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Time and Cost Inflation Leave the Fate of Military ERP Systems Uncertain

As the Army, Navy and Air Force implement their respective ERP systems, they have encountered immense struggle in doing so, leaving the effectiveness of each system in serious doubt.

With ERP acquiring an increasingly active role among defense IT programs, Greg Slabodkin of Defense Systems reports the Defense Department is in the process of implementing nine programs intended to replace more than 500 legacy systems that yield an annual operating cost of hundreds of millions of dollars.

But a 2010 report from a Government Accountability Office shows six of the programs have experienced schedule delays ranging from two to 12 years. Five have encountered cost increases ranging from $530 million to $2.4 billion.

The delays and cost increases leave many military programs hanging in the balance. Brig. Gen. Kenneth Moran, who oversees the service’s Expeditionary Combat Support System program, an Oracle-based ERP system that seeks to provide the Air Force with a single, integrated logistics system that includes transportation, supply, maintenance, repair, engineering and acquisition, says the current ECSS life-cycle cost estimate has resulted in a $2.2 billion increase from its original cost of $3 billion for the entire program. Four major system commands have implemented Navy ERP, designed to update and standardize the service’s business operations in addition to providing financial transparency and total asset visibility, but the full deployment originally scheduled for the fiscal year 2011 has been pushed back to 2013, with a cost increase from $1.87 billion to $2.4 billion. And although the Army is continuing with plans with plans to create a single, integrated ERP system, GAO reported in October 2010 that full deployment of the Army’s Logistics Modernization Program slipped by six years because of insufficient requirements management and system testing.

Optimism remains among the setbacks. The Army Enterprise Systems Integration Program integrates common data to harmonize common practices between GCSS-A, GFEBS and LMP using the three separate instances of the commercial SAP product suite.

“SAP now offers very sophisticated Master Data Management, and you take that and superimpose it on the three instances of SAP to create one virtual ERP system,” said Manish Agarwal, chief technology officer at Attain.

And despite inflation in time and money, the potential for integration leaves room for the improvement so desperately needed.

“Unfortunately, the ERP landscape [in DoD] is littered with many failures,” said Greg Baroni, chairman and CEO at Attain. “What is exciting about [AESIP] is the nature of convergence and integration opportunities around this particular initiative. For us, it is a chance to help rewrite the legacy around chronicled failures into one of successful outcomes.”

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