The Vermont Legislature’s nonpartisan fiscal analysts are raising concerns with lawmakers over a wide-ranging overhaul of state administrative software expected to cost more than $70 million.
Lisa Gauvin, an information technology consultant for the Legislative Joint Fiscal Office, cautioned lawmakers that the final price tag of a human resources and finance project could be significantly higher than the estimate. And while she said she didn’t doubt the need for new technology, she sought to scrutinize the process.
“The question is how they do this project,” Gauvin told lawmakers in the House Energy and Digital Infrastructure committee on January 23.
The Enterprise Resource Planning — or ERP — project is intended to replace five existing state systems with Workday, a cloud-based subscription platform. As proposed, the state would retire its human resources system, its accounting and finance system, its budget system, and even two older finance systems used by the Department of Labor and Agency of Transportation.
The existing systems help keep government running — facilitating everything from paying employees on time to constructing the state budget. Those essential functions make the Workday transition critical to the functioning of state government.
The project’s scale sets it apart. Denise Reilly-Hughes, secretary of the Agency of Digital Services since the fall of 2023, hasn’t worked on an upgrade so expansive since taking office.
“It touches every user, every department, every agency and every branch,” she said in an interview.
Two oversight reports investigated the project, one conducted by Gauvin, and one by the consulting firm Plante Moran. Both noted sizable risks, yet the Joint Information Technology Oversight Committee, which is composed of lawmakers, authorized $11.8 million to be spent on the project at a meeting in November — money that lawmakers had already appropriated but which required further approval.
Irene Wrenner, a former state senator who served on the oversight committee, was the lone “no” vote on the funding release. She said lawmakers had only had days to review the two reports — too short a time to make an informed decision.
How exactly that money will be spent is not entirely clear, though it will go toward implementation. Reilly-Hughes said that the state was using some of the money for “business process transformation.”
But she added that the funding would also include other expenses.
“We are now taking into account some of the operating costs that would not necessarily be reflective of the project cost themselves, but they’re adjacent to them,” Reilly-Hughes said. “We are taking a little bit of a wider spectrum look at this project, because it touches so many people.”
The state signed the Workday contract in 2022 and has since cycled through multiple Agency of Digital Services secretaries. In the meantime, taxpayers have been footing the bill for one year of the software — though it hasn’t yet been implemented. Reilly-Hughes said Workday allowed the state to defer payments after the first year, given that state government had not yet started using the product. A recently released annual report from the agency on all its projects states that total spending on the project has been $740,000. However, Reilly-Hughes said in testimony to the joint IT oversight committee in November that total spending is closer to $4 million.
Other states have contracted with Workday for similar services with varying success. In Iowa, officials backed out of their Workday contract after already spending millions. And in Maine, the state’s more than $50 million contract came under fire after continued hiccups.
Central to Gauvin’s critique is that the state did not conduct a “gap analysis” before choosing Workday, meaning the state doesn’t know which functions can and can’t be replaced by the software. Gauvin singled out the labor and transportation systems in particular as possible challenges. The Plante Moran report similarly separates out the two “legacy” systems, noting that other states have had to replace those systems individually at a cost of $25-35 million per product.
Reilly-Hughes disagreed with Gauvin’s assertion that the state had not done its due diligence. She said the state had done “multiple gap analyses” and expects Workday will replace the transportation and labor systems, known as STARS and FARS.
Still, she acknowledged that “there’s always going to be unknowns,” even after gap analyses are completed.
“The timeline to get us to this point of being able to kickstart the implementation of this technology is much longer than anyone anticipated,” Reilly-Hughes added. The state has not yet replaced any of its systems with Workday.
Gauvin, the contracted legislative IT specialist, told lawmakers in the new House Energy and Digital Infrastructure Committee that, by and large, the state projects she’s reviewed are in good shape. The ERP initiative, though, is an exception. Unlike with previous projects, she recommended specific oversight practices to accompany the rollout of the new expansive software.
Rep. Kathleen James, D-Manchester, chair of the digital infrastructure committee, said in an interview she expects to take further testimony on state IT projects, including ERP, in the next few weeks.
Clarification: This story was updated to provide additional context on total state spending so far on the enterprise planning resource IT project.
