Government Executive Magazine - 9/1/00 HR upgrades take their toll in time, money

Agencies that purchase commercial-off-the-shelf human resources systems can expect delays and cost overruns even as they begin to experience benefits from the products, according to a General Accounting Office report released Thursday.

GAO investigated five agencies using products from Oracle Corp. and PeopleSoft. The systems are intended to offer human resources workers better access to data and enhanced reporting features.

"Despite these expectations, four of the five agencies' efforts have encountered delays, while three ... have increased cost estimates," the report said.

The Defense Department's implementation is currently a year behind schedule and costs have risen $248 million to about $1.3 billion. Even so, DoD reported quantifiable benefits of $123 million as of September 30, 1999.

The Labor Department is also behind schedule. Initially, the department intended to spend $26.5 million on a system that would replace a non-Y2K compliant system and multiple legacy systems. Now, the cost for the project has risen to $71 million. The cost increases were blamed on Labor's failure to account for operating costs incurred after deployment. The agency also underestimated implementation costs, the report said.

The Department of Veteran's Affairs also saw a spike in the amount it will have to pay for its new system. If the system is implemented two years behind schedule in September 2001, as is now planned, the agency will have to pay $417 million rather than the initial estimate of $170 million.

Several of the agencies cited lack of maturity of COTS products as a reason for implementation delays and cost increases.

But the news isn't all bad. Each agency reported significant nonquantifiable benefits such as increased ease of use and reporting possibilities. Three of the agencies reported cost savings from having fewer overlapping systems to maintain, and decreases in full-time positions.

GAO also investigated implementations at the Centers for Disease Control and the General Services Administration. GSA's implementation is eight months behind schedule, because the agency decided to keep system integration in-house. CDC's deployment is nearly a year old, with an expected completion date of February 2003.