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L.A. government struggling with new inventory system
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May 16, 2001 (Computerworld) -- The Los Angeles Police Department would have had to write a lot of tickets to break even after it got a $750,000 invoice for new citation books that should have cost just $7,500. The culprit: incorrect data entered into a new procurement and inventory-management system that Los Angeles' city government began using in January.
And the Police Department isn't the only agency that's having problems with the $11 million system, which is based on PeopleSoft Inc.'s enterprise resource planning (ERP) applications. City officials this week confirmed that multiple departments have voiced complaints about inadequate end-user training and help desk support, resulting in billing problems, late payments to suppliers and inventory shortages.
"The [system] was meant to speed things up and save money," said Laura Chick, a member of the Los Angeles City Council and the incoming city controller. "So far, we are not reaching all the goals we have set. There's a laundry list of problems." Chick and other city officials noted that training, or a lack thereof, is the major cause of the problems.
The city is using PeopleSoft's procurement, inventory-management and accounts payable modules. The applications have "bugs like every software package, but we've [reported] them to PeopleSoft, and they've been good at turning them around," said Bob Jensen, assistant general manager of the city's General Services Department.
Jensen, who's overseeing the project for the city, wrote in a report dated May 9 that problems with PeopleSoft's inventory module "have resulted in inaccurate shelf counts" of some supplies. Manual processes for doing the counts have since been implemented, he said, adding that other bugs related to receiving and inventory-replenishment procedures were mostly resolved earlier this month.
But Jensen said this week that the software bugs aren't to blame for most of the start-up pains being felt with the new system. "The procurement problems have to do with people problems," he said. In one case, Jensen noted, employees unfamiliar with the system populated PeopleSoft tables with inaccurate data, causing glitches.
According to a memo issued last Friday by the city's Office of Administrative and Research Services, many departments indicated in detailed reports "that additional training on the new system needs to be provided" to their workers. Jensen said extensive training programs are already offered on an ongoing basis, but he added that more training is planned.
The design of the new system and many of the employees who are using it have changed since the initial training was done, Chick said. In addition, she said, some departments don't have employees who are familiar with how "to run complex technology." Illustrating that point, Chick added that the city has also had problems with an older payroll system that predates the PeopleSoft applications.
Last week's memo said the help desk staffers assigned to the inventory and procurement system are "helpful, but the demand for their assistance is greater than their availability." It also noted that payments to suppliers are being delayed because of processing problems, causing departments to lose discounts they usually receive. "Some [suppliers] have not been paid large sums of money, and it's costing the taxpayers money," Chick said.
In the case of the big bill that the Police Department received for its new citation books, Jensen said in the report he wrote last week that warehouse workers within the General Services Department incorrectly priced the books at $1,649 apiece when they entered the inventory data into the new system. The actual price should have been $16.49 per book.
The police department was credited the difference after the error was discovered, Jensen wrote, and warehouse workers "have been re-instructed on the proper procedures for entering price information." But his report listed a variety of other problems that police officials had complained about, including out-of-stock supplies and an inability to track inventory.
Jim McGlothlin, regional vice president for education and government at Pleasanton, Calif.-based PeopleSoft, said the Los Angeles project "was not an easy implementation." The rollout of the new system was a relatively extensive two-year project requiring "business process re-engineering and lots of [internal] changes" by the city, McGlothlin said.
In such cases, he added, it becomes "incumbent on the users to adhere to the new processes." Despite the bugs cited by Jensen, McGlothlin said that to his knowledge, the city hasn't encountered any major problems with the PeopleSoft software itself.
Public-sector ERP projects can be problematic because government agencies often are working on tight budgets and have to accept the lowest bids on system implementation contracts, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, Calif.
ERP vendors such as PeopleSoft and Walldorf, Germany-based SAP AG have a good reputation for the quality of their public-sector applications, Greenbaum said. But IT managers at government agencies as well as private-sector companies should be careful not to "nickel-and-dime on the implementation process," he added.
Related stories:
- Lawson users weigh application upgrade pains, gains, May 10, 2001
- SAP drops call center software deal with Clarify, April 23, 2001
- Adidas rescues e-commerce project after Pandesic shutdown, March 14, 2001
- Nike blames financial snag on supply-chain project, Feb. 27, 2001
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