UN to embark on US$300 million ERP mega-project

A complete overhaul of the organisation's systems is in the pipeline

The United Nations has been in the news recently, with the UN Summit on Climate Change making the headlines. However, less well known is that the organisation is embarking on a huge project to overhaul its ERP systems. An early-stage planning document for the UN's ongoing global ERP project calls for a budget north of US$300 million and provides a detailed look at the challenges the project must overcome.

Dubbed "Umoja", after a Swahili word meaning unity, the project "presents a once-in-a-generation opportunity to equip the organisation with twenty-first century techniques, tools, training and technology," the document states.

The UN's IT infrastructure is a staggering tangle of disconnected, redundant and antiquated legacy infrastructure, resulting in gross inefficiencies throughout the organisation, according to the document.

Over the years, the organisation has collected "at least" 1400 information systems, many of which are "used to support or track paper-based processes," states the report.

For example, the equivalent of up to 40 full-time employees is currently being used to process interoffice and interagency vouchers, and the total time spent each year processing travel claims "is more than the full-time equivalent of 60 person-years," the report says.

IT operations are also heavily siloed the report states: "Most duty stations, and many organisational units within duty stations, contain their own stand-alone finance, human resources, supply chain, central support services and information technology areas."

If the ERP implementation is successful, it could provide between roughly $470 million and $770 million in "ongoing annual capacity improvements, costs savings and cost recovery", the document suggests.

But the project has a sizable price tag of its own. The report proposes a budget of $337 million, which is divvied up among a series of line items, including:

* $76 million for "2597 work months" of system build and implementation services.

* $14 million for travel, which presumes 1285 trips will be taken by "ERP team members, subject-matter experts and corporate consultants" at an average air ticket cost of $6000. Each trip will also get $202 for "terminal expenses" and $5000 for 20 days worth of per diems, for a total cost of about $11,000 per trip.

* $1.8 million for office furnishings to support 234 workers, including 80 core staff, 66 subject matter experts, eight consultants and 80 system integrators, or about $7700 per person.

* $6.7 million for office rental, based on an annual rate of $14,300 per person

* $564,200 for long distance telephone calls, teleconferencing and videoconferencing

* $18 million for hiring "limited replacements" for subject matter experts involved in the project

* $16 million for software licences and maintenance fees

Also, news report indicate the project had originally been budgeted at $286.6 million.

The draft report has since been updated and the numbers in it have changed, says UN spokesman Farhan Haq. He could not say whether the project's scale had shifted significantly or confirm the budget figure cited by the media.

Haq declined to comment further, but says the UN would discuss the project in greater detail once the report is finalised.

What is clear is that the project remains at an extremely early stage. An initial design phase began in May and is scheduled to last between nine and 12 months, according to the document.

In addition, the UN has yet to finalise a contract with its chosen vendor, SAP, and won't solicit bids for the integration work until the last quarter of this year.

Despite the project's staggering scale, the UN could recoup its investment within two years of "full deployment and stabilisation," the report states.

In the UN's case, a slow pace may well be for the best, says Ray Wang, a partner with the analyst firm Altimeter Group.

While every global ERP rollout is difficult, the UN is in a special situation given its international makeup and set of missions, such as managing military peacekeeping forces and responding to emergencies, he says.

"You are trying to push a system out to people with different cultures, habits, levels of [connectivity]. It requires a lot of change management, a lot of face-to-face sessions for a project of this type to succeed. This isn't a standard business case. This isn't your standard ERP system," Wang says.

The UN report echoes the sentiment: "The enormous change in the human skills, working methods, procedures and technology required to fully realise the benefits of Umoja requires a strong commitment from staff at all levels."

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