Auckland Supercity’s new ERP system, delivered by SAP and a consortium of consultants, is too expensive and likely to run over budget, say well-placed IT sources.
According to the Auckland Transition Agency’s (ATA) background paper on major ICT projects, full roll-out of the Supercity ERP system is planned to be completed in August 2011 at a total cost of $62.3 million.
But sources within the council peg the price tag at $70 million and growing. They claim that a large chunk of the cost is due to extensive use of consultants, as the council is building the system from scratch instead of copying what is already operating at some of the local councils.
The sources requested anonymity, for fear that they could lose their jobs when the eight existing councils are merged into one new Supercity structure following elections next month.
“[The council] decided to get consultants in and build the SAP system from the ground up, ignoring all the existing systems and not leveraging any of that investment at all,” says one source. “The $70 million is a bill for Auckland’s rate payers.”
Mike Foley, leader of the business process and systems work stream for ATA, and the appointed IS manager for the new Auckland Supercity, says total cost will still be $62.3 million. Computerworld asked for a breakdown of the costs to understand how much is going to SAP, what the costs of consultants are and what other costs are involved, but Foley did not respond to those questions.
In comparison, the Auckland Regional Transport Authority (ARTA) recently built a SAP system for the Auckland Transport Agency, which cost around $2 million to roll out, say sources. Computerworld understands that this system was built by copying systems used at the Auckland Regional Council and ARTA, however ARTA wouldn’t confirm the implementation method or the cost involved, but referred Computerworld to Foley.
Foley says the ARTA SAP system will eventually cost less than $10 million and that implementation took around three months, from planning to functional migration.
So what are the main differences between the two systems, besides the $50 million-plus difference in price?
“In comparison to the system needed for Auckland Council, the level of complexity is significantly lower with a smaller user base to be deployed to,’ says Foley.
In addition, the Auckland Council’s SAP project had to “go through a full ERP implementation life-cycle. This is to create a solution that reflects the requirements of all stakeholders.
“There was no existing single solution in place that could be wholly ‘copied’ in the way that the team at Transport has been able to do.”
He says that the council solution is “highly complex” and requires “significantly more interfaces in place. In addition, the user population at Auckland Council is significantly greater and so the extent of training, payroll testing etc is much greater.”
The user population at the Auckland Supercity will be around 7000 users, at ARTA it is 1000.
Computerworld asked Foley what rate payers will get out of the $60 million-plus system.
He says that over time, by reducing the need to manage multiple solutions, infrastructures and databases, the system will help reduce support costs.
“From a business operations perspective, utilising a single solution will enable the council to deploy standard process across the business for such things as procurement, human capital management.”
The system will also give the council the capability to review its supplier base and to start rationalising and renegotiating contract rates, says Foley.
It will support core procurement, finance, project and revenue accounting, HR and payroll, he says. The Auckland council system will also cover asset management and plant maintenance.
As previously reported in Computerworld, a consortium consisting of SAP, Deloitte, Hewlett Packard and Soltius won the contract to deliver the ERP solution following a limited tender process.
Meanwhile, the Supercity's mobile telecommunications contract, signed with Gen-i earlier this year, is rumoured to be being renegotiated, with the ATA considering a rival bid from Vodafone. If the contract does go to Vodafone, Gen-i will be entitled to up to $2 million in penalty payments from the ATA.