"They Knew it would be Hellish"

The Los Angeles Unified School District (LAUSD) has a problem with its Business Tools for Schools (BTS) ERP implementation: the new payroll system isn’t working correctly and paychecks are wrong. This has led to an uproar, with the teacher’s union advocating that teachers boycott student meetings and filing a lawsuit against the district. Perhaps needless to say, the Union has been very vocal on this issue.

The system in question is an SAP implementation supported by Deloitte Consulting as the services provider. Deloitte’s original contract called for service fees of $55 million, out of total project estimate of $95 million.

From the LA Times on March 19, 2007:

“There’s really no good time to make a payroll change,” says Chuck Burbridge, the district’s chief financial officer, the guy upon whose lap the project landed last year when the chief information officer retired.

Critics now ask why the district couldn’t have rolled The System out more slowly, but Burbridge says running the old and new software simultaneously would have caused even more problems. And although plenty of teachers are ready to blame the software that’s causing payroll conniptions (and hence the fools who selected it), I have only to remember new editing systems introduced here at The Times to know what Burbridge means when he says: “The history of big system implementations is not a happy tale.”

The old system, at 40, was a patchwork of databases that were often out of sync, Burbridge says. Staffers, he adds, were making 20,000 adjustments by hand every month. Auditors had been clamoring to change it for more than a decade. No administrator had the stomach to do it, Burbridge says, because “they knew it would be hellish.”

From the LA Times on June 11, 2007:

The total cost of the controversial Business Tools for Schools project is expected to reach about $132 million, more than 35% higher than its expected price. The full seven-member school board must vote whether to approve the funding.

“There is a Churchill quote about when you’re marching through hell, just keep marching,” said Charles Burbridge, the district’s chief financial officer. “Well, that’s basically what we’re doing. We need to slow this down and get it right.”

About $14 million of the $46.3 million in additional costs have arisen from a series of software and hardware breakdowns and insufficient training that left school-site staff unprepared, problems that have hampered the project’s payroll component since it was launched several months ago.

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With no district employees knowledgeable enough in the complex system to make the repairs, much of the additional money is needed to pay outside consultants. The district also has had to pay overtime to employees dealing with the backlog of paycheck problems.

Hoping to avoid a repeat of the payroll debacle, Brewer said he decided to delay rolling out the final phase of the project. That portion was scheduled to launch next month and aims to revamp how purchases are made in the mammoth system.

The delay, Brewer and Burbridge said, is needed to allow enough time to properly train staff, a school-by-school effort that is expected to be completed in February.

That extra time and training will cost the district $32 million. More than a quarter of that money will go to the consulting arm of the international firm Deloitte Consulting, which has already been paid about $55 million to help the district plan and implement the three-phase project that began in 2005.

Brewer declined to discuss whether, or how much, blame rests with Deloitte, saying, “They’re still on the team, and we need to keep them on the team to help us fix this.”

This fiasco is an interesting story for a few reasons. First, there has been very little press attention, in either general newspapers or the computer trade press. In addition, there doesn’t seem to be much information available describing detailed causes of the problems. Finally, although it does seem that school district management didn’t move quickly enough to address the situation, they have fully acknowledged the issue. As a result, the district has decided to push back some rollout dates, allowing time for a less risky, more phased go-live than originally planned.

Given the lack of information, it’s hard to point fingers at a specific culprit. However, Deloitte was paid a very substantial amount to manage the project as lead consultant. And as they say, if you want to know the truth then follow the money.

UPDATE 10/15/07: For more information and the latest analysis, see this post.