Vendor, Client or End User?? · erp /core banking ... local sme local large enterprise regional...
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Transcript of Vendor, Client or End User?? · erp /core banking ... local sme local large enterprise regional...
The Perfect Project
Case Study of a Failed IT Project
Cobb’s Paradox
Complexity of IT Projects
So How do we prevent failure?
What to do when project failure is imminent?
Arbitrate or Litigate?
Veros’ Recommendations in Summary
2008 CNET
Situation:Sky wanted a "world class“ customer relationship management system at its contact centres in Scotland November 2000, EDS awarded Systems Integrator contract to design, build and implement on a T&M basisProject implementation period was estimated to be 18 monthsTwo years after project start, Sky subsidiary took over EDS’s role as system integrator responsibilitiesAnother 6 months later, EDS pulled out completely & contract ended. Initial baseline budget of around £48 million Upon termination, £170 million spent on software, systems integration, infrastructure costs, & remodeling of contact centre facilitiesSky ultimately took another six years & spent £265 million to complete the project.Sky sued EDS in 2004 … eventually for a sum of £709 million
Case Study references: Professor June Verner Uof NSW; Bill Molloy, Partner, Teacher Stern LLP, Herbert Smith LLP IT and outsourcing e-bulletin Feb2010
SKY CLAIMED EDS DEFENCE Misrepresentaion and DeceitEDS overstated or oversold their capabilities & unrealistically estimated resources required; I.e. Incompetent !
EDS falsely represented that they had a proper WBS and effort / time scoping and had reasonable grounds for believing they could and would meet the project deadlines as set out in both the tender response and the subsequent contract.
BSkyB did not know what it wanted from the system and attributed overruns to undefined project scopeBSkyB's requirements "kept on emerging like handkerchiefs from a magician's sleeve" during the roll-out.
Furthermore, Liability to BSkyB for non-fraudulent misrepresentation by EDS was excluded by the entire agreement clause
NegligenceEDS falsely represented that they "had a programme plan that was achievable and the product of proper analysis and re-planning
EDS denied that there was indeed a representation that it had carried out a “proper analysis” in relation to time or had “reasonable grounds” for an opinion that they could and would deliver within the timescales in the EDS response.
Breach of contractFailed to provide sufficiently experienced personnelFailed to deliver services & documentation as per contractFailed to exercise reasonable skill and care, or to conform with good industry practice.
No duty of care was owed by EDS to Sky in respect of pre-Prime Contract representations
The entire Sky claims were "absurd and extravagant”
Cobb’s Paradox :
“We know why (programs) fail”
“We know how to prevent their failure - ”
“So why do they still fail?”
Background
Martin Cobb – CIO, Secretariat of the Treasury Board of CanadaThe Standish Group’s CHAOSUniversity 1995Studied the 10 most complex IT projects in 1994All were all in trouble: eight over schedule, by an average factor of 1.6; over budget by a factor of 1.9 and the final two were cancelled with nothing delivered.
Judgment passed on 26 January 2010Judge Ramsey agreed with Sky’s claim of ‘misrepresentation constituted deceit’ because: EDS knew the representation was untrue, or was reckless as to whether it was true;
EDS intended Sky to rely on the representation
Sky relied on the representation to its detriment.
The court accepted Sky's argument and held EDS liable for negligent misstatement court also reiterated that suppliers owe customers a duty of care in relation to pre-contractual representations
Entire agreement clause does not exclude claims for negligent misrepresentation or misstatement
Court found that EDS: "failed properly to resource the project“; did not adhere to contractual deadlines, and ultimately made minimal progress.
failed to exercise reasonable skill and care or conform to good industry practice.
there was no effective project management, the planning was not properly documented
there were insufficient technical and managerial resources.
This 7 year legal battle is the most expensive court case in the history of the IT industryHP paid out £318 million in damages and legal costs
Case Study references: Professor June Verner Uof NSW; Bill Molloy, Partner, Teacher Stern LLP, Herbert Smith LLP IT and outsourcing e-bulletin Feb2010
IT P R O J E C T M A N A G E M E N T
F U N D A M E N T A L S
SCOPE TIME COST QUALITY HUMAN RESOURCE COMMUNICATIONS RISK PROCUREMENT
PROJECT TYPE
ENTERPRISE CAPABILITY
GEOGRAPHIC SPREAD
VENDOR ROLES
DEVELOPMENT ENHANCEMENT COTS ERP / CORE BANKING OUTSOURCING BPO HYBRID
NONE CONSULTANT APPLICATION DEVELOPER PRODUCT IMPLEMENTOR SYSTEMS INTEGRATOR OUTSOURCER CLOUD/SaaS PROVIDER HYBRID Via ON‐SHORE / OFF‐SHORE
LOCAL SME LOCAL LARGE ENTERPRISE REGIONAL MNC, LOCAL SITE REGIONAL MNC, HQ GLOBAL MNC, LOCAL SITE GLOBAL MNC, REGIONAL HQ GLOBAL MNC, GLOBAL HQ
LOCAL – SINGLE OFFICE LOCAL – MULTI OFFICES LOCAL – MULTI CITIES REGIONAL
– MULTI COUNTRIES GLOBAL
– MANY COUNTRIES
Drivers ofIT Project Complexity & Failure Propensity
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1. A project is NOT any project (aka classify them according to the drivers of IT complexity and failure propensity)
2. Select your PMs (client and vendor) accordingly (and appropriately)
3. Manage the Services Sourcing Life Cycle
4. It is OK to marry but please have a Prenupt !
5. Trust but Verify !
IT PROJECT MANAGEMENT
FUNDAMENTALS
SCOPE TIME COST QUALITY HUMAN RESOURCE COMMUNICATIONS RISK PROCUREMENT
PROJECT TYPE
ENTERPRISE CAPABILITY
GEOGRAPHIC SPREAD
VENDOR ROLES
DEVELOPMENT ENHANCEMENT COTS ERP / CORE BANKING OUTSOURCING BPO HYBRID
NONE CONSULTANT APPLICATION DEVELOPER PRODUCT IMPLEMENTOR SYSTEMS INTEGRATOR OUTSOURCER CLOUD/SaaS PROVIDER HYBRID Via ON‐SHORE / OFF‐SHORE
LOCAL SME LOCAL LARGE ENTERPRISE REGIONAL MNC, LOCAL SITE REGIONAL MNC, HQ GLOBAL MNC, LOCAL SITE GLOBAL MNC, REGIONAL HQ GLOBAL MNC, GLOBAL HQ
LOCAL – SINGLE OFFICE LOCAL – MULTI OFFICES LOCAL – MULTI CITIES REGIONAL
– MULTI COUNTRIES GLOBAL
– MANY COUNTRIES
Drivers ofIT Project Complexity & Failure Propensity
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Gartner: Key Issues for Services Vendor Selection and Contracting, March 2010
Of Failed implementation, 75% of root causes can be traced to pre‐project kick‐off stage
This is mainly due to lack of proper expectation management and organizational readiness ( both client’s and vendor’s):
1. This is a Business Process implementation, not just technical2. Project Scope unclear and not agreed3. Stakeholders (Business & Vendor) not actively involved4. Roles & Responsibilities of both parties not clearly laid out5. Deliverables ill-defined & managed6. No Risk & Issues Mitigation processes agreed & adhered to7. No planned independent expert reviews & assessments
Preventing Pre‐Contracting Issues
Inadequate Business Casepoorly defined requirementsno risk analysis & mitigation (e.g. lack of adequate skills & experience)underestimated complexity, cost and scheduleUpper Management expects more with less
Lacking Project Sponsorship & Leadership
Weak Tendering Process pre‐RFP, RFPpoor / ill‐defined scope criteria for Selection (POC, Technical, Business, Ts&Cs etc) evaluation misalignment with Selection Criteria
No clearly defined (documented) expectations of Vendorsroles & responsibilities – individual, joint (between / among vendors)accountability, measurement and monitoring no regular reviews & assessments of vendor’s performance
Internal Politics unclear responsibilities & accountability of End Users vs ITdiffering (conflicting) Unit / Departmental Objectives / Goalsundefined risks vs (joint) rewards
Business impetus (biz case; project charter)Project GoalsDeliverablesFunctional RequirementsProcessesNon‐functional RequirementsRegulatory RequirementsData RequirementsInterfacesTrainingTimeframeArchitecturesGeographical Coverage Business entities People …
Wh
at is N
OT in
Sco
pe
!!!
AND
1. What are the root causes of the IT Project(s) that did not meet End Userexpectations and / or Project Charter and / or Business Case?
2. What are the strengths and weaknesses in the current pool of project managers?
3. What are key End-User expectations not met currently?
4. What is the impact of cultural differences on the outcome of our IT Projects?
5. What profiles of Project Manager are required for different classes of IT Projects?
6. What are the developmental needs to meet current and future Project projected requirements?
1. Hope … that you have a good Prenupt (i.e. a good contract) !
2. Seriously – two concurrent issues must be answered and activities initiated :i. Where do you stand Contractually ?
ii. Where do you stand Project-wise?
3. Reality - while IT experts are not lawyers, Lawyers cannot possibly provide a proper recommendation without an independent expert project assessment
4. Be prepared for the worst – in more ways than ONE !
5. Arbitrate or Litigate? Answer: look into your Prenupt! But ….
6. Hang tight and Be prepared for a loooooong roller-coaster ride !!
1. What are the key contractual (and pre-contractual) requirements and deliverables?
2. Where is the Project on each of these key requirements, deliverables?
3. For major issues discovered - ascertain root causes.
4. Whose fault or which party (parties) is more at fault ?
5. Can they be remedied? I.e. can the project be salvaged – effort, time, cost and risks
6. What are the immediate steps to prepare for possible arbitration or litigation? War-room !
What exactly is Independence ?
How about separating roles and responsibilities?
Different incentives; more control with direct contracting vs main contractor with sub‐contractors?
1. Assess and know which of your business-critical projects belong to the extra-complex and super-risky category (use Veros complexity template) to single out for special care and attention.
2. Do you have the right Project Manager(s) for the right Project?
3. Plan for (anti-) Failure ! a. Seek (independent) advice and monitor (assessments) for proper sourcing procurementb. Engage experienced (IT savvy) lawyers to prepare (if possible) earthquake-proof contractsc. Do not be penny-wise and pound foolish – better to try and be healthy rather than rely on being
able to find a good doctor
4. Trust but verify : periodic outside assessments of your consultants, software providers and / or systems integrator (i.e. audit your auditors)
5. Legal and IT experts must be a team!
6. Documentation, documentation … documentation!
GOOD LUCK !!
Veros Consulting is a boutique information technology and management consulting firm that specializes in:
IT Audit & Review
IT Project Failure Analysis , Prevention & Recovery
IT Dispute Resolution
e-Financial Services Strategy & Implementation
Complex Project Management
Program Office setup and management
More than thirty two years in the Information Technology industry with 20 years of executive management experience across countries in the Asia Pacific (including Japan) region.
Insights and Experiences primarily in:•Financial Services •Public Sector (e-Government)
Also has a broad background in many functional areas of IT including:•Highly Complex Project and Program Management•Management Consulting & Systems Integration•Applications Development •Software Package Selection & Implementation•Quality Assurance & Risk Management
On the business front, has diverse experiences including:•IT Audit and Dispute Resolution•M&A Integration•Organizational Transformation•Contracts & Negotiations•Troubled Systems Integration Projects / Critical Situation Management
Positions Held include:•General Manager, Consulting & Systems Integration, Financial Services Sector, IBM Asia Pacific region •Managing Partner, IBM Global Business Services (GBS), ASEAN/South Asia region•Managing Principal, Mergers & Acquisitions , Financial Services Sector, IBM Asia Pacific region•IBM Asia Pacific Leader, Applications Management Services (Outsourcing) •General Manager, IBM China (East Region)•Director of Operations, Financial Services Sector, IBM Asia Pacific region•Adjunct faculty, Singapore Management University’s Masters in IT (Financial & Services) program
