International Business Machines Corp. (NYSE:IBM) was contracted by Pennsylvania to provide software to handle Pennsylvania’s unemployment compensation system, but that contract is dead in the water following cost overruns of $60 million based on an original budget of $106.9 million. Never mind that it was also 42 months behind schedule. While the contract is done, the lawsuits should continue for years with both sides blaming the other.
International Business Machines Corp. (NYSE:IBM) vs PA
The state’s Secretary of Labor and Industry, Julia Hearthway, made the decision following an $800,000 an independent study conducted by Carnegie Mellon University’s Software Engineering Institute, that blames both IBM and the state.
InfoWorld reports that Hearthway halted the project because, “the problems we’ve identified cannot be solved.” IBM said it was “surprised by today’s announcement,” adding, “In complex information technology implementations, there is accountability on both sides for system performance and service delivery.”
Hearthway, not wishing to back down, or take any blame given the inevitable lawsuit shot back with, “We’ve been meeting weekly with them and they know full well all the problems. That’s ridiculous that they say they’re surprised. They must be in denial.”
While that’s to be expected, let’s look to the Carnegie Mellon study to sort out some of this IT train wreck.
Report on International Business Machines Corp. (NYSE:IBM)
The report’s findings blame both sides while focusing on three primary reasons: software quality; procurement and implementation; and program management.
The report defends and blames IBM saying its development plan was up to, “industry and company standards and practices,” although the company lacked the “discipline to execute.” It also blames PA for its failure to oversee IBM properly and also suggested that there was a measure of inexperience on display by PA, while IBM may have rested on its name some.
As to procurement and implementation, the report once again blames both sides. The incomplete and ambiguous procurement specifications created by Pennsylvania was flawed from the beginning and created a poor foundation for the entire project. That said, IBM in its experience should never have accepted flawed specifications. Certainly there is more to it, but the report is quite lengthy and that is the gist of the myriad problems that occurred. For a comprehensive summary and report details have a read here.
Lastly, ineffective governance and program management cemented failure as the project encountered difficulties. Throughout the project, neither Pennsylvania nor International Business Machines Corp. (NYSE:IBM) established clear metrics and expected outcomes against which they could measure progress. Additionally, Pennsylvania personnel earmarked to this project was seriously lacking.
The whole affair should serve as a road map for private and public entities in how not to go about large IT projects.