San Diego City

Schools Case
Study

Presented by:
Walfridus Chaspuri
Zhen Guan
Kent Ikeda
Jun Mei 1
Agiimaa Tsogt
 Background
O In 2002, SDCS was the eighth largest
urban school district in US and the
second largest in CA
O Serves 142,000 students in K-12 at > 180
educational facilities
O 25K full- and part-time employees
O 2001-2002 operating budget of $1.1B
O Undergoing reform effort to improve
teaching and learning in the classroom
O Desire to modernize business practices

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ERP and Education Industry
O Education industry second largest in
US
O > $320B spent within K-12 segment
O According to the National Center for
Education Statistics, 81 school districts
in the US served >= 50K students
O IT spending low
O Average of 2% of revenues going to IT
budgets

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ERP in School Districts
O Industry leaders traditionally focused on
private-sector clients now tailoring products
to education markets
O SAP
O Peoplesoft
O Oracle
O In 2001-2002, prices charged to education
clients dropped
O Due to slowdown in general economy
O Critical mass of districts now interested in ERP
systems
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ERP in School Districts
O Emerging trend was new focus on education
within top-line consulting firms
O Accenture
O Price Waterhouse Coopers
O Deloitte
O SAIC
O As consulting firms education practices
matured, deeper understanding of unique
challenges confronting school districts emerged
O Firms better prepared to provide higher-quality
assistance to clients

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 Persistent Risks
O ERP failed to deliver what was
promised to school districts
O Districts reported low level of
satisfaction
O ERP design and implementation
immensely technical and difficult
O 50% of implementations failed

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 ERP Project Risk
O What do you think could be the risks identified for ERP Project
implementation?

O Significant portion of risk similar to any ERP deployment, including

O Scope creep
O Wide-scale deployment
O Issue escalation
O Organizational change
O Risks associated to education industry
O Negotiations
O IT experience
O Software modifications

O SDCS school board high divided five-member board

O Would you advise the school board of these risks? Why or why not?

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Unique Problems for School
Districts
O Three problems within school
districts hindered successful
implementation of ERP systems
O Limited budgets
O Under-qualified personnel
O Changing leadership

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 Problems Unique to
Education Industry
O Limited Capital
O Persistent lack of funding
O Only spend about 2%
O Under invest in consultants
O Spend on software and on
consultants
O Purchase inferior solutions because of
price

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 Problems Unique to
Education Industry
O Under-Qualified Personnel
O IT staff not professionals
O Districts over rely on consultants and
outside experts because staff
members are not trained

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 Problems Unique to
Education Industry
O Changing Leadership
O Longest Superintendent tenure was 6
years
O Impacts ERP implementation
O Inconsistent support from top
management

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 Problems
O Scope Creep
O Increasing the desired features
O Wide Scale Deployment
O Deploying
O Hardware
O Software
O User training
O Issue Escalation
O Snowball effect

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 Problems
O Poor Negotiation
O The lack of experience when negotiation
with solution providers results
O Increased costs for software
O Decreased benefits in service contracts
with the solution provider
O Software maintenance cost increases
yearly
O Starting at around 15-20% and could be as
high as 30% of the purchase cost of the
software

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 Problems (SLA)
O SLA service level agreement
O Agreement between ISP and clients that
defines
O Estimated downtime
O Level of technical support
O Number of users that can be served
simultaneously
O Help desk response time
O Support
O Dial in access
O Usage statistics

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 Problems (SLA)
O Failure of clients to understand what level
of SLA is needed by their business
processes
O Results in mismatching of projected
requirements to actual requirements
O Difficult to agree on what is actually needed
O Failure to
O Define
O Inability to understand when to upgrade/change
agreement to server business objective

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 Problems
O Software Modification
O Increases cost of implementation
O Increases cost of technical support
O Increases cost of upgrades

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 Problems
O Convincing top management to
support the implementation of ERP
O School board is divided

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 The Ideal ERP System
O Ideal school district ERP
system was one where full
power of ERP was used to
face the challenges
confronting school
managers
O School districts finance,
HR, food services, health
services, procurement,
delivery, and student
tracking functions would be
seamlessly integrated

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The ERP Big Picture at SDCS
O SDCS management sought to develop
enterprise-wide system to help reform and
modernize districts business operations
O District staff spent 18 months planning
implementation of ERP modules in areas of
finance, HR, and student information system
(SIS)
O SIS considered holy grail of ERP modules
O Initial survey reveled even the best SIS
systems offered only 50% of functionality that
district required

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 Alternatives
O ERP Vendors
O Benefits
O Simpler integration process between software
module
O Less training cost for personnel
O Potentially lower cost of ownership
O Easier to support the ERP system
O Drawbacks
O Potential changes in way school district does
business
O Potential software functionality gap in between
modules

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 Alternatives
O Best-of-Breed
O Benefits
O Ability to create a more organizational
specific functionally of the ERP system
O The client is not locked in with one vendor
O Reduced potential functionality gaps
between modules
O Drawbacks
O Much more complex system to implement
O Will cost much more than just hiring an ERP
vendor

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 Alternatives
O Implement all modules at once
O Benefits
O All IT learning occurs at once and theres no
downtime between implementations
O Reduced training costs
O Reduced time between implementations
O Ideally all modules are on the current version
O Drawbacks
O Exponentially increased complexity
O Increased costs

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 Alternatives
O Do Nothing
O Always a choice to do Nothing
O Benefits
O Cost savings
O Drawback
O Not accomplishing any goals
O Problems are not addressed

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 Alternatives
O Delaying ERP implementation
O Benefits
O More mature educational ERP systems
O Allows school district to evaluate its needs
O Allows vendors to refine their software
O Drawbacks
O Current problems will not be solve till the
future
O Current problems may prove to be costly
O School district may not be able to continue
operating until new system is available

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 Alternatives
O Wait for SOA and BPI
O Benefits
O Better integration of systems
O Many services can be standardized to reduce
redundancies in the system
O Allows for many processes to be automated
O All benefits associated with automating business
processes
O Drawbacks
O Same as doing nothing and waiting for educational
ERPs to mature.
O Extra complexity, costs, time
O Not a proven method in the Educational industry

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 Alternatives
O Software Choice
O Best of Breed/Single Vendor
O Best of Breed get best solutions but
no integration
O Single Vendor great integration
however not optimal/best solution for
each

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 Discussion Question
O What module was decided to be
implemented first? Why?
O HR module was to be implemented first.
O Districts head of HR successfully
implemented HR module at prior
assignment and had hands-on experience
O Early success of HR module would build
greater buy-in among district staff for
future ERP initiatives

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SDCS Human Resources ERP
Module
O Current SDCS HRMS mainly composed of 30-
year-old legacy mainframe code recently
migrated to client/server platform
O HRMS included payroll, personnel, and benefit
systems
O Other stand-alone applications purchased or
built over the past decade
O No true integration among any of the systems
O Sharing of data between systems not automatic
O Each functional area responsible for data entry for
respective department
O Resulted in duplication of data entry

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 Employee Benefits
O Administration of employee benefits
was complex and required significant
manual work

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 Payroll
O Payroll division responsible for
several areas and handled more than
28 different forms
O Time and labor collecting
O Paycheck processing

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 Personnel
O Complex process involved
O Processed retroactive payments and
credentials
O Reviewed education certification and
demographics
O Handled substitute staffing

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 System Implementation
Timeline
O Shortest time estimates for
implementing one module of an ERP
system was 10-24 months, excluding
post-production support

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 ERP System Costs
O Wiemann heard cost estimates for ERP
implementation projects ranging from $15M
for small-scale (implementing one module)
to > $125M for full-scale, heavily customized
ERP solution
O Cost elements included
O Software
O Implementation/consulting
O Infrastructure
O Training
O Ongoing costs

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Cost Summary of Deploying
SDCS ERP HR Module

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 ERP System Benefits
O Tangible cost savings
O Staff reductions
O Reduced overtime in HR and fiscal control departments
O Reduced printing costs, processing errors, and space
costs
O Productivity improvements
O Free up principals and clerical staff for crucial functions
they were unable to perform
O Soft benefits
O Improved employee morale and productivity
O Improved recruiting efforts
O Improved management access to data

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 Discussion Question
O In order to generate ROI, length of time for analysis based on five-year
useful life of the systems once implemented
O Wiemann unsure what cost of capital to use
O Unsure how to quantify soft benefits

O How can you quantify soft benefits of the system and include them in a
ROI analysis?
O Quantified through creative assumptions
O Assumptions can come from experiences others had when implementing similar
solutions or from drawing on similarities between other quantifiable benefits
O Other principals compared their successful implementation like receiving an
additional recruiting team, valued at $320K/year
O SDCS spent $400K/year on an internal audit team to provide access to HR data.
This team could be disbanded with the implementation of an HR solution leading
to a $400k/year benefit
O Improved employee morale and productivity could be measured by a lower
turnover rate, leading to lower training costs and recruitment costs, as well as
higher output rates leading to lower clerical demands and improved service

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 Discussion Question
O Withthe info presented, what should Wiemann present and recommend at the
board meeting? Specifically, would you recommend going forward with the
HR system implementation? If not, what alternatives would you suggest?

O This case focuses on the challenge of quantifying the return on investment (ROI)
of a large technology project in the nonprofit environment of the San Diego City
Schools
O The school district does not generate a profit so traditional revenue enhancement
arguments do not work
O The system ROI is composed of two major components: cost savings from
removal of legacy applications and productivity improvements
O The cost containment benefits are relatively straightforward to quantify, but do not
justify the system
O Productivity improvements are harder to quantify and many can be categorized as soft
benefits
O Many of the productivity and cost-saving benefits will not be realized without personnel
reductions, which are especially difficult in school districts and government agencies
O The case discusses the tradeoffs quantifying soft benefits and productivity
improvements, best practices for management decision making, and the organizational
change necessary to realize the ROI

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 Decisions/Outcome
O SDCS listed assessment criteria for vendors in draft of
RFP for HR system
O Product functionality 40%
O Price 25%
O Support 15%
O Organizational strength 10%

O Only a few vendors successfully implemented ERP

systems in school districts providing K-12 education

O What was the final consideration in choosing the

software vendor?
O Vendors experience with K-12 educational market

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 Decisions/Outcomes
O Empower Solutions selected as
implementation partner, using
PeopleSoft enterprise software
O Completed within budget (approx $11.6M)
O Live in approximately one year
O Complete understanding of K-12
processes
O Good training program in place
O Built relationships with key personnel on
SDCS staff

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 Decisions/Outcome
O After implementing the ERP system
O Users were satisfied with the new system
O Old laborious paper method replaced with faster,
more reliable electronic version
O Staff members able to achieve immediate results
O More productive, more accurate in their work
O Less bogged down by paperwork
O School district able to slim down workforce
O Employees were more productive with new system
in place, resulting in additional savings on payroll
O Saved money by automating processes on the
system instead of using the old paper process

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