As Umoja/Enterprise Resource Planning Project Expands Deployment, Fifth Committee Delegates Call for Details on Financial, Operational Benefits
Draft Decision Approved without Vote on International Decade for People of African Descent
Delegates at the Fifth Committee (Administrative and Budgetary) today urged the Secretariat to detail and clarify the benefits — financial and operational — of a costly major enterprise planning project that would streamline administrative practices and boost efficiency throughout the Organization.
Known as Umoja, the massive business transformation project aims to help integrate administrative and support functions in five areas: finance, supply chain and procurement, human resources, central support services, and programme and project management.
Yukio Takasu, Under-Secretary-General for Management, introduced the Secretary-General’s report on the Umoja’s progress, saying that Umoja was a live solution with more than 5,000 active users, covering 250 sites across 32 countries. It was the daily operating model for peacekeeping operations, special political missions and all United Nations Headquarters offices that supported field missions. As of 1 November, the Umoja real estate module was in use across the Secretariat. The system was bringing significant qualitative benefits to the Organization: more effective operations, timely and consistent information; and improved accountability and transparency. The proposed programme budget outline for 2016-2017, for example, would reflect a decrease of $30 million because of Umoja. The peacekeeping budget would reflect a benefit of $51.4 million for the corresponding period.
The progress report also detailed the revised resources requirements, $385 million, for the project (Foundation, Extension 1 and design of Extension 2) until the end of 2015. The report also provided estimated project costs for 2016-2017 (the construction and deployment of Extension 2) of $54.3 million.
Bolivia’s delegate, speaking on behalf of the “Group of 77” developing countries and China, welcomed the project’s progress but voiced concern with the challenges and risks, such as an insufficient level of organizational readiness, implementation delays, shortage of in-house expertise, cost escalation for the remainder of the project and absence of a plan for consistent delivery and benefit realization. She asked the Secretariat to provide more information on those issues during informal consultations.
While commending the progress made in peacekeeping operations and special political missions, Kuwait’s representative said timelines and the planned budget had to be respected. The representative for the European Union Delegation said the significant challenges and risks facing the project had to be addressed if Umoja was to deliver its full scope and fully realize its benefits in the overall timeline.
Steven Townley, Director of External Audit and Chair of the Audit Operations Committee of the Board of Auditors, introduced the Secretary-General’s note on the Board’s third annual progress report on Umoja’s implementation. In February of this year, the Umoja Project Steering Committee revised the system’s deployment schedule to create more time to address business readiness, and established a post-implementation review task force to tackle those problems.
As of March 2014, Umoja had cost about $271 million, or 78 per cent, of the $348 million allocated through the end of the biennium 2014-2015, he said. The project would run out of funds in June 2015 and completing the processes through the design of Extension 2, would cost another $24 million. The final cost was unknown because the cost of Extension 2 had not been fully defined.
Carlos Ruiz Massieu, Chairman of the Advisory Committee on Administrative and Budgetary Questions, introduced the Advisory Committee’s report. Despite the project’s first-large scale deployment, major challenges and risks needed to be addressed proactively to prevent further delays and increases in cost and ensure the project achieved its objectives.
In other business, the Committee approved, without a vote, a draft decision, “Programme budget implications relating to the programme budget for the biennium 2014-2015”. The decision outlines the budget implications if the General Assembly sets aside the next ten years as the International Decade for People of African Descent. According to the text, the proposed draft decision informs the Assembly that the Programme of activities for the decade would require $1.08 million in additional resources for the 2014-2015 budget cycle.
Other delegates speaking today were Switzerland, Japan and Russia Federation.
The Committee will reconvene at 10 a.m. Friday, 7 November, to discuss appointments to fill vacancies in subsidiary organs & other appointments.
Umoja/Enterprise Resources Planning
YUKIO TAKASU, Under-Secretary-General for Management, introduced the Secretary-General’s sixth progress report on the enterprise resource planning project, known as Umoja (document A/69/385). Umoja was the daily operating model for peacekeeping operations, special political missions and all United Nations Headquarters offices that supported field missions. It was a live solution with more than 5,000 active users, covering 250 sites across 32 countries. On 1 July, this year, the integration of Umoja Foundation and Extension 1 was also deployed in pilot format at the United Nations Stabilization Mission in Haiti (MINUSTAH). In addition, as of 1 November, the Umoja real estate module was in use across the Secretariat. “With Umoja’s first deployment, we are seeing ways in which it has begun to allow the Organization to realize tangible improvement and to operate more efficiently,” he said. “For the first time in the history of the Organization, we now have access to a single source of master data, using a common chart of accounts.”
Although many of the challenges had been anticipated, there was a gap between the current “way of working” and the business processes under an enterprise resource planning model, he pointed out, adding that “we have to change the mind-set of the staff and the culture of the way we do business in the Secretariat.” Even with the revised plan of the Umoja Steering Committee, all United Nations Secretariat entities would have deployed Umoja Integration (Foundation + Extension 1) by the end of 2015, in accordance with the timeline approved by the General Assembly in resolution 67/246. Umoja Extension 2 was an integral part of Umoja and, although its design would be completed in 2015, it would be built in 2016 and released beginning in 2017, as planned.
He went on to say that the Umoja team was increasingly focused on working with management and staff to ensure that the Organization was ready to adopt the changes and transition to a new and harmonized operating model. In line with industry best practices, the Secretariat was establishing a high-level Post-Implementation Review Task Force, chaired by the Controller, to review any issues, propose corrective action and provide guidance on preventative measures to enhance the plan for future deployment.
One challenge was a serious shortage of experienced local experts. The Umoja team needed to organize additional training programmes. A Deployment Coordinator, external to the Umoja team, had been established in Geneva, Nairobi and New York to serve as interlocutor between the business side of the Organization and Umoja for the duration of Umoja realization and deployment activities. In mid-September, the Secretary-General temporarily appointed Franz Baumann as senior deployment coordinator in New York to address the particular challenges facing Headquarters (cluster 4) for Umoja in November 2015. After Umoja Extension 2 would start its use in early 2017, the Umoja team should transition into a small dedicated support team under CITO [Office of Information and Communications Technology] to manage, maintain and enhance the new system.
Mr. Takasu stressed that Umoja brought significant qualitative benefits, such as operational effectiveness, timely and consistent information, and improved accountability and transparency. The proposed programme budget outline for 2016-2017 would reflect a decrease of $30 million, which was attributable to Umoja. The peacekeeping budget would reflect a benefit of $51.4 million for the corresponding period. The progress report detailed the revised resource requirements of $385 million for the project until the end of 2015 (Foundation, Extension 1 and design of Extension 2), which the Assembly would be requested to approve. The report also provided estimated project costs for 2016-2017 (build and deployment of Extension 2) of $54.3 million. The Assembly would also be requested to note that amount.
STEVEN TOWNLEY (United Kingdom), Director of External Audit and Chair of the Audit Operations Committee of the Board of Auditors, introduced the Secretary-General’s note on the third annual progress report of the Board of Auditors on the implementation of the United Nations enterprise resource planning system (document A/68/158). Implementing the system in peacekeeping operations and special political missions represented a significant milestone and a major technical achievement. However, unexpected severe problems arose regarding the adoption of the new business processes by staff, training, management understanding, processes at different locations, and the acceptance procedures on the part of stakeholders involved in signing off on technical, process and business readiness issues. In February this year, the Steering Committee re-profiled the deployment schedule to create more time to address business readiness, and established a post-implementation review task force to tackle those problems.
He said that the Board was currently assessing the impact of the weakened control environment and transaction processing errors as it completed the audit of the peacekeeping financial statements for the year ended 30 June 2014 and would report its findings in due course. The Board saw an essential opportunity to modernize the United Nations’ business administration. However, it was highly unlikely that the Umoja project would deliver its full functionality within the existing forecasts of time or cost. The Administration needed to assess what could be realistically achieved. In the absence of any clear linkage between planned expenditure and planned deliverables, the Board could provide no assurance that expenditure to date was matched by the appropriate level of actual delivery. As of March 2014, Umoja had cost about $271 million, or 78 per cent, of the $348 million allocated through the end of the biennium 2014-2015. The project would run out of funds in June 2015. To finish the processes through the design of Extension 2, it would cost an additional $24 million. The final cost was unknown because the cost of Extension 2 had not been fully defined.
Noting that the revised deployment schedule was unlikely to be met, he said that failure to capture the associated costs of the pilots and early roll-outs had limited the lessons for future development in terms of advising business units of the resources they would need. Progress was being made to quantify the benefits from more efficient and cost-effective ways of working, but the plans and baselines for realizing and measuring them had not yet been established. Those plans needed to detail the identification of benefits, and specify exactly how and when the estimated annual benefits of between $140 million and $220 million would be realized. There remained no agreed future service delivery model for the United Nations. It was important to have some sense of destination model to help support the project implementation and benefits realization, avoid expensive retrofitting, and enhance accountability. Of the Board’s 26 previous recommendations, five had been fully implemented, 11 were being implemented, five had not been implemented, and five had been closed.
CARLOS RUIZ MASSIEU, Chairman, Advisory Committee on Administrative and Budgetary Questions, said that with the deployment of the Umoja Foundation at peacekeeping operations and special political missions, the system had become an operational reality at the United Nations. However, despite that first-large scale deployment, major challenges and risks that lay ahead needed to be addressed proactively to prevent further delays and cost escalation, as well as to ensure the project fully achieved its business transformation objectives.
Noting that the Advisory Committee’s report covered a wide range of issues, he highlighted some of its main observations and recommendations. In the area of project governance, the Committee stressed the important role of senior managers in ensuring organizational readiness activities, adoption of standard business processes and realization of benefits in their respective areas of responsibility. It recommended that the General Assembly request the Secretary-General to take action, if necessary, to further strengthen ownership and accountability for the success of the project.
With regard to benefits, he said the Advisory Committee recommended that the Secretary-General be requested to accelerate the development of the benefits realization plans, adding that the objective and specific information on the expected quantified benefits, as well as on the methodology used to estimate them, should be provided to the General Assembly as soon as possible. With regard to Umoja operating, maintenance and support activities, the Advisory Committee recommended that the Secretary-General be requested to provide details on the related costs, service providers and cost-recovery arrangements. Concerning the request to upgrade the post of Deputy Project Director to the D-2 level, the Advisory Committee recommended that the Assembly approve the Secretary-General’s proposal.
DAYANA RIOS REQUENA (Bolivia), speaking on behalf of the “Group of 77” developing countries and China, welcomed the significant progress made on Umoja, but expressed concerns about the challenges and risks facing the project. Those included, among others, insufficient level of organizational readiness, implementation delays, shortage of in-house expertise, cost escalation for the remainder of the project and absence of a plan for consistent delivery and benefit realization. She asked the Secretariat to provide more information on those issues during informal consultations. In addition, she voiced concerns with such post-deployment issues as accountability, required resources, inconsistent processes between locations, and the level of coordination throughout the Secretariat, as well as the shortage of trained experts in many missions. She took note of the establishment of the post-implementation review task force and the Umoja Academy.
Also needed were detailed updates on the continued roll-out of the Umoja Foundation in New York-based departments and on the status of preparedness of future implementation of the project’s functional phases, she said, concurring with the Advisory Committee and the Board of Auditors on the importance of a detailed and consistent approach to benefits realization plans. To better understand the implications of implementation, more clarity was needed on how system data would be used to deliver benefits, as well as on the potential impacts of more efficient and effective administration processes. There was concern about considerable weaknesses detected in the initial phases of the project, which had led to ineffective and inefficient use of resources. Management failures had caused implementation delays and had contributed to cost overruns. A strong leadership and coordination were key to managing such a complex business transformation. While sharing the Advisory Committee’s concern on the risks of dismantling the project team prematurely, she also welcomed the information provided on the future Umoja support team.
CARMEL POWER, Delegation of the European Union, underscored her continued support for Umoja as an essential opportunity to modernize the business administration of the United Nations system and to improve the efficiency and effectiveness of the Organization’s process. Significant challenges and risks to the project remained and must be addressed if the enterprise resource planning system was to deliver its full scope and functionality and yield the full realization of benefits in the overall existing timeline. The continued and strengthened commitment of senior management and process owners was important to the successful deployment of Umoja in their respective areas.
In addition, she continued, a collective effort was fundamental to identify what was required to make business units ready to implement the system and to make efficient and appropriate use of the new business processes and supporting technologies. Further, collaboration between the Secretariat and other United Nations entities using the same system should be further intensified. Concerned with the serious and systemic nature of the issues that emerged in the post-implementation phase, as well as with the new delays in the project timetable and increased funding requirements, she commended the Secretary-General for his rigorous approach to address the root problems and urged him to approach issues commercially in order to maximize value from the major supplies.
Ms. SCHWEIZER (Switzerland), also speaking on behalf of Liechtenstein, said that the United Nations must reinvent its ways of working in order to harmonize all its business processes into a single mode of operation. The current inefficiencies in those processes would not disappear automatically with the implementation of Umoja. On the contrary, without the Secretariat’s proactive approach, the deployment of the project could entrench those inefficiencies in the system. She hoped that the new service delivery model would clarify where Umoja was leading, and strengthen the acceptance of the project by all stakeholders concerned. Furthermore, future action must be planned in a more detailed and systematic manner, and the uncertainties concerning the project’s timeline and costs must be clarified as soon as possible.
KHALED ALZEER (Kuwait), associating himself with the Group of 77 and China, stressed the vital role of the United Nations in maintaining international peace and security at a time of escalating threats. He commended the important progress made on Umoja in peacekeeping operations and special political missions. Nonetheless, there was a need to respect timelines and the planned budget. Managing risk was, therefore, important toward its full delivery. In that context, he supported the idea of setting up a group of experts.
SHIGETOSHI NAGAO (Japan) welcomed the substantial progress achieved since the previous reporting period, but voiced concerns about new delays of the project as well as increased funding requirements. Organizational readiness was among the most significant risks, and the continued commitment of senior managers was key to the successful implementation of the project. Reiterating the need to prevent further delays and cost escalations, he considered it “very important” for investments to be returned. The Secretary-General should therefore accelerate the development of qualitative and quantitative benefits realization plans.
SERGEY KHALIZOV (Russian Federation) welcomed the use of Umoja across the Organization and took note of the adjusted plan for its implementation. However, he said he was concerned that the adjustment would make the project more expensive. He asked the Secretary-General to restrain costs and be timely in carrying out the plans. Acknowledging the benefits of using Umoja in the post-2017 period, he also noted the conclusions of the Advisory Committee on additional resources to cover the shortfall of the Umoja budget.
African Descent Decade: Action on Draft Decision
The Committee then approved, without a vote, a draft decision, “Programme budget implications relating to the programme budget for the biennium 2014-2015” (document A/C.5/69/L.5), which outlines the budget implications if the Assembly sets aside the next ten years as the International Decade for People of African Descent 2015-2024. The draft decision informs the Assembly that the Programme would require $1.08 million in additional resources for the 2014-2015 budget cycle.