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BSkyB Wins £709m Lawsuit Against HP-EDS

kdawson posted more than 4 years ago | from the pants-on-fire dept.

The Courts 187

E5Rebel writes "In a massive legal case in the UK, HP-EDS has been found guilty of 'fraudulent misrepresentation' by their sales team when winning a major CRM project. Settlement could cost £200M out of an initial claim for £700M. HP's only relief was that parts of the claim were dismissed, but the core claim was upheld. HP is likely to appeal. Outsourcing will never be the same again. HP workers have been on strike against pay cuts last week; no doubt management will try and screw them further to pay for this debacle."

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187 comments

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No comment... (-1, Offtopic)

bwcbwc (601780) | more than 4 years ago | (#30911158)

...still thinking.

Re:No comment... (1)

Sunshinerat (1114191) | more than 4 years ago | (#30911228)

From the article:

The judgement is expected to change the legal basis for sales pitches and contracts. It is likely to mean that IT services companies will have to be very careful about what they suggest they are able to do during sales meetings, as they may be held accountable even if discussions are informal.

You better be careful in what you say, indeed.

Re:No comment... (1)

Splab (574204) | more than 4 years ago | (#30911694)

Oh god I wish that was the case around here.

Currently I'm looking at 1-2 months of (unpaid) overtime because sales people have sold something we didn't have and never checked with the software guys. For once I wish sales was the one ending up neck deep in crap.

(Why do I do it? Well if no one else does it, the company goes bankrupt and doing unpaid overtime is better than no pay)

Re:No comment... (3, Insightful)

Anonymous Coward | more than 4 years ago | (#30911764)

If your employer's finances are so bad that not working 1-2 months of unpaid overtime will bankrupt them, I advise that you start looking for another job.

Re:No comment... (2, Interesting)

asdf7890 (1518587) | more than 4 years ago | (#30912316)

If your employer's finances are so bad that not working 1-2 months of unpaid overtime will bankrupt them, I advise that you start looking for another job.

While most economies are starting to recover from recent event, decent well paying jobs are still thin on the ground. He may well be looking for alternative employment while working the current job. No point going until you've got somewhere to go to...

Re:No comment... (1)

Cryacin (657549) | more than 4 years ago | (#30911236)

Yeah, well, what a surprise. Outsourcing company great at sending out invoices, not so good at delivering a product.

World famous EDS quote. "Never get sales confused with delivery."

Overstated. (2, Insightful)

Itninja (937614) | more than 4 years ago | (#30911160)

The summary: "Outsourcing will never be the same again."

TFA: "Nigel Roxburgh, research director at the National Outsourcing Association, previously told Computerworld UK that if the case is upheld in favour of BSkyB, "it could lead to a real scratching of heads, particularly among lawyers."

Re:Overstated. (1)

mjwalshe (1680392) | more than 4 years ago | (#30911250)

And a lot of wonga for lawyers - or alternativly EDS will lobby Cameron to change the law - though if it does reduce outsourceing it will be very ironic its one of Murdochs companies that triggered it. More than a few GMPU and NUJ Members will have a wry smile at that.

Re:Overstated. (1)

clsours (1089711) | more than 4 years ago | (#30911264)

Apparently the bulk of the 'problem' came not because of actual contract violations, but the in the course of creating and implementing software product requirements, which is notoriously sticky and difficult; much of which was done on an informal basis. This is a watershed moment akin to Sarbanes-Oxley for outsourcing companies. Look for a whole new series of 'best practices' videos.

Re:Overstated. (-1, Flamebait)

Anonymous Coward | more than 4 years ago | (#30911294)

With a name like Nigel you know he's a stuffy white limey bloke motherfucker with a small penis and probably talks with an effeminate overtone.

Silly Slashdotter, Macs are for fags!

Re:Overstated. (2, Funny)

machine321 (458769) | more than 4 years ago | (#30911324)

it could lead to a real scratching of heads, particularly among lawyers."

At least they've been practicing scratching the other end.

Sorry, I mean practising.

Re:Overstated. (1)

Lead Butthead (321013) | more than 4 years ago | (#30911800)

it could lead to a real scratching of heads, particularly among lawyers.

At least they've been practicing scratching the other end.

I settle for "real beheadings, particularly among lawyers."

If EDS has to tell the truth it is dead. (4, Insightful)

HornWumpus (783565) | more than 4 years ago | (#30911378)

Has anybody ever heard of (or better yet been involved with) an EDS project that went well.

Anyone?

EDS is characterized by: lots of promises, no delivery, never saw the experts present during negotiations again, lots of low GPA recent college grads doing 'work' they are not qualified for.

I don't know how EDS stays in business. Kickbacks to purchasing officers with no stake in the projects is my guess.

Re:If EDS has to tell the truth it is dead. (3, Informative)

Anonymous Coward | more than 4 years ago | (#30911644)

Although it's possible things have changed in the past decade, having worked for EDS as a new graduate, I take issue with your assertion. It's full of high GPA recent college grads, with a seriously over-inflated sense of their own competence, doing 'work' they are not qualified for, managed by people whose sole qualification is that they are the sub-set of that group who lacked the ambition to leave their employment in order to do something less pointless long enough to be promoted.

Re:If EDS has to tell the truth it is dead. (1)

HornWumpus (783565) | more than 4 years ago | (#30911934)

I always assumed anybody with a decent GPA would have some experience/contacts by graduation and be able to get a better job.

I know I did.

I guess the defining characteristic of EDS employees is 'not knowing what they are doing'. GPA varies.

I have had to interact with EDS staff. I don't believe _they_ ever got a high GPA (except maybe in the school of education.)

Re:If EDS has to tell the truth it is dead. (0)

Anonymous Coward | more than 4 years ago | (#30912418)

Easy to get a high GPA, just take easy classes. Don't need calc for your degree? Take algebra instead. I was constantly shocked that some of these almost-high-school-level classes qualified for credit toward someone's major. I did some of that work in Gifted and/or in self-study, just for kicks.

Re:If EDS has to tell the truth it is dead. (1)

Anonymous Cowpat (788193) | more than 4 years ago | (#30911660)

Actually, the computer thingies in job centres work fairly well. The underlying database that they provide access to is badly designed, and badly filled in, but the terminals themselves largely work (and have EDS logos on them).

Re:If EDS has to tell the truth it is dead. (0)

Anonymous Coward | more than 4 years ago | (#30911912)

No, not really.
I used to work for them, and quit in disgust after some six months when I'd had seen from the inside what they were actually like. Fortunately, this was back in the day when finding a job was easy, so I have to admit that "quitting in disgust" was much less of a risk than it is now. Still, I'm somewhat proud of it - less so for the fact that I didn't realize from the start what I was getting into...

Re:If EDS has to tell the truth it is dead. (2, Insightful)

Cederic (9623) | more than 4 years ago | (#30912184)

lots of promises, no delivery, never saw the experts present during negotiations again, lots of low GPA recent college grads doing 'work' they are not qualified for.

This hardly differentiates EDS from their competitors. :(

Re:If EDS has to tell the truth it is dead. (1)

HornWumpus (783565) | more than 4 years ago | (#30912240)

Granted.

Which should make this a scary decision for any of these scumbags doing business in England.

Remedy: Don't buy anything from HP. (0)

Anonymous Coward | more than 4 years ago | (#30912208)

Remedy: Don't buy anything from HP. It's a lagging company with only a few good departments.

Re:If EDS has to tell the truth it is dead. (4, Insightful)

rocker_wannabe (673157) | more than 4 years ago | (#30912368)

Apparently you are not familiar with the Navy NMCI Contract with EDS. I haven't been following it lately (as in the last few years) but it had VERY overpriced systems on the contract and mostly hired people who didn't have much experience because they were cheap. That contract would keep even the worst managed company in gravy for quite a while. I don't know what most of the military guys thought about it but just ask any civilian employee for the Navy what they thought of NMCI and listen to the expletives fly.

I'm not sure how any company can sell computer software or services without lying, even unintentionally. Anything worth bidding on by EDS is going to be complicated enough to keep them from knowing what they really have for a month at least.

The worst part is if you're going to expect technology salesmen to tell the truth then you're going to eliminate at lot of material for the Dilbert comic strip, among others.

Re:If EDS has to tell the truth it is dead. (2, Informative)

asdf7890 (1518587) | more than 4 years ago | (#30912420)

I don't know how EDS stays in business. Kickbacks to purchasing officers with no stake in the projects is my guess.

Government contracts for one thing. Hardly anyone (or no one) else of notable size bids for them most of the time as they simply don't want to deal with the red tape and other hassle (taking part in a procurement process can be very expensive in terms of time and effort, especially for large projects, especially for governments), so EDS get some fairly lucrative contracts due to being the only real contender in the procurement process.

I've worked alongside EDS (they managed the IT and other infrastructure for a company we did a pile of work for over the course of a few years) and I can tell you there are some very good people in there. A lot of chaff too, but that is the way of things (in a large organisation chaff that know they are chaff can hide behind others, and once found can be difficult to legally sack), and they often move at the speed of a snail with severe alcohol poisoning (again, this I saw as mainly a function of the size of the beast). I've never dealt with the sales or management teams though, so things could be very different up those parts. There did seem to be notable communication disconnects between some levels of management and the people doing the work (I can't comment on sales - I never had reason to deal with them at all).

Re:Overstated. (5, Informative)

reebmmm (939463) | more than 4 years ago | (#30912066)

IAAL. I work with technology contracts. I think that the only reason a lawyer will be scratching his head is because of the genuine unlikelihood that the customer could actually prove a fraud case against a vendor. That's not to say it's impossible, just so unlikely. What's clear is that this was not a contract case. If it was merely a contract case, it would have looked to the four corners of the agreement. The plaintiffs (the customer) had to work extra hard (i.e., $40M in legal fees hard) to prove the fraud.

Customer-clients regularly come to me with contracts that have:
1. no objective criteria to measure success/failure
2. all of the liability for delays, failure to perform, etc. allocated to the Customer
3. do not have sufficient input from the technical people that will actually be working on the project.
4. no contractual remedies for failure.
5. no change management process.

Point #1 is the most important. In this case, if there were objective criteria to measure success, then the breach of contract case is simple to prove. It is like engaging in the design/plan phase of development before you even sign the contract. If a customer can't figure out what objective criteria it needs, it's probably not a good time to enter a $40M contract. Take for example, the objective criteria that the EDS software will meet the minimum process per second with 150 active users. Easy, does it do? If not, see points 2 and 4.

Point #2 is often overlooked. Customers regularly sign contracts that permit a vendor to deliver something non-conforming on the delivery date and not be in breach. The contracts are also usually written so that the additional time spent correcting the non-conforming deliverables are paid by the Customer. These are usually sneakily inserted under the "right to cure" a breach provision. At some point, the vendor (not the customer) should be paying.

Point #3 is necessary in order to establish point #1 and point #2. Management has this idea: oh we need ___ system. Let's find a vendor of ___ system. However, it is the technical people that need to set the objective criteria and then be able to test that it was met.

Point #4 is the stick with which you beat the Vendor into meeting those requirements. Every customer should be asking, "what happens if they don't deliver?" I say, "show me the money." Of course, you can customize however you see fit. Customers however don't usually ask.

Finally, point #5 is so painful its hard to write about. A lot of time and money is lost because the customer does not have a good internal change management process. In addition, the customer does not put that change management process in writing with the vendor. Any change management process should be coordinated through a project manager. The process should require 1. estimates of cost and 2. affect on time line. These should require signature of someone higher up the chain than the project manager if there is a big impact on price or time--what constitutes a "big impact" should be spelled out (e.g., more than $10,000 or more than a 1 week).

As a last tidbit: technology people need to STOP SIGNING AGREEMENTS WITHOUT A REAL LEGAL REVIEW. This includes the stupid little EULAs that you click ok to. That includes the purchase of off the shelf software. That includes signing up a third party for professional services. Those words mean things. Spending $1-3K now saves a boat load on the backend.

Who's getting screwed? (1)

girlintraining (1395911) | more than 4 years ago | (#30911168)

...no doubt management will try and screw them further to pay for this debacle."

Yeah. Printer ink will now start costing $7,000 a gallon instead of the paltry $6,400 it does now.

Re:Who's getting screwed? (1)

SomeJoel (1061138) | more than 4 years ago | (#30911202)

...no doubt management will try and screw them further to pay for this debacle."

Yeah. Printer ink will now start costing $7,000 a gallon instead of the paltry $6,400 it does now.

I'm not really sure how raising the price of printer ink is going to screw the striking HP workers.

Re:Who's getting screwed? (1)

girlintraining (1395911) | more than 4 years ago | (#30911778)

I'm not really sure how raising the price of printer ink is going to screw the striking HP workers.

They don't have to screw the workers -- they can screw us instead. Or split the difference and screw both.

Re:Who's getting screwed? (1)

StuartHankins (1020819) | more than 4 years ago | (#30912454)

I am amused by your thought process and wish to subscribe to your newsletter.

Re:Who's getting screwed? (0)

Anonymous Coward | more than 4 years ago | (#30911994)

trust me you dont want to know

Re:Who's getting screwed? (1)

clsours (1089711) | more than 4 years ago | (#30911218)

Not printer ink, this is about outsourcing. Printer ink costs a lot because of the pretty packaging.

Re:Who's getting screwed? (1)

causality (777677) | more than 4 years ago | (#30911326)

Not printer ink, this is about outsourcing. Printer ink costs a lot because of the pretty packaging.

I disagree with that, though I am sure the packaging is also a factor. Liquid printer ink (i.e. for ink jets) costs so much because the printers are sold as cheaply as possible, at a very low margin and maybe even at a loss. The company then hopes to make that profit back by selling overprices consumables. Laser printers don't use this model. This is why when you buy a laser printer, you pay significantly more money up-front for the printer itself and thereafter you can purchase cheap consumables that more closely reflect the actual cost of producing toner.

Re:Who's getting screwed? (1)

Nadaka (224565) | more than 4 years ago | (#30911354)

Printer Ink costs a lot because the DMCA made it a felony for the low cost and refillable ink cartridge makers to engineer compatible cartridges since the big companies started including DRM in them.

Re:Who's getting screwed? (1)

clsours (1089711) | more than 4 years ago | (#30911630)

Like I said, 'packaging'. (Marketing packaging, legal packaging, intellectual property packaging, etc).

Re:Who's getting screwed? (1)

obarthelemy (160321) | more than 4 years ago | (#30911726)

I think it's about HP deriving most of its profits from printer ink.

Re:Who's getting screwed? (0, Troll)

mmcxii (1707574) | more than 4 years ago | (#30911526)

If you bought an inkjet you got screwed before you ever had to buy ink for it.

Re:Who's getting screwed? (1)

Toonol (1057698) | more than 4 years ago | (#30911730)

There's nothing innately wrong with inkjets. They're terrible because of the marketing and sales paradigm that formed around them; but as actual technology, they're fine. The only real problem with them are the legal barriers to actual competition in refills.

Stupid Ads in TFA (2, Insightful)

Amasuriel (1176527) | more than 4 years ago | (#30911182)

From TFA:

Amanda Bucklow at mediation firm In Place Of Strife said that even “a long and extraordinary mediation process would have taken only a few days and cost a lot less” than the legal fees spent by both parties.

And now breaking news! Random person trying to sell you some services thinks you should buy their services!

Re:Stupid Ads in TFA (1)

Kuroji (990107) | more than 4 years ago | (#30911556)

Nevermind that apparently a long and extraordinary mediation would only have taken a couple of days, according to her.

SAP (3, Insightful)

16K Ram Pack (690082) | more than 4 years ago | (#30911248)

Somewhat off topic, but perhaps related to the topic:

Has anyone ever worked in a company where they had a SAP implementation where overall the users and management (and I don't mean snr management who are above it) are actually happy with the outcome?

Re:SAP (4, Insightful)

BlueBoxSW.com (745855) | more than 4 years ago | (#30911330)

There was a slashdot article awhile back about an SAP implementation at Waste Management that went bad.

Similar situation to this one.

I really think large companies buying these systems are going to start recording the sales presentations, burn them to DVD, and insist on including them in the contract.

That way the sales representations BECOME part of the whole agreement, and are actionable.

Re:SAP (1, Interesting)

Anonymous Coward | more than 4 years ago | (#30911696)

I really think large companies buying these systems are going to start recording the sales presentations, burn them to DVD, and insist on including them in the contract.

That might be entertaining, I've had vendors flat out lie in sales presentations.

Re:SAP (1)

16K Ram Pack (690082) | more than 4 years ago | (#30912362)

I really think large companies buying these systems are going to start recording the sales presentations, burn them to DVD, and insist on including them in the contract.

Or do what I do - completely ignore sales presentations except as a rough filter that they might be able to help you, throw it all away and get sitting down with their project managers. I was always amazed when I worked for large corporates at the shit that senior management bought based on a couple of sales presentations.

Re:SAP (4, Interesting)

cyberjock1980 (1131059) | more than 4 years ago | (#30911392)

When I was in the U.S. Navy I was lucky to be at a command that was a test platform for an SAP implementation for the Navy(ERP was the Navy name for it). When I was there, if you were a "power user", even if not a computer junkie, it was very easy to get a grip on the program and use it very effectively. Of course, we had alot of complaining by alot of older people that didn't like change (every group will have these people). The actual rolling out of the platform was painful, but once it was in and operating it was great.

Our only issue was that we needed to be able to store classified "Confidential" information. This was information that was simply above public release, but below "Secret". Our procedures required certain safegards that were not easily implemented into SAP at the time. We had a plan to get it to work, but at a pretty significant cost.

Googling I just found www.erp.navy.mil, so it looks like the Navy has started using it more broadly. As much money as the gov't dumps into crazy stuff, I would be the first to say SAP/ERP was money well spent! Just don't mention NMCI(Navy and Marine Corp Intranet).

Re:SAP (1)

Locke2005 (849178) | more than 4 years ago | (#30911508)

Just don't mention NMCI(Navy and Marine Corp Intranet). Well, there's your problem right there... when have the Navy and Marine Corp ever managed to agree on ANYTHING?!?

NMCI... (1)

gmfeier (1474997) | more than 4 years ago | (#30912452)

...there, I said it! Complete disaster. Of course I retired three years ago and maybe they've fixed it since. And maybe pigs are flying now, too.

Re:SAP (1)

machine321 (458769) | more than 4 years ago | (#30911394)

Yes, actually. My wife's company recently did a company-wide SAP implementation, migrating from several smaller apps at smaller divisions to a centralized system. It's been a resounding success. Her division migrated from a heavily-customized Solomon though, which lowers the success bar quite a bit.

Interesting question (1)

VampireByte (447578) | more than 4 years ago | (#30911434)

I always figured it was a good thing I hadn't invested in learning SAP and jump on the gravy train some of my software consulting neighbors have been riding... just seemed like a matter of time before word got out and the hours dried up for them.

Re:SAP (1)

codepunk (167897) | more than 4 years ago | (#30911702)

I am sure there where some that went well and many that went bad. Now most of them
I am sure are a horrible burden to the bottom line. Installing and running something
like SAP is all well and good when the company is making money and can afford it. When
the bottom drops out the expense and maintenance I am sure only quickens the pace
of demise.

Re:SAP (1)

masher_oz (1145983) | more than 4 years ago | (#30911946)

No. SAP was instigated by our previous CEO. Our current CEO was responsible for removing SAP from the last company they were CEO at, so we may have some hope. An example of the crappiness: In order to reconcile our credit card accounts, we are required to "go on a trip". Yes, the writers of this software think that the only time we spend money on our credit card is when we go away. I know that I use my credit card to get around the awful ordering process we are supposed to use - it's a lot easier to go on a "trip" than it is to actually order something.

TFA (1)

wizardforce (1005805) | more than 4 years ago | (#30911276)

The lawsuit alleged that EDS, now owned by HP, had fraudulently misrepresented itself in a sales pitch in 2000 for the system, leaving Sky to pick up the pieces and take on heavy costs as it implemented the system itself. EDS, on the other hand, said Sky did not know what it wanted, and kept introducing new requirements, making it difficult to deliver.

and

“If other representations become more important than contracts themselves, it could indicate that contracts effectively have no value,” he said. It also potentially risks Entire Agreement Clauses, which exist in most supplier contracts and insist that only terms in the contract are legally binding, rather than any other representations.

It almost sounds like Sky was suing EDS for not finishing work that their sales claimed they could do but wasn't actually in the contract. EDS/HP claim in response that they couldn't actually fulfil the claim anyway as Sky kept changing what was asked of HP/EDS throughout the ordeal. Further, there's concern that the decision weakens the strength of cotnracts compared to marketing/sales' claims...

Re:TFA (0)

Anonymous Coward | more than 4 years ago | (#30911368)

So basically the situation now is: if you promise to do something face to face you have to deliver regardless if its in writing? How is this a bad thing? Well, I mean for people that aren't scammers, cheats, liers and frauds that is. I can't count the number of times I've asked "Can I get that in writing?" only to get a cold eyed look and a promise that it will be "taken care of" later. I've walked away from quite a few deals, contacts and such (mostly consumer) for just such a reason.

Re:TFA (1)

wizardforce (1005805) | more than 4 years ago | (#30911550)

With a contract you can generally point out exactly where obligations to do work were unfulfilled. In this court case, it took 40 million dollars of lawyering to get to the heart of the matter. I suspect that contracts are more easily enforced.

Re:TFA (1)

Creepy (93888) | more than 4 years ago | (#30911524)

Well, I get a certain amount of schadenfreude when I see EDS get bad publicity because they basically wily-nily bought companies, destroyed their benefits, sucked any cash surplus out and fired half the workforce before cutting them loose so their stock didn't go junk. Yes, I am speaking from personal experience, and yes, I'm a bit resentful (how do you spin off a company the EDS way? Fire everyone and let the new company rehire - HR LOVED that one, btw). HP, I don't have any qualm against you aside from your crapware filled laptops and one year limited warranty.

That vented, I think every company has had at least one loosely defined specs created by marketing people who then promise an impossible date to meet even the loosest envisioning of those promises. I know I've seen them - too bad its usually way too late to change anything, but at least I can ask for clarifications before code is complete.

Re:TFA (1)

WarlockD (623872) | more than 4 years ago | (#30911646)

This took 18 months TFA. We don't have the reams of documents they possibly went though.

I can see the manager of Sky emailing a manager at HP/EDS on why its taking so long and the manager blatantly lies. I can also see Sky, after a few months into the projects getting some off hand information decides the change the spec in mid stream.

All this compounded by the fact that neither side seriously looked at either sides contract. I am sure both's in house lawyers did, but upper management don't look at that stuff. The only people who KNOW the timeframe are the line workers. However, at that low level in the food chain they have to lie so they arn't swept up in another EDS/HP employee purge. Being some of the people I have talked to in Plano, there isn't alot of love lost at EDS anymore.

I think Sky just went to the Judge and showed them what they originally were promised and what they got. I also bet one look at the contract shows its to have no substance (i.e. EDS/HP are not liable for anything, even if the software causes a million people to die). I very much doubt there would be an 18 month court case if the contract was rock solid.

Scope creep? (0)

SimonInOz (579741) | more than 4 years ago | (#30911296)

According to the article, 'HP today defended its position. It added: "While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB." '

Sounds like scope creep to me.
So what really happened was this:

EDS wanted some sort of CRM. They had no idea what.
They hired some random consultant to write a spec.
HP read the spec and thought "we can do that - in fact our system already does pretty much that"
The sales duly sold it as "our s/w does that now, and we can deliver it tomorrow"
EDS management, after some heavy golf sessions, and possibly the odd new BMW, decided it was a good deal
The HP s/w folks said "you sold what?!" to the sales guys, and started trying to make it do what the spec said
EDS started to get bits of the s/w, probably very late, then - finally - noticed they really ought to figure out what they actually wanted
So they change the spec totally
HP s/w folk get annoyed, but try to deliver to the new, completely different spec
It goes badly

Everyone sues everyone.

The lawyers win big time.

Hmm - sound familiar?

Re:Scope creep? (3, Informative)

Espen (96293) | more than 4 years ago | (#30911350)

Confused much? EDS is HP. The customer was BskyB.

Re:Scope creep? (4, Informative)

curmudgeous (710771) | more than 4 years ago | (#30911364)

BSkyB was the client in this case, EDS was the company contracted to provide services. EDS has since been bought by HP and so HP is now on the hook for the EDS fubar.

Re:Scope creep? (2, Informative)

Sunshinerat (1114191) | more than 4 years ago | (#30911370)

You are almost right.
HP does not play a part in your conversation until 2008.
EDS told BskyB that they would deliver a CRM system with golden monkeys, BskyB changed their idea for the system to blue unicorns.
The whole delivery tanks, HP buys EDS in 2008 and gets the bill for another 900m pounds.

Re:Scope creep? (1)

rhsanborn (773855) | more than 4 years ago | (#30911682)

I suspect it is somewhere in the middle. i.e. EDS tells BSkyB they would deliver a CRM system with golden monkeys, BSkyB says yes, and then changes their mind and wants a CRM system with golden monkeys and blue unicorns. EDS delivers, or tries to deliver a system with neither golden monkeys, nor blue unicorns.

Re:Scope creep? (0)

Anonymous Coward | more than 4 years ago | (#30911374)

You must be a moran .. This is not between HP and EDS... They are one company ....BSkyB was the company looking for CRM ...

Re:Scope creep? (0)

Anonymous Coward | more than 4 years ago | (#30911384)

WTF are you on about? This is only HP's problem because they bought EDS and EDS blagged their way into a $$$ deal with Sky. It's not a problem between HP and EDS.

Despite your ignorance and by pure luck, you're probably right about the golf and the BMW affecting some manager's decision making process.

Re:Scope creep? (1)

nurb432 (527695) | more than 4 years ago | (#30911420)

*snip*
It goes badly

Everyone sues everyone.

The lawyers win big time.

Hmm - sound familiar?

Yep, far to often its how things go. But not always on this scale.

Re:Scope creep? (1)

crath (80215) | more than 4 years ago | (#30911752)

I think it is safe to assume that the judge isn't a total moron; so, scope creen won't be at the root of the trouble.

I have managed several large IT outsourcing arrangements, and the supplier's consistently over-promise and under-deliver.

A big problem on these deals is that the sales team often doesn't have to stay behind after the customer signs; so, they don't have to live with the mess they talked the client into signing. As a result, the sales team doesn't learn from their mistakes.

I hope the ruling takes some of the snake oil out of the sales process!

Re:Scope creep? (5, Interesting)

Horza66 (1039328) | more than 4 years ago | (#30911758)

I worked as an independent consultant at GM (run by EDS) and at Sky, cleaning up the mess they left behind.

Firstly, on behalf of all the independent consultants and contractors at both sites let me say thank you to EDS. Thank you for our fees. Without your stunning incompetence all down the line none of this would have been possible.

The reality at Sky:

  I joined a couple of years after EDS was slung out. Sky had a creaking legacy (green screen) customer installs system. They needed a comprehensive, fully architected CRM system capable of handling their millions of customers. EDS came in, did a brilliant sales demo, then sent in the drones. This is their standard operating procedure. They have smart people to call on - for sales calls. When it looked like they were about to get slung out of GM suddenly the kind of guys who wrote RFCs were all over the place. Once the attention was off they disappeared back to sales calls. This is how all outsourcing operations run.

Sky discovered pretty quick that they were being handed a pos that could never scale to a multi-million customer operation. Pretty quick being after a couple of years of pointless development. After they ditched EDS things didn't really improve: every department (customer services, billing, actuarial, etc etc) chose a "best of breed" app (more like "best of sales demos" app) then spent years customising it to fit. Then a bunch of said indy contractors tried to integrate it all together. We did the best we could.

Counting the bodies in the development halls, and allowing for what Sky had to pay to get people to work in Livingston (Detroit was comparable, if rather bigger) I'd estimate their costs at £50+ Million a year over rather more than five years. This settlement would put a big dent in that, but it certainly won't cover the cost of EDS's truly monumental incompetence.

Coda:

Between the GM and Sky gigs I had a drink with Compaq's top salesman in Toronto. I related the disasters at GM for amusement value, only for him to express his undying affection and admiration for EDS. What goes, I asked, for there was a twinkle in his eye. He explained thusly.

EDS would come to him for a quote for 10,000 PCs in their upgrade cycle for a major client. Said salesman would provide a quote for top of the line PCs at below cost price. A massive loss for Compaq. He would put this deal on paper, fully specced, and pass it across the desk for signatures.

*Three years later* EDS would come back with the sign-off and a purchase order. Compaq would give them 10,000 of the dregs of the warehouse. They would all surpass the three-year-old spec in the contract. Massive profit for Compaq.

I imagine the salesman made a pretty decent bonus too.

Re:Scope creep? (2, Informative)

b4dc0d3r (1268512) | more than 4 years ago | (#30911834)

Not sure you read the article. HP completed purchase of EDS after the trial ended, so the only thing HP has to do with this lawsuit is it owns the losing party, which it didn't during the contract. The judgement took 17 months to reach from the end of the trial in July 2008. So the trial ended, and the judge sat around meditating for 17 months, and HP bought EDS.

EDS did not want some sort of CRM, BSkyB did. EDS is an outsourcing company (was, now it's part of HP) and would provide CRM, not purchase it. EDS, now owned by HP, had fraudulently misrepresented itself in a sales pitch in 2000 for the system

It's more likely that EDS promised some sort of a system, and BSkyB led EDS around through as you said scope creep. EDS thinks it upheld its end of the bargain, BSkyB thinks its requests were within reason. Of course, I don't know the details of the contract, nor any more specifics than what's in the article, but your version is completely wrong.

Re:Scope creep? (2, Interesting)

mgblst (80109) | more than 4 years ago | (#30911876)

Yeah sure, despite your obvious confusion, you are still wrong. You are only looking at one side.

The other side is that HP/EDS (the same company), over promised on what they could deliver to Sky.

Both are common problems in outsourcing, both are equally likely to be true. In this case, according to the judgement and HP, it seems to be that EDS overpromised more than scope creep occured.

Outsourcing suxors, but ... (4, Insightful)

Anonymous Coward | more than 4 years ago | (#30911314)

AC disclosure: I work for BSKYB, but not in CRM ... thank f**k.

Yes, the CRM system has problems, and from a tech perspective I'd agree that it's not worth £48M (OMFG!). However, I think it's amazing that things got this far. If we're in a capitalist society then I also want this to be a meritocracy and I want someone in Sky to publicly take the blame for this 3rd party POS. Regardless of the internal or external software teams, it should never be allowed to degenerate to this level of incompetence.

Re:Outsourcing suxors, but ... (0)

Anonymous Coward | more than 4 years ago | (#30911652)

That's the problem with HP/EDS. All of the managment, sales staff, and 99% of the offshore support are incompetent. There isn't any lower you can go. As soon as you sign the contract, your are at rock bottom.

Re:Outsourcing suxors, but ... (1)

mgblst (80109) | more than 4 years ago | (#30911882)

People don't get to be in important positions by taking the blame for problems. They get to be in those positions by deflecting the blame to someone else.

Re:Outsourcing suxors, but ... (1)

Cederic (9623) | more than 4 years ago | (#30912288)

It's hard to allocate blame in these cases. The internal staff typically work excessively hard to make the original contract work.

Someone senior usually gets booted out halfway through that leaving someone new to pick up the pieces, but the person booted out tends to have been constrained by various factors and acting with the best intentions, but caught out by a mix of supplier incompetence (don't assume malice), internal incompetence, overcommitment, inappropriate priorities and sometimes just being in over their head.

The people left trying to rectify the situation can bump into all of the same issues, with the added pressure that they know it's going wrong, and the understanding that they'll never get properly rewarded for putting it right.

Big projects go wrong for a number of reasons, including politics, finances, skills, promises, misunderstandings and frankly because these things are bloody difficult.

Publicly taking the blame? Probably inappropriate, unconstructive, unfair and unnecessary.

Re:Outsourcing suxors, but ... (1)

DragonWriter (970822) | more than 4 years ago | (#30912344)

If we're in a capitalist society then I also want this to be a meritocracy

That's kind of like saying "If floorplan of this room is a triangle, I also want it to have interior angles that total 360 degrees."

It's the relationship, stupid! (2, Interesting)

rickb928 (945187) | more than 4 years ago | (#30911436)

I've done a lot of contract work, but nothing on the scale of a CRM install. Despite that, there are somem things that are the same, no matter the size of the job;

- The relationship is key. If you don't forge a good relationship with your client, you will always suffer. Always.

- If the relationship is good you can overcome any obstacle. Even total failure. Yes, even if your solution turns out to not work at all, you can work out the relationship.

- Relationships are give-and-take. If you succeed wildly, you will get more and better. If you do fairly well, you get what is due. If you mostly fail, you work it out. Sometimes it doesn't work out, true. If you fail totally, well, you get what you deserve.

- Importantly, don't get into a relationship you don't intend to actually work on, and don't have any real expectation of success. Someone on the engineering side of HP-EDS needed to tell the sales side 'we can't do all this'.

- Most important, don't go into a relationship with a crazy partner. Sky may have violated this one. Money makes contractors crazy. Trust me on this. The more money, the crazier. Those of you who have real-life relationships with real-life people will find corollaries to this, and they are indeed true. You do not need to waste your 401K to learn this, ok? The tabloids will offer proof enough. Same thing in business. Almost the same process.

Crazy girl==great in bed/EDS==fucks you, no lube. (1)

HornWumpus (783565) | more than 4 years ago | (#30911474)

Granted you don't want a LTR with the crazy girl ether.

HERE IT IS, FOLKS! (0)

Anonymous Coward | more than 4 years ago | (#30911482)

Let me paraphrase your "comment", such that it is...

I know absolutely nothing about this subject, but let me tell you what's important...

Yeah, alrighty...

Re:It's the relationship, stupid! (1)

Locke2005 (849178) | more than 4 years ago | (#30911616)

It's not the relationship, it's the specification. I've never seen a project that had a complete, unambiguous specification, but this one sounds much worse than usual. Sounds like BSkyB went forward on this with this on just a wink and a handshake and figured they'd iron out the details later. Uh, no... the specification needs to be agreed on up front. Sounds like stupid people on both sides of the table to me -- BSkyB stupid for not specifying in the contract exactly what was being delivered and what the acceptance criteria was, and EDS/HP salesmen stupid for responding to all there questions with a "sure, it'll do that!" without having a clue what it would take to actually implement those features.

Not in this dimension (1)

Lead Butthead (321013) | more than 4 years ago | (#30912120)

Someone on the engineering side of HP-EDS needed to tell the sales side 'we can't do all this'.

And since when has THAT ever worked?

I'm confused (1)

Locke2005 (849178) | more than 4 years ago | (#30911472)

Shouldn't BSkyB just get back whatever they paid EDS/HP for the project, e.g. £48 million? What's the rest of the £200 million/£700 million claim for?

Re:I'm confused (1)

CannonballHead (842625) | more than 4 years ago | (#30911584)

Probably lawyer fees. :P

Re:I'm confused (2, Insightful)

ebcdic (39948) | more than 4 years ago | (#30911606)

Presumably they incurred costs as a result of EDS not providing what they were supposed to.

Sky and EDS - it couldn't happen to two nicer companies. With luck no-one will win except the lawyers.

Re:I'm confused (1)

Locke2005 (849178) | more than 4 years ago | (#30911866)

Lawyers for both sides have run up and estimated £40 million in legal fees... sounds like the lawyers have already won.

Interesting implications (2, Insightful)

BigSlowTarget (325940) | more than 4 years ago | (#30911492)

FTA it sounds like the salesmen lied and the contract didn't include the lies. The court found EDS liable for what the salesmen said (and prolifically emailed) rather than the signed contract. If that holds it's not outsourcing that will become difficult but selling many complex and high priced products. Each sales meeting could be a contract negotiation with legal implications as well as a demo or whatever. You sales guys might need to drag the lawyer to all your customer meetings going forward. Sales support would become a major pain as well.

Re:Interesting implications (0)

Anonymous Coward | more than 4 years ago | (#30911624)

FTA it sounds like the salesmen lied and the contract didn't include the lies.

That's exactly what it sounds like. I wonder how far into the sale process the vaporware was presented. Was it just Q&A in front of a white board? Or was it in written in the proposal in response to an RFP? I get the feeling EDS mislead them in the proposal and tried without complete success to squirm out of it in the contract.

Difference between what we can & what is paid (1)

Sunshinerat (1114191) | more than 4 years ago | (#30911628)

What happens a lot is that the sales people tell we can do A, B and C for you. Then pricing happens, and client is only willing to pay for A.
Contract is limited to A and closed. Then client figures out that in the end they need B and C.
Is that the sales peoples fault?

I still think this is a difficult case and am not aware of all details.

Re:Difference between what we can & what is pa (0)

Anonymous Coward | more than 4 years ago | (#30912060)

Having experience with both EDS and Capita it is far more likely that the sales people told the client they could have everything from A To X (when they only needed A,B,C but sales will be sure to convince them otherwise) , after while client realised they also need Y and Z so EDS charged them the cost to do that extra work X 20.

When final system was delivered it had A,D,E,H,M,R and Z actually working as they should, everything else was either broken, half implemented or implemented in a way that make no sense at all

When client realised this they went to EDS, who assured them it all could be resolved, for a cost that was about 2X the total original project budget on top of that original budget

Seen the above happen more than once with these companies

Re:Interesting implications (1)

chiguy (522222) | more than 4 years ago | (#30912396)

Each sales meeting could be a contract negotiation with legal implications as well as a demo or whatever.

This would be awesome for the techs who have to deliver the goods.

The sales guys can't just make false promises any more. They'd be on the hook too.

Management would be scared of over-promising in presentations and reign in the sales team.

Now that would change company dynamics.

Ahhhh, if only.

Re:Interesting implications (1)

Cederic (9623) | more than 4 years ago | (#30912424)

It'll hurt clients too; I usually ask salespeople for indicative costs, stating (honestly) that I'm not going to treat them as a promise, a commitment or something I can hold them to.

I just need an order of magnitude understanding of how much of my company's money I'm going to have to spend to implement their product. If I have a business need then there's a massive difference between mobilising a whole procurement process for a product because it meets the need superbly, and initiating internal development because we can't afford it.

Hell, senior management want to know about risk, timescales, and (oddly enough) cost. I can assess the risk, but I need the vendors to help me understand timescales and costs to even get the funding for a procurement process.

Obviously that procurement process includes a significant amount of further discussion, discussion of commercial terms, contacting reference implementations, all the necessary due diligence and a bevy of experience negotiators and lawyers. But that expense is why I need to know up front whether there's even a viable solution.

Great software with a £5m licence fee and a 2 year implementation timescale is never going to be easily implemented quicker or cheaper, even going elsewhere, but at least I can let the business decide whether they're willing to spend that sort of money (i.e. you're hitting 9 digits by the time you've included hardware, business change costs, training, procurement, let alone the implementation, integration and testing) to meet their needs before they commit any real resources (me, I'm cheap).

Getting lawyers involved up front? I concur, that could start getting very nasty, very painful, and break the whole engagement model for the whole industry.

No surprise. (1)

Yaos (804128) | more than 4 years ago | (#30911546)

If you go HP you deserve what you get.

HP is run by greedy idiots (3, Interesting)

Anonymous Coward | more than 4 years ago | (#30911558)

Being an HP/EDS employee myself, I can guarantee you that I will get screwed.
They already cut my pay once by 5%(plus 15% for one month). After doing this, they also cut several employee's salaries in a "job code alignment", which was just a pay cut in disguise.
This is before and after laying off hundreds of employees, replacing them with morons from India and Malaysia because they are "equally efficient but cheaper".
On the bright side, our CEO make record income thanks to his salary/compensations and his tremendous bonus. Apparently flushing your company down the shitter puts you at the top of the bonus queue.
HP/EDS is run by greedy morons, who outsource all the work to poor morons.
I'm happy to have a job and I hope this whole event doesn't affect me(although I'm sure it will), but HP/EDS can suck it for all I care.

Re:HP is run by greedy idiots (0)

Anonymous Coward | more than 4 years ago | (#30911826)

I am sorry you would let the company do that to you. Somebody cuts my pay 5% they better be looking to hire another person to take my
place because I vote with my feet. If the org I am working for at the time cannot pay then too bad I will find someone that can.

Re:HP is run by greedy idiots (0)

Anonymous Coward | more than 4 years ago | (#30911900)

In this economy, putting food on my family's table goes far beyond my personal pride. Unemployment is VERY high in my state(and very high in the city I work in), so getting a job that is going to pay anywhere near my current salary, even with the 5% is difficult if not impossible.

Re:HP is run by greedy idiots (1)

jtownatpunk.net (245670) | more than 4 years ago | (#30912296)

That's some nice Internet Tough Guy but life doesn't always work that way. I know a few people who are working jobs they loathe in order to support their families. Jobs that were awesome 5 years ago and have gone to shit recently with outsourcing of everything that isn't nailed down, forced "vacations" where the company shuts down for weeks and you can use PTO or go hungry, no bonuses, no raises, pay cuts, etc. If they were single and had nobody depending on their income, they'd bolt in a heartbeat even if it meant they'd likely be sleeping on a friend's couch in a few months but who wants to explain to their kids why they have to live in Auntie Jill's garage for a while?

So it's "Thank you, sir. May I have another?" until they can line up something better.

Outsourcing (3, Informative)

SimonTheSoundMan (1012395) | more than 4 years ago | (#30911580)

Anyone know of any large outsourcing company that deliver what they promised, to a decent quality?

Capita [capita.co.uk] are another company that comes to mind. They have ripped off most public services in the UK with their poor products. Capita did a good job [birminghampost.net] at ripping Birmingham City Council [birmingham.gov.uk] off with their new web site.

Re:Outsourcing (2, Insightful)

Locke2005 (849178) | more than 4 years ago | (#30911706)

What planet are you from?!? Everyone knows you don't get to be the lowest bidder on a project by giving the customer everything they want! All salesmen lie; the really good salesmen actually know when they are lying. If you didn't fully specify the list of deliverables, the acceptance criteria, and the liquidated damages for failing to meet the criteria was in the contract, then shame on you for signing that contract in the first place! Sure, if you're doing it in house or buying from somebody that gets paid by the hour, then you can incompletely specify and make changes later. But good luck doing that once somebody has agreed on a fixed price for the whole contract!

Greed is good! (0)

Anonymous Coward | more than 4 years ago | (#30911582)

If you are a labour union.

F |_| C K EDS (0, Troll)

dis0wned (1678250) | more than 4 years ago | (#30911808)

I wish the execs at EDS would be raped by wild packs of jackals, you know, similar to what they do to their employees.

Re:F |_| C K EDS (0)

Anonymous Coward | more than 4 years ago | (#30912084)

There's lots of people I'd like to rape. With a chainsaw.

Re:F |_| C K EDS (2, Funny)

BitZtream (692029) | more than 4 years ago | (#30912210)

You realize that we're adults and that you're retarded use of ascii isn't required since no one cares if you say 'fuck' right?

As for their employees, it sounds like they fucked up enough on their own and are too stupid to get a job anywhere else.

Its funny that you talk about 'screwing over the employees' when ... well, they just lost the company 200m

Douche bag editoral summary (1, Funny)

BitZtream (692029) | more than 4 years ago | (#30912020)

Outsourcing will never be the same again. HP workers have been on strike against pay cuts last week; no doubt management will try and screw them further to pay for this debacle.

Let me give you a little fucking hint, when the company you work for, losses a 200M lawsuit, because you were a fuck up ... a pay cut should be the least of your worries.

Where the fuck did this ridiculous sense of entitlement come from? What the hell is wrong with people now days? You don't exactly get raises when you screw up, ESPECIALLY when you end up costing millions to the company. The only time you get pay increases in this situation is when you're a US CEO of a massive company and cost millions of people pain and suffering, THEN you get a bonus.

Re:Douche bag editoral summary (1)

vajrabum (688509) | more than 4 years ago | (#30912152)

So just how many of those HP workers on strike have any connection to this project? Do you know? Or are you just another foul mouth knee-jerk flamer?

plus ca change (1)

HarryatRock (1494393) | more than 4 years ago | (#30912098)

The problem isn't new, nor is the result. Look for "Project Trawlerman" for a prequel. When sales people who don't know what they are selling meet custards who don't know what their company needs, it's the developers and "implementation team" who have to deal with the reality. If you aren't a lawyer, the next best job is a freelance designer/coder/engineer who gets in late and signs up for a fixed term (not fixed deliverables) at top rates. Everybody else gets shafted.
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