebled the damages. A judge dismissed the racketeering claims.

In 2010, Marin County announced it would rip out and replace the SAP system rather than attempt to fix the alleged problems with it, saying the first option would cost less money.

After the settlement in January, Marin County continued to use the SAP software and will keep doing so until a new system is implemented. The SAP payroll module will be run in parallel with the new system for a period to ensure there are no problems, said Flanagan.

A Deloitte spokesman didn't respond to a request Friday for comment on the county's actions this week. Deloitte has been under fire of late for its role in developing allegedly faulty unemployment benefits systems in a number of US states.

SAP spokesman Andy Kendzie declined to comment, except to say SAP is "examining" whether to submit a bid to the Marin County RFP.

Marin County has some considerations to make as it moves forward, particularly with regard to its own shortcomings on the first project, said analyst Michael Krigsman, CEO of consulting firm Asuret.

"Part of the challenge with the first system was the ability of the county to absorb changes," he said. "It could make sense for the county to rethink its expectations and scale back the anticipated scope." This would cut costs, lower the amount of process changes and "make the entire project shorter and more manageable," he said.

The county also must be careful in the way it words contracts with the chosen vendors, Krigsman said. While the contract should include incentives for the systems integrator to complete work on time and within budget, it must also leave wiggle room to address any significant issues that are discovered midstream, he said.

He compared the situation to a person renovating their house. While it's desirable for the project contractor to finish the work on time, If he were to lift up floorboards and discover termites, "it only makes sense to deal with the termite problem" rather than ignore it and press forward, Krigsman said.

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

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Tags enterprise resource planningIT managementCIO rolelegalsoftwareapplicationsSAPDeloitteit strategyCivil lawsuits

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Chris Kanaracus

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