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July 16, 2010 By Steve Towns, Editor
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."
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 The vendor also has canceled planning meetings and significantly withdrawn from planning activities associated with the project.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."
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.
You may use or reference this story with attribution and a link to
http://www.govtech.com/pcio/Texas-Warns-IBM-of-Outsourcing-Contract.html
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Seems funny that there are no comments about this story. If the truth be known, the people of Texas would be outraged at the fleecing they are getting under this contract.
Seems funny that there are no comments about this story. If the truth be known, the people of Texas would be outraged at the fleecing they are getting under this contract.
Why does the legislature continue to force agencies to outsource? Privatization does NOT save money; it costs MORE to outsource than to pay State workers to do the job. Most of them make less than $22,000 a year. This is ridiculous, I encourage everyone to WRITE your legislators to demand that they STOP privatization of eligibility and server support! These people do NOT care about needy Texans they are only in it for the money and they do NOT do a good job. They are wasting taxpayer dollars with every contract they award!
Why does the legislature continue to force agencies to outsource? Privatization does NOT save money; it costs MORE to outsource than to pay State workers to do the job. Most of them make less than $22,000 a year. This is ridiculous, I encourage everyone to WRITE your legislators to demand that they STOP privatization of eligibility and server support! These people do NOT care about needy Texans they are only in it for the money and they do NOT do a good job. They are wasting taxpayer dollars with every contract they award!
Comments against privatization are understandable but a bit off the mark. Privatization is the result of the government resources lacking the skill set or intelligence to do a given job, but the catch is there is seldom anyone in government skilled enough to manage the outsourced work, or to manage it if it was in-house for that matter. This project was (is) huge and would require very saavy oversight. IBM is one company that requires a heavy hand to manage.
Comments against privatization are understandable but a bit off the mark. Privatization is the result of the government resources lacking the skill set or intelligence to do a given job, but the catch is there is seldom anyone in government skilled enough to manage the outsourced work, or to manage it if it was in-house for that matter. This project was (is) huge and would require very saavy oversight. IBM is one company that requires a heavy hand to manage.
There are no comments because people are so used to the fleecing of their tax dollars that they have become immune to any story that talks about a new event.
The U.S. it is a government of the crooks, by the crooks, and for the crooks. So am I surprised when IBM put one over on the state of Texas ... no, I am not. Tell me something I don't know and I'll be a bit more surprised next time.There are no comments because people are so used to the fleecing of their tax dollars that they have become immune to any story that talks about a new event.
The U.S. it is a government of the crooks, by the crooks, and for the crooks. So am I surprised when IBM put one over on the state of Texas ... no, I am not. Tell me something I don't know and I'll be a bit more surprised next time.The next time I see a vendor do a better job than what the state employees could do will be the first. I have no idea why states continue to spend extra money to outsource projects when their own IT department would do a better job.
The next time I see a vendor do a better job than what the state employees could do will be the first. I have no idea why states continue to spend extra money to outsource projects when their own IT department would do a better job.
Yes, government IT workers typically cost less than private sector IT workers even when adding in governmnet retirement plan costs. The problem is the government IT worker typically does not have the necessary skill set to do the complicated IT projects because government does not offer a competative wage package to attract the bets IT minds; they go to the priivate sector. Hence the dilemma.
Yes, government IT workers typically cost less than private sector IT workers even when adding in governmnet retirement plan costs. The problem is the government IT worker typically does not have the necessary skill set to do the complicated IT projects because government does not offer a competative wage package to attract the bets IT minds; they go to the priivate sector. Hence the dilemma.
Thomas makes the frequently repeated but fallacious (and ignorant) statement that state government must outsource information technology resources because its employees lack the skill and/or the intelligence to do the job. Balderdash! As is his statement that state employees also do not have the requisite skills to manage an IT contract. IBM is not performing according to its contract agreement. Let's place the blame squarely where it lies, then --- on IBM, not on state IT workers. Perhaps IBM simply doesn't have the skilled people necessary to adequately fulfill its contract requirements
Thomas makes the frequently repeated but fallacious (and ignorant) statement that state government must outsource information technology resources because its employees lack the skill and/or the intelligence to do the job. Balderdash! As is his statement that state employees also do not have the requisite skills to manage an IT contract. IBM is not performing according to its contract agreement. Let's place the blame squarely where it lies, then --- on IBM, not on state IT workers. Perhaps IBM simply doesn't have the skilled people necessary to adequately fulfill its contract requirements
While outsourcing may seem like a sound business model, it has scary pitfalls, especially for government. Most of IBM's outsourcing goes to other countries. We should not be the least bit comfortable with our government's data/infrastructure be controlled by non-Americans. Outsourcing may be fine in some instances but this should be considered unacceptable. For example, you may be fine with hiring someone to cut your lawn and they get someone else to do it, but what if your child care provider did it? Today IBM is only outsourcing the manpower. When it becomes more cost-effective to house the datacenters elsewhere, what happens when the political climate changes and our data is in a country that's no longer on friendly terms with us?
While outsourcing may seem like a sound business model, it has scary pitfalls, especially for government. Most of IBM's outsourcing goes to other countries. We should not be the least bit comfortable with our government's data/infrastructure be controlled by non-Americans. Outsourcing may be fine in some instances but this should be considered unacceptable. For example, you may be fine with hiring someone to cut your lawn and they get someone else to do it, but what if your child care provider did it? Today IBM is only outsourcing the manpower. When it becomes more cost-effective to house the datacenters elsewhere, what happens when the political climate changes and our data is in a country that's no longer on friendly terms with us?
Migrating the states huge email platform to an outsourced provider could immediately eliminate a huge part of the problem:
State have highly trained professionals mostly who came from private businesses. On Another site IBM hires for little pay unprofessional interns. Most work done from India and other countries. Lots of work done by IBM employees who located in another states and pay taxes and spend there's money in another states. How this can benefit State Of Texas?