The state’s massive computer outsourcing contract with IBM is mired in delays, server meltdowns and disputes, but it can still be salvaged, two independent consultants said Friday.
It’s still a good idea to merge computer systems in 27 different state agencies because the state can save money by buying in bulk and aiming for across-the-board improvements, said the report, commissioned by the Department of Information Resources.
But low morale among IBM employees, poor service and billing disputes remain chronic problems, and if the state is to rescue the troubled privatization push, it must let IBM concentrate first on the most critical needs of agencies, the report said.
“In the final analysis, the current relationship is not sustainable,” said the report by Houston-based IT consulting firm EquaTerra and Sierra Systems Group Inc. of Vancouver. “Texas has yet to realize all the benefits the state anticipated from this initiative, and we believe IBM has yet to reach even a financial break-even point.”
IBM holds a seven-year, $863 million contract.
The report said the department and IBM were in uncharted territory and probably couldn’t have foreseen all the difficulties, which have included thinly veiled lawsuit threats and intervention by Gov. Rick Perry. Late last year, he briefly suspended transfer of state records to the IBM data management program, following a Dallas Morning News investigation into a record-destroying server crash in the attorney general’s office that prosecutes Medicaid fraud.
Glenn Davidson, a managing director with EquaTerra, said the contract set performance standards that fit large corporations, which often have branch offices with similar needs and equipment. But the contract imposes “one size fits all” demands in state government, which makes no sense and has tied IBM in knots, Davidson said.
“For some agencies, once a week backup may be adequate. For other agencies, where they do large volumes of transactions … it’s not adequate,” he said. “That’s just one example but that exists across this contract. That’s what needs to be fixed.”
The report urges that the contract be rewritten by February. It said needed changes can be made without additional cost to the state.
It’s not clear, though, if the privatization can save the state $178 million by September 2014, as originally forecast three years ago. The most recent audit showed only $9.7 million of savings in the venture’s first 23 months – far off the $24 million annual needed to hit the mark.
Karen Robinson, a former aide to Perry who recently was named the department’s interim chief, said the new report “confirms the soundness of our basic goal and provides a clear path for reaching it.” Robinson said, though, that much work remains.
Tony Befi, IBM’s senior state executive for Texas, said the company “remains committed” to making a go of the venture.
In September, Secretary of State Hope Andrade pulled the state elections system out of the contract, weeks after a 13-day hardware outage denied the public access to records in her business-filings office.
“We just felt like we could not put in jeopardy the ability to conduct fair and credible elections,” Russell Dillard, a spokesman for Andrade, recalled Friday.
The secretary of state won Perry’s blessing to upgrade its existing computers and create backups at two other locations so it can get through next year’s elections, he said.
And last month, the department’s board was given a report showing that agencies that are the project’s customers remain very unhappy. In August, they gave the venture on average a customer satisfaction score of 2, out of a possible 5.
Source:http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/DN-statetech_14tex.ART.State.Edition1.4b9ffcd.html
