The U.S. Air Force has finally made the long anticipated decision to completely scrap a major ERP software project after spending more than $1B over the last seven years. When Oracle won the contract in 2005, securing the deal over rivals such as SAP, the price tag was $88.5M.
The project was intended to replace 240 systems with one fully-integrated ERP solution. After three restructurings of the project in the last three years, systems integrator, CSC, was terminated in March, according to Defense World.
Dubbed the Expeditionary Combat Support System (ECSS), the project is estimated to require an additional $1.1B for even a quarter of the original scope to continue and fielding results would not be available until 2020. The Air Force deemed this timeline unacceptable and decided the ECSS is no longer a viable option for meeting the FY17 Financial Improvement and Audit Readiness (FIAR) statutory requirement. Instead, the Air Force will use its “existing and modified Logistics systems for 2017 Audit Compliance”, an Air Force spokesman said in an email statement in mid-November.
Why, you might ask, didn’t the U.S. Air Force leadership take action to keep ECSS from turning into a billion dollar debacle? The reasons are explained well in the 2011 Institute for Defense Analysis Report. The report explains why Department of Defense (Dod) ERP projects are routinely “over budget, behind schedule, and have not met performance expectations.”
The Institute for Defense Analyses (IDA) states that on these projects, “Program managers are unable to deliver a completely factual version of their status to leadership if it contains any element that could be considered significantly negative. To do so is perceived as weakness in execution even though the root causes may be out of the control of the program manager. Program managers fear that an honest delivery of program status will result in cancellation. As a result of this, leadership is unable to be effective in removing obstacles to program success.”
Put another way, nobody in the DoD leadership chain wants to hear bad news. The IDA report further noted that bringing up bad news required “courage,” which apparently is in short supply in DoD ERP projects. This is a systemic organizational change management problem that all organizations have to face on some level and the United States military is not immune.
From the highest ranks, permeates a culture that promotes selective truth telling and a shell game of information instead of a transparent chain of command that enables issues and risks to reach the right ears. Important issues should be communicated to a single accountable leader who has the span of control to define, implement and executive the end-to-end business processes that the IT investment intended to support. In the case of the Air Force, it is apparent that there was no “executive buy-in” at the highest ranks which bestowed that power onto a single accountable leader.
It always starts at the top, and the top of the Air Force failed in the most epic fashion. This, unfortunately, is true in many government organizations that Panorama has engaged with over the years. In many cases, an executive ERP Boot Camp is the first step in the education process which eventually promotes buy-in at the highest level. Only then can an organization, public or private, create a structure and culture for a successful ERP implementation.
Written by Jason Henritze-Hoye, Senior ERP Consultant at Panorama Consulting Solutions.