11 Jul 2012 Don’t Take Your Tank to the Mall, Mrs Worthington
Shortly before I stopped working for Government I attended a particularly dispiriting conference. The theme was “Delivering More With Less”. I went to a session on “Re-engineering Government Procurement” and listened to assorted “experts” and senior figures claimed that the thing to do was to sort out procurement processes then hand it all over to SAP and Oracle. I could have thrown myself out of a high window had we not been on the ground floor.
One speaker wondered out why things were so often going so badly in government despite their having invested in ERPs and there was a sense of bafflement when I asked if he had considered that things were going badly precisely because they were using ERPs.
Complaints about trying to do e-procurement with ERPs are not new. The failure of Ford’s eVerest project with Oracle in 2004 should have flashed red lights on everyone’s dashboard. Information on that failure was hard to come by at the time but it is believed by many that Ford accumulated costs of around $400m on the $200m budgeted project – which was canned when they went back to the Board for a further $200m to complete the work.
If a major player in the manufacturing sector, for which ERPs were designed, was having difficulties, despite significant support from the system manufacturer, why on earth should public bodies think they can do better?
For example Western Australia budgeted AU$82m for a shared services programme based around a common ERP, spent AU$440m and may end up with a total AU$1bn price tag for cancelling it. (See this report in WA Today.) The main problem there was HR/Payroll but the official report noted in passing that “the Oracle system, particularly the procurement module, can be very slow, which causes delays in completing work”.
These siren voices only rarely make it into print so I was interested that the Financial Times has also been moved to pass comment.
There are several things one could say about this but I will raise only one here: the belief that e-procurement is achievable by implementing an e-procurement module (or, for that matter, a standalone system) without first paying attention to the business fundamentals.
The first and most important question to ask is “do I have a business problem and, if so, what is it”?
The answer is a business answer, whether of cost control, management information, efficiency and effectiveness, maverick expenditure or other issues. It is only when you know what your problem(s) is/are that you can specify the solutions you require. Some or possibly even all of the solution will be to do with people and processes, behaviour, skills levels and training and nothing to do with software at all.
The successful selection of any tools to help achieve the change or lock it into place follows from that business analysis.
Unless you understand your business and your problems, how can you possibly specify what solution you want and critically assess the claims and relative merits of system vendors?
Ian Burdon can be found on twitter @IanBurdon