An ERP implementation project for the city of Santa Fe, N.M., ran into difficulties and was put on "pause." It...
needed a new plan to move it forward. This was the decision: To keep the project on track and compensate workers for their extra effort, the city approved a temporary pay increase of 10% to 15% for the project's workers.
This plan put Santa Fe Mayor Alan Webber on the spot.
There were questions about the pay hike process and the need for incentive pay. The local newspaper was critical. The temporary pay budget was about $400,000. The ERP project is costing about $4.2 million.
An ERP implementation project is a challenge for private and public sector organizations. Cost overruns, project delays and lawsuits are common. Santa Fe's project faced "serious staffing and workload challenges," hence the pause, according to a city report on the project.
Santa Fe saw three options for fixing its project. It could outsource the ERP implementation project to consultants. It could hire temporary employees to help with the day-to-day work and free up the staff for the ERP work. Or it could approve temporary pay increases for city workers involved in the project.
It "seems like [Santa Fe] had no good options," said Jim Johnson, chair of the Standish Group, a research organization that studies software projects.
Novel and interesting approach
Johnson said that outsourcing the work to consultants "rarely, if ever, works out and costs much more." But he likes Santa Fe's incentive pay decision. "It is a very novel and interesting approach," he said.
The temporary pay increase "leaves the employees in place and gives them experienced people and some incentive," Johnson said. His "only caution would be not to drive them too hard; otherwise, they could get burnout and make mistakes."
Santa Fe is modernizing its paper-based operation with this ERP implementation project.
"We are still operating in the old world of paper and pencils, while the rest of the world has moved on to software and information technology," Webber said in a report released last week defending the project.
The city is installing a Kronos time and attendance system. It is using Tyler Technologies for financials, HR and payroll, and fleet and asset management, among other functions. The total annual subscription cost is about $1 million.
But too much work for in-house staff
Jonathan Gross, managing director of Pemeco Consulting, an ERP project management firm, believes the city is piling too much work on its in-house staff.
Based on the material the city made available, Gross gave the mayor a passing grade for addressing the executive sponsorship, communications and change management issues. But he did not for the "core team commitment issue," meaning how this plan affects those city workers directly involved in the project.
Jonathan GrossManaging director, Pemeco Consulting
"The hard part will be to design, implement and test the new systems and processes," Gross said. "The even harder part will be getting end users to change their work behaviors and adopt the new processes."
Where the "wheels start to fall off," Gross said, revolves around the team's commitment to the project. Based on industry best practices, an ERP project typically requires from 50% to 75% of the core team's time, he said.
"The practical implication is that, for the project to be successful, the core team members, including functional leads and subject matter experts, will have to effectively work 12- to 14-hour days to cover their daily work and project duties. How will these people not burn out?" Gross said.
Gross argued that the city could have addressed the personnel needs by "backfilling." That could mean hiring extra staff, cross-training other staff or a combination of the two.
"The city focused on performance-driving incentives without first assuring that its key people have sufficient time to work on the project," Gross said.
Plan made people angry for different reasons
Unlike a private sector ERP implementation project, Santa Fe had to deal with the public's questions about its pay decision.
"Rarely has one decision made so many people angry for so many different reasons," Webber said in the report he issued last week.
That included the employees who got the raises. They "were angry that they read their names in the newspaper in a negative light -- after having done nothing wrong," Webber said. And then, there were the employees who didn't get raises who had questions, the mayor noted.
Webber said city officials believed that the temporary pay increase was the right project management decision.
"The decision to use temporary pay increases was based more on the assessment that it would make more managerial sense to have the work done by the people who would be using the system," Webber said in an email. That was better than "having the implementation done by outside contractors and then expecting the city employees to be competent with and committed to the system once it was turned over to them."