Denver Finance System a Cost Blunder
The City of Denver had not updated its financial services systems since 1979 - more than 20 years ago. Given that fact, how much would you expect to pay to update your system, and how much of the money would you expect to go to consultants?
Denver certainly is glad it updated the system, and the new one is called "ASPEN" - All Systems Performance Enhancement Network. The network links the city's payroll, human resources, ledger, purchasing and employee benefits programs, and will definitely be a state-of-the-art system when it is finished.
However, when the city began to add up the costs associated with the project, it quickly realized that the outside consultants were being paid the bulk of the monies for the project, to the tune of $18 million of a $23.4 million expenditure. While this is over budget by 67 percent, only $2 million was spent on software and only $1.3 million on computers. In addition, the city expects to spend another $9 million before the project is finished.
So who are the consultants? Large companies like AG Consulting, PeopleSoft and even KPMG (the auditors). When adding up the costs, most of the expense to consultants lies in training city employees on how to work the new system.
No doubt the city of Denver has learned a lesson about its dependence on consultants - a hard lesson learned.