Dysfunction Shows in Texas Outsourcing Contract with IBM

Ann All

Reality TV used to be one of my guilty pleasures, though I haven't gotten hooked on any shows since becoming a mother. My husband and I often joke that when we retire, we'll spend at least a year catching up on all the TV series we missed due to parenthood. Based on recommendations of reality-loving friends, I've seen a few episodes of "Celebrity Rehab," the VH1 series that follows Z-list celebrities at California's Pasadena Recovery Center who are trying to kick drug and alcohol addictions. The problem: Dysfunction has become a comfort zone for many of them, and they apparently lack any real desire to get clean and sober.


If I thought anybody would watch it, I'd pitch a similar show about government outsourcing. In the past few months, I've written about troubled outsourcing initiatives in Virginia, Indiana and Texas, all of which seem heavy on excuses and light on resolutions. With government outsourcing projects, as with substance abuse treatment, dysfunction is a hard habit to break.


An InformationWeek article about Texas' continuing problems with a two-year-old outsourcing contract with IBM points to a lack of effective governance as the primary problem. Governance is always a challenge, but it's an even bigger one in organizations where folks are more motivated by maintaining the status quo than a desire to solve problems. That comes through in a report by IT consulting firms EquaTerra and Sierra Systems Group that finds the state's seven-year, $863 million contract with Big Blue is "not sustainable" in its current form.


The agreement did not take into account "the organizational, financial and operational realities" of Texas government, the consultants found. Among the problems mentioned in the report: cross-agency contention and a lack of real authority for the Department of Information Resources, the agency tasked with managing the contract. Recommendations include addressing inter-agency dynamics, categorizing and prioritizing disputes and open issues, and overhauling the governance process.


Sounds like a tall order, and the consultants say these changes should be made within a year if the state hopes to achieve anything even close to the $159 million in cost savings projected when the contract was signed. Thus far, Texas has saved less than $10 million. Not only that, but in a case of lose-lose, the consultants believe "IBM has yet to reach even a financial break-even point."

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Dec 5, 2009 6:29 AM user45678 user45678  says:

Irrespective of who messes up, why dont your write about Outsorcing the CEO - perhaps that should be the new trend.

I think greed has overridden these CEO's and politically - to make themselves look good they are selling off their companies pieces in name of cost saving and higher profit.  So dont you think they should experience what it is like to be outsourced. US can save trillions of dollars and get out of deficit quickly - TARP payments paid over night. CEO/ bankers/ financial traders salary should not top $1 million.


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