Auditor: Warning signs in massive, Accenture-led Oracle ERP project

Project costs have ballooned to more than US$670 million

A major Oracle PeopleSoft ERP (enterprise resource planning) software project in California led by Accenture is running well over schedule and budget, according to the state's auditor.

While it was recently decided that the project's approach should be altered to reduce risks, these changes will bump up the schedule year and rack up an additional US$56 million over the original budget of $616.8 million, auditor Elaine Howle said in a letter this week to lawmakers.

Dubbed FI$Cal (Financial Information System for California), the project is just one of a number of massive IT overhauls undertaken by the state in recent years to experience significant cost and time increases.

Last year, the state launched an effort to overhaul California's IT procurement and implementation practices, but FI$Cal's origins stem back to 2011.

FI$Cal will be implemented in five stages, with a "pre-wave" and then four main waves of development.

The is supposed to begin in July with all departments converted over by July 2017, rather than the original July 2016 date.

Under the revised project plan, the final wave will now include 68 departments, up from 45.

"The primary concern is the risk that the size of Wave 4 may be too large," Howle wrote. "Our IT expert believes that including so many departments in a single wave may overwhelm the project's resources."

Howle also singled out Accenture, saying that state staffers aren't able work directly with offshore workers on the project and that Accenture hasn't provided enough documentation of how it will configure the software.

A third-party vendor the state hired to independently oversee the project has concluded "it would be very difficult for state staff to learn, maintain, and upgrade the software at the end of the project with the limited documentation that the [Accenture] has been providing," Howle added.

Oracle and Accenture declined comment, with latter saying the state's finance office was handling all media inquiries related to the project. A spokesman for the office didn't immediately respond to a request for comment.

But a finance department spokesman told the Los Angeles Times this week that Governor Jerry Brown's next fiscal year budget accounts for the shifting schedule and costs, and that the system would be ready to take on a significant task.

"As with any large IT project, FI$Cal has and will continue to experience challenges that must be resolved," the spokesman told the paper, adding that Brown's administration is "remains committed to building the 2015-16 Governor's Budget in the FI$Cal system."

That last statement has the ring of politics, said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on why IT projects become troubled and even fail completely.

"This sounds to me like a classic case of damn the torpedoes, full steam ahead," Krigsman said.

The spokesman's statement makes a couple of assumptions, one being that it's acceptable to go over budget on IT projects, and that the demand of completing the project by a certain date makes it acceptable to downplay the practical considerations of actually getting it done right, according to Krigsman.

"The attitude evinced in that statement seems to be indicative of what's wrong with California IT projects in general," he added.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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