IBM NZ criticised for role in Customs' blown out border management system project

IBM NZ criticised for role in Customs' blown out border management system project

A Deloitte review of the Joint Border Management System reveals a catalogue of missed deadlines and contract renegotiations

Customs' $104 million Joint Border Management System project turned into a multi-year nightmare for IBM.

Customs' $104 million Joint Border Management System project turned into a multi-year nightmare for IBM.

IBM is not named in Deloitte's report on Customs' Joint Border Management System project, released today, but the "prime vendor" comes in for some serious criticism.

However, both Customs and the Ministry of Primary Industry also played roles in the $104 million project's five years of delays and eventual cost blowout from an original budget of $76 million (see Reseller News timeline below).

"JBMS was a complex undertaking - a large, multi-agency delivery programme, to be delivered over years in partnership with a multinational software vendor [IBM]," the report added.

"Faced with time pressure due to a protracted business case and procurement phase, JBMS moved straight into delivery without sufficient focus on effective programme setup. This disproportionately affected the programme’s ability to successfully manage issues at later stages."

IBM didn't bring their delivery and sales teams together early enough in the process, leading to an unrealistic commitment of what was possible to be delivered.

As the programme progressed, the vendor did not commit the resources required to the programme.

"The level of commitment only raised once the Minister of Finance raised attention to the vendor executive that they were not delivering," the report stated.

In a statement today, IBM New Zealand said the Joint Border Management System is an important transformational project to modernise New Zealand's border control.

"Customs is a valued client with both parties committed to its success," a statement read.

The original contract with IBM was a solid legal contract, however, it did not provide for easy measurement of the outputs against cost and what the contract set out to deliver.

Therefore, when the programme ran into delivery challenges, the true impact of these and their commercial implications took longer to be realised and escalated so appropriate action could be considered.

In the earliest phase of the programme, the significant challenges it faced were mostly shielded from view, the report says.

When the programme was seriously challenged in 2012, Customs and MPI leaders took accountability for resolving these issues and took a "transparent, open and honest approach with stakeholders", from Ministers through to industry.

"This transparency helped the programme to build and retain trusted relationships, which they were then able to draw on to get cross-government skills to help resolve issues," the report stated. "The leadership took accountability, and personally committed to doing their best to resolve the issues."

A key challenge was the lack of skills needed to bring the project home on time and on budget.

Complex programme like JBMS requires skills and experience not widely available in NZ public sector agencies or the broader labour market, including vendors, Deloitte stated.

"At a number of points, both Customs and MPI underestimated the skills and experience they required internally, particularly during programme establishment. Instead of acquiring the experience needed, they provided the opportunities to internal team members, who were not experienced with setting up and delivering a programme of JBMS’ size and complexity," the report read.

"This is an issue also faced by JBMS’ vendor – with many feeling that their team did not have sufficient experience of programme delivery with the vendor’s delivery methodology."

Deloitte recommends agencies challenge vendors to make sure they are bringing a team with the level of skills and experience to be able to effectively deliver their commitments.

But they also need to match vendor experience to hold their vendor to account.

Specifically, this requires the agency to have the necessary capability in each of the programme disciplines, such as programme management, architecture, solution design and so on, to effectively assure their delivery to contractual and commercial expectations.

Deloitte points out that multi-national vendors are complex, and often not governed as a single entity - it is therefore vital to understand motivations and clarify routes of escalation early in the programme.

"When other routes fail, don’t be reluctant to use the contractual mechanisms to escalate issues within your vendor(s) organisation," the report advised.

IBM’s reassurance of its ability to deliver a project of the size of the JBMS led to the adoption of their methodologies, Deloitte said, despite many feeling they were not suited to the programme.

When challenges were faced, the programme team were not able to quickly escalate this within IBM. This led to delays in appropriate action being taken.

"Once the JBMS executive were able to build the right relationships within the vendor organisation they were then able to use these to partner effectively, and escalate issues," the report added.

"Later action to activate strike clauses within the contract also acted as a catalyst for the vendor’s senior management team to take immediate remedial action."

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