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?

The events chronicled in the lawsuit, which was settled out of court in October, parallel the events at the SFUSD. According to the complaint, Gore:

  • bought human resources software from PeopleSoft;
  • hired Deloitte to implement the software, with PeopleSoft's endorsement;
  • watched its system falter as Deloitte's invoices ballooned to more than twice the original estimate; and
  • was forced to hire additional consultants -- including PeopleSoft's -- who said Deloitte was responsible for the software's woes.

The Gore lawsuit also charged Deloitte with using Gore's implementation as a "training ground," in which consultants routinely needed to consult PeopleSoft's telephone help line, a charge that echoes district complaints about Carrera's "rookies."

The lawsuit claimed that "PeopleSoft benefitted ... by retaining partnership fees from Deloitte [worth tens of thousands of dollars annually] for listing Deloitte as a competent partner."

Jill Wynns says board members weren't given all the facts when they OK'd PeopleSoft in 1995.
Anthony Pidgeon
Jill Wynns says board members weren't given all the facts when they OK'd PeopleSoft in 1995.

A PeopleSoft spokeswoman, Michelle Loesch, says Alliance Partners do pay fees to PeopleSoft, but eligibility to be a certified PeopleSoft consultant hinges first and foremost on a positive track record with PeopleSoft implementations. She adds that the company announced more rigid certification requirements -- including tests for individual consultants who work on implementations -- at a recent conference of its users.

As Gore learned, PeopleSoft software often comes with no guarantees. Sometimes this is actually spelled out in the contract, such as in the $10.7 million agreement signed by the Houston Independent School District in 1998 that read: "The delivered functionality in PeopleSoft may not handle K-12 through modification."

And if the HISD, using PeopleSoft's own consultants and not an Alliance Partner, was able, eventually, to successfully install the software, other school districts have been less fortunate. The Elgin (Illinois) school district used a PeopleSoft-endorsed consulting firm to install software, and when the District's Oct. 31 payroll included 231 paycheck errors, school officials heralded the news as progress. The previous paycheck cycle had included 352 erroneous checks, and direct deposit camouflaged many of the errors, causing teachers to bounce checks and miss mortgage payments.

Several hundred employees even staged a full-fledged sign-wielding, line-toeing "informational picket" over the computer problems.

Larry Ascough, spokesman for the 40,000-student district, says that consultant costs on the $750,000 software have already surpassed $1 million, with a new batch of consultants collecting $5,000 a day to try to get the system functioning. The system also fouled up the district's retirement benefits enough to draw a $14,000 fine from the state. Plus, the district was recently forced to spend $36,000 on temporary accounting help to deal with the mess. The year-old project has already exceeded its $1.7 million budget, with no end in sight.

Although PeopleSoft does not make software specifically for public school districts, it does sell software designed with college campuses in mind. These programs are supposed to manage everything from financial aid to admissions to registration, which means that, when bugs arise, they can damage a university's operations in countless ways.

The Jan. 7, 2000, edition of The Chronicle of Higher Education, an influential trade publication, featured a story about a letter sent by the provosts or vice presidents of seven Big Ten universities to David Duffield, PeopleSoft's chief executive at the time. In the letter, the universities complained that the "performance of the software, in terms of responsiveness, is simply unacceptable." (For instance, at the University of Wisconsin at Oshkosh, system quirks helped failing students escape mandatory expulsions.)

The complaints were not limited to the Big Ten. Malfunctions at Cleveland State University, for instance, led to the delaying of thousands of financial aid checks as installation costs ballooned from an estimate of $4.2 million to $11 million. At Boise State University, the problem was delayed transcripts. The cost: $16 million, for a project that was budgeted at just more than $5 million. University dissatisfaction was so widespread at one point that The Chronicle ran a story about events that seemed unusual enough to be news: Some schools were actually able to install the software smoothly.

"We knew going in that this was a high-risk project in general," says Steve Cawley of the University of Minnesota, which has PeopleSoft running well, but only after spending three years and $60 million implementing it (on a $42 million budget). "Going in, our research showed us that ERP systems typically come in 170 percent over budget with about 60 percent functionality.

"Now we're happy PeopleSoft customers."

Nearly all of the schools that struggled implementing PeopleSoft software eventually got it running. Even UW-Oshkosh eventually figured out whom to expel, and it now proclaims itself satisfied with the software's performance.

As does W.L. Gore.

But the San Francisco Unified School District, after spending more than $5 million, five years removed from its initial PeopleSoft purchase, having invested in more than three years of nonstop consulting, is not even close.

"We've had something like 900 successful implementations, so I don't think you can say it's the product," says Chris Feeley, PeopleSoft's vice president for education and government. "Obviously some of the things you need for a successful implementation weren't in place."

Feeley's assessment may contain an element of self-service; in educational quarters, PeopleSoft has become nearly legendary for late, overbudget software installations. Still, the San Francisco school district seems to have helped make its PeopleSoft project an undeniable disaster.

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