California county dumps SAP

After four years, county abandons ERP system, following a May lawsuit against Deloitte Consulting, its systems integrator.

Editor's note: This story was modified on Aug. 30, 2010, to incoporate new information. 

Officials of Marin County, California are replacing their troublesome SAP enterprise resource planning system rather than trying to fix it. The county starting working on the system four years ago, but today only 50 percent is in place and working, according to a county report.

"In order to make it happen with SAP, we would need to re-architect it, redesign it, and that would be quite expensive," said David Hill, director of the county's information services and technology department, during a meeting of the Marin County Board of Supervisors, which was webcast.

Most county department heads "agree there's a compelling reason to move off SAP or improve it, but not to stay where we were," he said, quoted in Network World.

Marin County filed a lawsuit for fraud in May against the software’s integrator, Deloitte Consulting. Deloitte “knew that it did not have the ability or intention to provide the skilled resources necessary to deliver a successful SAP implementation for the county,” according to the lawsuit.

“All the while, Deloitte continued to invoice the county, collecting more than $11 million in fees….The result of Deloitte’s misconduct was a defectively designed, deficiently installed and poorly functioning SAP system that was incapable of performing the County’s financial, HR and payroll functions. After serving as Deloitte’s SAP installation guinea pig for nearly two years, the County was saddled with a costly computer system far worse than the legacy system it was intended to replace.”

Deloitte has filed motions against Marin County's "completely unfounded allegations," as well as a complaint seeking unpaid fees, a spokesman said, according to the Network World article. The system "was working properly and could perform all the tasks consistently with the standards set forth in the written contract," according to a Deloitte court filing. "Moreover, the County did not apprise Deloitte Consulting of any problems with its services, or provide Deloitte Consulting with an opportunity to correct such problems, if any, as required by various provisions of the contract."

In its report, Marin County estimates that, over a ten year period, a new ERP system would cost $26.2 million; fixing and improving the SAP system $49.8 million; and maintaining status quo, with no fixes or upgrades, $34.7 million. No particular software package is currently in mind for the replacement.

SAP "strongly believes in the value and performance of its software in use in Marin County," said spokesman Andy Kendzie in Network World. "Our software works exactly as it should, and any issues in this implementation in no way reflect on SAP. Our software is installed and functioning perfectly in tens of thousands of public sector agencies, including dozens in California.
"We regret their decision but will work with them going forward as they deem appropriate," Kendzie said.

Many government entities have had horrendous ERP experiences, including the Health and Human Services Department, said Patrick Marshall in a June GCN story. As a result, agencies are moving away from ERPs to software as a service and multiple vendors for specific functionalities, said Michael Fauscette, group vice president for software business solutions at IDC.