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?
Ata roundtable on IT failures, which was organised by Hiscox and ComputerWeekly, one of the main themes was the lack of influence of businessanalysts in supplier bids. The business analysts are the people who would help to deliver theproject. So their ideas are grounded in the practicalities. A delegateat the roundtable, who works for a major IT supplier, said:
“Sales people will have full knowledge of broad offerings and yet theywill promise the world to the customer to get the sale which inevitablydoes no parties to the contract any favours – other than the salespeople riding off into the sunset with their bonus.
“Business Analystswill understand requirements and work with all parties to ensuredelivery 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 successfuldelivery and customer satisfaction? And when will our interaction withthe customer be brave enough to challenge their lowest bid mentalityand suggest the best way to deliver what they want based on fundedfeasibility prior to the bid process?”
Another delegate said:
“I like the idea ofrewarding sales people when the project is successfully deployed ratherthan on a commission basis which they get as soon as the contract issigned.
“This perhaps would stop them promising the universe when all that is being delivered is an unnamed asteroid.
“Itcomes down to cost: will the customer pay that little bit more for thetwo to three weeks of business analyst time?
“Often not, unfortunately, because thepeople primarily involved with IT projects – those who hold the pursestrings and not the actual users – are typically the only ones involvedduring the award of the contract.
“All they are thinking aboutis, as you say, keeping it cheap. The government (local and central),as we all know, falls for this every single time.
“Often it looks cheapat the start but those larger organisations – who we all know and love- know how to milk the public sector…
“All we can do is tocontinue delivering IT solutions that meet the requirements of ourcustomers and hope that one day a bonehead from central governmentactually attends a roundtable such as the one we had at Computer Weeklyand learns a few things.”
Red Teams Reviews – an eye-opening factor in any major IT buying decision?
Littleis known about the important work of “red teams” at suppliers – thoughthese teams could, for IT decision-makers, make the difference betweensuccess and failure on a major project.
Red teams comprise asupplier’s employees who haven’t worked on a bid and so can cast anindependent eye on the promises made by the salespeople on the bidteam. Through objective role-play, the red team ascertains whether aproject is feasible, whether the timescales are possible, and whetherthe budget is too low for what the client wants.
A former EDSemployee, who was an EDS red team member, told the Berwin Leighton Paisner/Burnt Oak seminar that IT buyerswho want to know whether a supplier’s bid is realistic should ask for acopy of a bidder’s Red Team Risk Register and the Red Team Reviews.
IfBSkyB had obtained EDS’s Red Team reviews before contract signing,would it have revealed some internal scepticism about the promisedtimetable 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 tosee if misrepresentation might have been a factor in their troubledprojects.
Bravard said the BSkyB case may increase the overall procurement timescales and cost.
Suppliers who tell the whole truth may not get the contract
Evenif suppliers know that the customer’s expectations are unrealistic,will they lose the bid for saying so? Suppliers in the past might havebeen economical with the truth to get the contract. Now less so afterthe BSkyB judgment. It appears that bidders are increasingly refusingto go ahead with bids if they believe that buyers aren’t clear on whatthey want.
Buyers are apparently dumbfounded when all the major IT suppliers withdraw from a large bid.
When is a promise a contractual commitment?
Partof EDS’s argument during the BSkyB case was that a promise was not arepresentation. The implication was that, if a promise wasn’t arepresentation, it could not be a misrepresentation.
Should IT buyers pay for supplier feasibility studies?
Agood way to see if a project is feasible and what the challenges andrisks will be is to pay for two favoured bidders to do competingfeasibility studies.
Requirements will always change – so keep timescales short?
Thelonger the project the more likely the original requirements whichdrove the specifications will become obsolete before the systems aredelivered. So short is beautiful. Keep the project to a year frombeginning to end. Break it into components which may be integratedlater. It’s a lesson the government hasn’t learned.
BSkyB wanted a “world-class Contact Centre” – did it expect too much?
BSkyBwon the court case against EDS – subject to any appeal. But it wasstill the victim of an IT disaster. Were its expectations overlyoptimistic? Its invitation to tender dated 17 March 2000 described theproject thus:
“The Build and Implementation of a World ClassContact Centre for BSkyB and the further retrospective fitting ofenvironment, 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 – ComputerWeekly.com