If there are any Barnet Councillors out there who are unaware of just how dangerous outsourcing can be, they should consider the experience of the first ever major outsourcing cock up. Hanno the Great outsourced his army to 20,000 Numidians. The result? Rome won. I have a great interest in ancient military history and whilst researching Roman military tactics came across this article on the AccountingWeb site (http://www.accountingweb.co.uk/blogs/accountingweb/accountingwebs-10-notable-outsourcing-failures)
It details the top ten outsourcing failures. Hanno's defeat was number ten ! What is interesting is the way Barnet Council seem to think they know more about business than Sainsburys,
1. The NHS’ NPfIT
Estimated overruns of £7.6bn,
ridden with security problems, loathed by doctors, and way behind
deadline already. Impossible, according to some. EDS came and went. Now
Fujitsu, CSC and Capital Care Alliance are amongst the names taking the
2. HMRC’s Tax Credits
They tried EDS, they tried
Capgemini, they’ve paid over £300m and the site still doesn’t work
properly. The credits system has already had to write off £1.4bn in
overpayments – proof that handing money out isn’t the taxman’s forte.
3. Sainsbury’s ‘Business Transformation Programme’
new stock system apparently couldn’t track stock. Sainsbury’s take a
£550m charge to profits and draft in 3,000 new shelf stackers – quickly.
Meanwhile Accenture respond by blaming Sainsbury’s for insufficient due
4. DfES’ Indivudal Learning Accounts
these? The ubiquitous Capita oversaw a project that at its height saw
10,000 accounts opened daily, the vast majority entirely unverified. The
project led to a £70m overspend, the ILA budget itself overshot by
£93m, and there were at least 133 police investigations. The amount paid
to fraudsters is still unknown.
5. Swansea City Council’s e-government
(pop 226,000) signs ten-year, £83m deal with Capgemini to implement the
government’s e-government initiative. Spends £40m. Realises “cash
realisable benefits” not quite what were budgeted. Stops, after 18
months (and a couple of strikes – nice).
6. Cable & Wireless’ global IT services
outsource IT to IBM. 14 months later a benchmarking process reveals an
overcharge of £115 m for UK operations alone. The Big Blue thought
otherwise. Went all the way up to the High Court before being settled in
an “amicable resolution.” Proceedings meant C&W couldn’t insource
again until the agreement had expired.
7. Cahoot’s security systems
Cahoot, owned by Abbey, outsourced its security testing to Qinetic.
After an unmonitored systems upgrade customers’ were able to wander in
and out of each others’ accounts just by guessing user names and
bookmarking the page. Could have been kerput! for Cahoot, but according
to security consultant Neil Bartlett, the lapse was so dumb none of the
hackers even noticed it. Qinetic still enjoys good relations with the
8. DWP’s change management
The Department of Work
and Pensions outsources its IT to Microsoft and EDS. Somebody – we
don’t know who – decided to upgrade a single desktop to Windows XP and
accidentally applied the changes to the entire network, which consists
over 80,000 computers. They all crash. Widely regarded as the worst
computer crash in government history. Edward Leigh MP, PAC chair, put
things into perspective by pointing out the DWP’s IT system was losing
it £1.5bn a year anyway.
9. Lloyd TSB’s customer service
The UK’s biggest
current account provider closed its Indian call centres after a petition
signed by 400,000 customers. Now they can ring their branch instead,
and listen to a British voice, albeit a recorded one, as it drones
endlessly through the options on their selection menu. Not the first
bank to pull out, and won’t be the last. Rivals estimated the move cost
10. Carthage’s First Punic War
Hanno the Great
outsources his soldiering to 20,000 Numidians. A one-nil away defeat to
Rome causes a contractual dispute that sees Tunis seized by a rebellious
mercenary army that soon decides to march onto the capital. Changes at
board level result in the restatement of previous manager Hamilcar
Barca, who resolves the matter out of court. By killing them all.