Australia: The authorities summed up the results of the most failure project with IBM and SAP

2007: IBM wins tender for creation of a payroll system

In the 2007th year of IBM won the contract on creation of a payroll system for Department of health care of the State of Queensland (Australia) on the SAP platform.

Initially planned project budget made 6 million Australian dollars, then was increased to 27 million Australian dollars.

2013

Prohibition of IBM on participation in other tenders of the state

In August, 2013 the government of the Australian state prohibited IBM participation in other contracts for execution of works for Queensland until the company does not improve process management. However, at that time this was not about submission of the claim to court as the state check revealed violations from both parties during implementation.

In the report according to the results of check making 258 pages it is said that IBM not ethically behaved even in the course of tender, and the staff of the company executed the duties from bad faith that delayed implementation for years. Besides, earlier between IBM and authorities of the state the settlement agreement according to which the authorities promised not to file a lawsuit if a system is brought to operating state was signed.

Growth of the project budget from 6 million to 1.2 billion dollars. The claim against IBM

In December, 2013 continuation of history of the conflict, event between IBM corporation and the Australian State of Queensland became known. After change of the power the government of Queensland changed the decision made concerning the project in August, 2013. With respect thereto the IBM company announced that it "is disappointed" with this solution.

Authorities of the state filed a lawsuit the claim against the IT company, having made a complaint concerning one of implementations: the main claim consists that, at the initial project budget of 6 million Australian dollars, as a result it grew to 1.2 billion Australian dollars (about $1.09 billion), i.e. by 200 times. The Australian^[1] reported about it].

Customers assure that system implementation took years, installed solution never worked correctly while 1000 people were involved in an implementation project, and expenses constantly grew.

According to the comment provided to the edition Business Insider, IBM considers this claim "political".

2014: An indemnification claim from IBM

On December 1, 2014 a story with the failed SAP project of IBM worth $1.2 billion in Australia received continuation. The government of the State of Queensland announced submission of the claim against IBM to achieve from the company of compensation for the monetary losses connected with incorrect system operation of payroll in local medical institutions.^[2]

Thousands of workers of health care in Queensland received the wrong payments or at all lost monthly salaries as a result of the wrong functioning of the system implemented by the former labor government. It did not begin to try to obtain compensation from IBM in due time and signed with it the peace agreement.

"We intend to finish case. Took away the money which is due to them from fair taxpayers of Queensland, and now we will do everything possible to return them" — the prime minister of the state Campbell Newman (Campbell Newman) said.

Based on investigation which began in 2013, became clear that failure in the salary project of IBM-SAP partly occurred because of public servants who appeared incapable to manage a system properly.

Australia accuses IBM of incorrect system operation of payroll worth $1.2 billion

IBM said that the company only in small degree is involved in the wrong payroll distribution among the Australian physicians, and "the blue giant" conferred the main responsibility for it on officials who during development and deployment of a system provided to the contractor incorrect function of calculation of income.

The representative of IBM reminded that, according to results of detailed investigation, the basic reason of incorrect system operation of payroll is connected with "groundless and rough negligence of authorities of the state". Those try to exculpate with themselves before society for own failures now, said in IBM.

At the same time the commission did not reveal any violations of the law or terms of the contract from IBM before project implementation, noted in the American corporation, having added about intention to be protected from attacks of the government.

2015: Authorities of the state summed up the results and recognized errors

On May 19, 2015 the ZDNet edition published material from which follows that the former prime minister of Queensland Anna Bligh recognized wrong the choice of a product of IBM for creation of the IT system of payroll in medical institutions of the state.

Speaking at the conference Gartner IT Infrastructure, Operations, and Datacentre Summit in Sydney, Bligh said that the entrusted IBM project was this "catastrophic disaster" as a result of which about 74 thousand employees of medical institutions received the wrong payments or lost them at all.

The former prime minister of Queensland Anna Bligh said that acquisition of an IT product of IBM for a health care system was wrong

"The managing program and its interaction with activity of authorities became the only largest lack of the project. There was no clarity in the organization of management" — Anna Bligh remembers.

According to her, there was no interrelation between the main leading structure which was responsible for all government IT infrastructure, and the Queensland Health agency which is engaged in projects in the field of local health care. The authorities of the region assured heads of Queensland Health that the IT system which in accuracy, will replace outdated was purchased.

"Actually we purchased a product which was improper for our purposes" — the ex-prime minister of Queensland reported.

She also added that the government did not consider complexity of works on creation of a system which needed to consider nearly two hundred industry agreements and at least 24 thousand conditions of payroll in medical institutions.

"Many people were close to the project, including IBM, SAP and governmental bodies, but when something went wrong, they just closed eyes to errors and reluctantly recognized them" — Anna Bligh told, having added that if it was possible to return back time, she involved to the project of the auditor from outside.

IBM completely lays all blame for the incident on authorities of the state and note that the made investigation did not reveal from IBM of any violations of the law and provisions of the agreement within the project.^[3]

Notes