Harvard's modernization of its financial-data systems--the first phase of a $115-million University-wide project called ADAPT--has been plagued by escalating costs, delays in implementation, and slow system performance. As the project entered its second phase this spring, an overhaul of the human-resources (HR) systems, the Faculty Council of the Faculty of Arts and Sciences (FAS) sought assurances that these problems had been addressed. Administrators, who point out that other universities undertaking similar projects have also experienced problems, say that the worst is over, and remain cautiously optimistic that the HR conversion will proceed smoothly.
Harvard had little choice but to modernize its administrative data systems. The old central financial system, designed in 1940, ran on customized software written in the 1960s that could not generate reports thorough enough to comply with federal reporting requirements, and was not Y2K compliant.
Back in 1995, administrators charged with deciding what to do with the old systems planned to address these deficiencies, and even thought that a redesign could result in annual operating savings of $2 million. A University-wide financial system, they reasoned, would at once eliminate redundant data entry and the so-called "shadow systems": department- or tub-level software that duplicates the work of the central systems. What planners didn't fully appreciate was that the only standardized software solutions available in the marketplace were designed for commercial clients, not universities.
Early estimates of the cost to implement a new system hovered around $20 million. In 1996, when Harvard planners and consultants had identified many of the specific tasks involved, the estimate for full implementation was $50 million. But that was before a software vendor had even been selected. "That's like guessing how much a building is going to cost before you've even hired the architect," says vice president for finance Elizabeth "Beppie" Huidekoper. By the time Harvard had selected Oracle to provide the software, the cost was projected to exceed $100 million over five years, or $20 million per year. That, Huidekoper points out, is only a small fraction of Harvard's annual $1.8-billion operating budget, for a capital project that crosses all schools and serves more than 4,000 users. "Universities are extremely complex organizations," she says, "and vendors didn't quite understand the financial-management needs of these kinds of institutions. What they kept thinking was, 'You have to change your business practices, you have to centralize, you have to do all your purchasing and procurement through a central office.'"
But universities, unlike businesses, track three kinds of money: unrestricted funds (the only kind used by most businesses); endowment funds that are accompanied by explicit instructions for their use; and sponsored grants, which are awarded for specific purposes and must be tracked against expenditures. "Harvard has at least 5,000 sponsored grants or accounts and by regulation we have to track those explicitly," says Huidekoper. "That cannot be done centrally. We have to push out responsibility to the person who knows, 'This piece of equipment is for that grant, and this one for another.'" The problem? "A lot of [the existing commercial financial-management] systems aren't designed to be distributed to a lot of people, and therefore the security and the processes aren't designed to give a lot of people access."
The result is that while end-user complaints about the new system's slowness have abated, the special security add-ons can require as many as eight separate log-ins by a single individual. "It's been frustrating," says Huidekoper, "because we were told that [the vendors] could do all these things" at the outset. The expected $2 million reduction in operating costs? Says Huidekoper, "We are not seeing that."
"The fact that Harvard is at the extreme of decentralization complicated the process," says Geoffrey Peters, FAS representative to the ADAPT oversight committee. "Phase two [HR], under [assistant provost and chief information officer] Dan Moriarty, will be different. The chart of accounts, which [went from a 14- to a 33-digit coding structure and] was a complicating factor in conversion of the financial systems, has no analogue in human resources. And this second phase will incorporate an open architecture from the outset."
Systems with an open architecture are better suited to highly decentralized organizations like Harvard because they include robust interfaces to the central systems that can accept data from other software packages that may be developed to serve very specific, sometimes unique, purposes in a school or department.
This is a critical design element for the ADAPT systems, because one of the things they weren't designed to do is track encumbered funds like those that come with grants. "Twenty-five percent of the University's budget, approximately, is sponsored," says Huidekoper, "so we still have to meet the needs" of researchers. In addition to HR, an accounts-receivable system, a procurement system, and a benefits system are still intended to be part of the project, says Huidekoper, who reports that, as of the end of June, expenditures for ADAPT totaled $68 million.
Adapting to ADAPT
System slowdowns and security issues have complicated what planners knew from the start would be a difficult changeover process. Representatives from Harvard's many schools and administrative units convened in 1994 and 1995 to ensure that the new system would address each unit's needs. "None of us had experience at this, and we were trying to specify a reengineering process," says associate dean for administrative resources Geoffrey Peters, who was the FAS representative to the ADAPT oversight committee.
And there were management problems. Between 1996 and mid 1999, ADAPT lost its first three top managers. "I don't know if the problem was so much the management turnover as it was really getting the right management in place," says Huidekoper. "We needed some skill sets that we didn't have here, people who are experienced in managing large, enterprise-wide systems...What we have learned is that you need to get an experienced project manager in there right away."
"There was a reliance on consultants [such as KPMG, Oracle, and Sapient]," says assistant provost and chief information officer Dan Moriarty, "a tendency to rely on outside sources." Moriarty says ADAPT proved much more difficult than anyone expected, even given the way Harvard is organized and the size of the project. The problem was not the information technology, not the software or the servers, he says, but rather the implementation, the change management, and the interfaces between the central systems and the rest of the University.
