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AccountingWEB's 10 notable outsourcing failures

15th May 2007
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Rob LewisPosted by Rob Lewis, AccountingWEB feature writer

Following on from the recent survey by Compass on the propensity for outsourcing contracts to fall apart, I thought of some other notable outsourcing disasters. Here is my top 10.

1. The NHS’ NPfIT
Estimated overruns of £7.6bn, ridden with security problems, loathed by doctors, and way behind deadline already. Impossible, according to some. EDS came and went. Now Fujitsu, CSC and Capital Care Alliance are amongst the names taking the blame.

2. HMRC’s Tax Credits
They tried EDS, they tried Capgemini, they’ve paid over £300m and the site still doesn’t work properly. The credits system has already had to write off £1.4bn in overpayments – proof that handing money out isn’t the taxman’s forte.

3. Sainsbury’s ‘Business Transformation Programme’
Accenture’s new stock system apparently couldn’t track stock. Sainsbury’s take a £550m charge to profits and draft in 3,000 new shelf stackers – quickly. Meanwhile Accenture respond by blaming Sainsbury’s for insufficient due diligence.

4. DfES’ Individual Learning Accounts
Remember these? The ubiquitous Capita oversaw a project that at its height saw 10,000 accounts opened daily, the vast majority entirely unverified. The project led to a £70m overspend, the ILA budget itself overshot by £93m, and there were at least 133 police investigations. The amount paid to fraudsters is still unknown.

5. Swansea City Council’s e-government
Swansea (pop 226,000) signs ten-year, £83m deal with Capgemini to implement the government’s e-government initiative. Spends £40m. Realises “cash realisable benefits” not quite what were budgeted. Stops, after 18 months (and a couple of strikes – nice).

6. Cable & Wireless’ global IT services
C&W outsource IT to IBM. 14 months later a benchmarking process reveals an overcharge of £115 m for UK operations alone. The Big Blue thought otherwise. Went all the way up to the High Court before being settled in an “amicable resolution.” Proceedings meant C&W couldn’t insource again until the agreement had expired.

7. Cahoot’s security systems
Internet bank Cahoot, owned by Abbey, outsourced its security testing to Qinetic. After an unmonitored systems upgrade customers’ were able to wander in and out of each others’ accounts just by guessing user names and bookmarking the page. Could have been kerput! for Cahoot, but according to security consultant Neil Bartlett, the lapse was so dumb none of the hackers even noticed it. Qinetic still enjoys good relations with the company.

8. DWP’s change management
The Department of Work and Pensions outsources its IT to Microsoft and EDS. Somebody – we don’t know who – decided to upgrade a single desktop to Windows XP and accidentally applied the changes to the entire network, which consists over 80,000 computers. They all crash. Widely regarded as the worst computer crash in government history. Edward Leigh MP, PAC chair, put things into perspective by pointing out the DWP’s IT system was losing it £1.5bn a year anyway.

9. Lloyd TSB’s customer service
The UK’s biggest current account provider closed its Indian call centres after a petition signed by 400,000 customers. Now they can ring their branch instead, and listen to a British voice, albeit a recorded one, as it drones endlessly through the options on their selection menu. Not the first bank to pull out, and won’t be the last. Rivals estimated the move cost around £30m.

10. Carthage’s First Punic War
Hanno the Great outsources his soldiering to 20,000 Numidians. A one-nil away defeat to Rome causes a contractual dispute that sees Tunis seized by a rebellious mercenary army that soon decides to march onto the capital. Changes at board level result in the restatement of previous manager Hamilcar Barca, who resolves the matter out of court. By killing them all.

 

Replies (3)

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By carnmores
16th May 2007 14:35

Carthage
no mention of Archbishop Hippo!

i still dont know wher the word punic came from can anybody help?

iall i seem to remeber is that after Rome got tired of being beaten by the Carthiginians he wioed them off the map - shame really

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By User deleted
17th May 2007 14:54

Providers are the problem .... not outsourcing
Is outsourcing 'per se' the issue or the fact that organisations never learn from previous disasters

The problem is that same Providers who make complete 'foul-ups' are allowed to bid for future contracts. EDS, Accenture and laterly CapGemini seem to be on this monopoly board (pass GO collect £200).

Each time there is a disaster they seem to simply move onto the next contract whereas in fact they should be 'blacklisted' from these government contacts based on past performance - or to take matters further there should be a performace register (in the public domain) of all Providers, contract and results and any contract awarded on historic success

One howler that was missed was the iSoft debacle with Accenture pulling out of pole position and dropping everyone else in the mire

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By User deleted
13th Aug 2007 04:31

C-NOMIS - another winner ......
and the disasters keep rolling in. This one belongs to EDS

http://www.kablenet.com/kd.nsf/FrontpageRSS/77F1D5AA9FC1E91D8025733200415567!OpenDocument

http://www.theregister.co.uk/2007/08/09/id_card_pork_barrel_formal_opening/comments/

When are the 'powers that be' going to wake up to these guys - someone needs to be accountable for this sort of thing

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