Having been involved in many project recoveries and expert witness work around the globe, Panorama has found one common theme: a flawed RFP process that rewards lowest bidders with same old failed methodologies and lack of accountability.
With the increased ERP implementation failures and public scrutiny, one must wonder what is wrong with the system. Research shows that 78% of public sector ERP implementations are over budget and over schedule and 35% simply fail! Reporters covering high-profile ERP implementation failures across the U.S. have asked us about this trend and we normally point to three common themes when evaluating what went wrong:
- Flawed RFP process
- Lack of ERP implementation experience and change management experience in the public sector
- Lack of accountability
The RFP process not only rewards the lowest bidder but also hinders innovative thinking. The vendor chosen normally is forced to cut corners in multiple ways:
- Uses old templates from past projects and calls them “best practice” models.
- Uses their “G” team – often referred as to the “government team” or the cheapest resources in the company – or hires retired government employees for the project teams.
- Moves important tasks to non-qualified subs in order to meet certain RFP requirements.
Congratulations! You have just instructed your vendor to put the D-Squad together for your multi-million dollar ERP project because the only way the contract could be awarded is by delivering a cheap product and we all know that you get what you pay for. The project team is not qualified to deliver these projects to specs on time and under budget. Because they are inexperienced, they end up submitting multiple change orders just to fix what they got wrong in the first place and the project then is delayed and over budget. The agency does not want to bring the failure to light because of public outrage. Have you heard of Healthcare.gov? The bid was won in 2011 for $93M, the project ended up costing over $600M and the darn thing still does not work! Who let this happen? Who is held accountable?
Another reason for ERP failure in the public sector is that nobody (at least nobody who is qualified to oversee a multi-million dollar ERP implementation) manages the vendor and the project with the contract and project plan in hand. With proper management oversight and quality assurance measures, these projects would never go over budget but oftentimes there is not enough budget for quality assurance and project oversight tasks.
These failure points illustrate why projects fail but the root cause goes far beyond this. Innovation is the only way to truly achieve ERP success and increase return on citizenship (ROC). This is essential for keeping up with the times and the current citizen demand from a socioeconomic standpoint.
Hiring ERP consultants who use an innovative methodology ensures that your ERP implementation is properly managed and your government agency achieves a high ROC. We have been fortunate enough to work with valiant leaders that recognize that this effort is a collaborative effort between vendor and government, with the common goal of serving citizens. Innovative leaders need to get out of the vicious cycle of using the same vendors who keep relying on the same failed implementation methodologies. I laugh when I hear the term “best practices” because such practices have a 78% failure rate, which by pure statistical definition, would actually be considered “worst practices.” So, in essence, the public sector continuously hires the same consulting firms who use stale methodologies and old templates from past failed ERP implementation engagements.
Return on citizenship and innovation in government is truly intertwined and if you want to increase the social return on investment, you have to change the game.
If you’re ready to change the game, be sure to register for our 2014 ERP Boot Camp and Vendor Showdown, designed to help your government organization serve citizens and make a positive socioeconomic impact.
Follow us on Twitter and Facebook for Part II and Part III and enter your comments on how we can promote innovative thinking and transform government! Our ROC Awards will be coming soon to recognize innovative leaders in the public sector.