Sad saga of GSIS and IBM

The pitiful battle between pension firm GSIS and tech giant IBM is nothing short of tragic. But, it's something that could have been easily averted if only the two camps exerted more patience and effort in resolving the issue.
Written by Joel D. Pinaroc, Contributor and  Melvin G. Calimag, Contributor

The pitiful battle between pension firm GSIS and tech giant IBM is nothing short of tragic. But, it's something that could have been easily averted if only the two camps exerted more patience and effort in resolving the issue.

However, I will say early on who I think is on the wrong side of this argument: it's the GSIS. Let me tell you how I arrived at this opinion.

For those who are not quite familiar with the case, here are the facts as I see them. Sometime in April this year, GSIS reported that its ILMAAAMS (Integrated Loans, Membership, Acquired Assets and Accounts Management System) broke down because of huge amounts of transactions conducted by its members, who comprise entirely of government employees.

The ILMAAAMS ran on IBM's DB2 database software, but here's the flashpoint of the controversy: GSIS did not purchase the database directly from IBM Philippines.

IBM, along with German business software firm SAP, entered the picture because their respective software--IBM's DB2 and SAP's enterprise application--was offered as a packaged solution by Team Synergia, a local company that was part of consortium that undertook the GSIS IT project.

Under their global OEM arrangement, IBM provides DB2 to be used in SAP applications that are sold by SAP or its business partners to customers. The maintenance and support of DB2 under this arrangement is through SAP.

When the problems cropped up, IBM Philippines insisted that, technically, it had no liability in the project. Big Blue stressed it did not have contract with GSIS and was not involved in the "supply, design or installation of the system".

Nonetheless, IBM Philippines said that "out of goodwill", it actively participated in resolving the issues by providing a database specialist to work with Questronix, the lead systems integrator, which installed and implemented the project.

This was disputed by GSIS, which argued that IBM Philippines either dilly-dallied or refused to acknowledge any liability when the database is clearly a product of its parent company, IBM USA.

In a GSIS press briefing I attended, its chief legal counsel, Estrella Elamparo, said it's unjustifiable for IBM Philippines to escape any liability when in fact it is the local office of the company that sold the product. That is why GSIS decided to charge in court not just IBM Philippines, but also IBM USA and Questronix, Elamparo added.

But, what's interesting in this case is that Questronix blamed GSIS for the system failures, claiming it did not institute standard industry practices. An incensed Elamparo, in the same presscon and court filing, said it was outrageous for Questronix to put the blame on GSIS in order just to save its neck. GSIS, thus, filed a libel case against Alex Aloba, president of Questronix, whose private letters were quoted in media reports.

GSIS also filed a 100 million pesos counter suit against IBM Philippines, which earlier filed a 200 million pesos libel case against the pension agency for its series of damaging print and broadcast ads that continue to this day.

From where I'm sitting, I can see that the damage wrought by this controversy to IBM Philippines has been tremendous and far-reaching. It's clearly an injustice, if you ask me. However, I think the company could have avoided this if its officials made some extraordinary efforts to help GSIS in its IT problems, instead of merely sending a database representative and invoking that it had no contract with the pension firm.

Knowing how trigger-happy the GSIS leadership is, it would have helped IBM Philippines if it marshaled its resources to fix the problem once and for all. The IBM subsidiary was also very stingy with comments, and very slow to react to the accusations hurled by GSIS in TV and print ads.

But, I'm quite surprised that the U.S. government, through the U.S. embassy in the Philippines, has not yet stepped into the row to protect the interest of one of its biggest technology companies. I haven't heard anything either from the American Chamber of Commerce (AmCham), which I think is also following the developments.

On GSIS, I honestly believe that they were overeager in filing those lawsuits. The situation could have been better if, as stated by Questronix chair Angelo Balili, the matter was dealt with "cooperation and collaboration rather than finger pointing and legal action".

And why is GSIS just training its guns on IBM? Under the terms of the OEM licensing agreement, it is SAP that should provide support in the event of any technical issues.

Now, there are even talks that the system crash is being made a scapegoat because of alleged missing funds which GSIS cannot make available to its members.

I've spoken to a couple of CIOs who work in the top departments of the government and they told me that most, if not all, of their IT systems are based on DB2 but are working just fine. "It's only [GSIS] who have experienced that," they said.

That assertion--along with the fact that Questronix has squarely put the blame on GSIS for its own system failures--should make the pension firm think really hard.

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