Reference no: EM131135816

Project Ocean-The Troubled Water Billing System

The city of Philadelphia entered into an agreement with Oracle Corporation to replace its antiquated, custom-built, 30-year-old water billing system that fails to collect all the revenue it should. After three years and spending $18 million on "Project Ocean," the project was two years behind schedule and at almost twice the cost originally envisioned. Moreover, the new billing system still had not been deployed to support its 500,000 customers.

Philadelphia Chief Information Officer (CIO) Dianah Neff cited technical complexity, administrator turnover, and Oracle"s inexperience building such a system as the reasons for Project Ocean"s problems. Alan Butkovitz, the City Controller, said that his office is currently reviewing what happened with Oracle, but that it is too soon to speculate as to what went wrong with Project Ocean. An official at Oracle has said that they would deliver on their promise to complete the project and that implementation is "still in progress, and Oracle believes that the work performed to date conforms with the current agreement."

Project Ocean is currently on hold until the Mayor"s Office of Information Services (MOIS) and other city officials can reach an agreement with Oracle to put Project Ocean back on track. Neff stated that she believes a workable solution can be delivered within 18 months to protect the city"s investment.

Former City Water Commissioner Kumar Kishinchand was a vocal critic of Project Ocean since before leaving the commission after 12 years. Kishinchand believes that Project Ocean was doomed from the start. "One reason is that they picked a company that had never done a water billing system. Oracle had only done viable customer service systems with a small portion for billing purposes. Municipal billing systems tend to be tremendously complex. The off-the-shelf components of such systems have to be heavily modified, a complex and time-consuming effort."

Kishinchand also believes that the project managers did not have much to lose if Project Ocean failed because the city"s Finance Department was in charge of the project-not the Water Department, which is the main operator and user of the system. He believes that Neff and the MOIS were interested in building empires because the water billing system takes in over $300 million in revenues a year. Kinshinchand also accused city officials of "putting all of their eggs in one basket [Oracle], without consulting the Water Department."

In rebuttal, Neff contends that MOIS chose the Oracle Enterprise Resources Planning E-Business suite for a number of city uses that include human resources and that the Finance Department made the decision to make water billing the first application. MOIS was then brought in to implement the system once the decision was made. As Neff contends, "it [the water billing system] was a big system, very complicated with very unique features. Hindsight is 20/20 and ERP is difficult anyway."

In addition, the system was designed to be run by a number of city departments, but there was constant turnover among executive sponsors. Neff contemplated "Continuity was a problem, and we could have had better-defined business processes. Problems came up between the contractor and business people. As we put it, it was a project that 'washed ashore' for IT to handle."

About 12 months ago, MOIS was assigned to review the work completed on Project Ocean so far. This led to a work stoppage and the suspension of several consultants, Oracle employees, and a private contractor who had been indicted by a federal grand jury in Connecticut on unrelated charges that she had paid a state senator to help her win consulting contracts.

While negotiations between the city of Philadelphia and Oracle continue, Neff is preparing to start a new job as a consultant in another city. After five years as CIO, Neff maintains that her impending departure is unrelated to Project Ocean.

1. Do you believe that the trouble with Philadelphia"s water billing system is a technical problem or a people problem? Why?

2. What factors contributed to the problems associated with Project Ocean?

3. Compare the different views the city"s MOIS and Oracle may have when negotiating a new agreement that will continue that project.

4. Can this project be saved? If so, what should the new agreement include? If not, can Philadelphia and Oracle come to an agreement that satisfies both parties? Or would this end up being a "win/lose" situation?