The key to ERP success

Federal Prison Industries Inc. will lock up its aging distributed financial

management system May 30 and fire up a new enterprise resource planning

system. No matter what. No contingency plan.

That's the type of decisiveness federal agencies must exercise if they

want ERP to work, said Thomas Phalen, chief information officer at Federal

Prison Industries, a $600 million-a-year self-supporting unit of the Justice

Department's Federal Bureau of Prisons. Federal Prison Industries, also

called Unicor, employs more than 20,000 inmates at 105 factories, turning

out metals, furniture, textiles, electronics and graphics services to other

government agencies.

Unicor is one of several federal, state and local agencies implementing

commercial ERP solutions to better account for their budgets, assets, spending,

selling, personnel and planning.

Phalen said he is aware of ERP implementation pitfalls: It's not cheap,

it takes a long time, and it can't be done without strong management. Agencies

that focus solely on the technology might fail to rally the troops and train

them to use the new system, he said.

"You have to win people over from the beginning," Phalen said. "You

have to put someone in charge and give them authority to make the call."

Unicor is implementing an unmodified, commercial off-the-shelf (COTS)

version of SAP Public Sector and Education Inc.'s R/3 software. Unicor will

be the first SAP customer to use the newest R/3 release, which came out

in January. The system will centralize the data used for all aspects of

Unicor's business.

The whole program is budgeted for $11 million, but Phalen said costs

have reached $12 million. Such overruns are not unusual. Industry research

shows that at least half of all ERP initiatives are delivered 200 percent

over budget, said Scott Luellen, chairman of The Carpe Diem Group Inc.,

an IT consulting firm. Luellen spoke at the ERP for Government conference,

sponsored by the Government Performance and Results Act Institute, Feb.

29 in Alexandria, Va.

With the technicalities of transferring data to a new integrated system

and the cultural difficulties of preparing workers to use the system, most

of the time ERP is only a marginal success, Luellen said. The root causes:

ignorance and cognitive dissonance (an unwillingness to accept fact because

it conflicts with opinion), he explained.

But Phalen refuses to allow failure. He offered three keys to successful

implementation of ERP:

n Have strong leadership and project management. Unicor put a steering

committee in charge, led by the chief executive officer, chief financial

officer, CIO and other high-level officials.

n Train users intensively. Phalen set aside $750,000 for travel and

training. Training is being held in five classrooms at a training center

at the Dallas-Fort Worth airport.

n Use a commercial ERP solution in its purest form. "If you modify it,

you are in trouble," Phalen said. "You won't be able to do the seamless

upgrade." Unicor will adapt its business practices to the fit the COTS system.

Most problems occur when the scope of a project changes during development

and the contractor is asked to modify the original requirements, said Patrick

Smith, executive director of the General Services Administration's Financial

Management Systems Services Center.

Most of the problems in implementing any IT project are management issues,

said Sandra Borden, deputy project manager for Coast Guard Vessel Traffic

Services acquisition and a member of the Office of Management and Budget's

IT Resource Board, which reviews IT projects at federal agencies.

"Good projects have engineering discipline used throughout the life

cycle of the project," Borden said. "Technology is not the issue. It's the

people."