Reasons for Government ERP Failure

It’s no secret that an enterprise resource planning (ERP) implementation can be challenging. With so many factors to consider, decisions to make and employees to engage, it’s easy to see why ERP implementations can fail.

The government sector is especially wrought with hurdles. As entities seek to replace legacy and custom-developed software applications with modern ERP systems, they experience frustration as their projects end up over-budget and behind schedule. 

With so many resources at their disposal, why can’t these ventures result in measurable ERP business benefits? Today, we’re taking a closer look at the factors behind government ERP failure, along with the consequences that result.

Goals of Government ERP Implementations

Government leaders look to ERP software to achieve benefits, such as optimizing citizen service, increasing efficiency and providing greater transparency.

Public sector organizations, including state and municipal governments and agencies, must be able to clearly show the value that citizens receive in exchange for their tax dollars. This often means highlighting the conveniences that automation can afford, such as cutting DMV wait times through online vehicle registrations. 

Common Forms of Government ERP Failure

What does a government ERP failure look like? Some of the most common forms include:

• Budget overruns
• Schedule overruns
• Low benefits realization
• An unacceptable amount of operational errors and disruptions caused by the ERP system

One example of a government ERP project that encompassed all of these types of failure? The Department of Defense (DoD) ECSS project.

Initiated in 2004 as an effort to replace nearly 250 Air Force computer systems with a single, integrated ERP system, the project cost the government $1 billion during seven years of development, but the final system was determined to have no “significant military capability.”

Why is ERP Failure More Common in the Public Sector Than the Private Sector?

With so much external pressure, government leaders are often pressured to focus their budgets on modernizing their outdated IT infrastructure and systems. This often means implementing new and emerging technologies, such as real-time and predictive analytics.

With so much money dedicated to the technology itself, they often experience budget restrictions when it comes to ramping up the support and resources for the implementation. Fewer resources means less focus on success factors such as business process reengineering. In turn, a lack of process optimization can translate to low benefits realization.

Another disadvantage that the public sector has is that many ERP vendors and systems integrators tend to lowball their initial cost estimates to win government-issued RFPs. This can lead to unexpected costs and obstacles down the road.

Other government-specific challenges include:

• Ever increasing service-level demands
• The need for highly specialized functions and controls

Consequences of Government ERP Failure

When any ERP project fails, there are serious consequences. In the case of a government failure, these ramifications can be even more devastating. They include:

• Contract cancellations
• Wasted budgets
• ERP lawsuits 

If litigation occurs, hiring an ERP expert witness can prove invaluable. This knowledgeable resource can:

• Determine the feasibility of litigation
• Provide software expert witness testimony in court
• Build background reporting

To learn more about the consequences of ERP failure, check out our blog post, ERP Success and Failure Stories.

5 Common Causes of ERP Failure in the Public Sector

1. Inconsistent Software License Pricing

It can be impossible to choose an ERP vendor when software licenses aren’t priced consistently. Yet, this is routinely the case in the public sector.

This disparity can make ERP selection infinitely more challenging, leaving government leaders unsure what provider to choose for key functionality, licensing and maintenance support.

2. Fixed-price Contracts

When public sector leaders enter into a fixed-price ERP contract, they agree to pay a set amount for the implementation. The systems integrator defines which deliverables fall within its scope and which are left to government employees.

Public sector organizations then overestimate the abilities of their team and underestimate actual costs. In many cases, their employees do not have the experience or bandwidth to complete their assigned duties. In turn, this can delay the project and drain the ERP budget.

3. Inadequate Project Planning

Both public and private sector ERP implementations require robust project planning, governance and controls at every touchpoint. Without a detailed ERP project plan, government leaders can make inaccurate assumptions, such as:

• The number of resources required
• How quickly internal teams can define and validate ERP requirements
• The scope of the project
• What ERP implementation success factors are required
• The degree of configuration and/or customization required 

A realistic project plan can reduce the risk of budget overruns and help prevent scope creep by establishing a formalized change control process.

4. Under-qualified Project Resources

When public sector employees are assigned ERP-specific duties, it’s important to ensure they’re qualified to perform them. Too often, these teams lack the tools and experience necessary to fulfill their duties.

Again, this has more of a detrimental effect when leaders enter into fixed-price contracts. Systems integrators tend to underestimate the number of resources and assistance they will require from the client’s team, meanwhile inflating the percentage of the project they pledge to complete. This can lead to an understaffed project, high turnover rates and cost overruns.

5. Lack of Attention to Change Management

Readying the workforce to embrace new technology is especially important in the public sector. There are many reasons why public sector employees might be hesitant to adopt a new ERP solution, including:

• Long-standing employee tenures
• Dedication to outdated legacy systems 
• Familiarity with current business practices
• Lack of incentive to embrace the new technology 

A change management plan can prepare employees for new processes and technology, reducing the risk of major pushback or change resistance.

Successfully Navigate Your Government ERP Implementation

Government ERP failure does not have to be a given. Teaming with the right software consultants can help ensure a successful ERP implementation, regardless of the hurdles that might await.

With a strong background leading public sector ERP projects and providing expert witness testimony for failed public sector projects, we’re ready to walk you through every step of your project, from technology assessment to organizational change management. 

Request a free consultation below to learn more.