The Mayor's Office is taking issue with my characterization of the Wild ERP project on TV the other day. During the broadcast discussion, I suggested that the 40 or so city employees working on the project full time as it is being delayed were costing the city money "in addition" to the $36 million budgeted for the project.
Actually, a portion of that $36 million budget for the project is supposed to account for the 40 city and Data Processing Corp. employees working on it full time.
Rachel Laing, a spokewoman for the mayor, wrote me this (my emphasis added):
The time of the city staff dedicated to the project is, in fact, being charged to the $36 million project fund. They are not "in addition to" the $36 million cost of software and consultants. Their work is part of the project budget. Every hour worked counts against the project budget. It's not a separate cost growing on top of an already-spent/earmarked $36 million. If the costs of the additional staff time grow such that it can't be contained within the $36 million project budget, then we will have to go before council to ask for an increased project budget.
Key word there is "if." I think we're beyond if. The project's finish date has been delayed now by at least eight months and possibly up to a year. And, the city has now been forced to hire SAP, with a no-bid contract to finish the work of the much cheaper firm, Axon.
So let's be clear, the budget of the project -- roughly equal to the entire cost of operating the city's library system -- does include costs for the city employees working full time on the effort. However, it was supposed to be done in October. Unless these people agree to work for free, making them work for several more months means they will have to be paid with money not budgeted.
City staff acknowledges this. In the FYI memo to the City Council announcing that they're doing the no-bid contract, (remember, they just communicate with the council as a courtesy, everything is run through the supposedly independent Data Processing Corp.) city officials say they're going to have to pay for the delay (my emphasis added).
On a total project basis, the primary pressure on the total project cost has been City employee staffing costs which are anticipated to be higher as a result of schedule changes.
So perhaps they should start talking about "when" the project costs exceed the budget rather than "if" they do.
And, finally, our news partner, NBC 7/39, got the mayor on the record directly:
Scott: I attended the DPC board meeting that discussed the ERP implementation last week. I strongly believe that this city--wide IT upgrade is perhaps the most important project the city has embarked on and will improve customer service substantially, pay for itself rapidly and make financial fraud much more difficult. The city has shown poor judgement by reserving all decision making about ERP to itself even though it doesn't have the technical knowhow. The city chose the software, the platform and the implementation contractor, Axon, and to replace Axon with the much more expensive SAP, the company that created the software. DPC, wrongly in my view, has been reduced to a contractor that oversees the various contracts with the outside companies. To be absolutely clear, if this upgrade fails it is city staff who will be responsible and the public should demand answers.
The only way this project can pay for itself is if the city continues to waste money on IT at the same enormous rate it has since the establishment of the DPC. Granted, the city's chaotic IT system is disorganized and semi-obsolete. But pie-in-the-sky proposals for data processing "modernization" are almost always money sinks. The place where we agree is that upper level decision-making on matters of IT are encumbered by ignorance.
Josil: I understand your point that IT upgrades can be a money sink. But it is essential to upgrade the city system, hopefully efficiently. I disagree with your comment about DPC since I have been following the Corporation ever since David Gotfredson of Channel 8 and I exposed the excesses of the Talamantez era. Previous to that my wife worked at DPC as an IT analyst so I know the history of the corporation very well. I am not confident that the IT upgrade will be implemented efficiently because the SAP contract has no penalties for nonperformance. In addition, the city is ill-equipped to manage the implementation as previously discussed. Then there will be the resistance to change by the Departments as this column has already commented on. This requires leadership from the highest levels (try mayor) if it is going to get done properly.
First time commenter. How much has the project cost so far? How much will it cost if it is completed within the timeframe now being proposed? How much have other cities spent on their comparable projects? How long did those projects take? How much will this project save each year? How long will the new system last? What do you mean by roughly equal to the cost of operating the library system? I assume you mean the original total budget of this project is roughly equivalent to the cost of operating the library system for one year. Why don't you compare this project with another one-time project instead of a recurring cost? Thanks, HA.
Earth to HA: OK, let's talk about recurring costs; just review the city annual budget. It shows two IT organizations, DPC and the city's "Chief Information Officer". Each of these organizations has an annual budget of over $40 mil. The budget to run the entire library systems is about $37 mil, OK? When do these costs decrease? Another good question. Don't expect it to happen when and if the ERP projet is finished. After all, DPC has been "providing state of the art technology " for over 20 years now, and it hasn't shrunk. Look at CCDC. You'd think their mission waould b about complete after over 30 years of "redevelopment". Nah, they got a $17 mil INCREASE over last year. If you want to know why your streets are falling apart, I just told you.
Axon - what a great example of outsourcing!! So much for the City's competence at managing contracts. Can you say Kroll, can you say Prudential? The City has a proven track record of total incompetence when it comes to managing the contracts of outside service providers. Gee, I can't wait to outsource more City services - oh, wait - what a great vehicle to raise taxes and line the pockets of corporate America, right Carl?
Watch out Scott, I think you have just noticed that Mayor Sanders is very thinned skinned and does not like detractors. I agree that the City IT system needs an upgrade but they need to hire competent contractors if they continue their outsourcing agenda, these contractors need to be capable of doing the job from the beginning or write a contract that will make the failing(incompetent) contractor responsible for cost overruns and not the Taxpayers.
For someone that does IT Procurement in the private sector, this article is flat out embarrassing. Whomever managed this project did a horrible job. I am still trying to understand why this was earmarked for so much money to begin with. It does not cost that much money to implement an ERP system. For that kind of money, they could have afforded SAP or Oracle many times over. What sickens me even more is not the PM was so bad, but the contract management was even worse! A contract this valuable regardless of (company/organizatio size should have some serious oversight. Procurement in the private sector is similar in many ways to the public sector. The public just has more stringent rules to abide by because everything contracts need to be made public. Why was SAP no-bidded? Very fishy!
Users may post more than one comment, but should not pose as multiple users. Multiple posts from the same IP address but with a different user name on each will be reviewed to determine whether abuse has occurred.
Posts with overly personal attacks or unsubstantiated allegations may be edited or deleted.
Please be patient with the posts -- there may be a delay before they appear on the site -- and make sure to enter the code in the "image verification" box.
Post a comment
Scott Lewis on Politics
The Scott Lewis on Politics blog, abbreviated cleverly as SLOP, is a collection of observations, insights and the occasional scoop on public affairs in San Diego. Please feel free to e-mail Scott at scott.lewis@voiceofsandiego.org.
Listen to voiceofsandiego.org's radio program on AM 600 KOGO: Latest Episode (October 18): Andrew Donohue and Scott Lewis talk in depth about the Chargers stadium search, municipal bankruptcy and whether residents are too dumb to vote on the City Hall project.
PRINT 
E-MAIL STORY
SHARE
FACEBOOK
REDDIT
NEWSVINE
DIGG
DEL.ICIO.US
BLINKLIST
Don't want to miss a story? Want to be the first to know about breaking news? Sign up now.