Anchorage

A milestone for Anchorage’s troubled SAP system: First paychecks go out

Anchorage has cut its first paychecks to city employees on its $81 million upgrade to its business software system, a major milestone for a painfully expensive and drawn-out project that has tied up city resources for years.

Friday's payday wasn't without glitches. Of about 2,800 city workers, roughly 460 reported some missing pay in direct deposit, according to an email update from deputy fiscal chief officer Alden Thern to members of the Anchorage Assembly.

Most of the problems appeared to be tied to hours or leave not being recorded properly, according to Jason Bockenstedt, deputy chief of staff for Mayor Ethan Berkowitz. On Friday morning, the city payroll and finance officers were sending out compensation forms and writing out paper checks to the few hundred employees who weren't paid properly.

At the same time, Bockenstedt said he and many others, including Berkowitz, found no errors in their direct deposits through SAP — a critical sign that at long last, the software, which will take in invoices, handle tax information and account for budgets and labor contracts, is functional.

"The system is in production," said Zig Berzins, a Colorado-based independent consultant on the SAP project. "It's alive, and well, and it is operating."

In addition to payroll, the purchasing and finance systems are now being used, as well as accounting and budgeting tools, said city manager Mike Abbott.

[Timeline: Anchorage's increasingly expensive SAP project

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It's a moment that seemed at times like it would never come. The project began in 2011 during the administration of then-Mayor Dan Sullivan, with a $10.6 million price tag and plans to launch the next year.

When Berkowitz took office in 2015, the project was in its fourth year and suffering from cost overruns and staffing issues. After a review, Berkowitz concluded the city had invested too much in the project to scrap it. The mayor later concluded that nearly half of what had been spent had "no measurable benefit."

Now, another $40 million later, and with the project nearing the end of its sixth year, most of the key pieces of the system are working, said Abbott, the city manager. There are glitches, he said, and some less critical elements will be activated in the coming months.

"But we're doing the work of the city now in SAP," Abbott said.

City managers had expected issues with the first payouts on Friday, Bockenstedt said. In the weeks leading up to the payments, administrators warned people to check paychecks carefully.

He said fixes will be worked on before the next payday later in October.

Next comes the bill. The mayor's proposed budget for 2018 calls for spending $7.5 million on SAP.

More than half that amount is dedicated to paying off the city's debt on the project. The rest covers annual expenses associated with maintaining the software.

Devin Kelly

Devin Kelly was an ADN staff reporter.

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