The Stark Difference Between Private and Public Sector ERP Implementations

Okay, I will admit it. I was on the government payroll for almost my entire adult life. Like a dutiful parent, Uncle Sam fed me, clothed me and sent me away to far off places for years at a time. The U.S. government was good to me but since I left government service for the “real” world of serving as a multi-sector ERP consultant, I have noticed a number of huge differences in philosophy, mindset and oversight between the private and the public sectors, especially when it comes to ERP implementations.

In this equation a solution is a reasonable answer to the issue; good feelings are the benefits to the organization and the client; price is labor, materials and costs all rolled up into a single figure; and hassle is how hard the program would be to implement (e.g., how much organizational change management was required, what the risk was, etc.).

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What I have discovered while working on commercial and government ERP implementations is how different the emphasis on the four variables can be between these two sectors. Press releases and public pronouncements notwithstanding, most government agencies or departments really do not care about price other than trying to spend their entire annual budget. A Google search of government ERP projects as well as various reports by the Congressional Research Service yield program after program over budget and time. A good case in point is the U.S. Air Force’s Expeditionary Combat Support System (ECSS), a cautionary tale of a failed ERP implementation. It lingered for seven years at a cost of one billion dollars before it was cancelled in November 2012 with a negligible system in place. Before pulling the plug, the Air Force estimated it would take another billion dollars and seven more years to implement the ECSS ERP solution. In vivid contrast to the private sector, “no one was fired or reprimanded because of the program’s failure. Brigadier General Kathryn Johnson, USAF, did not believe that was necessary,” according to the Air Force Times.

The solution is also a much ignored variable as requirements creep and scope changes hobble large government programs. The Air Force kept adding requirements to ECSS, forcing a much larger scope and massive budget overruns. ECSS was the largest attempted ERP implementation and is a compelling case study of how not to conduct an ERP implementation. There was a lot of blame to be shared for all participants but the bottom line is that the taxpayers were charged a billion dollars and the Air Force did not have any semblance of an ERP solution at the end of the program. Most likely, they will ask for bids to try and do this all over again.

In the government, the two most important variables are “good feelings” and “hassle.” Good feelings, in that the program managers are providing a return to their public sector clients, even if it is not necessarily what the clients requested. Programs usually start out with the best of intentions to give the clients what they need and end up with add-ons, engineering and requirements creep as well as schedule overruns because of the constant modifications. Again, the ECSS failure is a textbook case of constantly changing requirements and pushing all the decisions and hassles onto the consultant.

The “lack of a hassle” is important to the government in that most of the rank and file will get paid whether or not the program fails. As stated in a recent Government Accounting Office report, government program managers are not always held accountable for their decisions, are reluctant to share bad news and need to communicate and collaborate more. Therefore, whatever a consultant can do to make management’s life easier and move the implementation along will be more embraced than a better solution at a lower price.

Working in the private sector was a real change of pace. The importance of the variables in the value equation could not be more different. Price was the most important followed closely by the solution. Good feelings and hassle were not that important to private firms unless they directly impacted profitability. In stark contrast to government programs, the small to large manufacturing firms I have dealt with are incredibly focused on price and how ERP software could allow them to operate more efficiently and cost-effectively. Private sector program managers scrutinized every invoice with an eye on profitability and return on investment. They needed a good solution as it would increase productivity, growth and profitability. The private sector employees were also very accountable. Unlike ECSS and the Air Force, they were rewarded for success and fired if they failed.

Scope and schedule were very important as they directly translated into dollars. Private implementations are very close to schedule and scope (as compared to their public sector peers) and it would be career-ending for any private sector employee to spend millions on a program that was years over schedule, over budget and failed to meet major milestones. (Well, except for the CEOs but that is another article.)

To sum it up, commercial and government ERP implementations each have a long laundry list of pros and cons. The wise consultant will know which levers in the value equation to pull and the different mechanisms vital to either sector that must be addressed. In short, the grass is always greener on the other side but in the end it still tastes like grass.