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Overhauling legacy software with SAP still on the syllabus for BU

Some organizations, like Boston University, are still moving forward with ERP software selection in the recession.

Increasingly complex technical requirements along with a steep increase in operations and research budgets led...

Boston University to invest in a full suite of ERP software after decades of using homegrown, legacy applications.

The country's fourth-largest private university isn't starting small either: It's overhauling and replacing its systems with a suite of SAP applications. BU is proving that there are still customers moving forward with large-scale ERP implementations in the recession.

"We really saw the current environment as one that could be very dynamic, and one that could possibly yield benefits for us to do this now during a down market," said Peter Smokowski, BU's vice president of administration.

For more on ERP software selection
Read an ERP software comparison, and learn why SAP scored the highest

Read about the TCO of SaaS: Is on-premise software a better deal over the long run?

One of SAP's challenges during the recession has been potential customers taking longer to make decisions, North American president Rob Enslin said during a recent IT forum in Boston. In October, there were layoffs and cutbacks at SAP when small and midsized companies that were planning ERP purchases changed their minds at the last minute. Since then, customers have remained cautious about making big purchases.

BU was no exception. It started its decision-making process in 2006, and ultimately didn't settle on buying SAP software until June 2009. The university saw this as a good time to move forward. Among other things, it was able to purchase the software more cheaply than expected, Smokowski acknowledged.

Boston University will implement SAP ERP financials, human capital management, product development and project management, procurement and logistics, and NetWeaver Portal. A total of about 8,000 faculty and staff will use the system. MicroStrategy, which is currently in place for BI and analytics, will remain.

In 2006, BU started an analysis of whether it made more sense to continue with self-development of its legacy systems or to consider something more standardized. It looked extensively at what other universities had put in place.

Since its last major IT purchase in 1985, BU's operations budget had grown from $350 million to $1.4 billion. Research budgets had grown from $60 million to $450 million.

BU was also concerned about the impending retirement of those on its IT staff who had developed the applications, because of its ability to recruit people with comparable programming and development skills to run the systems once those retirements occurred .

"The scope and complexity of engagement – whether it's from a compliance perspective, reporting perspective, operations – it just became a very significant risk for us," Smokowski said.

BU engaged IBM on a gap analysis and received its recommendations at the end of 2007. The university ultimately decided ERP software would be the best way to mitigate risk and reduce the fragmented systems and a lot of the manual processes used to manage the business.

"It would be better for us to look at an all-in-one solution that was fully integrated, that could help not only transform the way we do business but could improve our IT capabilities," Smokowski said.

When researching the ERP projects of other universities, BU found that the software generally worked, but what failed was the governance put into place -- the way they managed the scope, he said. Institutions tried to overlay current business processes on top of software and ran into challenges such as cost overruns.

BU decided not to customize the software too much. Though he anticipates some modifications, Smokowski said the SAP platform best fits BU's needs out-of-the-box.

"We're not going to overlay our 20-year-old business processes on top of this software and try to make it work," he said.

The major business owners were involved throughout the ERP selection process -- the vice presidents for IT, finance, human resources, administration and procurement; representatives from the academic side; and members of the provost's office. There were also a number of representatives of the individual schools and colleges who worked in the finance and administration side.

"Very early on, we saw this not so much as an IT project but as a business transformation enabled by technology," Smokowski said. "It's an opportunity to improve the way we do business and use technology as the way to do that."

BU went out to bid for software in September 2008 and received bids in October. Smokowski wouldn't specify which other vendors BU evaluated, except to say that the major players were involved. An evaluation team analyzed the proposals, with help from industry research and independent consultants.

After that, BU invited the vendors to demo the products on site over the month of January. Vendors were asked to bring to the table everything that the university would need, whether the software belonged to them or a third party.

One of the things that BU is excited about in SAP is NetWeaver Portal, Smokowski said. The university has a vision of an integrated information platform for finance, HR and procurement, and standardization of master data.

Some of BU's goals include delivering cost containment and gaining greater efficiency in operations For instance, on the procurement side, the software will give the university the ability to aggregate and leverage procurement spend across the enterprise. SAP will help position the university for future growth.

BU is currently selecting a systems integrator and should announce an SAP implementation partner in September or October. BU anticipates beginning the implementation in January 2010, going live with SAP ERP financials in July 2011, and with human resources and procurement applications in 2012.

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