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The University of Minnesota's new computer system goes $22 million over budget--and the glitches still aren't fixed

Snafu U

by Leyla Kokmen
March 15, 2000

Back in 1996, long before the Y2K bug became a common concern for folks around the nation, officials at the University of Minnesota were reaching an unpleasant realization. The U's computer systems were not Y2K compliant. This situation alone, recalls associate vice president Robert Kvavik, might have been handled by school staffers. They could possibly have gone through the systems, which had sprouted across the university's four campuses over three decades, updated them, and prevented them from crashing when January 1, 2000 rolled around. But there was another change to contend with: In 1995 the university's board of regents had voted to switch from quarters to semesters by fall 1999 (the state Legislature had already ordered the rest of Minnesota's public colleges to make the change by 1998). "We could have fixed the system if it only had to be Y2K compatible," Kvavik laments. But to manage the schedule switch too, well, the whole computer architecture would have to be rewritten.

And so the U seized upon the opportunity to introduce an entirely new software system--one that would be a centralized repository for information related to student services such as registration and financial aid, human resources, perhaps eventually financial services as well. Rather than write the software itself ("We probably would have failed," Kvavik declares. "It took 30 years to build the old system. We had two years to put in a new system"), the U searched for a company that could fill its needs. It chose PeopleSoft, a California firm acknowledged as a leading developer of complex software systems for the higher-education market. Its 1999 sales totaled $1.4 billion, and according to the company up to 40 percent of that came from education and government clients. (The City of St. Paul had chosen PeopleSoft to update its human-resources software back in the mid-Nineties, but dropped the project when it became clear the cost would exceed the $7 million budget set by the city council.)

When the U put out its request for proposals in 1996, Kvavik says, the only three responses came from PeopleSoft (which at the time was still developing its product that handles student services); a company that hadn't started writing any software yet; and another that has since gone out of business. "It wasn't much of a choice," Kvavik remembers.

Still, the PeopleSoft system sounded promising. It would help simplify everything from Web registration to classroom allotment. Yet thus far, implementing the software has taken longer, cost more, and caused more glitches--breakdowns, long lines during registration, foul-ups with financial-aid checks--than anyone ever anticipated.

Just last Friday, Kvavik sat before the board of regents and offered an update on the computer conversion, formally asking the university to increase the budget to $60 million. The original allocation from December 1997 was $38 million, and it had already been raised to $53 million last June. In addition, Kvavik described some of the continuing bugs in the software and said the completion date is now likely to be June, instead of the hoped-for finish next month.

After Kvavik's presentation, university president Mark Yudof quickly commented that there has been a lot of "Monday-morning quarterbacking" about the spiraling costs of the computer conversion, and he said those increases were simply unavoidable. He acknowledged the problems with PeopleSoft and stressed that the lack of a choice in software suppliers and the looming Y2K deadline had forced the university into a corner. "In the future we'll see multiple vendors out there," he predicted. "We'll make a series of choices over the years that is less tied to one company that has dominance in the market."

But for now the university will have to live with its high-priced and much-flawed fledgling as the software goes into effect. "The student system is in," Kvavik said. "It's not working as well as we wanted. But it is in."

Most of the U's bugs have popped up in PeopleSoft's student administration software, a new program that the company launched in late 1997. During registration last November, for example, students trying to sign up for classes over the Web discovered interminably long waits when the system, unable to handle such a large volume of users, slowed to a standstill. Encouraged to come into the registration stations, where at least they got lemonade and cookies, students had to wait up to a half-hour in long lines, recalls registrar Sue Van Voorhis. The PeopleSoft problem wasn't limited to students; registrars faced the same delays--up to 15 minutes just to add a class, she says. (The system crashed again during registration in January, but that had more to do with high traffic that overwhelmed the Web software, which was not created by PeopleSoft.)

The glitches haven't been only at the U. Universities across the nation have used PeopleSoft's software; registration failures, financial-aid delays, and late transcripts have occurred at such institutions as Northwestern University, Cleveland State University, and Boise State University. Budget overruns have also been common: CSU saw its costs rise from $4.2 million to $11 million, while at Ohio State University, the budget for PeopleSoft's human-resources system soared from $53 million to $85 million.

At the University of Minnesota, about $35 million of the $60 million budget has gone toward buying and implementing the student software--and paying consultants to create the program functions PeopleSoft hadn't developed, Kvavik says. While he calls that piece of software the most crucial to the university, which is, after all, here to educate students, he admits that "for a public institution, it looks like a horrendous number."

The fact is that these enterprise-wide software updates are massive undertakings; although institutions try to plan for costs and time, unforeseen delays and changes often inflate the bottom line. "There is significant customization involved," says Judy Hodges, program director at the Massachusetts-based technology research firm IDC. "It's hard to actually itemize what has to get done. They're almost always over budget, and late."

PeopleSoft says it is working in close collaboration with its clients, stepping up software testing and increasing staff to help address universities' concerns. Some of the problems, notes Laura King, PeopleSoft's director of marketing for its education and government division, arose early in implementation, when the student administration software, the company's newest product, was in its first, or "beta," version. Concerns about Y2K compliance, it seems, gave universities little choice but to install a new, relatively unproven program. "Generally you don't have such a wide adoption with such a young product," King says, adding that there have been subsequent improvements and updates to
the software.

Van Voorhis says it seems that most of the program's kinks have been pounded out at this point. "PeopleSoft could have done a few things better. We could have done things better, too," she says, pointing out that PeopleSoft's product didn't anticipate some of the U's needs, such as coordinating its multiple campuses. "If we waited until the PeopleSoft system was more stable, we would have been in better shape. But it had to be before Y2K."

Now that the U has selected and installed PeopleSoft, it must rely on the company to continue service and fix problems moving forward, Kvavik says. That's why seven Big 10 schools wrote a joint letter to PeopleSoft in January, detailing their frustrations with the system and asking to work more closely together to alleviate them. Cleveland State has even considered the possibility of a lawsuit against PeopleSoft but has not moved forward with a claim. Kvavik says the U isn't planning to sue PeopleSoft. "What's the point?" he asks. "We need them to succeed. If they don't succeed, we're dead in the water."

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