New seminar on impact of BSkyB v EDS judgment

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Reading-based Clarkslegal is hosting a breakfast seminar on 31 March on  the impact of the judgment in the case of BSkyB versus EDS.

It says the judgment is of "relevance way beyond the IT sector and has lessons for all businesses taking part in procurements, whether as supplier or customer as a result of the finding of fraudulent misrepresentation by EDS and the devastating effect on its limitation clause".

It adds: "The decision also demonstrates the consequences of failing to vet and monitor your employees closely."

With my colleagues Bryan Glick and Karl Flinders, I attended last week an excellent seminar on the case at Berwin, Leighton Paisner.   It was organised by outsourcing advisers Burnt Oak Partners. Karl sums up here

These were some of the points that struck me:

Shouldn't business analysts rather than salespeople lead supplier bids?

At a roundtable on IT failures, which was organised by Hiscox and Computer Weekly, one of the main themes was the lack of influence of business analysts in supplier bids. The business analysts are the people who would help to deliver the project. So their ideas are grounded in the practicalities. A delegate at the roundtable, who works for a major IT supplier, said:

"Sales people will have full knowledge of broad offerings and yet they will promise the world to the customer to get the sale which inevitably does no parties to the contract any favours - other than the sales people riding off into the sunset with their bonus.

"Business Analysts will understand requirements and work with all parties to ensure delivery of the desired product whilst encompassing quality, change, risk and relationship/stakeholder management.

"When will sales people be rewarded as the rest of us are on successful delivery and customer satisfaction? And when will our interaction with the customer be brave enough to challenge their lowest bid mentality and suggest the best way to deliver what they want based on funded feasibility prior to the bid process?"

Another delegate said:

"I like the idea of rewarding sales people when the project is successfully deployed rather than on a commission basis which they get as soon as the contract is signed.

"This perhaps would stop them promising the universe when all that is being delivered is an unnamed asteroid.

"It comes down to cost: will the customer pay that little bit more for the two to three weeks of business analyst time?

 "Often not, unfortunately, because the people primarily involved with IT projects - those who hold the purse strings and not the actual users - are typically the only ones involved during the award of the contract.

"All they are thinking about is, as you say, keeping it cheap. The government (local and central), as we all know, falls for this every single time.

"Often it looks cheap at the start but those larger organisations - who we all know and love - know how to milk the public sector...

"All we can do is to continue delivering IT solutions that meet the requirements of our customers and hope that one day a bonehead from central government actually attends a roundtable such as the one we had at Computer Weekly and learns a few things."

Red Teams Reviews - an eye-opening factor in any major IT buying decision?

Little is known about the important work of "red teams" at suppliers - though these teams could, for IT decision-makers, make the difference between success and failure on a major project.

Red teams comprise a supplier's employees who haven't worked on a bid and so can cast an independent eye on the promises made by the salespeople on the bid team. Through objective role-play, the red team ascertains whether a project is feasible, whether the timescales are possible, and whether the budget is too low for what the client wants.

A former EDS employee, who was an EDS red team member, told the Berwin Leighton Paisner/Burnt Oak seminar that IT buyers who want to know whether a supplier's bid is realistic should ask for a copy of a bidder's Red Team Risk Register and the Red Team Reviews.

If BSkyB had obtained EDS's Red Team reviews before contract signing, would it have revealed some internal scepticism about the promised timetable and proposed budgets?

Indeed, would pre-contract disclosure of the Red Team Review have made the difference between success and failure on the CRM project? Would its disclosure have forced a meeting between BSkyB and EDS at which both sides better understood the challenges and risks?

Companies are asking: could they benefit from BSkyB/EDS judgment?

Robert Morgan and Jean-Louis Bravard of Burnt Oak Partners said several companies are looking at their contracts and projects to see if misrepresentation might have been a factor in their troubled projects.

Bravard said the BSkyB case may increase the overall procurement timescales and cost.  

Suppliers who tell the whole truth may not get the contract

Even if suppliers know that the customer's expectations are unrealistic, will they lose the bid for saying so? Suppliers in the past might have been economical with the truth to get the contract. Now less so after the BSkyB judgment. It appears that bidders are increasingly refusing to go ahead with bids if they believe that buyers aren't clear on what they want.

Buyers are apparently dumbfounded when all the major IT suppliers withdraw from a large bid.

When is a promise a contractual commitment?

Part of EDS's argument during the BSkyB case was that a promise was not a representation. The implication was that, if a promise wasn't a representation, it could not be a misrepresentation.

Should IT buyers pay for supplier feasibility studies?

A good way to see if a project is feasible and what the challenges and risks will be is to pay for two favoured bidders to do competing feasibility studies.

Requirements will always change - so keep timescales short?

The longer the project the more likely the original requirements which drove the specifications will become obsolete before the systems are delivered. So short is beautiful. Keep the project to a year from beginning to end. Break it into components which may be integrated later. It's a lesson the government hasn't learned.

BSkyB wanted a "world-class Contact Centre" - did it expect too much?

BSkyB won the court case against EDS - subject to any appeal. But it was still the victim of an IT disaster. Were its expectations overly optimistic? Its invitation to tender dated 17 March 2000 described the project thus:

"The Build and Implementation of a World Class Contact Centre for BSkyB and the further retrospective fitting of environment, culture, process and technology to existing sites."


Clarkslegal breakfast seminar - Clarkslegal website

IT salespeople should beware customers who are now crawling over their IT contracts - Inside Outsourcing

EDS on BSkyB case: the people involved "were exited" - IT Projects Blog
HP boosts contingency reserve after latest ruling in BSkyB case -


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