SAP helps Houston with a problem: replacing mainframe with ERP

When Houston, the fourth largest U.S. city, replaced a legacy system with mySAP ERP, a unique project management structure made its implementation a success.

With 24 city departments serving a population of 2.1 million, the city of Houston, Texas, faced significant logistical challenges when it decided to upgrade its legacy systems.

But the fourth-largest city in the U.S. really had no choice, according to Earl Lambert, citywide chief technology officer, because the particular mainframe-based system that it had been using was no longer supported by its vendor, American Management Systems (AMS). The city had to find a new system to manage finance, human resources and payroll functions -- processes that affect 22,000 employees in offices distributed across 640 square miles.

So, a few years ago, Houston began evaluating enterprise resource planning (ERP) software, narrowing choices down to Oracle, SAP and AMS (acquired by CGI Group in 2004). Houston ultimately chose mySAP ERP, Lambert said, based on cost and functionality. The key to the massive implementation's success, he said, was a project governance and management structure that oversaw planning, implementation and training.

The first phase of the project, completed in July 2006, focused on materials management and financial processes, including procurement and vendor payments. The second phase, slated for completion before the end of the year, will upgrade payroll and accounting functions. The team faced unique implementation challenges, Lambert said, because the system affects almost all of Houston's diverse departments.

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The city's infrastructure is immense, including public works and engineering departments, an aviation department that manages three airports, facilities management for public buildings and convention centers, and large police and fire departments. Accounting, purchasing and human resources are decentralized functions, Lambert said. Adding to the logistical challenges, city employees were wary after the last enterprise technology project, a Y2K initiative, caused infighting and left some departments feeling disenfranchised. No one wanted to see a repeat performance, Lambert said.

Houston's project management structure

In May 2005, when the SAP project began, the team identified the 12 departments most affected by the new system. Those department directors formed the governance committee, headed by the city's chief administration officer, whom the mayor had put in charge of project oversight. The governance committee designated people in their departments for the steering committee, which made many of the day-to-day decisions in the project, Lambert explained. A technical team was responsible for the actual technology implementation, with help from SAP.

The steering committee's first task was picking a name for the project. It's now known as "HoustonOne: One process, one system, one city." This motto helped promote the project internally, but it was just the first of many decisions that the committee made. The group meets every two weeks and is very proactive, not just a project status group, Lambert said. During planning, for example, the committee reviewed customization requests and prioritized which of them needed to be acted on by the go-live date and which could wait. The group set up a voting structure -- one vote per department -- but has never had to use it, he said. Instead, they've managed to compromise and find consensus.

"The steering committee is probably the thing that allowed us to keep the project on track and on budget," Lambert said. "If we hadn't had that involvement and support, the project would have struggled."

The steering committee helped every department identify a business readiness lead and a technical readiness lead, responsible for ensuring that their particular department was ready for the implementation. These leads identified the people, processes, systems and data in their departments that would be affected by the new system. They also identified "super users," advanced users who learned the system early on and acted as the trainers and expert resources for every department.

In July 2006, phase one of HoustonOne went live, with about 2,000 users trained. It's a mySAP ERP system running on hardware with AMD processors, with a Windows operating system and Microsoft SQL databases. The day it went live, the system processed five vendor payments; just three months later, the project passed a major milestone when it processed its 30,000th vendor payment. The materials management process is now more streamlined, and employees really like the ability to access information themselves rather than having to request a special report. To Lambert, though, the real success story is the teamwork and new bonds created across departments.

"Strong working relationships have been formed within the steering committee, between project teams, with the business readiness leads and the super users," he said. "Usually, the stresses of this type of project have people frustrated with each other, but after this project, we're stronger at working together."

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