About a month ago, an article titled “Air Force scraps massive ERP project after racking up $1 billion in costs” caught my attention. My immediate reaction to this story was how we can be so irresponsible to spend $1B+ over 7 years with almost no value in return. I recently came across a similar story in the New York Times on the US Air Force’ Billion Dollar Flop. The ERP project referenced in this news is called Expeditionary Combat Support System (ECSS). The timing of this ECSS project blunder is all the worse in light of our current fiscal cliff woes.
Before we analyze the ECSS project failure, let me offer a quick primer. ECSS was an ERP project that proposed to merge base level and wholesale logistics systems for the US Air Force. The scope of the ECSS ERP project included: advanced planning and scheduling; material management, contracting and logistics finance; configuration and bill of material; repair and maintenance; product lifecycle management; customer relationship management; order management; distribution and transportation; decision support; facilities management; quality control; document management and budgeting. ECSS would have replaced the capability of approximately 400 or so legacy IT logistics systems with Oracle’s integrated IT suite of modules comprised of product support & engineering, supply chain management, expeditionary logistics C2, and maintenance, repair and overhaul.
Here are the key highlights of the ECSS ERP project:
- Project started in 2005 with CSC as a system integrator and Oracle as an ERP solution provider
- Project racked up $1.03 billion in costs since 2005 without yielding any significant military capability
- It would have required an additional $1.1B for about a quarter of the original scope to continue and fielding would not begin until 2020
- Project was restructured three times within the past three years, with the final customer conclusion that they would be better served by developing an entirely new strategy versus revamping the ECSS system of record again
The ECSS ERP project failure story resonates with me for couple of reasons. First, I work in an ERP solution space, and second, I was involved in a similar USAF transformation project called Stock Control System (SCS) from 1994-96, with CSC as a lead system integrator. Let’s focus our analysis of the ECSS project around three key questions:
- What could we have done to prevent such a disaster from the outset?
- What have we learned from this failure?
- What are we going to do in the future so we don’t repeat this fate?
From my perspective, ECSS disaster could have been avoided with the understanding of complexity management. Complexity management can be distilled to seven “Ps” of complexity and is elaborated in my white paper, Complex Enterprise. Let’s review the seven “Ps” of complexity in light of the ECSS project:
External drivers such as regulations or turbulence; e.g. What is the provider’s track record in delivering successful transformation outcomes within an Aerospace & Defense (A&D) environment?
Strategic planning, accountability and decision making; e.g. What are the program goals and how are we going to measure our success both short-term as well as long-term? What is the contingency plan if things don’t work out as planned?
Culture, behaviors and relationships; e.g. How are we getting our job done today? How is the provider solution going to help us do our job faster, easier and better than ever? What are the risks and pains associated with the new solution and are they greater than the pain of staying with the current situation?
Business and operational processes; e.g. How are we going to streamline processes and consolidate 400 logistics systems into a single system of record? Will this be accomplished in a big-bang or a phased approach?
Product portfolio management and proposed solution; e.g. What are the product’s base capabilities and what customization is necessary to meet our needs and demands?
Project and change management; e.g. How are we going to ensure that the project meets or exceeds our expectations for time, budget and value?
Pricing models, schedules and discounts; e.g. Have we structured the project on value-based pricing model? Are system integrators and solution provider’s fees tied to real value creation and outcomes delivered versus simply based on promises?
With complexity management lenses, the government could have uncovered a whole range of issues that are critical in driving large scale transformation projects like ECSS to success.
Could Cincom Have Saved This Project?
As I look at ECSS project goals, they seem to align perfectly with Cincom’s strengths in highly complex project-based supply chain environments. At Cincom, our clients typically generate $30 to $50 or more in return value for each $1 of investment with us. This strong value proposition comes with our “3M95+” advantage, thus providing our clients with a total peace of mind with respect to their ERP solution. “3M95+” simply means that over past 44 years, we have scored 95% or better marks in three key areas:
- Customer support satisfaction
- ERP implementation successes
- Net promoter score
In summary, why do the US Air Force and other government agencies continue to deliver large-scale transformation projects like ECSS to providers who have nothing but broken promises, disappointment and failed projects to show for their results? Isn’t it time they look outside and find a company like Cincom as their trusted partner?
Whether you are in public, private or government sector, there is a renewed sense of urgency for greater accountability, visibility, and transparency in projects along with focus on real results. Make sure your ERP partner is a key enabler and contributor to this quest.