Oracle has won a $100 million ERP project that will replace legacy systems at 34 colleges in Washington state, in a deal that highlights the continued relevance of its PeopleSoft product as it tries to convince customers to adopt its next-generation Fusion Applications.
The Washington State Board for Community and Technical Colleges is planning to implement Oracle’s PeopleSoft Campus, Human Capital Management and Financials, according to Oracle’s announcement Tuesday.
Systems integrator Ciber will work on the implementation, which is estimated to cost up to $100 million and scheduled to be delivered over the next five years, according to the project’s website.
What’s hoped for is a standardized IT platform for human resources, payroll, financials and procurement that replaces the older systems and eliminates the need for manual workarounds, a process that had become unsustainable, according to the announcement.
WSCTC is also planning to install a number of Oracle’s Fusion Analytics applications, but clearly is making a long-term bet on PeopleSoft for its core needs, and not Fusion Applications.
Oracle has said more than 400 companies have adopted Fusion Applications, which were the result of a long and expensive development process. It has promoted a modular adoption curve for Fusion, with customers adding a few modules and running them side-by-side with an existing system, rather than a rip-and-replace strategy.
While Oracle has Fusion modules targeting the same areas as PeopleSoft, it may be a while before the market sees many full-fledged Fusion ERP implementations.
“The challenge for Oracle Fusion is that it’s a broad horizontal play and PeopleSoft is heavily verticalized for service based industries,” said analyst Ray Wang, CEO of Constellation Research via email. For schools, PeopleSoft provides education-specific features for areas such as grant management, fund accounting, student scheduling and registration, he added.
Oracle’s announcement is also notable due to the project’s size and complexity, and potential for problems if the right planning and execution doesn’t happen.
PeopleSoft implementation difficulties have been at the center of a number of legal disputes, including the now-settled lawsuit between Montclair State University and Oracle over a project at the New Jersey institution.
Some in Washington state’s education community also likely haven’t forgotten problems that Washington State University had last year, when a newly installed PeopleSoft system experienced glitches, resulting in problems with financial aid disbursements at the start of the semester.
WSCTC’s size is considerable, as its schools serve 470,000 students and 21,000 employees, according to its website.
There’s also something inherently difficult about installing ERP at a school system, according to Wang.
“Campuses are in fact small cities and governments,” he said. “They are very complex from food service to student housing to course work. It’s as if you are putting together 25 different businesses onto the same system.”
The Washington schools’ project announced Tuesday in particular looks “very complicated,” said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on IT project failures.
“It’s big and involves lots of change going across many different schools,” he added. “Let me put it this way, if we were to look at the statistics of this kind of project it’s almost a certainty that it’s going to come in over budget.”
Indeed, the project is intended to “standardize business processes across the colleges with the least amount of customization and college-unique configuration as possible,” according to its website, meaning individual schools may have to make many adjustments to the way they’re used to working.
School officials “need to recognize the dangers going in,” Krigsman said. “It’s very easy to underestimate the capacity of the organization to absorb the change.”
WSCTC should err on the side of higher budgets and longer timelines, and be sure to devote plenty of attention to system testing when the go-live date nears, he added.
Two schools in the system are scheduled to go live in August 2014, followed by four deployment waves ending in July 2017, according to the project website.