It Projects Failures.

IT projects failures.

$1B wasted by the Navy on an effort to save money by piloting an Enterprise Resource Planning (ERP) system.

Studies and surveys conducted within the last decade have shown that IT project failures are more common than most would expect. Results show that success and failure (cancelled prior to completion or delivered and never used) rates both come in at about 25% while partial success and failures rates fall somewhere in the middle.

According to a study by the Government Accountability Office (GAO), the Navy wasted a billion dollars trying to figure out how to save money and streamline business. A business management modernization program was initiated in 2001 by the Secretary of Defense due to the recognition that business operations departments were not working well together to provide reliable information to make effective business decisions.

To address the need for operational reform, the Navy established an executive committee to identify areas of opportunity for change. Working groups comprised of financial managers across the Navy were established and these groups recommended the use of ERP as a foundation for change. They reviewed and identified several ERP initiatives that were already being developed inside the Navy.

The Navy’s selection of ERP systems was an attempt to provide a commercial perspective to management. The Navy, if compared to a private company with total asset of $321 billion and 870,000 in personal (including civilian and reserve) would be ranked within the 15 largest companies on the Fortune 500 list. ERP is widely used by companies like Wal-Mart and Home Depot to manage day to day operations as well as supply chains and inventory while making huge profits.

The Navy approved the continuation of four ERP solutions within Navy commands of sea, air, space and supply and began planning, developing and implementing separate ERP pilot programs. A steering group was created to monitor the program...