The State of Idaho lost millions on the unsuccessful ERP project

The department of health care of the State of Idaho for the first time addressed Unisys in 2007 for development of the system of processing of claims from the companies providing medical services. Last year the division of Unisys involved in the project was absorbed by Molina Healthcare which approved the project in inheritance.

However since a system was brought into operation, "in it a series of construction defects and a lack of coordination on their elimination were detected that led to a monthly payment delay and inexact processing of claims", said in the report of local management of the state assessment.

Usually transaction in any new IT system assumes careful planning and development and also involvement of all concerned parties, including users. But in the project for Idaho it was not made, on the contrary, the project was "crude", adequate participation of users of department in it was not organized, also written in the document.

At the same time a system was put in operation without carrying out such significant stage as testing, auditors consider. The state had to select in addition $117 million to cover requirements of the companies while all difficulties described above were not resolved.

Now the department tries to return this money, but so far it was succeeded to receive only $49 million, and there is a risk that $2 million will not be returned in general, the report says.

At the same time the government contract of Molina expires only in November, 2014, its total cost is $106 million where $1.3 million monthly operational payments enter. The state paid already about $18.6 million under the contract as of March of this year. But payment of an invoice for $9 million is intentionally delayed, this account covers the period from June to December of the current year. Staff intends to compare the paid and provided services.

Auditors made to the parties several recommendations. In particular, the IT companies they advised to improve monitoring of system effectiveness and to take measures to correction of defects. Further it is necessary to state in contracts more accurately stages of projects and their terms.

In turn Molina refers to the fact that the project was executed by Unisys completely before absorption so new owners did not enter to it lines. Experts say that start of such complex system without test operation was doomed to a failure.