Texas gov. intercedes in failing IBM project

Texas Governor, Rick Perry, ordered state agencies to stop transferring data to IBM to prevent data loss on a failing project. Here's what's going on with this failure-in-progress.
Written by Michael Krigsman, Contributor
Texas gov. intercedes in failed IBM project

Texas Governor, Rick Perry, ordered state agencies to stop transferring data to IBM to prevent data loss on a failing project. Texas also fined IBM $900,000 for failing to meet data backup requirements specified in the state's $863M outsourcing contract.

This backup situation represents only tip of the iceberg with lots more failure to come. Be forewarned: as they say, "You ain't seen nothin' yet."

The Dallas Morning News reported:

[A] July server malfunction in the attorney general’s Tyler Medicaid fraud unit destroyed nearly half of eight months’ worth of documents – compromising scores of prosecutions. In the months before that crash, more than 10 agencies complained about network breakdowns and server backup problems with IBM....

In an unusual move, Perry has positioned himself as IT program manager on the disastrous project:

IBM has failed to perform “the crucial backup of data for more than 20 state agencies,“ Mr. Perry wrote in a letter to Brian Rawson, who oversees the IBM contract for the state’s Department of Information Resources [DIR]. “The agency has failed to implement a system of checks and balances that ensures data security, jeopardizing the ability of state agencies to deliver services to their constituencies.”

IBM's response provided no insight whatsoever in the company's position or thinking:

“IBM takes very seriously the issues that have been reported,” [a spokesperson] said. “We are committed to helping the state to better serve its citizens through the innovative use of information technology.”

In a separate article, the Morning News did report that IBM acknowledges things haven't gone well with the Texas contract:

In a Nov. 3 letter to the governor's office, IBM acknowledges the company overreached by assuming responsibility for existing technological conditions that are inadequate, inconsistent and not sustainable.

"The state and IBM will have to evaluate the investments required to remediate the current deficiencies, develop a funding model, and prioritize accordingly," wrote two IBM officials.

The Morning News added:

At the time the contract was signed, the state and IBM said taxpayers would save $25 million over the first two years. An early cost analysis by the accounting firm Grant Thornton showed the project had saved the state about $500,000 overall through February.

Texas initiated the project in 2005 with House Bill 1516 , which called for the state to consolidate purchasing and outsourcing of IT-related goods and services. According to DIR, the outsourcing program, called Team for Texas, will reduce waste and redundancy caused by IT system overlap in departments across the state:

Four statewide goals governed the development of this plan. Reducing government costs and driving effective technology contracting, expressed in the 2005 State Strategic Plan, Shared Success, remain as key components of this plan and are encompassed within the single goal of leveraging the state’s technology investment. The goals are:

  • Leverage the state’s investment in shared technology infrastructure
  • Protect and secure technology assets and information while safeguarding citizen privacy
  • Simplify citizen, government, and business access to public-sector services and information
  • Promote the innovative use of technology that positively impacts the state’s business, as well as its economic development


This failure seems to be the result of overly ambitious transition time frames, driven by IBM's desire to secure the business combined with Texas' need to quickly push its outsourcing goals forward. Significantly, poor change management also played an important role, as suggested by this comment in the Morning News:

One IT employee, who asked not to be named because of his connection to Team for Texas, acknowledged that IBM walked into state agencies ill-prepared. But the employee said the problem was compounded by hostile treatment from longtime state employees.

Solving this problem will require substantial investment for both IBM and the state. IBM must acknowledge its own mess, recognizing it accepted the contract without fully preparing to handle the scope of potential problems.

A more cynical view might suggest IBM accepted the contract despite these issues, knowing that project scope, and therefore IBM billings, would eventually increase as a result of these project start issues. Given the interlocking and conflicting agendas inherent in Devil's Triangle relationships, this scenario is not far-fetched.

Texas is hardly blameless. The governor must conduct an urgent session with agency heads to gain their support. IBM cannot, and will not, succeed without the state's active cooperation. The governor has inserted himself into the middle of this nightmare, and now he must find a way to get the departments to work with IBM. That's going to be a tough job: Gov, I feel your pain.

Based on progress to date, I don't believe either IBM or the state of Texas will meet this challenge, thus creating large-scale delays and cost overruns for years to come. My prediction: the iceberg of failure is rising in Texas.

[1912 illustration of Titanic hitting the iceberg from Ulster Folk and Transport Museum.]

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