|
IBM is facing the heat in Texas over an $863 million government data center consolidation outsourcing project. An independent report on the seven-year project, commissioned by the Texas Department of Information Resources, says the project is “not sustainable” and that the state is a long way from realizing the savings originally projected.
The main fault for the failure - a misalignment between “the original business intent of the project, and the organizational, financial and operational realities of the State’s complex operating environment.”
Sound familiar? IT and business alignment is repeatedly the number one concern of CIOs. Yet it continues to confound projects big and small.
In the Texas case, the report issued by independent consulting firms EquaTerra and Sierra Systems Group, basically recommends tearing up the current agreement and going back to the drawing board to come up with a better thought out plan of attack.
“In the final analysis, the current relationship is not sustainable,” the report concludes. “Texas has yet to realize all the benefits the state anticipated from this initiative, and we believe IBM has yet to reach even a financial break even point. Both of these issues must be resolved in order for the Data Center Consolidation Project to be successful. Without remediation, far more significant financial and performance issues are likely to be experienced.”
The report is posted on the Texas Department of Information Resources (DIR) Web site. The State awarded Sierra Systems and EquaTerra a contract to investigate the data center consolidation project in September after a State Auditor Report highlighted on-going problems.
The surprising thing about this potential debacle, is that on the surface it seems like a fairly straightforward project. IBM was contracted to consolidate the state’s 31 data centers into two facilities in San Angelo and Austin. In so doing, it was estimated the State could save about $159 million between 2006 and 2013. IBM has completed some of the work, but has fallen well behind in a number of areas.
The independent review says the initial premise for the project is still sound, but the execution has been deeply flawed.
“The basic premise – that IT infrastructure services could and should be consolidated across a large number of State agencies to obtain economies of scale and scope and to drive improvements in performance and resilience – is sound,” the report states. “A number of other states have conducted the same analysis and reached the same conclusion.”
To get back on track the report has three recommendations:
• Revise the outsourcing agreement to drive a closer alignment between the business intent it seeks to serve and the organizational and operational realities.
• Adjust the multi-dimensional relationships between the State agencies, Texas Department of Information Resources (DIR) and IBM to facilitate attainment of the business intent
• Revise the services defined in the Agreement to more closely reflect the diverse needs of the State agencies that are end customers.
Only registered users can write comments.
Please login or register. |
