A Special Report from the Office of MIT President Charles M. Vest • June 1998
SAP at MIT
Like the boy who cried "wolf," reports on MIT's impending conversion to the SAP financial management system have worn down the patience and enthusiasm of many in the Institute community. This spring, however, the introduction of the system into departments, labs and centers is now proceeding on a schedule that will have the largest remaining segment of the project complete by the end of 1998.
First announced at the end of 1994, the adoption of SAP has required extensive (and ongoing) training, software customization, and a comprehensive review of work practices and procedures in almost every unit. MIT officials at every level -- even those who recognize the need for a more integrated and efficient financial management system -- would agree that SAP implementation has been slow and difficult.
As President Charles M. Vest noted in a recent letter to the community, "Most of the tools, processes, and reward systems to achieve organizational change and efficiency have been developed in the business sector. Translating this experience to the complex and consensus-based university world has been difficult... but when finally installed and working, such systems make the work of the organization simpler and more efficient."
The SAP conversion team, also known as the Management Reporting project team, is about to initiate Institute-wide training in the new program. September 1 is the target date to begin the four-month process of introducing departments, labs and centers to the purchasing component of the new system -- the final step in rolling out SAP.
This month, in response to concerns expressed about an incentive plan for keeping the project on schedule, an ad hoc group appointed by President Vest will talk with people in the departments, labs and centers to learn what they believe would be most helpful in implementing SAP in their areas.
SAP will replace the separate general ledger, accounts payable, accounts receivable, procurement and financial reporting systems with a single, integrated software program. The new system will be on-line, and will work in real time for most transactions.
That means that data entered once by a user, such as an administrative secretary ordering furniture, won't need to be entered again. Instead, the outside vendor/partner taking the order, the purchasing office, accounts payable, general ledger and the property office will all receive and make use of the same data at the same time. The secretary's requisition in SAP will create a commitment and a purchase order; the order will be placed with the vendor; the furniture will be received at MIT; the invoice paid, the account debited, and the account's projected balance updated -- all without using interdepartmental mail.
It promises to be a vastly improved system that will automatically and accurately update most reports but, to date, only two areas -- the Sloan School of Management and the Administrative Services Organization (which provides administrative services to the Departments of Chemical Engineering and Materials Science and Engineering, and the Center for Biomedical Engineering) -- are currently using the full system.
"There are many new and improved functions that people will be very excited about once they start using them," says James D. Bruce, Vice President for Information Systems. "But there's a lot of change involved and that frightens people."
Joan Wingo, an administrative secretary in the Sloan School, says that learning SAP was "exciting and frustrating. Beforehand, I was worried because I was intimidated. Now it's become like the old system; I just don't think about it that much."
"It's not a terrifying experience," says Elizabeth Cooper, director of the Administrative Services Organization (ASO), which "went live" on February 17. "I used to work as a management consultant and I've seen a lot of systems implementations. This is a pretty useful system."
MIT undertook the replacement of its financial management and reporting system in 1994, as part of the reengineering project. But the need to revamp these systems predated reengineering. More than 30 years had passed since the core accounting systems had been updated, and the various branches of accounting, procurement, budget, and the Office of Sponsored Programs had each developed separate systems, making for an unwieldy network.
In choosing a new system, the Institute faced the difficulty of finding an integrated systems software that would fit a university setting.
"When you establish an accounting system of record, you have, in essence, established a world view," said Dr. Bruce, a professor in the Department of Electrical Engineering and Computer Science who has been head of IS since 1983. "But a third party software package, like SAP, has its own world view. To the extent that these views are the same, you don't have much of a problem. But in those cases where we said, 'You've got to do this our way,' we've had to make changes to the software."
"For instance, in a corporation, procurement would be limited to a small number of people. SAP never anticipated you'd have 4,000 people requisitioning," said Katherine Cochrane, head of the Management Reporting team.
"MIT is not an environment where we say, 'Here's the new system. Use it.' If it were, SAP would already be implemented. Instead, this is an environment that requires consensus about decisions," said Ms. Cochrane, who came to MIT in 1973 and worked in several departments and administrative areas before joining the Management Reporting team in 1994.
Add to these challenges the fact that MIT is one of the first large universities to integrate all its financial reporting functions with a single software product, and the enormity of the project becomes clearer. MIT is acting as something of a leader in this case, paving the way for other institutions now preparing for a similar process. Someone has to take the first step, however, and MIT officials see real advantages in seizing the opportunity to consolidate the Institute's fiscal systems.
"There's no question," said Vice President for Finance and Treasurer Glenn Strehle, "that almost all major research universities are adopting new, comprehensive fiscal management systems -- and any system, no matter how good, is going to require some difficult cultural changes from its users. I know that the process of adapting and deploying SAP hasn't been easy, yet agreeing on a single central system was necessary. Many of our decentralized systems in departments, labs and centers were facing technical obsolescence. Without a centralized effort, we would now be undergoing dozens of uncoordinated upgrading projects.
Once the purchasing component has been rolled out, MIT will go on to investigate whether to add human resources and payroll functions to the new system. "Initially, teams made recommendations about the functionality of SAP. Now we're matching up those recommendations with the actual system. So far, we're meeting or exceeding expectations while responding to most of the proposed recommendations," said Ms. Cochrane.
"This has been a hard pull for everybody in every department," said Dr. Vest. "But I'm confident the results will justify the extraordinary effort it is taking to get there."
Denise Brehm
Milestone 1: Departmental Education and Status (March
25-April 30)
Project plan and rollout process
Introduction of School coordinators
Concept workshops
Milestone 2: Reporting (May 18-July 15)
Executive information system (EIS)
New SAP reports
Manual reservations
Interim budget plan process
Internal provider billing
Milestone 3: Phased Offerings (March 15-August
31)
Electronic journal vouchers
MIT VIP Card
Data warehouse
Enhanced electronic catalogue (ECAT) for computer products from
NECX
Milestone 4: Preparation (May 18-August
31)
Preparing documents to use new SAP accounting structures
Milestone 5: Procurement (September 1-December
31)
SAP and web-based purchasing
Funds availability checking
Labor distribution system
Milestone 6: Infrastructure and Future Planning
(September 15-December 31)
Expanded use of new financial architecture
Legacy systems conversion/decommissioning
SAP Physical Plant systems
Investigation of:
New budget system
SAP human resources/payroll system