Auditor: Big Aussie SAP project behind schedule, over budget

A major SAP ERP (enterprise resource planning) software project being conducted by the New South Wales Department of Education and Communities has hit a rocky patch, with projected costs for the first phase ballooning from $153 million to $210 million, according to a new report by the Australian state's auditor.

"I am concerned that another large government IT project is failing to deliver, is over budget and is behind schedule," Auditor-General Peter Achterstraat said in a statement.

However, it is expected that the second phase will cost the schools organization A$176 million, down from A$218 million, the report stated.

SAP financials were implemented in the system's state and regional offices in March 2010, several months after the original target date of November 2009, according to the report.

That element of the project "did not provide all expected benefits to the business," the report said. Users were forced to create "some manual workarounds, which resulted in lost time and additional effort and costs, not included in the original business case."

Users also had trouble getting the information they needed from the financials system and the shared services center didn't have the skills needed to provide support, it added.

SAP financials were installed at the New South Wales Technical and Further Education Commission (TAFE) in October 2010, also slipping the original target by some months, according to the report.

The department's schools were supposed to have financials running by late last year. Those systems have been built but not deployed, the report stated.

Phase two of the project was to see SAP human resources and payroll implemented at the schools as well as state and regional offices by the middle of this year, but at this stage, only pilot projects are being targeted for late 2012, it added.

The second phase is also scheduled to include student administration systems, with the original plan calling for implementation at the schools in late 2012 and at TAFE in mid-2013. Both are now scheduled for pilots toward the end of 2012, according to the report.

Officials reviewed the project this year "to ensure it was a solution that met current and future business requirements," it states. "As a result, the implementation dates for the majority of components were realigned to provide an integrated solution ... rather than separate implementations for finance, human resources and student administration and learning management."

An SAP spokesman couldn't immediately provide comment on Wednesday.

However, the success and failure of ERP projects depends on how well not only vendors but also customers and systems integrators play their respective roles as the often complex systems are put in place. It wasn't immediately clear on Wednesday whether the New South Wales project is using SAP staffers or third-party consulting services.

The effort may have also suffered due to turnover in leadership. Its general manager left the project in November 2010, according to a report in The Australian.

New South Wales officials have developed "a revised action plan" for the project, which includes a revamped governance model that emphasizes "information transparency and business user engagement," according to the auditor report. In addition, all testing and training processes are being evaluated, and another A$14.4 million has been approved for more staff and training, the report states.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com