Burnaby: another SAP cost overrun

The city of Burnaby, British Columbia (B.C.) is a small Canadian town that could furnish the next big SAP cost overrun story. In 2005, Burnaby committed $10 million (in Canadian currency, which is currently close to even with the U.S. dollar) to an SAP financials system. Now, in 2008, an article (SAP costs buried?) in BurnabyNow reveals that the cost estimate is up to $26 million, and that it isn’t clear when the system will go live. New costs keep springing up, including $1.4 million for servers, heating and cooling units, and single sign-on software at least partially necessitated by the SAP project. Apparently, Burnaby had retained Telus for SAP integration, but Telus dropped out of the project in 2006, so the history of problems predates the current dispute over costs.

The Burnaby case doesn’t necessarily say as much about SAP as it does about the customer. As in the Waste Management case, there are clearly customers who are wrong for SAP–companies going through a major executive suite shuffle, for example, or, as in Burnaby’s case, customers who buy the Mercedes when all they need is the Toyota. Consider that the politicians in charge of selecting SAP at Burnaby believe that the small city’s alleged accounting complexity requires the installation of a $10 million accounting system, which costs three times as much as the politicians are willing to spend on improving local neighborhoods. It will be interesting to see whether Burnaby’s citizen stakeholders are at peace with this kind of allocation of their tax money.

Demir Barlas, Site Editor