Several threats and a long letter detailing what it calls “chronic failures” of agreed service levels, Texas has made another move in its efforts to fix a seven-year, $863 million outsourcing contract with IBM that’s gone bad. The Texas Department of Information Resources is now saying it will rebid – four years early – all work now performed by IBM.

In a letter sent to IBM earlier this month, Karen Robinson, the department’s executive director said failure to correct alleged deficiencies leaves her “no course but to pursue procurement,” according to this article in the Dallas Morning News. In the letter, Robinson said the agency won’t terminate the IBM contract because it “has determined that it is not in the best interests of the state to exercise that right at this time,” the article reported.

IBM maintains it has done nothing wrong, and in the article IBM spokesman Jeff Tieszen said the company disagrees with the department’s accusations, adding that “IBM has worked in cooperation and good faith” with the department and hopes “to move the data center services project forward for the benefit of the state.”

You all may recall that the contract was first awarded to IBM in 2006, and by 2008, problems surfaced. There was a suspension and IBM promised to fix the problems. The contract was re-started, but things got bad again in the fall of 2009, and the contract was renegotiated.

IBM was contracted to migrate data center operations for 27 agencies into two consolidated data centers. The consolidation, per IBM’s bid, was to be done within 24 months. As I wrote back in July, in this blog, only five agencies have been completely transformed, according to Texas. Moreover, Texas claims, IBM is only working on the transformation of five of the remaining 22 agencies, and that these five are “only partial” transformations.

There are also allegations that IBM isn’t performing required, nightly backups on all the systems under IBM’s management, and that Texas has issues with IBM regarding disaster recovery, staffing, security, service level failures, asset management, system management and monitoring, efficient use of resources, procurement, capacity planning, project analysis and reporting, technology refreshes, and reports and forecasts.

I’ll keep watching as this unfolds. And I’ll share with you what I see and hear. I bet there is a lot to learn about what not to do from this gig gone bad.

Source:http://advice.cio.com/beth_bacheldor/12102/ibm_and_texas_outsourcing_troubles_part_two

Last Friday, IBM sent a letter to Texas Department of Information Resources (DIR) defending its performance on the $863 million, seven-year outsourcing contract that the state awarded to IBM in 2006, says a story in the Dallas Morning News.

As you may recall, in mid-July, the DIR sent a “Notice to Cure” letter to IBM stating that the company had 10 days to complete a plan that was acceptable to the DIR for curing the material breaches and correcting other deficiencies the DIR had identified, and that IBM must cure the contract breaches within 30 days. If IBM failed to do this, the DIR implied that it would seek to terminate the contract.

The Morning Star article states that IBM decided that it wouldn’t be making a formal response to the DIR’s cure notice, but would seek to meet with Texas sate officials to try to work out a new plan of action.

In addition, the Morning Star quotes the IBM response to DIR as saying,

“As you know, we do not agree that IBM is responsible for the problems that you outline in that letter… (but that IBM recognizes DIR) is dissatisfied with the current state of the project.”

That latter bit is somewhat of an understatement, I think.

Given the very public put downs by DIR of IBM and by IBM of DIR, I sure would like to be a fly on the wall of the next DIR-IBM meeting to see how they try to kiss and make up. To be sure, the meeting will be filled with lawyers from both sides subtly and politely blaming the other, but also trying to say let bygones be bygones.

Source:http://spectrum.ieee.org/riskfactor/computing/it/texas-outsourcing-contract-performance-defended-by-ibm

The Texas Department of Information Resources (DIR) warned IBM on Friday that its $863 million data center outsourcing contract with the state is in jeopardy. A seven-page “notice to cure” from Texas CIO Karen Robinson asserts that IBM has repeatedly underperformed and undelivered on the seven-year contract signed in 2006. The notice gives the company 30 days to fix the problems.

“IBM promised an investment in people, processes and technology to bring the benefits of data center consolidation to the state of Texas. We have had continual problems with basic service delivery and IBM has failed to deliver on their promises,” said Robinson, in a statement released by the DIR Friday.

The DIR says IBM failed to deliver on the centerpiece of the agreement: moving IT operations for 27 Texas state agencies into two new consolidated data centers that would be operated by the vendor. The notice gives IBM 10 days to come up with an acceptable plan for solving the problems and 30 days to implement the fixes. If not, the state could begin proceedings to cancel the contract, which is one of the largest state government IT outsourcing deals in the nation.

IBM denied the allegations.
“IBM has fulfilled its obligations under the contract and today’s action by DIR was unnecessary and unjustified,” said company spokesman Jeff Tieszen. “IBM has worked in cooperation and good faith with DIR to provide benefits and improvements to all citizens of Texas. IBM very much regrets the state’s action and will aggressively protect its interests going forward.”

Slow Transition
The massive data center consolidation, which was expected to be finished in December 2009, is less than 12 percent complete, according to the DIR. Just five agencies are completely consolidated, and consolidation efforts are under way in only five more, the department said. There are no schedules in place for consolidation of the remaining 22 agencies, the DIR added.

The notice says IBM began removing its personnel from consolidation activities without the state’s approval starting in October 2009. The vendor also has canceled planning meetings and significantly withdrawn from planning activities associated with the project.
“In the plainest terms, IBM has abandoned its contractual obligations to perform transformation services,” the notice said. “DIR has repeatedly pressed and requested IBM to resume and complete its transformation obligations.”

In the statement issued Friday, the DIR said it “remains committed to data center consolidation” and expects that the notice sent to IBM will trigger “immediate and substantial performance improvements.”
Second Notice

Friday’s action marked the second time Texas has issued a notice to cure to IBM over problems with the data center initiative. The DIR gave the company a 30-day notice in 2008 after Gov. Rick Perry ordered a temporary halt to consolidation efforts because of concerns about data backup.

At the time, Perry said he was particularly worried about IBM’s “apparent failure” to back up data for more than 20 state agencies. IBM and the DIR reported three weeks later that they had made progress on a plan to improve backup and recovery services.

Earlier this year, the DIR implemented changes designed to give individual state agencies stronger representation in — and more accountability for — the outsourcing initiative. Those moves came after a study commissioned by the DIR and completed by outsourcing consultants EquaTerra, found that governance provisions spelled out in the IBM contract were ineffective and inappropriate for keeping the massive outsourcing deal on track.

An executive committee of agency leaders was created to guide business direction for the initiative. Another committee of agency IT leaders, DIR representatives and contractors was formed to tackle technology issues. And a handful of working groups were created to focus on specific aspects of the project like service delivery and program management.

Texas officials said the old governance model, where the DIR centrally directed the consolidation project, simply didn’t fit the state’s highly federated government structure. The new approach, dubbed the “owner-operator model” by the state, was designed to push decision-making authority to the lowest level possible for a given issue.

Source:http://www.govtech.com/gt/articles/766425