The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
The number of legal disputes over IT contracts and projects seems to increase every year, not just due to the number of high-level IT project disasters occurring, but also the growing number of security breaches taking place in recent years.
Indeed, looking at some of the big contracts that have just been signed, there could well be dozens more already incubating, with plenty of fresh legal cases coming too.
Some IT contract fiascos have been ended by mutual agreement of some sort (see NHS Scotland and BT patching up their differences, for example) but many more end in acrimony and recrimination - and even court.
In some cases, large sums of money have changed hands as a result of suppliers not keeping their promises, or customers wanting out of lengthy contracts.
Computing counts down some of the top IT contracting fiascos in the UK and the US...
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
7. Coats plc terminates IBM contract
Coats plc, the world's largest manufacturer and distributor of sewing thread and supplies, terminated its data centre services contract with IBM because it felt that the tech giant "lacked relevance".
Its CIO, Richard Cammish, told Computing that, in 2012, the British company's biggest data centre provider was IBM. However, within two years, IBM was no longer a service provider to Coats.
Coats, which counts the likes of Nike, Adidas, Levi's, Gap and IKEA as its customers, grew increasingly frustrated with IBM, complaining that it was not able to move fast enough for the business. CIO Cammish therefore took the decision to completely remove the company from its operations altogether.
He added that the termination of IBM's contract should serve as a warning to Coats' other IT service providers - namely SAP and Salesforce.com.
"If SAP are looking to increase their market share they have to bring contemporary tools to the table... it's all about relevance, they have to have the right tools, the right price point, they have to have agility," he said.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
6. How far will Oracle go to ensure it makes money?
You'd think that a company of Oracle's size would value a customer the size of US confectionary firm Mars - maybe even going easy on its much-criticised software licensing audit practices to keep such a high-profile customer sweet?
But you wouldn't be right.
The dispute kicked off when Oracle suggested that it wanted to review Mars' licences, and started a full-scale audit discovery process to determine how many servers at Mars ran VMware vSphere 5.5 or later (Oracle expects customers to buy an Oracle licence for every physical server on which vSphere is installed).
According to Mars' account of events, it tried to work with Oracle's Licensing Management Services (LMS) representatives to try to structure the audit and come to an agreement for a letter of understanding to govern the audit process, but LMS said it wasn't able to agree to any letter of understanding.
Then, Oracle sent a letter to Mars stating that it had breached the agreement the companies had by unreasonably delaying and refusing to permit Oracle's licence review. Mars then provided Oracle with hundreds of thousands of pages of documents to assist in the auditing process - but Oracle didn't want any of it.
After several exchanges between the companies, Mars said that Oracle wanted information that was "outside the scope of the audit" that was agreed, such as a list of all clusters and servers included in Mars' VMware environment.
In response, Oracle allegedly threatened to terminate Mars' software licences outright if it did not comply with all of its demands.
Mars then went to the Supreme Court of California County of San Francisco for an order against Oracle to limit its audit activities and to bar Oracle from following through on its termination threat.
Eventually, the two companies settled out of court, but it just shows how aggressively Oracle will go after customers that, it feels, ought to be paying more. Fortunately, Mars had deep enough pockets to be able to stand up to Oracle in court - something that other, smaller, companies may not be able to do.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
5. SAP sued by FoxMeyer - claiming that SAP was partly at fault for its demise
US pharmaceuticals company FoxMeyer blamed SAP - at least, in part - for its collapse following an SAP R/3 implementation, which it started in 1993, that rapidly went horribly wrong.
The company's bankruptcy trustees filed a $500m lawsuit in 1998 against SAP, and another $500m suit against implementer Andersen Consulting (now better known as Accenture), claiming the failed implementation directly led to its demise.
The lawsuit argued that R/3, which was intended to consolidate all the company's IT onto a single, integrated system, would also connect all FoxMeyer's operations at its warehouses.
However, by 1994, SAP informed FoxMeyer that the program could only process invoices at six of its 23 warehouses, and that it couldn't handle any more than 10,000 customer orders a night - compared with the 420,000 that FoxMeyer typically processed under its old system.
In 2004, SAP finally reached a settlement agreement to "pay a specified amount" in compensation.
However, FoxMeyer will forever be better known as a business school case study of how an ERP software implementation can go horribly wrong unless the customer is strong and focused, and fully aware of the software's limitations before it signs on the dotted line.
FoxMeyer is understood to have depended far too much on consultants and vendors, and had too little independent in-house expertise to carry out the implementation successfully.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
4. Cornwall Council terminates £160m BT contract, but not without a fight
In December 2015, Cornwall Council won the right to terminate its far-reaching outsourcing contract with BT - just two years into its 10-year term.
The two fell out almost from the moment the contract was signed, with councillors complaining of poor service and a failure to achieve agreed benchmarks.
By May of last year, the council was formally threatening to terminate the contract unless BT fixed the issues within the next few months.
Independent councillor Andrew Wallis, who opposed the outsourcing deal and blogged regularly about its shortcomings, said that there had been little evidence of service transformation. A botched Windows 7 upgrade, meanwhile, had been delayed and problems continued with network capacity and performance issues.
The council gave BT until August to shape up or be shipped out.
At the time Wallis said: "BTC [BT Cornwall] has had two years to deliver this contract and have failed. There are only so many second chances you can give. For me, if by summer BTC does not deliver its commitments, then I am afraid we must be in the area of looking to terminate the contract.
"I feel if this was a full private sector deal, the contract most likely would have already been torn up," he said.
Last month, the council's relationship with BT came to an official end, with services transferred back in-house and 270 employees in HR transactional services rejoining the authority.
But the story may not be over. The council now says that it will continue to hold discussions with BT Cornwall over the payment of costs and the level of damages it ought to receive.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
3. Suing a security firm for failing to prevent a security breach
Usually, the company that suffers at the hand of a data breach looks bad to the general public (see: 1,000 other data breach stories in the last few years). But in this case, the blame shifted from the company to the organisation that was meant to help it contain that security threat.
US casino chain Affinity Gaming hired Trustwave back in 2013 when it suffered a breach that exposed the data of up to 300,000 Affinity customers. Its job was to investigate and contain the data breach.
But Affinity Gaming claims that a second cyber attack took place at the time that Trustwave was still looking into the first data breach. The security company missed that attack, claims Affinity, and when told of it had suggested that the threat had been contained. In fact - at least according to the casino - the threat had not been from gaming and consumer regulators as a result of the second data breach.
Affinity said the company "takes seriously its data security obligations" - don't they all? - and claimed that Trustwave conducted a "woefully inadequate ‘investigation'".
It added that after Trustwave's engagement had concluded, it learned that it had been subjected to an "ongoing data breach" following a penetration test by Ernst & Young, and has had to retain a second security consulting firm, Mandiant (which has since been acquired by FireEye).
The company wants $100,000 in damages from Trustwave after using $1.2m of a $5m cyber-insurance policy on the breach. Trustwave will fight Affinity in court, as it believes that it had not been negligent.
We look forward to the case!
Whichever way it goes, it will be a landmark in cyber security. Never before has a security company been accused of negligence in its handling of a data breach affecting one of its clients.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
2. UK government's dispute with Raytheon over £750m contract
In what Computing regards as one of the worst-ever government IT projects (against some pretty stiff competition), the Home Office's decision to select Raytheon, and then subsequently sack the US supplier, has wasted hundreds of millions of taxpayers' pounds.
In 2003, the government decided to launch an e-Borders programme, which would be able to track all passengers in and out of Britain within 10 years. US company Raytheon Systems was selected to design the system in 2007, winning a nine-year £750m contract. But in 2010, the Home Office terminated the contract on the grounds that key milestones had been missed.
Chaos ensued.
At arbitration, Raytheon argued that the Home Office should pay it £224m because the termination of the contract was unlawful and, therefore, entitled it to recover substantial damages. Raytheon won the first round. But the Home Office won an appeal, after a ruling that it was "tainted by serious irregularity".
Nevertheless, the government agreed to pay Raytheon £150m to settle the dispute, which, while significantly less than the £224m originally won by Raytheon, is still a ridiculous amount of money for a largely failed project.
In addition, the dispute went on for five years and cost £35m of taxpayers' money in legal fees alone. The total cost of the programme, all in? £1.1bn, according to the National Audit Office.
Stupendous.
The top IT contract fiascos
Computing counts down some of the biggest disputes between companies and their IT suppliers
1. A £10bn taxpayer nightmare - the National Programme for IT
The NHS's National Programme for IT (NPfIT) finds itself at the top of this list, because its failure didn't just involve one contract with one supplier, but several gigantic contracts with multiple suppliers.
Fujitsu, was one of three key suppliers for the project. It was responsible for digitising patient records in the southern area of the scheme, but it was fired by the NHS in 2008, after 10 months of contract re-negotiations broke down.
At the time, it was suggested that the NHS was demanding more flexibility in Fujitsu's services, but that Fujitsu wanted more money to provide this flexibility.
After it was fired, Fujitsu announced that it intended to sue the Department of Health for £700m - more than two-thirds of the £896m it would have received for completing the entire project.
Although the government tried to broker a deal, the organisations ended up in arbitration and, in 2014, the Daily Telegraph suggested that the dispute had been settled - in favour of Fujitsu. This suggested that taxpayers would be footing the bill for all £700m claimed by Fujitsu.
Meanwhile, BT is said to have been paid £1.3bn more than the £2.1bn it had been contracted for in 2004, while CSC, which was supposed to provide its Lorenzo EPR system to the North, Midlands and East of England, failed to deliver its milestones a number of times.
It is no surprise, then, that MPs labelled the NPfIT the "worst and most expensive contracting fiasco in the history of the public sector".
Well done, guys!