Tacoma weathers ERP and CRM 'perfect storm'

Cost overruns and other glitches have plagued its $50M software rollout

Cost overruns, glitches and other bumps hit during a $50 million-plus rollout of SAP AG's ERP, CRM and other business applications in the city of Tacoma, Wash., have generated a storm of end-user complaints, bad press and even led a City Council member to call for an independent audit to determine the causes of the problems.

While a number of Tacoma administrators believe that the year-old implementation of SAP R/3 has been an overall success, they acknowledge that the system's payroll, billing, budgeting and customer service performance has proved a thorny problem. Moreover, the city has had to pay nearly $700,000 in customization work to the integrator, TUI Consulting Inc.

"They threw the switch at one time and a lot failures happened," said a Tacoma city spokesman. End users dealing with the learning curve of the new system initially complained, he said.

Of late, the most pressing issues have been around the budget module, which delayed hammering out the city's fiscal numbers, as well as performance problems in the CRM software that supports the city's five utilities.

The situation has become so prominent that late last month City Council member Julie Anderson in a resolution called for an audit.

"The city of Tacoma is experiencing unanticipated costs in operating the system, and there are significant gaps between our expectations for functionality and how the SAP system currently operates," Anderson said in an e-mail. "As an elected official, I am unable to determine if these issues are due to SAP software, management of city of Tacoma employees or poor consulting services from TUI."

"Technically, 99% of the system is working fine," said Mark Crisson, CEO for the Tacoma Public Utilities. The issues have tended to be mostly as a result of the new processes and formats that SAP supports. For instance, some of the bills the CRM application generated for customers were different from the prior ones they had received and were difficult to understand. That resulted in a flood of service requests, he said, requiring extra staff to handle the spikes in calls. The city also paid $270,000 to TUI to make modifications.

While Tacoma now has a much-desired work management system to help support job order fulfillment, service reps working with utilities customers have to flip through five different screens. Last month, the city authorized TUI to do some extra work, including collapsing the customer data into a single screen, at the cost of $405,000. Crisson acknowledged that the price tag was "not trivial."

Other issues have been resolved. For instance, the payroll application issued inaccurate checks, but that had to do with manual errors, according to IT personnel, and has not recurred. More significant are the problems around the budget module, which was installed on the fly and has led to delays in creating a city budget.

The difficulties of switching to the new system, combined with a $30 million budget shortfall, resulted in a "perfect storm," said David Otto, director of business information systems for the city. Even so, Tacoma was able to meet the preliminary budget deadline of Oct. 31, and plans to have its final numbers crafted by year's end. He said his department will do an "extensive debrief" on the budgeting process to avoid repeating the same mistakes.

"The city of Tacoma violated one of the key rules of a big ERP implementation," said Joshua Greenbaum, an analyst at Berkeley, Calif.-based Enterprise Applications Consulting. "They tried to do too much too fast."

Additionally, Tacoma "didn't hold the integrator's feet to the fire on the nondelivery of functions," he said.

SAP has no worries about an audit, said spokesman William Wohl. He noted that R/3 has enabled Tacoma to establish common practices and become more efficient. "The software is helping transform city government in a way not otherwise done with its legacy systems," he said. "At the end of the day, the customer has said the software tools are an asset."

Copyright © 2004 IDG Communications, Inc.

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