BSkyB Wins £709m Lawsuit Against HP-EDS 187
E5Rebel writes "In a massive legal case in the UK, HP-EDS has been found guilty of 'fraudulent misrepresentation' by their sales team when winning a major CRM project. Settlement could cost £200M out of an initial claim for £700M. HP's only relief was that parts of the claim were dismissed, but the core claim was upheld. HP is likely to appeal. Outsourcing will never be the same again. HP workers have been on strike against pay cuts last week; no doubt management will try and screw them further to pay for this debacle."
Re:SAP (Score:5, Interesting)
When I was in the U.S. Navy I was lucky to be at a command that was a test platform for an SAP implementation for the Navy(ERP was the Navy name for it). When I was there, if you were a "power user", even if not a computer junkie, it was very easy to get a grip on the program and use it very effectively. Of course, we had alot of complaining by alot of older people that didn't like change (every group will have these people). The actual rolling out of the platform was painful, but once it was in and operating it was great.
Our only issue was that we needed to be able to store classified "Confidential" information. This was information that was simply above public release, but below "Secret". Our procedures required certain safegards that were not easily implemented into SAP at the time. We had a plan to get it to work, but at a pretty significant cost.
Googling I just found www.erp.navy.mil, so it looks like the Navy has started using it more broadly. As much money as the gov't dumps into crazy stuff, I would be the first to say SAP/ERP was money well spent! Just don't mention NMCI(Navy and Marine Corp Intranet).
It's the relationship, stupid! (Score:3, Interesting)
I've done a lot of contract work, but nothing on the scale of a CRM install. Despite that, there are somem things that are the same, no matter the size of the job;
- The relationship is key. If you don't forge a good relationship with your client, you will always suffer. Always.
- If the relationship is good you can overcome any obstacle. Even total failure. Yes, even if your solution turns out to not work at all, you can work out the relationship.
- Relationships are give-and-take. If you succeed wildly, you will get more and better. If you do fairly well, you get what is due. If you mostly fail, you work it out. Sometimes it doesn't work out, true. If you fail totally, well, you get what you deserve.
- Importantly, don't get into a relationship you don't intend to actually work on, and don't have any real expectation of success. Someone on the engineering side of HP-EDS needed to tell the sales side 'we can't do all this'.
- Most important, don't go into a relationship with a crazy partner. Sky may have violated this one. Money makes contractors crazy. Trust me on this. The more money, the crazier. Those of you who have real-life relationships with real-life people will find corollaries to this, and they are indeed true. You do not need to waste your 401K to learn this, ok? The tabloids will offer proof enough. Same thing in business. Almost the same process.
HP is run by greedy idiots (Score:3, Interesting)
Being an HP/EDS employee myself, I can guarantee you that I will get screwed.
They already cut my pay once by 5%(plus 15% for one month). After doing this, they also cut several employee's salaries in a "job code alignment", which was just a pay cut in disguise.
This is before and after laying off hundreds of employees, replacing them with morons from India and Malaysia because they are "equally efficient but cheaper".
On the bright side, our CEO make record income thanks to his salary/compensations and his tremendous bonus. Apparently flushing your company down the shitter puts you at the top of the bonus queue.
HP/EDS is run by greedy morons, who outsource all the work to poor morons.
I'm happy to have a job and I hope this whole event doesn't affect me(although I'm sure it will), but HP/EDS can suck it for all I care.
Re:SAP (Score:1, Interesting)
I really think large companies buying these systems are going to start recording the sales presentations, burn them to DVD, and insist on including them in the contract.
That might be entertaining, I've had vendors flat out lie in sales presentations.
Re:Scope creep? (Score:5, Interesting)
I worked as an independent consultant at GM (run by EDS) and at Sky, cleaning up the mess they left behind.
Firstly, on behalf of all the independent consultants and contractors at both sites let me say thank you to EDS. Thank you for our fees. Without your stunning incompetence all down the line none of this would have been possible.
The reality at Sky:
I joined a couple of years after EDS was slung out. Sky had a creaking legacy (green screen) customer installs system. They needed a comprehensive, fully architected CRM system capable of handling their millions of customers. EDS came in, did a brilliant sales demo, then sent in the drones. This is their standard operating procedure. They have smart people to call on - for sales calls. When it looked like they were about to get slung out of GM suddenly the kind of guys who wrote RFCs were all over the place. Once the attention was off they disappeared back to sales calls. This is how all outsourcing operations run.
Sky discovered pretty quick that they were being handed a pos that could never scale to a multi-million customer operation. Pretty quick being after a couple of years of pointless development. After they ditched EDS things didn't really improve: every department (customer services, billing, actuarial, etc etc) chose a "best of breed" app (more like "best of sales demos" app) then spent years customising it to fit. Then a bunch of said indy contractors tried to integrate it all together. We did the best we could.
Counting the bodies in the development halls, and allowing for what Sky had to pay to get people to work in Livingston (Detroit was comparable, if rather bigger) I'd estimate their costs at £50+ Million a year over rather more than five years. This settlement would put a big dent in that, but it certainly won't cover the cost of EDS's truly monumental incompetence.
Coda:
Between the GM and Sky gigs I had a drink with Compaq's top salesman in Toronto. I related the disasters at GM for amusement value, only for him to express his undying affection and admiration for EDS. What goes, I asked, for there was a twinkle in his eye. He explained thusly.
EDS would come to him for a quote for 10,000 PCs in their upgrade cycle for a major client. Said salesman would provide a quote for top of the line PCs at below cost price. A massive loss for Compaq. He would put this deal on paper, fully specced, and pass it across the desk for signatures.
*Three years later* EDS would come back with the sign-off and a purchase order. Compaq would give them 10,000 of the dregs of the warehouse. They would all surpass the three-year-old spec in the contract. Massive profit for Compaq.
I imagine the salesman made a pretty decent bonus too.
Re:Scope creep? (Score:3, Interesting)
Yeah sure, despite your obvious confusion, you are still wrong. You are only looking at one side.
The other side is that HP/EDS (the same company), over promised on what they could deliver to Sky.
Both are common problems in outsourcing, both are equally likely to be true. In this case, according to the judgement and HP, it seems to be that EDS overpromised more than scope creep occured.
Re:No comment... (Score:3, Interesting)
If your employer's finances are so bad that not working 1-2 months of unpaid overtime will bankrupt them, I advise that you start looking for another job.
While most economies are starting to recover from recent event, decent well paying jobs are still thin on the ground. He may well be looking for alternative employment while working the current job. No point going until you've got somewhere to go to...
Re:Outsourcing (Score:2, Interesting)
Anyone know of any large outsourcing company that deliver what they promised, to a decent quality?
No. And I'd never in my life hire one.
If you're a big company with a reasonably bespoke requirement for software which isn't going to die after a few months, then you should treat it as part of your company. I'm amazed when companies think they can treat their complex data like something as simple as business stationery or the car fleet.
The one time it's worth going 3rd party is for highly specialised expertise or non-bespoke software.
An insider perspective from a different case (Score:2, Interesting)
I was called into the middle of a $110 million dollar contract between a very well known multibillion dollar company and HP. I was a subcontractor for HP that was assigned to make things work on the front lines. The vendor promised a migration of tens of thousands of computers without any need for desktop engineers other than simple boxing and unboxing. Over 800 packaged apps were on the line and over 50 desktop platforms had to be made to move to a single standard image.
The client at the time had an almost exclusively 10Mb hubbed network. They also had a contract with AT&T that stipulated everytime a port on a hub, switch or router was touched AT&T made $400. Found out an entire 24 port switch was set to half duplex? That will be $9600 to switch the single switch to full duplex. We had dozens of such switches and over 200 sites. The contract with the client demanded that the network upgrade to a fully switched 100Mbps network would be completed before the migration of the tens of thousands of computers.
Turned out the vendor promised the client their software would be so good that the client could reduce internal IT headcount by 25%. This was discovered by the clients IT department, and along with a contractual guarantee that no field engineer would be needed resulted in a perfect storm of non-cooperation with the clients IT department. It also turned out that the client postponed the network upgrade until after the migration to avoid those $400 a port switch costs as the contract with AT&T was due to expire in eight months.
I got involved as I was one of only three people assigned to migrate tens of thousands of desktops with no client cooperation on a network that was primarily 10 Mbps hubs. The vendor promptly assigned package creation to India which resulted in fewer than 100 of 800 packages being available at migration start due to their incompetence.
It was a perfect storm of incompetence and I was in the middle. I started keeping track of progress and wrote a daily report of what was successfully migrated, what wasn't and the reason for failure. For months the project dragged on, getting farther and farther behind as time went on. Unknown to me the client and the vendor started using my reports as a basis for daily fines that were in the six figures per day. Over the course of several months I unwittingly dictated how literally tens of millions of dollars were spent on fines between the two companies.
At the end the client was suing the vendor for fraud (which was true) and the vendor was suing the client for contractual non-compliance (which was also true). I had two well known multibillion dollar companies getting ready to sue each other, with each having decided ahead of time that I was their preferred witness on why things went bad. I had law firms from both companies tell me to prepare for dispositions the following week as I was advised that I could be in court for several months while the court case progressed. In America when you are an witness you are not allowed to be paid for your time in court as that would be considered a bribe. (Expert witnesses can be paid as they are not material to the case and are outside it).
I explained to both teams of lawyers that I of course cooperate with court and tell the truth. I also let them know that neither side would care for what I had to say. The case was settled the next day. I lost my job along with everyone else as part of the settlement. However I was able to get another job right away and was able to avoid personal financial disaster with being a witness in the middle of battling multibillion dollar behemoths.
It doesn't have to be this way (Score:2, Interesting)
None of these is healthy and when it goes wrong, the only winners are the lawyers. I worked with a Major European Telco which outsourced the development of a large software system. It went wrong quite quickly and no useful code was delivered for two years while they sorted out the mess - expensive.
...
It doesn't have to be this way. The construction industry has similar issues with large projects, due to the same root causes. The collaborative contract for the construction of Heathrow Terminal 5 was very successful and resulted in the project being delivered on time and on budget, with very few disputes:
http://www.iaccm.com/contractingexcellence.php?storyid=368 [iaccm.com]
I wonder if the IT industry will attempt to learn from this
Gord.
Re:HP is run by greedy idiots (Score:4, Interesting)
Ha, I'm laughing at the "put food on the table" crowd. Putting food on the table is a day-to-day chore. Job satisfaction, a suitable home life, unstressed parents and most importantly JOB SECURITY are a million times more important in the long run. It's short-sighted to claim that you have to be completely disrepected as a person in order to feed your family. Baby doesn't care that dad's a road sweeper, or a baker, or an IT manager, so long as he's home after work, and happy, and that he'll *probably* have a job tomorrow.
Working for companies that treat their employees like that is *not* security - security for today, maybe, but not for tomorrow. And the more you "suck it up" and "just deal with it" by continuing to work with employers that are *abusing* you as a human, the more they'll take you to the cleaners. And the more those employers will thrive and really not care about their employees at all. When do the companies stand up and listen and improve pay and conditions? When all their employees start to walk (and no, I'm not and never have been a member of any union, because I have a tendency to believe that other people are just as wet and short-sighted as some of the posters on this thread and I don't want them dictating what work / pay I'm limited to).
Think I'm just mouthing off and haven't ever been in the position? Been there, done that, several times, with a wife, newborn, toddler, etc., with a mortgage to pay, bills everywhere, loan payments, and balancing a thousand other spinning plates. Every time that I got screwed (or sensed it coming), I moved onwards and upwards and got happier in my work (and higher-paid, but that's neither here nor there). One of those times was when my daughter was barely a month old and I walked from a job because they wanted to treat me like shit (they also thought that the *best* candidate for my replacement wasn't suitable because "He's been working at a supermarket for the last month" in the middle of a economic crisis... so f***ing what? He's working, when he could be sitting at home, and he has more than enough experience / skill to do the job). Call me an idiot if you want, but my daughter did not go without at any point and within a week I was working somewhere else for infinitely more respect and a little bit more money.
I'm sorry, but I owe it to my family to keep my self-respect, to teach my daughter that I'm not a faceless, numbered drone, to come home healthy and happy, and if that means we eat bread and water rather than smoked salmon, so be it. And if a large company offering me huge wages for screwing other people over and / or a paycut that I haven't agreed to has to be told to stick their offer where the sun don't shine, I can, will and have done that (on both counts actually - I've turned down jobs that were handed to me on a plate purely because I didn't agree with how the company were making their sales).
Your family need to be fed, but they also need to know that Daddy isn't a robot that can be stepped on by everyone around him. That's teaching your kids nothing but subservience to people with money, and they'll grow up to hate you or follow you in that path. Like any sensible parent, I want my kid to grow up to question things that are wrong, learn the value of money, the value of respect, and to do better at life than I have. In a modern, developed country, starvation is a *long* way off and, if you seek proper help, almost impossible. If it means a choice between giving up my mortgage and making me / my daughter unhappy, it's an easy choice. Sorry, but my daughter's respect for her father cannot be bought for any job, price or token gesture. And nothing buys my daughter's happiness except my own, and that can't be had by knowing I'm "only" putting food on the table.
Live your corporate existence being abused and trodden on because there "aren't many jobs about". But it's not for me. I'll take my kid to the park rather than to a stadium, I'll show her how to cook masses of cheap soup instead of takeaways and restaurants, and I'll end up having more fun and gaining more respect in the process.