Menu
Price tag for troubled SAP project will skyrocket to nearly $1 billion, audit says

Price tag for troubled SAP project will skyrocket to nearly $1 billion, audit says

An 'overly ambitious design' and poor training are cited as reasons for the mess at a New York gas utility

The cost of finishing a massive SAP software overhaul at a New York gas utility will rise to nearly US$1 billion from an original estimate of $383.8 million, a newly released audit report has found.

National Grid's SAP upgrade went live in November 2012, nearly simultaneously with Hurricane Sandy, the massive storm that ravaged the East Coast.

Immediately upon the go-live, the SAP system was wracked with issues, particularly related to payroll, with the chaos wrought by Sandy and the subsequent cleanup effort only exacerbating the situation.

National Grid ended up bringing in 450 additional contractors to work on the payroll problems, along with 400 to help out with issues related to supply chain and financial closes, according to the audit, which is dated July 25 but was released this week by the New York Public Service Commission.

Now the total cost for the project through the utility's fiscal 2015 is expected to be $945.1 million, the audit states. The system, which replaced multiple Oracle systems at National Grid, was supposed to be stabilized as of September, with updates to bring various modules up to current versions completed by the end of this year.

The audit goes into significant detail about the root causes for the implementation's woes.

For one thing, National Grid "did not use vendors with a strong track record of US utility industry experience in SAP platform implementation," it states.

Initially, the utility hired Deloitte but later decided to switch partners, bringing in Ernst and Young along with Wipro.

Also, in choosing SAP as the new platform, National Grid had only "very limited discussions" with other U.S. utilities about their experience with it, relying instead on assertions of National Grid UK, which had already moved to SAP, according to the audit.

Moreover, "while Wipro had extensive experience in Europe, it had virtually no experience at the time implementing an SAP platform for utilities regulated in the US," it states.

Overeagerness on the part of National Grid also led to recklessness.

Some groups within National Grid raised questions about "problems with system and company readiness" before the switchover to the new system, but "that information was subsumed by a push to go live," according to the audit.

Even now, National Grid is failing to take full advantage of the SAP system's capabilities, relying on "complex Excel spreadsheets" for management reporting, it states.

A Wipro spokesman didn't immediately respond to a request for comment Friday.

"We recognize the challenges National Grid faced and have worked continuously with the customer to address them," SAP spokesman Andy Kendzie said in an emailed statement Friday.

A spokeswoman for National Grid didn't return a request for additional comment beyond the audit.

In a letter released with the audit, National Grid said it didn't agree with all of its conclusions but "generally accepts" its recommendations.

The audit also includes a number of reasons National Grid gave for why the project stumbled, including an "overly ambitious design," lack of accountability, poor data quality from the legacy systems and ineffective training.

Company shareholders, and not ratepayers, will absorb the extra costs of fixing the system, according to the Public Service Commission.

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


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags enterprise resource planningIT managementCIO rolesoftwareapplicationsSAPbest practicesDeloitteit strategywiproErnst and Young

Featured

Slideshows

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Reseller News has honoured the leading female front runners of the New Zealand ICT industry at the 2019 Women in ICT Awards (WIICTA) in Auckland. The awards recognised standout individuals across six categories, spanning Entrepreneur, Rising Star, Shining Star, Community, Technical and Achievement. Photos by Gino Demeer.

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA
Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Show Comments