‘Scope change’ increases Waitakere’s SAP costs

Waitakere builds its own templates, rather than using those already built by Auckland Regional Council

The cost of an SAP project at Waitakere City Council has grown from an initial estimate of $1.6 million to $2.47 million, an increase of $869,000, after changes to the project’s scope and timeline.

Scope changes to the project, which will see the council’s ageing GEMs software replaced, have been significant and include changes to the human resources component. This requires Waitakere to build its own templates, rather than using those already built by Auckland Regional Council (ARC).

“After the evaluation of the templates used by the Auckland Regional Council, it was discovered that their system would not be suitable for Waitakere’s requirements due to the variability of contractual terms and conditions for employees being higher than originally anticipated,” a June report to council says.

The project now includes HR and payroll and this, in turn, includes employee self-service and improved leave-processing.

Changes have also been made to the business-planning simulation system specifications, again moving away from using those developed by the ARC. New asset classes will also be included in the general ledger and purchase ordering changes are also under way.

The council’s manager of information management, John Johnson, says a significant high-level scoping exercise covering the processes, taking into account various scenarios, was undertaken for the tender process.

“In addition, council and the vendors worked closely together to understand the requirements and some of the obstacles that may be faced with such a significant system change to the organisation. All this took place before the vendors submitted their proposals.

“The intention was always to fully develop the detailed scope of the project with a controlled scope-change process, and budget was allowed for this to be done,” he says.

Johnson says the first phase of council’s SAP implementation successfully went live on August 1, including the financials, accounts payable and purchasing modules. This was in addition to the infrastructure model, which includes the enterprise core component, web portal and business intelligence solutions. Projects and contracts functionality was added on August 6.

“All the modules have been well received and, considering the size, complexity and the scale of change to the organisation, the implementation has gone very well, but we are going to have a reasonable period of time to bed down the system,” he says.

“The investment in the training and change management certainly contributed to the successful implementation.”

The implementation team is not asking council for any further funding for the project. Instead, it proposes reprioritisation of the council’s 10-year information management capital expenditure budget of $62.4 million.

“This budget was based on the projections to replace and upgrade current systems such as Pathways, GEMs financial system, digitisation projects, asset management systems, electronic document and management system, etcetera, and the replacement and upgrading of the information-management technical infrastructure,” the council report says.

An earlier report to council, from late 2006, reveals how close the original system evaluations were that led to SAP winning the deal. Three tender respondents were considered, two of them offering SAP, one with Fujitsu as implementation partner and the other with Deloitte. The other contender was Australian software-maker Technology One, which has a large footprint in local government in Australasia.

Technology One and the SAP/Deloitte partnership both scored 64 out of 90 in a non-price evaluation, while the SAP/Fujitsu partnership scored 51. Technology One was the cheaper option, both up-front and ongoing, but failed to win the deal as the council felt SAP offered organisation-wide benefits and was ready to deliver modules that Technology One was still developing.

In choosing SAP, Waitakere would also be able to share expertise with both the Auckland Regional and Auckland City councils. Waitakere is also upgrading its Hewlett-Packard hardware. Datacom won this part of the deal, valued at $567,774.

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