System Failure 

Richmond finance officials compiled most of this year's budget by hand, even though the city has spent $4.5 million on software designed to make such things more efficient.

In April 2000, the city of Richmond began installing a state-of-the-art business software package that city leaders claimed would fulfill their technology needs and make local government function more efficiently. Top city officials have since touted the software's virtues to other public agencies and in the promotional materials of its computer consultant.

SAP, the software manufacturer, even flew former City Manager Isiah Turner to a users' conference in Orlando to deliver a positive PowerPoint presentation in which he described Richmond's experience as "a true story, with a happy ending."

But four years and about $4.5 million into the scheduled seven-year transition, the story is neither complete nor looking particularly happy. With Richmond now in the midst of a widely publicized financial crisis, some city leaders are now pointing fingers at SAP's wares as a costly failure. Frustrated department heads complain that the fancy new system -- originally designed to meet the needs of the business world -- doesn't work and should be upgraded or replaced. Instead of making things run more efficiently, at least two department heads say, the system has actually created extra work.

Finance director Pat Samsell, for instance, says his people have worked hundreds of extra hours preparing this year's 893-page draft budget because they were forced to do much of the work manually. All the extra prep time, he says, has limited his ability to do fiscal projections and analysis. Considering that Richmond has recently found itself grappling with a "surprise" $35 million deficit, this is a city that needs as much financial analysis as possible to prevent future surprises. The ostensibly sophisticated SAP system is "not intuitive, nor is it user-friendly," he says.

Meanwhile, planning director Barry Cromartie grouses that he can't use the system to perform "cost recovery," in which his planners bill applicants on an hourly basis for their project-related work. Cromartie says he needs to track those work hours to show his bosses on the city council that his department is generating enough money to cover his staff -- and thus protect them from layoffs amid the current budget crunch. The fed-up director created a spreadsheet last year with Microsoft Excel, using a basic consumer program to do the job rather than fuss with the troublesome, multimillion-dollar SAP system. Cromartie says he's been promised an operational billing and revenue-tracking component for two years. "As of this day, we do not have a workable system," he says.

City leaders began looking for a new software system at the height of the dot-com boom in 1999, when everyone and his grandmother was hyping this so-called systems integration software. Information technology director Sue Hartman recalls that the previous setup was so old that no one offered tech support for it anymore. After a competitive process in which Oracle and PeopleSoft also submitted proposals, Hartman says the selection committee picked SAP, with Denver-based consulting firm Solbourne to do the implementation.

In June 2002, more than a year after the new rig went live, SAP flew Turner to Orlando to give a presentation at its annual Sapphire conference. He was accompanied by Hartman, whose expenses were paid by the city. She provided Feeder with a video of Turner's 26-minute presentation, in which he described both the benefits and challenges of the SAP system. Turner boasted that the software-conversion project had come in on budget and without any political fallout. "We think thus far it's a happy ending," he told the audience. Also present, Hartman recalls, were Department of Defense representatives in the market for similar software. They later recruited Turner to give a presentation on SAP for their bosses in DC.

Turner, who retired at the end of last year, wasn't the only Richmond heavy giving the system premature kudos. Solbourne, the contractor hired to make it all work properly, listed Richmond as a "success story" in its literature, and quoted ex-finance director Anna Vega crediting the company for its contribution "to the success of this project." In July 2001, IT director Hartman bragged to a trade publication about how the then-new system empowered its users.

So what does Hartman think of it now? She defends it vigorously and insists it's a clear improvement over what the city had before. "We're functioning. We issue payroll checks, we pay vendors," she insists. "This is not a failed system." She knows there have been complaints from city staff, but says that happens with any major systems change, as people get accustomed to the new technology.

Another municipality still getting used to its new SAP software is the city of Tacoma, Washington. A couple years ago, Tacoma officials came to Richmond and received a presentation on the system from Hartman and others. They must have liked what they heard -- Tacoma has since spent $50 million for its own SAP system, assistant finance director Joe Delaney says. It went online eight months ago and the bugs are still being worked out. "It was a difficult transition due to the complexity of the system," he says.

Miffed Richmond leaders say a key reason for their problems is that the software the city bought was first designed for the corporate world. At the time of the sale, SAP had only recently gotten into the public sector, so programmers and consultants had to rejigger the product to make it work in a government setting. Finance chief Samsell says a midsize city like Richmond (pop. 100,000) could have bought a cheaper and more effective system from a smaller firm that specialized in government software. Over the next few months, Samsell says, he will shop around to see whether it would be cheaper to buy a new system or upgrade to SAP's new government-specific software.

Meanwhile, the city council has directed Everett Jenkins, the acting city attorney, to explore the possibility of a lawsuit against SAP and the implementation consultants who sold them a system tailored for the wrong market. "The question is," Councilman Gary Bell says, "were we used as guinea pigs?"

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