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The PeopleSoftTouch 

PeopleSoft software has forced a Delaware manufacturer to cut paychecks to Mickey Mouse and let failing Wisconsin college students evade expulsion. Guess what software the San Francisco school district owns?

Wednesday, Nov 22 2000
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It is about two weeks before election day, and San Francisco School Board President (and re-election candidate) Mary Hernandez has just explained why she is too busy to participate in a long-scheduled interview, leaving Cathi Vogel to explain everything else. And Vogel, the school district's chief financial officer, is doing her dead-level best to put a fresh face on an ugly reality: After five years of trying to install computer software meant to seamlessly integrate all of the San Francisco school district's financial and human resources information, nothing coming out of district computers can be trusted.

Vogel looks as if she has smelled something foul, but is too polite to mention it. "The focus I've taken is not to look back on the past," she says, "but to do an assessment of where we are right now, and what we can do about it."

Right now, the district is essentially nowhere, and it's entirely unclear what can be done.

"Look," Vogel explains, "if you go into the system and type in something as simple as the district's name, the district's name could be in there 25 different ways. That similarly could occur if you go in and look up my name. I could be under "Cathi Vogel,' under "C. Vogel.' I could be under "Anne Catherine Vogel' -- and it thinks those are all different people."

The school district is not the first client that bought PeopleSoft Inc. software and then struggled terribly with an installation. Far from it. In various incarnations, PeopleSoft products have helped failing college students escape mandatory expulsions, forced a large corporation entirely unconnected to the Disney Co. to cut regular paychecks to Mickey Mouse and Donald Duck, and mangled one public school district's payroll so spectacularly that the local teachers' union picketed in response. PeopleSoft has even been sued under federal racketeering law over arrangements surrounding the installation of its software.

But the San Francisco school district's computer mess is not just another in a line of PeopleSoft follies. Even if PeopleSoft's troubled implementation programs often exceed deadlines and budgets, most of them have eventually resulted in software that is at least partly functional and somewhat dependable.

While public records show that the San Francisco Unified School District spent five years and more than $5 million, it now has a system that is all but useless, because, in the SFUSD, PeopleSoft found a client with the muddled, conflicting leadership and indifferent, unquestioning oversight necessary to grab onto PeopleSoft flaws -- and magnify them tenfold.

Pleasanton-based PeopleSoft, founded as a human resources software maker in 1987, is today considered -- along with Oracle Corp., SAP A.G., Baan Co., and J.D. Edwards & Co. -- one of the leaders in the business software industry. More specifically, PeopleSoft specializes in "enterprise-resource planning" via complex packages of software designed to automate and integrate traditional "back office" functions, such as accounting, finance, and human resources. When functioning properly, these systems can make a business more efficient. That said, because all businesses are organized differently, an ERP software package usually has to be custom-tailored to each business that installs it, often by consultants. Because of that, ERP vendors usually acknowledge that their software is only as good as the way it is implemented.

PeopleSoft has built a huge business in ERP applications. It employs more than 7,000 people and reported $1.4 billion in revenues last year. And as the initial ERP market -- Fortune 1000-class corporations -- has become saturated, the company has developed applications to manage other enterprises, including college campuses, offices in the public sector, and health care providers, to name a few. Buzz over the company's latest release, PeopleSoft 8, pushed its stock prices up to $50 a share earlier this month, its highest total since early 1998. (The stock was at $38.81 at press time.)

In October 1995, however, the San Francisco school district bought the earlier and much more troubled PeopleSoft 6.0.

"The logic behind buying a new computer system was sound," recalls Jill Wynns, a school board member who was part of the unanimous board vote to accept former Superintendent Waldemar "Bill" Rojas' recommendation to purchase software from PeopleSoft. Indeed, the district had little choice but to shop for a new system; it was then running a system it built during the 1970s that was not Y2K compliant. But the board apparently was not told that the $283,000 human resources/payroll software package Rojas recommended had been designed with commercial enterprises, rather than public school districts, in mind.

Wynns says the board asked "the right questions" when Rojas' office pitched PeopleSoft to it, but didn't get honest answers. Specifically, she contends, Rojas and his chief financial officer, Bill Coleman, didn't disclose that the software would require extensive consulting costs to implement and that PeopleSoft had no legal responsibility to make sure it worked properly. (In August, a district technology consultant described this arrangement as "drop and run" -- which apparently marked the first time the school board was informed of the one-sided nature of the PeopleSoft contract. Repeated attempts to contact Rojas and Coleman for comment were unsuccessful.)

"What that means," says Wynns, the board's most outspoken -- some say only -- critic of wild spending during the Rojas regime, "is that you buy this software, and the people that sell it to you have no obligation to make it work. They tell you when you buy it. And Coleman used to say, "We've known all along that we'd need consultants to make this work, it's part of the package.' But we were never told that in the beginning. So, when we approved that one contract, we were actually committing ourselves to something like $4 million.

"Maybe Coleman and Rojas thought we had the expertise in-house to install it, but that would have been pretty ridiculous, considering the level of technology we had."

Actually, consultants weren't used "all along." Coleman and Rojas let district staff spend 1996 trying to install the PeopleSoft package. By the beginning of 1997, however, the district was in the market for a consulting firm to help it with the implementation.

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Jeremy Mullman

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