A $10 Million Outsourcing Failure


Lunch with a friend who works for a sizable quasi-government entity. He had an interesting tale to share, about an IT project run amok. Although I didn't get enough details to write it up as a case study, I'll share what I remember here, because it's fascinating to learn how much money an organization — government or private — can burn through without a lot of effort.

First rule: Hire a brand-name consulting firm, since they know how to run these things.

Second rule: Let them know that you have $25 million to spend on a given endeavor, so that they can staff up appropriately.

Third rule: Supply them with a three-page spec for the application you want them to build. After all, you wouldn't want to get in their way too much.

That's right. Three pages of specifications defining what this $25 million project was supposed to look like, act like, and do.

As I recall, my friend was pulled in to act as the risk manager on the effort. The risks were many, but the greatest that he saw was a complete lack of internal oversight. All management was being handled by the service provider. Wasn't that what they were being paid for?

As you'd guess, about $10 million into the timeline, the project was canceled and security showed up to retrieve keys and security badges from the consultants involved and escort them out of the building.

Just once, my friend says, he'd like to be put into something that he can see all the way to its conclusion.