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California + Oracle = $95 Million Fiasco
bahtama writes: "The Sacramento Bee is reporting that California apparently signed an agreement to purchase 95 million dollars worth of Oracle software that they really didn't need and that will not save them as much money as promised. They apparently purchased 270,000 licenses, which is more than all the state workers, including prison guards and others who would never need it." How do you think Oracle would treat the whole country?
What I'd really like to see happen is California take some initiative and put this software to good use! Yes, they've got WAY more licenses than they need. But, that's based on their CURRENT need. California has the chance now to do some really big things with information management.
My dad works for the State of Maryland. I can't even imagine how many millions (billions?) of dollars MD could save if they just restructured the way they maintain information. Welfare records are still being maintained using PAPER spreadsheets. Auditing this information takes months. The savings in this area alone could justify such a purchase. Auditing time could be cut drastically. Code could be written to locate discrepancies in the data. This doesn't even take into account things like payroll systems which could be automated. Doing that would allow the state to eliminate the positions of the hundreds of people with little-to-no education they have working in their payroll department.
Bill Gates (love him or hate him) really hit the nail on the head in his book Business @ The Speed of Thought. It really outlines how technology can be used to increase the flow of information, while at the same time reducing the cost associated with acting on that information.
Maybe someone in the California government will take charge and turn this bad situation into a golden opportunity!
The exact same story surfaced here in Toronto about 3 or 4 months ago. The city purchased far more licenses than were required (I can't remember the value of the extra licenses, but it was definitely into the millions of dollars). Two incidents are hardly damning, but you have to wonder if there is any misrepresentation going on.
Yeah, I saw that article (http://www.nytimes.com/2002/04/14/magazine/14TECH NO.html). Scary stuff.
I have to agree with your assessment of Ellison - he comes across as incredibly pompous and arrogant individual, afflicted with the same overly-inflated sense of "I am right and you are wrong"-ness common to religious fanatics.
The best (worst) quote in that article is from him:
'I had one last question for Larry Ellison. ''In 20 years, do you think the global database is going to exist, and will it be run by Oracle?'' I asked.
''I do think it will exist, and I think it is going to be an Oracle database,'' he replied. ''And we're going to track everything.'''
Makes Bill seem all soft and fluffy in comparison.
Tig
California did sign the agreement. Oracle expects them to abide by the contract.
... makes these disparities even more troubling."
The situation is not exactly clear yet, but the article leads me to believe that the state will claim that Oracle and this Logicon company thinger may have misrepresented themselves during the contract negotiation process. Misrepresentation is definitely something that can cause contract to get nullified:
"The disparity "raises the question that Logicon may have misled the state," the audit says. "The fact that Logicon appears to benefit by as much as $28.5 million from its role
We shall see what happens in court.
The California state govt has a long history of misspent money. They blew over a billion on a DMV computer system that never saw the light of day. Oracle just sold them what they asked for.
They recently also spent a lot of money making a switch from Novell GroupWise, to Lotus Notes. Why? Nobody really knows, though it's suspected that it's because someone was looking at a supervisor's mail and he wanted an encrypting mail system. (Of course, GroupWise is encrypting, but they went with Notes anyway.)
They've spent hundreds of millions of dollars making the switch, and are spending more every day trying to keep it up to date and running.
California knows how to waste money.
using namespace slashdot;
troll::post();
At $95 million they're practically giving that software away... ;)
The worst part is that they aren't even selling software so much as licenses. The "sell organizations a bunch of numbers that enable them to use software they already have" business model isn't illegal, of course, but it is morally reprehensible. I'm not just talking about oracle, I'm talking about the whole concept of license-based profit models. *glares north toward the evil empire of redmond*
__
Choose mnemonic identifiers. If you can't remember what mnemonic means, you've got a problem. - Larry Wall
(posting AC to protect the guilty)
I do IT work in the public health field. One northeastern state took three years to approve a $40K contract that people at the operational level considered vital. We had to meet with everyone from the state director of IT down to his lowest level minions (actually several times because they forgot they had met with us the process took so long), and our contract had to be personally reviewed by the secretary of state. By the time we finished with all the review meetings, we ended up making less than minimum wage on the project.
This was the worst case, but we have had a similar experiences in other states, including CA. By in large it means we have to charge the public more when we work for states to recoup cost of sales.
The problem is with a kind of tough guy politician zero tolerance talk. In a true zero tolerance regime, wasting thirty or forty grand is treated as being as bad as wasting a hundred million dollars. The converse is that in a sense hundred million dollar contracts may end up being treated like small ones. Their ability to prevent large losses is hindered by excessive attention paid to small losses. And while small losses can add up, still at some point you need to trust people with small decisions or hire people you can trust. If you ever have read Snow Crash Stephenson captured the attitude of the government towards its workers.
In some ways, protecting the state from financial losses should work like any other kind of security -- work harder to protect from big losses but rely upon detection and response for smaller losses.
This is where you have to draw the line between Federal and State services, and have itemized public budgets that citizens can always look at. If the Federal government has less money to work with, and decides to cut funding to schools and not mention it, then they may get away with it. But if they have to publicize an itemized budget detailing where all of the money goes then the citizens can DEMAND that they take a billion or so dollars and move them from Defense Spending to Education spending. The states should do the same. In fact, I think there should always be a 30 day period of citizen feedback on the state and federal budgets.
Kintanon
Check out JoshJitsu.info for Brazilian Ji
Why is everyone so sure that California was conned? Shouldn't we consider the possibility that Larry Ellison and Gray Davis made a pact? Perhaps Davis agreed to give Oracle millions of taxpayer-supplied dollars, in return for large campaign contributions from Ellison in the future. It's worth looking into, especially since the article reports that the purchase was not made after competitive bidding.
This is on-topic to your post
Irwin Schiff has some interesting things to say about the "Withholding Tax" aka Internal Revenue Code section 3402.
There was a recent release by the Gartner Group that "Gartner believes that Oracle sales staff has inappropriately imposed extra licensing fees on some database customers." I guess this just furthers their case.
Forget the per-seat cost of an oracle license and read between the lines here. Exactly why did California officials decide to go with Oracle in the first place?
The only justification in the article is "claims of savings." In other words, Logicon handed California a balance sheet that said, "You can save $150m (or whatever) by using Oracle, therefore $95m is a deal." And California said, "Oh gee, the math works, sign us up!"
Nobody ever asked real-world questions like, what exactly do we need Oracle for? Who is going to install it? How difficult/costly will the changeover be? What alternatives are there?
Sounds to me like California believed the old hype that software is magic and that savings are automatic. This is what happens when you base too many of your decisions on "studies" and not enough on cold, hard logic.
How do you enumerate "savings" from installing a piece of software anyway? Is the existing system too slow? Are developers expensive? Is there too much red tape? It's such sketchy math.
If the existing system works, then it's probably not all that expensive. New systems should be based on a need for a faster, cleaner implementation, not on illusory "savings."
All of this may be so. Hell, I'll even concede, without looking it up myself, that it is so. And it doesn't change a damned thing. Those vacant-stared people at K-Mart at 2 PM don't help anyone. All they do is take. No amount of money that I make, no amount of money that the government spends on other things, no amount of philosophy changes that. Now put that in your pipe and smoke it, chuckle-boy.
Useless opinions, worthless observations, and more!
In Seattle the city council managed to issue councilmanic debt, not requiring voter approval, to pay for a new parking garage for the Nordstrom family's department store and a new downtown concert hall. But when it came to finding money for parks and libraries the city council punted the issue to the voters by putting levies on the ballot. The lesson here? Most elected officials don't care about schools, or libraries, or police or emergency medical service or public health or anything else. They're filth who, if you give them access to your money, will piss it away to buy favor with whatever special interest groups they need to suck up to in order to stay in office. The lesson is that it is amazing that the politicians who found the will to save baseball and football in Seattle, by pumping over a billion taxpayer dollars into paying for their stadiums, and then effectively handing them the deed, can't find the will to make government run efficiently and honestly or to provide basic services. The lesson is that these people cannot be trusted and the only way to deal with them is to make sure that when the government has money it is tightly constrained in what it can do with it. No general funds and sunsets on all taxes. During the boom times of the late 1990s, when state and local governments were collecting money hand over fist, especially in the Seattle area, they pissed it away as fast as they could get it. And when voters, who saw what was going on and wondered why it was that the state could afford to tax them for new stadiums while failing to provide basic services killed off a few taxes, most notably the Motor Vehicle Excise Tax, the politicians responded by saying "don't blame us when everything falls apart, you don't want to pay taxes". Of course now that the local economy has tanked the politicians are closing parks (never mind that King County spent 50 million dollars on a computer system that they had to scrap or is spending $250,000 dollars on public art to beautify a garbage transfer station) and blaming the voters.
Now, the voters of King County are a fairly generous lot, school levies usually pass here, when the local public transit agency needed more funding their levy passed, the park and library levies in Seattle passed. The lesson here is that when voters are asked to pay for basic public services and the price is reasonable they will tax themselves to do so, however they are unwilling to give corrupt politicians carte blanche to spend their money.
cheap labor conservatives - they want to keep you hungry enough to be thankful for minimum wage.