When the prestigious institution installed new Oracle and PeopleSoft systems, it nearly flunked out of the project. Can tighter controls earn it a passing grade? (Baseline)
It was the 1990s. A boom time, at least in technology. And Stanford University was eager to dump its 20-year-old mainframe software and move to the latest financial and human-resources systems from Oracle and PeopleSoft.
The prestigious institution, located in the heart of Silicon Valley, enjoys access to the best and the brightest minds in technology. But Stanford administrators discovered that even they are not immune to the pain of delays and budget overruns that accompany complex enterprise resource planning (ERP) systems.
"Sometimes I look back and wonder if this wave of ERP software
wasnt a collective hallucination," says Stanford CIO Chris Handley, a former psychology instructor who joined Stanford from PricewaterhouseCoopers in 1999. "Just buying the software does not solve the problem. You have to change the institution, and thats something Stanford struggled with."
Stanford has spent more than seven years transferring its financial systems onto applications from Oracle called Oracle Financials. The project was supposed to be finished in 1999. The delay has been caused in part by Oracle itself, which helped Stanford customize the software so heavilychanging Oracle Financials to accommodate the way Stanford redistributes overhead costs across its grants, for instancethat together they broke continuity with future versions of the software, rendering portions of what they put in place unusable.
In 2000, Stanford got part of Oracle Financials running and set the remaining projects aside. The university then started installing PeopleSoft to manage student records and human-resources systems. The PeopleSoft projects were delivered on time. But faculty and students found them so disruptiveinterfering with Stanfords ability to issue correct paychecks and assign student housing, for examplethat in 2002 the Faculty Senate called for independent oversight of Stanfords information technology department.
Stanford has spent a lot of money on software and still has work to do. According to the universitys annual budget plans, the board of trustees since 1999 has been asked to approve $93.4 million in capital expenditures for applications and infrastructure . The trustees had approved $60 million in 1994 to overhaul Stanfords entire administrative information systems, a project they expected would take five years, even though controller Susan Calandra says some of the projects in the original plan were never started.
What makes Stanfords troubles all the more ironic is the institutions proximity to Oracle and PeopleSoft. Stanford, with its gracious red-tiled roofs, and Oracle, with its gleaming metal-and-glass towers, sit just 10 miles apart along Route 101, the main thoroughfare through Silicon Valley. Three Stanford professors serve on Oracles board of directors, and CEO Larry Ellison has pledged $10 million to the university as director of the Ellison Medical Foundation. Across San Francisco Bay behind a range of hills is PeopleSoft, which has been fighting Oracles hostile takeover attempt for the last year.
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But such close relationships have made no difference in Stanfords struggles with Oracles and PeopleSofts software, according to Handley. In fact, the high-profile business battle between the vendors complicates matters. Each companys software is known to interfere with the others, to the detriment of customers like Stanford.
For Handley, a big problem is that the software is designed to be used by public companies, not decentralized educational institutions. He notes that every ERP package hes worked withOracle, PeopleSoft and SAPhas a single ship-to address in the purchasing module. Thats great for a company like IBM, which is organized around a central receiving unit, but tough for a 14,000-student research university like Stanford that receives packages directly in offices and labs.
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