Speakers Highlight Concerns about Cost Over-runs, Delays as Fifth Committee Examines Progress in Implementing Umoja Business Transformation Project
Speakers highlighted both the successes and serious issues related to implementation as the Fifth Committee (Administrative and Budgetary) today examined progress over the past year in rolling out Umoja, the United Nations ambitious business management project.
Yukio Takasu, Under-Secretary-General for Management, introducing the Secretary-General’s seventh progress report on that subject, said that the project, launched to harmonize the Organization’s business processes and simplify staff movements, among other areas, would result in qualitative benefits of $205.5 million by 2021.
Carlos Ruiz Massieu, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing that entity’s related report, said that serious issues in the aftermath of each of the major deployments of Umoja had led to delays and cost over-runs. Moreover, he expressed disappointment in the lack of progress to fulfil the General Assembly’s request for a detailed accounting of the indirect costs absorbed by departments due to Umoja.
Echoing the concerns of the ACABQ Chairman, the representative of Thailand, speaking on behalf of the “Group of 77,” said issues that delayed changes to the common system compensation package, which should have come into force in July, had postponed application of the new unified salary scale. In the future, the Group would like to examine proposed timelines for the project’s next phase. Moreover, the costs for Umoja’s operation, maintenance and support should be included in the project budget, she said, questioning the rationale for the proposed 23.8 per cent budget increase — which would bring the total project budget to nearly $544 million — while there was still insufficient transparency on total project costs.
The Under-Secretary-General for Management had noted the successful deployment of the first phase of the compensation package, but the Russian Federation’s representative expressed worries that Umoja was not prepared to implement decisions made in 2015 relating to that Commission. The issue was hidden by the Secretariat and only reported several months after the decision was made on the staff compensation package. That “serious incident” raised questions over whether the new system could adapt to any new requirements from United Nations intergovernmental bodies. All departments had been asked to determine how they might achieve the indicator for reducing costs, but that “pseudo methodology” for benefit realization did not meet Member States’ expectations.
Meanwhile, the representative of Switzerland, also speaking for Liechtenstein, struck a more positive note, calling the project’s progress remarkable given its difficult start and highlighting that, for the first time, the Secretariat had a single, modern solution to enable the transparent management of the Organization’s resources. Many of the benefits of Umoja would be qualitative, including the ability to obtain easy-to-access information of a high quality, as well as more accountability in decision-making, and those would lead to a more effective and coherent United Nations.
The European Union’s representative agreed that significant progress had been made with regard to Umoja, even while a number of important issues remained. She looked forward to the full implementation of Umoja Extension 2 as it contained some of the project’s most promising functionalities, from enhanced supply-chain management to force planning, and that the quality of data that would be made available with that implementation would aid decision-making for both the Secretariat and Member States.
The representative of the United States noted that the project lacked a clear end-state vision, benefits realization plan, strong leadership buy-in, and adequate project governance, management and transparency, but said that did not mean that the project had not been worth the investment and should not be implemented.
Responding to the comments of representatives, Mr. Takasu said Umoja was on the right track and reaffirmed his commitment to finish the task with the continued commitment and support of Member States.
Also during the debate, Salhina Mkumba, Director of External Audit and Chair of the Audit Operations Committee of the Board of Auditors, presented that entity’s related report.
The Fifth Committee will reconvene at 10 a.m., on Wednesday, 7 December to discuss the 2016-2017 programme budget for the United Nations Assistance Mission in Afghanistan (UNAMA), United Nations Assistance Mission for Iraq (UNAMI) and the review of the United Nations Office to the African Union, as well as to fill vacancies in the Committee on Contributions.
Introduction of Reports
YUKIO TAKASU, Under-Secretary-General for Management, introduced the Secretary-General’s eighth progress report on the enterprise resource planning project (document A/71/390) known as Umoja. He noted that on July 1, services delivery functionality had been integrated into all peacekeeping and special political missions. In addition, the first phase of the International Civil Service Commission (ICSC) compensation package changes had been deployed. In October, two more functionalities of Umoja were completed: an electronic exchange of information with a vendor for automated processing of orders and invoices, and the preventative maintenance of equipment. Cluster 5 was also deployed as planned, covering over 11,600 national staff and 6,800 individual uniformed personnel across 38 peacekeeping and special political missions.
Implementation of Umoja was guided by the valuable recommendations of the Organization’s oversight bodies, he said. In its fifth report (document A/71/180), the Board of Auditors acknowledged that, while it was common for such implementations to face challenges, the Board had focused on the responsibilities of business units for user adoption. Of the 16 recommendations brought forward from the previous report, two had been fully implemented, 13 were in progress, and one had been closed by the Board. On preparations for future roll-outs, he said that clusters 3 and 4 presented new challenges as the standardized business processes had been rolled out across diverse entities. The Post Implementation Review Task Force had been working to resolve those challenges. Also, while stabilization efforts continued, the report outlined the deployment plans for fully implementing Extension 2 functionalities by the end of 2018.
The qualitative improvements to the Organization for harmonizing business processes through Umoja were evident in terms of personnel administration and time management, the simplification of staff movements, and the consolidation of systems contracts and global suppliers databases, he said. The report also outlined quantitative benefits, and that cumulative benefits would amount to $163.7 million by 2019 and $205.5 million by 2021. In terms of reorganization and re-profiling of resources, the General Assembly had authorized the Secretary-General to postpone the downsizing of the Umoja project team until 31 December 2016. The report contained a proposal for a gradual downsizing and re-profiling of positions to ensure the transfer of knowledge from external consultants and to restructure the project staff.
On resource requirements he recalled that those had been estimated in the sixth progress report (document A/69/385) at $129.39 million for the biennium 2014-2015 and $54.29 million for the biennium 2016-2017. As explained in the seventh progress report (A/70/369), the project had undertaken unforeseen activities in 2015 and as result many activities had to be delayed, leading to an under-expenditure of $17.87 million. In 2016, extended stabilization efforts continued, and the project would require additional resources totalling $26.81 million for the biennium 2016-2017. Without additional resources, it would be difficult, he said, to make the financial commitment needed for the development of Extension 2 functionalities in early 2017. Based on the approved cost-sharing arrangement, the additional requirement would be funded as follows: $4.02 million from the regular budget for 2016-2017, $16.62 million from the support account for peacekeeping operations for 2017/2018 and $6.17 million from extra-budgetary resources during 2017.
SALHINA MKUMBA, Director of External Audit, Chair of Audit Operations Committee, Board of Auditors, introduced that body’s fifth annual progress report on the United Nations enterprise resource planning system, (document A/71/180), noting that as of 31 December 2015, spending on Umoja had hit $374.1 million – 97 per cent of the approved $385.1 million budget. A further $54.3 million had been approved in January 2016, increasing the total budget to $439.4 million through 2017. Discussing findings, he said the global deployment of Umoja had introduced a “step change” in technology and a platform to support wider business transformation. However, the Administration must show it could realize the promised financial and service delivery benefits. At the time of the audit, the Board had considered it likely that additional funding would be required and that the Administration would need to make major revisions to existing plans. It had recommended the Administration conduct a review of plans to develop fully costed operations for delivering the remaining scope.
Noting that Umoja Integration had been deployed to four clusters, with more than 33,000 users globally, he said the Administration had decided that delaying deployment of clusters 3 and 4 presented a greater risk than those previously identified. A post-deployment survey of cluster 3 subsequently had found that 47 per cent of users strongly disagreed or were dissatisfied that they were ready to go live on 1 June 2015; 49 per cent considered themselves unprepared when asked the same question prior to deployment of cluster 4. Training needs had not been assessed with any rigour and users had been inadequately trained prior to the deployment of Umoja.
He said only 53 per cent of the planned trainings by location had been achieved prior to “go-live” and the Administration could not confirm whether users had received all trainings required. Further, the scale of problems reported in 2015 had exceeded the Administration’s capacity to respond, with users encountering several severe difficulties. More than 400 issues had been reported by clusters 3 and 4, such as high volume of open items, numerous delayed or blocked payments (more than 20,000) and items held in suspense. Weakness in business intelligence reporting functionality was a critical issue identified by clusters 3 and 4.
Moreover, he said, the Administration did not have a fully costed plan for delivering the remaining scope of Umoja that would address numerous competing challenges, such as stabilizing and enhancing Umoja functionality for clusters 3 and 4, and decommissioning the legacy asset management system. It was over-reliant on a small number of staff to address such challenges, he added. The design, build, implementation and stabilization of Umoja Foundation and Extension 1 had consumed most of the programme budget, and additional funding would be needed to meet remaining challenges. While the Administration was committed to realizing the benefits, ranging from $140 million to $220 million by 2019, there was no agreed methodology for realizing them, he asserted. Among other findings, the Administration had concluded it would be unable to deploy upgraded software, in line with the General Assembly’s implementation dates. The Board had made 38 recommendations since it began its audit in 2012. Sixteen of them were extant in 2015, 2 had been implemented, 8 were under implementation, 5 had not been implemented and 1 had been closed by the Board.
CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that entity’s eighth progress report on the enterprise resource planning project (document A/71/628). He underscored that the Secretariat-wide deployment of the Umoja Foundation and Extension 1 was a major achievement for the United Nations. However, serious issued had emerged in the aftermath of each of the major Umoja deployments, which required extensive stabilization efforts and resulted in delays and overruns. He stressed the importance of ensuring that lessons learned from previous deployments were drawn and taken into account in the preparation of future roll-outs.
The ACABQ had consistently said that it was in the Organization’s best interest that the full scope of the Umoja project be delivered, and it therefore welcomed the Secretary-General’s proposal for the implementation of all remaining Umoja Extension 2 functions and processes by the end of 2018. The Advisory Committee also welcomed the Secretary-General’s proposal for restricting and downsizing the Umoja project team. In terms of benefits, a more robust business case was needed for the Umoja project, which should reflect the actual efficiencies and benefits achieved through its implementation.
He also expressed the ACABQ’s disappointment over the little progress in responding to the General Assembly’s request to maintain a detailed accounting of the indirect costs absorbed by departments, or to conduct an analysis of the total cost of the ownership of the Umoja project. The Secretary-General’s proposals would bring the overall project budget from 2008 to the end of 2018-2019 to almost $544 million, which represented an increase of over $104 million. The ACABQ recommended that the General Assembly ask the Secretary-General to submit for consideration at its second resumed session an analysis of the total costs of the project, including the indirect costs borne by the implementing entities. Pending the Assembly’s consideration of that cost analysis and an updated business case, the ACABQ recommended that the General Assembly approve 50 per cent of the proposal net additional revised requirements for 2016-2017 to provide for the funding of the project under a further decision by the General Assembly at its second resumed session.
SIRITHON WAIRATPANIJ (Thailand), speaking on behalf of the “Group of 77” developing countries and China, said serious issues had emerged after each of the Umoja deployments. The project timetable had seen multiple revisions, with cost implications and an impact on the approved budget. Implementation of the new common system compensation package, which should have come into force in July, had been delayed, which in turn affected implementation of the proposed unified salary scale and changes to the education grant. There had been a three-month delay in finalizing financial statements for their normal processing period in July.
She said that going forward the Group wished to examine proposed timelines and justification for the project’s next phase, as well as learn about the Secretary-General’s plans to strengthen in-house Umoja capacity and expertise. She expressed regret that no benefit realization plan had been presented, stressing that an assessment of benefits should be made using actual efficiencies and objectives achieved, rather than artificial budget reduction targets. Moreover, a robust business case must be made for Umoja. She expressed disappointment that little progress had been made to respond to the Assembly’s repeated requests for an accounting of the indirect project costs absorbed by departments, or to analyse the total cost of ownership of the project. Costs for Umoja operation, maintenance and support should be included in the project budget. She looked forward to discussing the proposal for Extension 2 implementation in informal consultations. As proposed resource requirements would bring the project budget to nearly $544 million — a 23.8 per cent increase — she questioned the rationale for proposing another substantial budget increase while there was still insufficient transparency on total project costs.
ALEXANDRA BAUMANN (Switzerland), also speaking on behalf of Liechtenstein, called progress made on the Umoja project “remarkable” given its difficult start. For the first time, the Secretariat had a single modern solution that would enable transparent management of Organization’s resources. Full implementation of Umoja Extension 2 must remain a priority, as it would allow for integrating processes for budget formulation and supply-chain planning into the system. The financial benefits were expected to accrue from that Extension. She agreed that the Secretary-General must balance the need to adhere to the implementation schedule, on the one hand, and the need for organizational readiness on the other. Defaulting on either schedule carried risks that must be carefully weighed.
She went on to say that the system’s technical deployment was not more important than reform of operational processes and implementation of lasting cultural change. The Administration should develop fully-costed options to fulfil the remaining remit of Umoja. Business unit heads must provide training, while the Administration must ensure they were supported. Most of the benefits of Umoja would be qualitative. Their importance could not be overemphasized and included the ability to obtain better quality, easily accessed information, and more accountable decision-making, and thus, a more effective and coherent Organization.
FIONA GRANT, European Union delegation, said the bloc remained a strong supporter of the enterprise resource planning project. Taking note of the Secretary-General’s progress report and of the observations of the Board of Auditors and the ACABQ, she said that despite the significant progress achieved, a number of important issues remained. The European Union looked forward to a better understanding of the Secretariat’s plans to ensure staff preparedness and training ahead of future deployments, as well as plans to promote smoother and shorter stabilization periods. She also noted with concern that issues related to those areas had contributed to project slippage and cost over-runs.
She emphasized that the European Union attached great importance to the full implementation of Umoja Extension 2, which included some of the project’s most promising functionalities, among them enhanced supply-chain management, budget formulation, programme management, conference and event management and force planning. The quality of data that would be available with the implementation of Extension 2 had the potential to aid the Secretariat and Member States in decision-making. She agreed with the Board of Auditors that Umoja was central to successful reform of the Organization’s administration, and concurred with the ACABQ that implementation of the project’s full scope was necessary to protect the investments already made by Member States, and to realize its benefits in full.
AMIT UPADHYAY (United States) noted that in past discussions on Umoja, Member States had expressed concern that the project lacked a clear end-state vision, benefits realization plan, strong leadership buy-in, and adequate project governance, management and transparency, and also noted frustration at the perennial budget and schedule overruns. While those concerns were valid, it did not mean that the project had not been worth the investment and should not be implemented. The United States was not satisfied with all aspects of the project, and was disappointed that additional resources were being requested to conclude the project without an effort to see how those resource requirements could be offset through realizing the benefits of the project. He said he would like to see the Secretariat explore those options and others before requesting additional resources. He supported the continued implementation of critical elements of Umoja, but called for greater efforts to manage financial requirements. In that regard, his Government was studying the ACABQ recommendations carefully, as some of them could inadvertently hinder further implementation of the project.
SERGEY KHALIZOV (Russian Federation) said he had taken note of progress made on the Umoja project over the last eight years, but the transition had faced significant difficulties. The need to stabilize it had meant that the time required for implementation had slipped and costs had overrun. The final cost was now $554 million. But the General Assembly had approved a $439 million cost plan, not including indirect expenses, which had not been calculated. A worrying sign was that Umoja was not prepared to implement decisions made in 2015 relating to the ICSC. That issue had been hidden by the Secretariat and only reported several months after the decision had been made on the staff compensation package. That “serious incident” raised questions about whether the new system was able to adapt to new requirements that might stem from United Nations intergovernmental bodies. Benefit realization must be a priority and he shared ACABQ’s concerns in that regard. All departments had been asked to determine how they might achieve the indicator for reducing costs, with options such as cutting posts. That “pseudo methodology” for benefit realization did not meet Member States’ expectations. He agreed on the need to take urgent measures to analyse overall spending and outcomes, and to draft a more realistic business case for the Umoja project.
Mr. TAKASU, responding the delegates’ statements, said that as many Member States had recognized, Umoja was on the right track and he was confident that its journey would be completed. He also reaffirmed the commitment to finish the task, noting that one year ago it was not clear whether the Secretariat had the capacity to complete Extension 2. But, after some reorganization, he was confident that it could be finished. The timeline for the project was very ambitious and it had been highlighted that there had not been enough training to carry it out. The project was the largest management reform in the history of the United Nations, which involved all peacekeeping missions and all duty stations. Umoja had tried to harmonize all its existing systems with Umoja. It was important to maintain momentum and he looked forward to the continued commitment and full support of Member States.