news Australian technology vendor TechnologyOne has claimed that using major third-party systems integrators such as IBM and Accenture on major technology projects can add to the risk of “implementation disasters” such as the billion-dollar catastrophe with Queensland Health’s payroll systems overhaul.
In a media release issued this month, Queensland-headquartered TechnologyOne noted that nine of Victoria’s TAFEs had successfully rolled out TechnologyOne’s Student Management System, as part of the Victorian Government’s project to support its TAFEs’ transition to new contestable training markets.
The go live of the final TAFE in October 2013 marked the successful end of a nine-month implementation project rollout phase, which TechnologyOne began at the beginning of 2013, the company said. TechnologyOne’s solution approach and close working relationship with Victoria’s TAFEs has streamlined each implementation, according to the company, enabling the participating TAFEs to derive early value
“Since TechnologyOne took over the management of this implementation project, we have successfully rolled out nine TAFEs in nine months, on time and on budget. In terms of multi-institution, enterprise-wide rollouts, this is a significant achievement, and a great outcome for the Victorian TAFEs and the Victorian Government,” said the vendor’s executive chairman Adrian Di Marco (pictured, right).
“This project is another example that demonstrates the power of working with a solution provider which builds, implements and runs its own software, as opposed to the scenario where third-party integrators such as IBM and Accenture are engaged to manage large-scale Oracle or SAP implementations. Using third-party integrators introduces added cost and complexity, and runs the risk of implementation disasters such as the failed Queensland Health Payroll system. We take complete, end-to-end responsibility for our customer implementations.”
The Queensland Health payroll systems upgrade was first kicked off in late 2007, when Queensland Health determined there was a need to look at a new payroll platform to replace the previous platform, based on Lattice and ESP software, which had been progressively implemented from 1996. Partially as a result of the fact that the state had decided to standardise on SAP’s ECC5 and Infor’s Workbrain software across its whole of government operations, those same platforms were picked for the Queensland Health implementation.
However, the project, implemented by prime contractor IBM, Queensland Health itself and government shared services provider Corptech — quickly went off the rails as poor governance and the complexity of Queensland Health’s award system kicked in, with the result that many of Queensland Health’s 85,000 workers have gone without pay, or were overpaid, at various periods from early 2010, when the system went live.
The Queensland Government’s formal inquiry into the payroll systems upgrade debacle at Queensland Health found damning allegations of procurement impropriety in the appointment of IBM as prime contractor for the initiative, and concluded that Big Blue should never have won the contract in the first place.
Subsequently, the Queensland Government explicitly banned its departments and agencies from entering into any new contracts with IBM until the company demonstrated that it has improved its governance and contracting practices. IBM is still believed to be banned from participating in Queensland Government contracts.
Accenture, too, has been involved with problematic large projects in Australia, with one of the most notable being the Australian Taxation Office’s colossal $814 million Change Program IT platform overhaul.
The Change Program was kicked off in 2004, when it had an initial budget of $445 million. This figure was subsequently increased by several hundred million, both due to increased legislative scope of the reform, but also budget overruns. The objective of the program was to migrate away from the ATO’s decades-old technology platform and on to a more modern architecture that was to deliver the agency improved flexibility in the way it conducts its business.
For the first few years of its life the Change Program appeared to be broadly on track, with the ATO conducting regular briefings with the IT media to give updates on its progress with the initative.
However, throughout late 2009 and early 2010 the project hit a series of roadblocks which resulted in very public delays to the ATO’s core work of processing Australian tax returns. In addition, the ATO’s extensive community of tax accountants became quite disgruntled with the ATO over the delays at times, threatening to sue the agency at one point. The problems resulted in the ATO having to hire around 800 extra staff to do manual processing work
However, an extensive review of the program published in June 2012 also found the program broadly to be a success, with the initiative delivering on most of its objectives and making a return on its investment in just four years, despite a history which at times seemed close to going deeply off the rails.
Both IBM and Accenture, in addition, have also achieved major wins in terms of complex IT project delivery in Australia. IBM was ultimately successful in deploying the Department of Immigration and Citizenship’s mammoth Systems for People overhaul using Oracle’s Siebel software, and Accenture has been successful at deploying SAP’s core banking platform at the Commonwealth Bank. Both projects ran substantially above $500 million in value.
Accenture declined to respond to TechnologyOne’s comments. IBM has also been invited to respond.
OK, let’s get stuck into this issue. Is TechnologyOne right? Does using third-party systems integrators such as IBM and Accenture with software platforms from Oracle and SAP create higher risk than using vendors such as Technology One, which integrates and manages all of its own software?
There are multiple sides to this story.
Firstly, let it be said that there is a grain of truth to Di Marco’s comments in this area. It is a fact that over the past decade, there have been many examples of technology projects in Australia based on software from SAP and Oracle and integrated by companies like IBM and Accenture which have suffered problems, especially in government.
Additionally, I would say that it is likely that a technology vendor like TechnologyOne has a better understanding of its own software than a third-party company like IBM or Accenture could, and how that software could be integrated in a customer environment.
However, this is not the whole story in this argument — not even close.
For starters, government audit reports into these kinds of projects have consistently shown that much of the blame for their failure, or for cost and time over-runs, lies with the customer-side governance of the project. If the projects had been governed better by the customer, they would have suffered less problems. In short, if you keep third-party systems integrators on a short leash and apply modern project management controls, they are much more likely to do a better job on your project. And this is definitely the customer’s responsibility. Not everything is IBM or Accenture’s fault — in fact, often it’s a problem with the customer’s business processes or original program scope or definition.
Secondly, there is also the fact that many of these projects are inherently incredibly complex. Overhauling the Queensland Health payroll system, with 85,000 staff and many different award structures? Overhauling the ATO’s taxation systems? These are hideously complex projects which have thousands of complicating factors. It’s not enough to just say that it’s IBM’s or Accenture’s fault that these projects have suffered problems. That’s an overly simplistic argument. Sometimes I’m amazed these projects succeed at all, given how complex they are.
Technology project management isn’t precisely an established field. As Lancaster University lecturer Paul Ralph wrote this week about the Obamacare fiasco in the US: “The uncomfortable reality is that no one really knows how to design or manage large, complex IT projects.” These are some of the most complex systems in the world, and when they go wrong, blame isn’t easily apportioned. Usually multiple factors cause delays and cost overruns.
In addition, there is a lot of evidence to suggest that these projects could not actually be delivered without the assistance of third-party systems integrators. Certainly Oracle doesn’t have the specialist standing workforce to integrate its Siebel software for the ATO. And the same can be said of SAP in the case of Queensland Health. These projects involve hundreds, sometimes thousands of staff, and the only way to get those staff is to turn to major IT integrators like IBM and Accenture. That’s their job.
Then too, TechnologyOne may talk big, but it’s a fact that its technology is probably not up to the task of running an ATO central taxation system. It’s generally seen as a junior technology vendor compared with the big guns like SAP and Oracle, which generally have platforms with significantly more complexity. There’s no doubt that TechOne’s software is very capable, but I’ve mainly seen it being deployed in medium-sized organisations in Australia, such as councils. You don’t tend to see deals in the hundreds of millions of dollars signed with the vendor. Usually you have to go to SAP, Oracle, IBM and Accenture for that kind of work. There aren’t a lot of options when things get really complex.
In conclusion, there is probably some degree of underlying truth to TechOne’s claims about the risks of using third-party systems integrators on IT projects, although the vendor’s comments are very far from being the whole truth, with many other factors involved. In addition, I feel that it’s usually not the specific choice of vendor and systems integrator which ends up deciding the fate of most IT projects — it’s how the two are managed and the project governed. But then, that’s usually the nature of smack talk: It highlights one aspect of the truth while ignoring others. And Adrian Di Marco has long been a master of it ;)