I was not amused to hear that a UK council is bankrupt. The council blamed an IT system that cost the earth. The IT system was meant to cost £19 million, but exploded over time to a cost of over £100 million. This is nicknamed the Oracle disaster by The Register, but it runs deeper than this. In fact, it is deep in the blood of many technology companies.
Way back when, when I first got a job as a sales rep in an IT firm (yes, before most of you were born), I got an opportunity. The opportunity was to upgrade a client from the system they had purchased. For simplicity, the system they had purchased was $1 million project. We were several million dollars cheaper than all of our competitors. Fantastic. However, the system they purchased would never have been able to support the trade they wanted to support on that system. It was seriously under configured in memory and storage. Why? Because it meant that the company’s bid to win the deal was half the price of the competition. Why was it half the price? Because it was seriously under-configured.
When this was raised, the answer was: “well, we responded to the RFP, and that system is what we thought would work … then you changed the goals”.
Who is right and who is wrong?
I felt bad as the client had to pay almost ten times more to get the system they wanted, and that they thought they had bought; they felt bad as they couldn’t get rid of my company, having invested so much, and were now stuck with them.
In that instance, as in many, they paid to dig themselves out of the hole we had built for them. I made the sales achievers trip to Hawaii, and all was well. Except that is never sat well with my stomach.
So, when you see headlines of technology projects running to excess, what has gone wrong? The client did not clearly articulate their needs or the technology company underbid to ensure they got the deal?
I guess this argument will never disappear, as it is clear that the issue is one that has existed for all time.
It reminded me of Will Smith in The Pursuit of Happiness (a great film), which reminded me of Parkinson’s law that states work expands to fill the time available. Can I just repeat that: work expands to fill the time available.
If you are in sales – whether it be technology, banking or otherwise – you always want to ensure the customer comes back, begging for more. Therefore, you sell the minimal, beat the competition, get the deal, and then work expands to fill the time available.
You may say that I am being cynical, but how else could a deal that was £19 million balloon into a £100 million plus contract with Birmingham City Council?
Boiling things down to basics, what amazed me is when someone took the bold decision to look at options. Options? Yes, there always options. I was specifically reminded of a bank CEO who told me they had a long-term project with a major tech provider. The project was late and under-delivered. He sat through the presentation from the provider which concluded the budget would be ten times more and take three times longer.
He threw them out. His decision was to hire another provider at a tenth of the cost and faster delivery thanks to current compute power, cloud services and more willingness to work with the bank’s aim and objectives.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...