Thursday, October 22, 2009

UN Blames Delay in SAP Contract and Accounting Standards on States, But Changed ERP Plan

By Matthew Russell Lee

UNITED NATIONS, October 21 -- Is the current UN well or badly managed? In January 2008, more than twenty months ago, the UN's Department of Management announced it has selected Germany-based SAP for a contract for its enterprise resource or ERP technology project, and that the contract would be finalized in three months.

On October 21, Inner City Press asked Department of Management chief Angela Kane to confirm that the contract has still not been finalized, that ERP is being schedule and over budget, and to explain why. Inner City Press also asked why the UN is failing to live up to a 2010 deadline to implement the International Public Sector Accounting Standards. Video here, from Minute 44:34.

Ms. Kane acknowledged that the contract has not been signed. She blamed the General Assembly, that is the member states, for making the schedule "far too ambitious" and then only allocating the money in March 2009. She said the ERP project is not really over budget, because there is no real budget, "we were way off base." Video here, from Minute 49:43.

But the UN's Advisory Committee on Administrative and Budgetary Questions in its report on ERP criticized Ms. Kane's Department of Management for changing its proposal at the last minute. ACABQ sources say it's "DM's fault it got delayed -- now Kane is blaming others for her department's last minute changes" and thereby putting off the IPSAS accounting standards.

Ms. Kane on Oct. 21, SAP contract not shown

From the ACABQ report:

67. The Advisory Committee was informed of the revised requirements just as it was finalizing the present report. The reductions reflect changes in the sequence of activity and acquisition strategies, as well as delays in the approval of the project.
The Secretary-General now considers that it would be in the best interest of the Organization to complete the selection of the ERP software before proceeding with activities related to the acquisition of integration services rather than conducting those activities in a partially overlapping manner as initially envisaged. In addition, he proposes to break down the acquisition of integration services for the design, build and/or roll-out phases of the project instead of developing system integration proposals to cover a comprehensive range of services for the entire project at the outset (A/62/510/Rev.1, para. 35). ..The Committee was also provided with an updated timeline for the project (see annex IX), which shows an overall six-month delay in completion of the implementation.

68. The Advisory Committee was further informed that, as a consequence of this approach, the following activities and expenditures envisaged previously during 2008-2009 would not be completed during the biennium:

• Software licences and customization ($11,475,000): as a result of the Organization’s stronger negotiation strategy with the software vendors, there would be limited payment for software licensing during the design phase of the project, and any required customizations would be initiated later in 2009.
• Software integration ($21,847,400): based on the above-stated approach to the
acquisition of software integration services, there would be a significant
reduction in the overall work-months required during the biennium 2008-2009, as those resources would be required during the subsequent build and roll-out phases.
• Project and change management ($5,387,700): the ERP project team would postpone the recruitment of its full staffing complement until July 2009 until the initiation of the design phase after the completion of high-level business re-engineering activities in the first quarter of 2009. The change management strategy continues to focus on an awareness campaign for the stakeholders of the ERP project, pending approval by the General Assembly.
• Training ($5,615,400): the commencement of training is dependent upon the acquisition of the ERP software solution, which is in the final phase of evaluation.
• Operational costs ($749,000): the above delays have a corresponding impact on the requirements related to general operating expenses.

69. The Advisory Committee considers that these revisions represent a
significant change in the strategy for the implementation of ERP as set out in paragraph 35 of the report.

So the Secretariat made last minute "significant changes" to the ERP plan, then blames the resulting delay in the allocation of funds for not having taken steps due a year and a half ago, and puts back implementation of IPSAS accounting standards for two -- some say four -- years.

Again the question: Is the current UN well or badly managed?

Footnote: For weeks Inner City Press has been asking in the UN's noon briefing that Department of Management chief Angela Kane come to take questions, on why Office of Internal Oversight Services recommendations have not been implemented, from disciplining a staff member who pleaded guilty to having child pornography to recouping $7 million overpaid in Timor Leste.

On Wednesday Ms. Kane did come to the briefing, but only about the budget. Inner City Press, when called on, was told to limit itself to one question. While the Controller was still answering a question about the UN and the dollar, Ms. Kane left the briefing. It's been three months since the last one: it seems clear these should be more frequent.

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