UN adopts ASP model for ERP

Computerworld (U.S.)

On Jan. 1, Norman Sanders, CIO of the United Nations Development Program, will take his global IT infrastructure from a once-a-month reporting system to a round-the-clock operation. It’s a change that will affect 7,500 users, and Sanders knows exactly how many days remain until the switch takes place.

When that day arrives, “my heart is going to be in my mouth, I assure you,” he said. And that will be true for some others at the agency “who have really put their necks and careers on the line,” Sanders said.

The UNDP, the UN agency that runs development programs in about 140 countries, is moving from a proprietary human resources and financial system to a PeopleSoft Inc. ERP system managed by an application service provider.

The UNDP and the vendors involved in the project – prime contractor Unisys Corp. in Blue Bell, Pa., and ASP Corio Inc. in San Carlos, Calif. – announced the six-year, US$27.5 million deal this week.

Sanders said the change is touching every aspect of his IT operations.

“What I would have preferred would have been a risk-free option,” said Sanders in an interview in his New York office last week. But there wasn’t one, he said. “The (situation) was, take your pick as to which risk you want.”

Outsourcing poses significant risks, ranging from the financial viability of the company to which you outsource, to the competence of the people there, said Sanders.

On the other hand, Sanders said he faced the problem of trying “to create from scratch a world-class application management capability” and “leveraging technologies with which we had minimal expertise.”

The UNDP operates nearly 170 offices worldwide. These offices send administrative data to the agency’s headquarters once a month – much too infrequently for an agency that wants to improve its business processes. And there are other problems.

The in-house system is “feature-thin,” as Sanders described it, and local IT managers have developed custom applications that need to be maintained and updated.

The inadequacies of the system also created some “profound anxiety, if not outright skepticism, that headquarters would get it right this time,” said Sanders. The key to addressing that skepticism was creating a project that was driven by business needs and not by IT, he said.

The UNDP decided to adopt software from Pleasanton, Calif.-based PeopleSoft about a year ago because it felt it was the best fit and offered the most accessible user interface for a global, multicultural organization.

The decision to outsource was made after assessing the cost of building an in-house system, with hardware alone costing in excess of US$15 million. On top of that were software licensing costs. Moreover, the IT staff didn’t have the skills needed to manage these systems, Sanders said.

A Unix platform was selected because Sanders didn’t believe Wintel could scale. Sun Microsystems servers were selected as the hardware for the ERP system because the UNDP already had experience with Sun and sought “to leverage whatever strengths we already have,” said Sanders.

The PeopleSoft development work is being undertaken by Cap Gemini Ernest & Young’s Kansas City offices. On Oct. 31, a “gold copy” of the application will be moved to the outsourcing facility in Phoenix, with any subsequent application changes being made there, said Sanders.

He said the only technical issue he’s concerned about is the potential for latency where satellite links are used.

Amy Mizoras, an analyst at IDC in Framingham, Mass., said the UN’s motivations for moving to an ASP fit a classic scenario. But relatively few companies are moving to an ASP model, in part because there’s no catalyst such as a Y2k upgrade pushing them to do it.