DOD reining in integration costs

For every dollar military officials spend buying back-office software, they spend another $15 deploying it. To reduce steep systems integration costs, Defense Department officials want the military and its agencies to consult with a select group of firms before installing enterprise resource planning (ERP) applications.

Last month, DOD awarded blanket purchase agreements under a General Services Administration schedule to Accenture, BearingPoint Inc., Computer Sciences Corp., Deloitte Consulting LLP and IBM Corp. Officials believe the BPAs will make for easier, standardized installation of software from Oracle Corp., PeopleSoft Inc. and SAP AG.

"Our goal with the BPAs is to get a handle on ERP systems integration costs, to get the 15-1 ratio down," said Jim Clausen, co-chairman of DOD's Enterprise Software Initiative Working Group. The department started the initiative in 1998 to lower the cost of hardware, software and information technology services and establish IT management processes across the military.

Back-office software projects are expensive because they merge older financial, human resources and logistics systems into one network using a new product. They also make the information available to designated users, said Harold Youra, president of Alliance Solutions LLC.

Defense Secretary Donald Rumsfeld's 3-year-old transformation effort to achieve a smaller, lighter, more lethal military force has led to departmentwide adoption of ERP hardware and software solutions.

DOD officials began crafting an approach to back-office software projects two years ago with help from top logistics officials. Those leaders met with ERP software developers and systems integrators for nearly eight months of discussions on how to demystify the process — or how to get projects finished faster while following a standardized approach, Clausen said.

In January, the Naval Inventory Control Point issued a request for quotations for departmentwide BPAs, and officials awarded the five deals in early May, Clausen said.

The BPAs, which can be found at www.don-imit.navy.mil/esi, do not obligate officials from the military services and defense agencies to use the five companies for their back-office software projects. "It's not mandated, but [it's] highly recommended," Clausen said.

The BPAs signify the Defense Department's efforts to optimize ERP budget and delivery schedules, said Craig Conway, president and chief executive officer of PeopleSoft. "Enterprise application software is no different than any other technology sector," he said. "More and more of a supplier's attention has to be spent on making it easier — easier to implement, maintain, operate, upgrade, expand — and [making it] less costly."

Matthew French contributed to this story