SAP Watch

May 12 2008   8:52AM GMT

Burnaby: another SAP cost overrun

JackDanahy Jack Danahy Profile: JackDanahy

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

2  Comments on this Post

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  • bryan
    This story says _something_ about the person(s) who sold the solution to the town. Why would anyone in good conscience sell the Mercedes when the Toyota is needed, especially to a government/non-profit/public entity? What responsibility does SAP have in this case?
    10 pointsBadges:
  • Michael
    The salesman are on commission. Just like lawyers, it doesn't matter if they're right or wrong, as long as they win. The management team gets many wiz-bang sales presentations showing how great the product is, and only later find out what it really takes to make the product work that way. SAP is just the software company - similar to Microsoft. It's up to the integration company to ensure the customer's needs are met. Microsoft wouldn't be responsible if someone put together a bad database using Microsoft Access.
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