A £41m Oracle enterprise resource planning project, run by Deloitte and undertaken by Pennsylvania’s Liquor Control Board (PLCB’s) has been marred by inflated costs, staffing woes and operational problems, according to a damning report by the state’s auditor general.
While PLCB’s sales rose between 2008 to 2010 financial periods, net profits from store operations dropped by 47%. The audit states “problems with the Oracle ERP system appear to be one of the primary causes of this major downturn in profits”. “Unfortunately (the Oracle system) was a waste of tax payer money that failed to do what it set out to do” said Jay Ostrich, PLCB’s Director of Public Affairs.
According to the audit report: the project stems to 2007, when a contract was signed for $25.8m. By 2009, following subsequent amendments, the contract value was boosted to $66.6m. A staggering 150% increase on the initial cost! Inventory forecasting software supplied did not work, causing untold problems. Requests to fix the issues were declined and PLCB had no choice but to solve the problem itself.
Now some of the problems experienced could have been caused by PLCB itself; an organisation must be ready to accept new business processes and provide the necessary resources. However, what were its advisors, Deloitte’s, doing in helping to guide their customer? And, apparently, Oracle appears to have considered this project to be a relative success, naming PLCB one of its Retail Excellence award winners. Small wonder PLCB declined to comment.
This isn’t good news. But leakage of time and money can be stopped, and stopped quickly. The good news is that problematic major projects, such as PLCB’s ERP system, that are not achieving business objectives can be put back on track quickly and more often than not at the vendor’s cost.
By the prudent application of a recent Court judgment, where a vendor represents itself as a specialist, then they are accountable for their advice and must fix errant projects, such as software/IT projects, fast. This is even if the contract is ambiguous or tries to exclude reasonable responsibilities for the vendor to make their projects work. In other words, PLCB could have put a stop to their problems, and saved precious tax payer’s money.
- How to cut costs quickly from new and existing major projects and outsourcing agreements.
- How to prevent unexpected costs from arising; if they do, who is responsible.
- How to avoid misunderstandings over your expectations.
- How to improve service delivery performance and forge strong relationships.
- How to ensure your own behaviours don’t undermine the contract (a common problem in doubling the costs and timescales of outsourcing agreements).
- How to achieve your benefits realisation, faster.