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BSkyB Wins £709m Lawsuit Against HP-EDS
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."
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."
I judt got a nre Kinesis keybiartf so please excusr ant egregiou typos.
...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.
#fuckbeta #iamslashdot #dicemustdie
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!
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.
Load New Commander (Y/N)?
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."
Science advances one funeral at a time- Max Planck
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?
and
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...
Sigs are too short to say anything truly profound so read the above post instead.
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.
Confused much? EDS is HP. The customer was BskyB.
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.
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.
Load New Commander (Y/N)?
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.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
*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.
---- Booth was a patriot ----
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.
Run and catch, run and catch, the lamb is caught in the blackberry patch.
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.
deleting the extra space after periods so i can stay relevant, yeah.
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?
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Granted you don't want a LTR with the crazy girl ether.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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.
If you go HP you deserve what you get.
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.
Anyone know of any large outsourcing company that deliver what they promised, to a decent quality?
Capita 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 at ripping Birmingham City Council off with their new web site.
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.
Load New Commander (Y/N)?
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.
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)
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!
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.
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.
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.
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.
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.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
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.
nec sorte nec fato
And since when has THAT ever worked?
ELOI, ELOI, LAMA SABACHTHANI!?
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
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
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...
Let me guess, you're exempt and don't get over-time. And the sales people are mostly commissioned-based, and their commission is not based on the completion (nor the success) of the project (but just on having a signed contract with the client).
If that's the case, and if you don't rise up, expect this kind of pattern of behavior to continue. I've seen sales people take down companies because they were chasing poorly structured commissions (instead of worrying about the viability and profitability of each deal they were making).
The bottom of page quote for this:
Even if you can deceive people about a product through misleading statements, sooner or later the product will speak for itself. - Hajime Karatsu
Damn. And I actually read the article and everything. I really should have had my morning caffeine first.
Ah well, no-one's perfect. Certainly not any of the participants in this debacle, whoever they were.
"Cats like plain crisps"
Has anybody ever heard of [..] an EDS project that went well.
No, and that's not surprising in their field. As a company that provides infrastructure, EDS projects are expected to go well. It's not notable when they succeed.
There's just not a lot of articles in the news about "Multi-billion dollar project went as expected". It's not that they never do, rather it's not newsworthy when they do.
In statistics, Moran's I is a measure of spatial autocorrelation. Also, Moran is a city in Shackelford County, Texas, United States. The population was 233 at the 2000 census.
Um, maybe you meant something else?
Ah well, at least you didn't criticize my spelling ...
"Cats like plain crisps"
Sales people lied...I'm Shocked.
I was called into the middle of a $110 million dollar contract between a very well known multibillion dollar company and HP. I was a subcontractor for HP that was assigned to make things work on the front lines. The vendor promised a migration of tens of thousands of computers without any need for desktop engineers other than simple boxing and unboxing. Over 800 packaged apps were on the line and over 50 desktop platforms had to be made to move to a single standard image.
The client at the time had an almost exclusively 10Mb hubbed network. They also had a contract with AT&T that stipulated everytime a port on a hub, switch or router was touched AT&T made $400. Found out an entire 24 port switch was set to half duplex? That will be $9600 to switch the single switch to full duplex. We had dozens of such switches and over 200 sites. The contract with the client demanded that the network upgrade to a fully switched 100Mbps network would be completed before the migration of the tens of thousands of computers.
Turned out the vendor promised the client their software would be so good that the client could reduce internal IT headcount by 25%. This was discovered by the clients IT department, and along with a contractual guarantee that no field engineer would be needed resulted in a perfect storm of non-cooperation with the clients IT department. It also turned out that the client postponed the network upgrade until after the migration to avoid those $400 a port switch costs as the contract with AT&T was due to expire in eight months.
I got involved as I was one of only three people assigned to migrate tens of thousands of desktops with no client cooperation on a network that was primarily 10 Mbps hubs. The vendor promptly assigned package creation to India which resulted in fewer than 100 of 800 packages being available at migration start due to their incompetence.
It was a perfect storm of incompetence and I was in the middle. I started keeping track of progress and wrote a daily report of what was successfully migrated, what wasn't and the reason for failure. For months the project dragged on, getting farther and farther behind as time went on. Unknown to me the client and the vendor started using my reports as a basis for daily fines that were in the six figures per day. Over the course of several months I unwittingly dictated how literally tens of millions of dollars were spent on fines between the two companies.
At the end the client was suing the vendor for fraud (which was true) and the vendor was suing the client for contractual non-compliance (which was also true). I had two well known multibillion dollar companies getting ready to sue each other, with each having decided ahead of time that I was their preferred witness on why things went bad. I had law firms from both companies tell me to prepare for dispositions the following week as I was advised that I could be in court for several months while the court case progressed. In America when you are an witness you are not allowed to be paid for your time in court as that would be considered a bribe. (Expert witnesses can be paid as they are not material to the case and are outside it).
I explained to both teams of lawyers that I of course cooperate with court and tell the truth. I also let them know that neither side would care for what I had to say. The case was settled the next day. I lost my job along with everyone else as part of the settlement. However I was able to get another job right away and was able to avoid personal financial disaster with being a witness in the middle of battling multibillion dollar behemoths.
Agreed 100%. As a former HP-EDS employee who got involved in a fixing a few debacles it was usually a lot of overpromising by Sales that got the trouble started.
When they start tieing sales commissions to the delivery team actually being able to make good on what was promised then maybe there will be some changes. The Sales team would never buy into that as they think the delivery team are idiots and would screw them with cost over-runs, change orders for no costs, etc. . So you make BOTH teams have a moderate base + good sized completion bonus (by completion I mean client sign off). SInce both have money at risk I think you would get a good contract, a workable set of requirements, and at a cost that is still competitive. Of course one day pigs will fly too.
I'm not at all knowledgable about UK law but in the USA verbal agreements or promises are non-binding (if exception such was made by a corporate officer not Joe SalesGuy) so one cannot sue for specific performance or damages.
The judgement couldn't happen to a nicer firm. HP screwed a lot of EDSers when they took over, and cut benefits and salaries to BELOW the level the "real" HP people were making. And they raided the pension fund for billions (HP has no pension plan)/ And they were going to keep the EDS brand...and they did for less than a year. Bad Karma comes back at you in many ways. That said there are a lot of good people at HP-EDS who may be hurt by all this crap even if they had nothing to do with it.
Of course one day pigs will fly too.
Actually, it's one thing to go to management and ask for more money, and it's another to go to management and ask that they don't pay as much or defer payment to their sales people. That latter request, cutting costs and pissing off an entire department of sales employees, is what will make you look like management material.
They were so close; cuz lead monkeys and horses were all they had to work with. Next time, Crazy Glue would be used instead of Elmers for the horns.
Having worked at EDS and a number of other technology organizations I believe that the incentive schemes shape behavior. Those EDS sales teams at BSkyB and other accounts mentioned would have received their commission cheques when the deal was signed. Deal Signed = $$$$$ Should their incentives and commission be paid in line with the delivery of major milestones and/or the delivery of the solution to the cost model and specification then there would be a little more focus on the technical components rather than just the commercial ones. For this to happen it would take an industry wide shift as EDS/HP, IBM, Accenture all pay the same way. If I were a client negotiating with any of these organizations I would demand that the sales team not get commissioned until my major milestones are met.. Money makes the world go round...
At least they got the picture right for the website!
When they had leaflets made, they had the Birmingham Alabama skyline!!!
http://news.bbc.co.uk/2/hi/uk_news/england/west_midlands/7560392.stm
[UID-HeinzIntel]
I'm not at all knowledgable about UK law but in the USA verbal agreements or promises are non-binding
Here in the UK verbal contracts are legally binding as long as it can be proved what was said (i.e. witness testimony). Written contracts can also be implicitly agreed to without signing them, e.g. if I received a contract of employment that had a clause in that I disputed, but turned up for work before the dispute was solved and the contract signed, then I will have implicitly agreed to the original version of the contract that included the disputed clause.
Listen to my latest album here
I am not a lawyer. This is not legal advice. And even if I were a lawyer, I am not your lawyer. That said, the limits on verbal agreements are pretty narrow in the US. Basically:
Are not able to be made with a verbal contract. Everything else goes. For example, multi million dollar stock transactions are done verbally every work day. (yes end of day settlement does turn into a he said she said discussion with millions on the line during market downturns.)
So, in the US a company sales team that promises that it can duplicate Google.com in six months for ten million dollars, could be screwed if the company cashes the check. Even if no executive officer signs off on it. (Then again a company that is depositing ten million dollar checks without oversight is screwed anyways.)
Work bio at MMWD
None of these is healthy and when it goes wrong, the only winners are the lawyers. I worked with a Major European Telco which outsourced the development of a large software system. It went wrong quite quickly and no useful code was delivered for two years while they sorted out the mess - expensive.
...
It doesn't have to be this way. The construction industry has similar issues with large projects, due to the same root causes. The collaborative contract for the construction of Heathrow Terminal 5 was very successful and resulted in the project being delivered on time and on budget, with very few disputes:
http://www.iaccm.com/contractingexcellence.php?storyid=368
I wonder if the IT industry will attempt to learn from this
Gord.
It is if the salesman promised them they'd be getting B and C after the contract is drawn up. And don't tell me that doesn't happen.
Some sales guys really can't say "No" to the question "Does your system do this?" - I wouldn't have believed how surrealy awful this can get (at least from the perspective of the poor sod responsible for delivering the final working system) if I hadn't attended so many of these meetings over the years.
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.
Even more so if the employer is unable to pay you for your overtime work.
It sounds like the company really wants to die, if they're unwilling to pay someone to save them.
I'm not at all knowledgable about UK law but in the USA verbal agreements or promises are non-binding
In Netherland they are legally binding, but very hard to prove. You could have a case if you record the conversation, however.
I'm looking at it from a client perspective.
The client getting raped and EDS going home with the money and not getting sued is considered success by EDS.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
*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.
I've heard that chestnut in different forms involving government contracts. That story should be on Snopes, it's so old.
It's nonsense, particularly in computers. It MAY have been true once forty years ago in pipe fittings or something, but in computers it's implausible.
Computer manufacturers don't make things and sit on them for three years. They sell them because beyond a certain point, it's better to sell them at a loss than keep them in a warehouse. 10,000 computers at $1000 each is $10 million dollars in inventory that HP allegedly sat on for three years? I know the story talks about the "dregs" meaning HP could scrape together anything it had sitting around, but the reality is they just don't have that much sitting around - just in time inventory, etc.
What is far more likely to happen is that EDS came back and said "can you honor this" and HP pointed to the bottom where it said the quote was good for 90 days. At that point they negotiated a new deal. HP had some systems that weren't selling well, perhaps about to be dumped, and EDS bought them for full price not knowing.
Advice: on VPS providers
Ah, but EDS didn't PAY for the computers till three years latter. The specs are for a PC three years old so you can sell them the bottom line PC at that point.
Don't know EDS's side of it though. Could be EDS' client wanted to hold on the order. Maybe there were billing issues. I bet the client told EDS that they needed the computers and since no one renegotiated the contract, EDS asked for Compaq for the original spec quote.
As if this story wasn't interesting enough, the exec responsible for the CRM system lied about his internet degree, and got it from the same institution as the prosecutor's dog, Lulu, who achieved a better score. Too funny.