Auditors: Army's huge SAP project 'at high risk'

The $2.4 billion implementation is already over time and budget, according to officials

The U.S. Army's massive SAP software project is "at high risk" of running further over time and budget, according to a recent report by the Department of Defense's Inspector General's Office.

Auditors sought to determine whether DoD and Army officials managing the project had taken the proper steps to fix problems identified in a 2008 report by the Inspector General's Office, according to the report, which was released last month.

Their actions were insufficient, auditors found. "The Army estimates it will spend $2.4 billion over the [project] life cycle; however, it still has not identified all of the requirements and costs associated with the project," the report stated. "In addition, the DoD and Army did not implement 7 of the 16 recommendations we made in our prior report."

The SAP project, which is called the General Fund Enterprise Business System (GFEBS), will manage a US$140 billion annual budget and serve nearly 80,000 users once it is complete. Some 15,500 users are now live on the system.

It has already seen delays and more than $53 million in cost overruns, according to the auditors' report. An initial "operational capability" milestone first set for August 2007 was pushed back to September 2010, it stated. A proposed December 2009 target date for "full operational capability" was moved to December of this year, it added.

There's also the chance that the system, once implemented, won't meet its original objectives, according to the auditors' report. Between June 2005 and September 2009, testing requirements more than doubled from 314 to 634.

"Complete and accurate program requirements are critical because GFEBS will interface with or replace at least 141 systems," the report said.

The system should not be deployed to additional users until the deficiencies are corrected, the auditors stated.

But comments from Army project managers who were included in the report downplayed the auditors' findings.

"The Army believes the risks identified in this report are manageable and do not materially impact the [project's] cost and schedule," said an official with the Assistant Secretary of the Army (Acquisition, Logistics, and Technology).

SAP "values its strong relationship with the United States Army, which continues to implement SAP software to enhance transparency, speed and real-time analysis in its operations," the vendor said in a statement. "Just last week, the Army deployed wave six of GFEBS to 12,000 users of the Army National Guard, and the Army is scheduled to deploy future waves of implementation." SAP declined further comment.

Accenture, which has served as a systems integrator on the project, did not immediately respond to a request for comment Friday.

Overall, the auditors' report came as little surprise to Michael Krigsman, CEO of Asuret, a consulting firm that helps organizations conduct successful implementations.

"Late, under-performing, and over-budget IT projects are a way of life in the federal government," Krigsman said via e-mail.

Wasteful IT spending persists despite efforts such as the Federal IT Dashboard and legislation like the Information Technology Investment Oversight Enhancement and Waste Prevention Act of 2009, Krigsman said.

The recent decision of federal CIO Vivek Kundra to step down "can only make things worse," Krigsman added. "Unfortunately, it's hard to be hopeful about the future of successful IT in the government."

Any large-scale ERP project presents a trove of challenges for the parties involved as old systems and ways of working are replaced. The dynamics in play can be likened to a three-legged stool, or in Krigsman's preferred parlance, the "Devil's Triangle," with the software vendor, systems integrator and customer all needing to play important roles well.

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

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