University Accounting Overhaul Year Behind, Over Budget

A year behind schedule and at twice the expected cost, Harvard's radical accounting overhaul known as Project ADAPT is finally grinding into action-though only two pieces of its first phase are in place, three years after the project began.

ADAPT--an initiative aimed at revolutionizing the way records are kept and money monitored across Harvard's 10 schools--has been in the works since 1996.

Harvard is currently operating under an archaic accounting system developed in 1948. An explosion in information technology, coupled with exponential growth in the size of the University, have rendered the old system all but obsolete, officials say.

"There are key questions we can't answer today, like `How many employees does Harvard have?'" says Peter J. Segall, executive director of ADAPT.

The University responded to these needs with ADAPT-which sought to computerize the University's financial information and record keeping, making it more accessible to administrators who need it.

Provost Harvey V. Fineberg '67, who oversees ADAPT, describes the project as "truly fundamental," remarking what he calls "the invisible backdrop of how the University functions."

But ADAPT has now ballooned to cost twice the University's original estimate, and is a full year behind schedule.

To date, ADAPT has managed to put into place only two of its key pieces: an on-line expense reimbursement program and another budget management program, and ADAPT managers expect more functions will be available this summer.

Now estimated to cost $100 million, ADAPT is eventually expected to deliver, but in order to complete this massive project, the University must ensure that the delays that have plagued ADAPT thus far become a thing of the past.

Meeting Deadline

ADAPT is divided into three phases, each with set goals, but Phase I-implementation of the so-called "core financials"--has yet to be completed.

"We don't have much time now to accommodate further slippage," Fineberg says.

From day one ADAPT has faced logistical problems. In the world of high-priced computer consultants, Harvard has learned that the buyer should beware.

"Working with consultants," Fineberg says, "is... a lesson to be learned."

ADAPT first hired consultants from the firm KPMG, but the firm "did not understand higher education," Segall says.

The University moved on to Oracle software to implement the eight parts of ADAPT but found that the pre-designed programs did not fit all of Harvard's needs.

"Oracle tends to be a generic system and Harvard has some uniqueness," Segall says. "They assumed it would work in some key areas, but you never know where it won't work until you buy it."

Having spent $5 million on software from Oracle, some of which did fit the University's needs, Harvard has now moved on to a Cambridge firm called Sapient.

Unlike the previous firms, Sapient is charging Harvard a flat fee for their

consulting, and are "more responsive to ourneeds," according to Segall.

Fineberg says the new firm may work out betterbecause their contract includes incentives for amore speedy completion. He adds that Harvard woulddo well to become less dependent on consultants.

In fact, Segall says, ADAPT probably beganusing consultants too early and as a result, "itwas probably more expensive than it should havebeen."

Fineberg says the biggest early mistake ofADAPT was its own underestimates, particularlywith regard to the major component known as thecharter of accounts-a listing of all assetaccounts at the University.

"People didn't appreciate how hard the charterof accounts would be," Fineberg says.

What is more, computer software is usuallydesigned for profit-oriented corporations, notnon-profit educational institutions, which makesADAPT's work that much more difficult. Forexample, there is no software available that dealswith sponsored research, according to former VicePresident of Finance Allen J. Proctor '74.

And unlike a typical corporation with anorganization all dedicated toward one purpose,Harvard's umbrella includes everything from anItalian villa to an arboretum.

"Harvard is so diverse," Segall says.

It Must Be Done

As difficult as ADAPT has been to implement,the University has little choice but to persevere.

Both the federal government and Harvard's owncorporation have demanded clearer and more regularreports from the different schools.

Specially, the government is asking for morereliable reports about Harvard's use of thefunding it gets from the National Institutes ofHealth (NIH).

"There's an agreement with the federalgovernment that we'll improve our reporting,"Segall says.

"The federal government has asked Harvard toproduce reports in a more timely fashion," headds.

According to Proctor, Harvard has haddifficulty providing the NIH with the informationit requires.

"My first day on the job, I got a sanctionletter," says Proctor, who worked at Harvard from1994 through 1996. He says the NIH withdrew thesanctions six months later, after "intense"efforts from the University to improve itsreporting.

Segall says the government has also beencracking down on other universities, asking forbetter reports of how they spend their nationalgrants.

Equally important, Harvard must facilitate itsown record keeping. Currently, each school actsseparately, working on its own definitions anddeciding unilaterally how much to spend to supportits assets.

"Financial and administrative deans concludedthat it was too expensive for every faculty tooperate and maintain its own system," Segall says.

Project ADAPT will enable Harvard to givetimely reports to the Corporation which will makeclear "what schools could run into financialproblems down the road," Segall says.

The Road Ahead

With these needs still pressing, it isimpossible to predict if the rest of ADAPT'simplementation will go more smoothly.

Phase I-"the core financials"-is expected to beavailable on-line this July. After they "go live,"ADAPT managers will spend the next six monthsworking out the kinks and hope finally to lay thefirst part of the project to rest.

Phase I was originally budgeted to cost $45million dollars-even with a 20 percent costoverrun built in. It is now expected to run morein the neighborhood of $60 million.

Once they have finished with Phase I, ADAPTwill attempt to tackle the last two piecessimultaneously.

Phase II will deal with human resources,payroll and benefits, and Segall expects it to becompleted by 2001.

Phase III will deal with other financialsystems, such as grants, and should finish at thesame time as Phase II.

But the University is painfully aware thattrouble may well lie ahead.

"It doesn't make sense to try to predict [whenADAPT will be entirely finished]," Segall says.

He says he is somewhat apprehensive aboutgaining acceptance of the new systems from thethousands of Harvard administrators who will usethem.

"Some will find it a challenge to change theway they work," Segall says. "They will need a lotof hand-holding."

Harvard will work hard to train its employees,but even that may go wrong, Fineberg says.

Fineberg says he fears a situation like the onehe experienced while traveling the day after hisairline changed its software. He says heencountered long lines because the airline's staffwas having trouble with the new software.

When he asked one worker whether he had beentrained in the new software, the employee toldFinberg that he had been, but it was during theprevious summer, and the training had beenforgotten.

Such unforeseen problems could well hit Harvard,and, Fineberg says, "We need a backup plan at thispoint."CrimsonSeth H. PerlmanTECHNICAL DIFFICULTIES:Project ADAPTExecutive Director PETER J. SEGALL has his workcut out for him in order to finish by 2001.

consulting, and are "more responsive to ourneeds," according to Segall.

Fineberg says the new firm may work out betterbecause their contract includes incentives for amore speedy completion. He adds that Harvard woulddo well to become less dependent on consultants.

In fact, Segall says, ADAPT probably beganusing consultants too early and as a result, "itwas probably more expensive than it should havebeen."

Fineberg says the biggest early mistake ofADAPT was its own underestimates, particularlywith regard to the major component known as thecharter of accounts-a listing of all assetaccounts at the University.

"People didn't appreciate how hard the charterof accounts would be," Fineberg says.

What is more, computer software is usuallydesigned for profit-oriented corporations, notnon-profit educational institutions, which makesADAPT's work that much more difficult. Forexample, there is no software available that dealswith sponsored research, according to former VicePresident of Finance Allen J. Proctor '74.

And unlike a typical corporation with anorganization all dedicated toward one purpose,Harvard's umbrella includes everything from anItalian villa to an arboretum.

"Harvard is so diverse," Segall says.

It Must Be Done

As difficult as ADAPT has been to implement,the University has little choice but to persevere.

Both the federal government and Harvard's owncorporation have demanded clearer and more regularreports from the different schools.

Specially, the government is asking for morereliable reports about Harvard's use of thefunding it gets from the National Institutes ofHealth (NIH).

"There's an agreement with the federalgovernment that we'll improve our reporting,"Segall says.

"The federal government has asked Harvard toproduce reports in a more timely fashion," headds.

According to Proctor, Harvard has haddifficulty providing the NIH with the informationit requires.

"My first day on the job, I got a sanctionletter," says Proctor, who worked at Harvard from1994 through 1996. He says the NIH withdrew thesanctions six months later, after "intense"efforts from the University to improve itsreporting.

Segall says the government has also beencracking down on other universities, asking forbetter reports of how they spend their nationalgrants.

Equally important, Harvard must facilitate itsown record keeping. Currently, each school actsseparately, working on its own definitions anddeciding unilaterally how much to spend to supportits assets.

"Financial and administrative deans concludedthat it was too expensive for every faculty tooperate and maintain its own system," Segall says.

Project ADAPT will enable Harvard to givetimely reports to the Corporation which will makeclear "what schools could run into financialproblems down the road," Segall says.

The Road Ahead

With these needs still pressing, it isimpossible to predict if the rest of ADAPT'simplementation will go more smoothly.

Phase I-"the core financials"-is expected to beavailable on-line this July. After they "go live,"ADAPT managers will spend the next six monthsworking out the kinks and hope finally to lay thefirst part of the project to rest.

Phase I was originally budgeted to cost $45million dollars-even with a 20 percent costoverrun built in. It is now expected to run morein the neighborhood of $60 million.

Once they have finished with Phase I, ADAPTwill attempt to tackle the last two piecessimultaneously.

Phase II will deal with human resources,payroll and benefits, and Segall expects it to becompleted by 2001.

Phase III will deal with other financialsystems, such as grants, and should finish at thesame time as Phase II.

But the University is painfully aware thattrouble may well lie ahead.

"It doesn't make sense to try to predict [whenADAPT will be entirely finished]," Segall says.

He says he is somewhat apprehensive aboutgaining acceptance of the new systems from thethousands of Harvard administrators who will usethem.

"Some will find it a challenge to change theway they work," Segall says. "They will need a lotof hand-holding."

Harvard will work hard to train its employees,but even that may go wrong, Fineberg says.

Fineberg says he fears a situation like the onehe experienced while traveling the day after hisairline changed its software. He says heencountered long lines because the airline's staffwas having trouble with the new software.

When he asked one worker whether he had beentrained in the new software, the employee toldFinberg that he had been, but it was during theprevious summer, and the training had beenforgotten.

Such unforeseen problems could well hit Harvard,and, Fineberg says, "We need a backup plan at thispoint."CrimsonSeth H. PerlmanTECHNICAL DIFFICULTIES:Project ADAPTExecutive Director PETER J. SEGALL has his workcut out for him in order to finish by 2001.