Bridgestone are suing IBM for $600 million following a catastrophic systems implementation failure that did huge damage to the business -- unable to process orders, stock piling up, losing customers, -- the business information systems nightmare of every CEO.

This article examines the REAL reasons these things happen and how to prevent them by analysing the key elements of the Bridgestone -- IBM situation and explaining how to prevent them occurring in your project.

Issues discussed include the viability of old software, valid governance for projects of this nature, the need for a tough and robust procurement approach and resulting contract, the Business Process myth and why the Business Process approach is dangerous, the need for a rigorous "engineering" approach, the critical need for a Business Simulation Laboratory, the benefits of tough certificates and the non-negotiable need to provide a roll-back capability in the event of disaster.

It is concluded that both parties made mistakes, that the mistakes are common place and, in reality, part of the established order and that there is a need for a radically different approach -- this approach is outlined in the article.

Bridgestone sues IBM for $600 million after suffering massive damages -- tires stacked in the parking lot, hiring a third party warehouse to store stock, unable to fulfil orders, lost customers --THE business information systems nightmare of any CEO.

http://www.businessinsider.com/bridgestone-sues-ibm-for-600m-2013-11

The system cost over $75 million and went live in January, 2012. It immediately experienced "system-wide failures" for three months, Bridgestone alleges:

"Tires which should have been delivered to fill customer orders --piled up in distribution centres, smaller warehouses, and trailers parked in parking lots. Ultimately, [Bridgestone] was forced to lease an enormous amount [of] public warehouse space at great expense."

The complaint also says:

"IBM's defective system lost or deleted scheduled customer orders, would not process orders, duplicated, or partially processed orders and, for those limited orders that were processed, did not complete critical corresponding business applications"

But IBM says the problems were caused by Bridgestone. The company failed to do its part so that IBM could build the system on time and on budget. IBM sent this statement to the Tennessean:

Google "Bridgestone sues IBM for $600 million" in quotes so you get an exact match -- 4,560 results!

This is big news.

It MIGHT be THE event that redefines the business information systems in the way that dramatic construction engineering failures a century earlier redefined the construction industry .

Why do these things happen?

Fact is that failure is rife -- see my "Failure Catalogue", failure that involves mainstream firms like Bridgestone, BMW, The BBC, etc as clients and IBM, Deloitte, EDS , etc as service providers.

In fact the indications are that the failures are getting bigger, more frequent and more damaging.

There is NO real indication that anyone has an answer to THE CRITICAL QUESTION -- "how do we prevent our organization getting hit by such a catastrophic event?"

This article seeks to answer that question from a very different point of view -- a point of view that I term "the engineering approach".

Before you ask what an engineer has to do with an industry that is the preserve of accountants and MBA graduates I ask you to note that ALL significant engineering structures are designed using computer based systems that are far more complex than business information systems and which are required to operate at exceptionally high levels of reliability.  Engineering MORE than accounting drove the creation of high performance computers over the last fifty years.

This article is a summary, the full article is available on my website  and will also be emailed to you progressively in the days ahead.

Fundamentally, failure has been rife for decades but the big implementers and the NOT so big implementers continue to focus on getting better and better at what they are doing seemingly oblivious to the principle that "if you do what you have always done you will get what you have always got".

This article seeks to present a DRASTICALLY different, and I contend, BETTER way of looking at this sort of situation directed at enabling you, as an executive of a company faced with the prospect of replacing your systems, or sitting with a project that is failing or a system that is under performing, to take DIFFERENT decisions to your counterparts in Bridgestone, BMW, The BBC, etc.

I have been investigating failures and sub-optimal outcomes of business information system projects since 1989, speaking about the reasons they happen since 1992 and learned a large amount to the point where I am now in a position to actively publish what I have learned after undergoing an intense and lengthy process of discovery, inquiry, analysis, practical application and refinement.

Following are the points that stand out for me about the Bridgestone situation:

The project commenced with a fundamentally unsound, supposedly technical, motivation -- existing systems were written in COBOL, COBOL was "obsolete" and therefore needed to be replaced.

Firstly there are still a large number of organizations running COBOL, secondly, as a programming language it is entirely possible to maintain COBOL applications for the long term.

There was therefore NO technical need for Bridgestone to change, they should ONLY have changed as part of a clearly thought through strategic initiative to add value conceived and driven by the business.

For more discussion on why OLD systems ARE viable and also relating to COBOL please see the article "Old Software IS Viable ", there is a piece on COBOL lower down the page.

The balance of this article is based on the assumption that you DO have a sound business case for moving to new technology and want to do this with minimum risk and maximum value add.

OK, so Bridgestone decided for good or bad reasons to change.

There was clearly a major governance problem, the CIO was replaced SIX TIMES in two years during the project !

Inspecting the "Bridgestone USA Executive Bios " page we find that there is NO Chief Information Officer on the Executive team.

After some digging on Google I was unable to festablish who the CIO reported to but it seems clear that the Chief Information Officer was NOT really a "Chief" -- effectively just the IT Manager.

For a project as far reaching as the Bridgestone "Order to Cash" project the CEO is the ONLY person in the organization who can take custody of the project and the person managing the project should report directly to the CEO with an executive mandate.

This is the ONLY way to make this sort of project work:

a. Make the CEO responsible -- see my material on "Executive Custody " for guidance;

b. Appoint a highly experienced expert to run the project on behalf of the client and have that person report VERY closely to the CEO in an Interim Executive capacity with a VERY tough mandate to act on behalf of the CEO and a strong contract for the duration of the project -- see my article on "The Art of Project Leadership " for some suggestions;

c. and ... see the sections that follow.

Studying Bridgestone's complaint there was clearly a major deficiency in their procurement approach.

It is vital that a project such as theirs is initiated with a very formal tender process against extremely detailed and very robust documents prepared by the client team with assistance from a business systems procurement expert and client legal advisors in order to create a framework for a robust contract.

For procurement to lay a foundation for a successful project:

a. It is vital that the CEO has first appointed their tough interim executive Project Leader / Project Director, someone with a large amount of procurement experience;

b. It is also vital that the procurement takes place against a tough and comprehensive procurement pack;

c. with at least three to five bidders;

d. with a tough multi-stage adjudication procedure;

e. resulting in a tough contract.

See the discussion of the requirements for such a procurement approach on my website .

Such a contract must lock the contractor into a fixed price for a clearly defined business outcome.

It must contractually bind provably competent contractor personnel individually to the project for the duration.

Please read the material on my website  for more information.

Next major contributing factor:

The project name "Order to Cash" speaks volumes.

This was clearly a "Business Process" orientated project.

How do I know that?

Firstly the whole industry does it that way.

Secondly "Order to Cash" is a classic example of the nonsensical gobbledegook that Business Process proponents use to describe things.

"Order to Cash" is a substitute for -- order processing, works orders, warehousing, logistics, invoicing, credit control, ... or whatever Bridgestone exactly DID commission.

Fundamentally a Business Process centric approach to a project of this nature is a waste of time and money -- see my article "Business Process -- Irrelevant, Distracting and Dangerous " to understand why I say this.

The things that matter are the software functionality on a module by module basis correlated to the business -- business function by business function coupled with the configuration of the system and particularly the validation data and master classification lists, see my article "The Alternative to Business Process -- the RIGHT Approach " for a discussion of the correct approach.

Fundamentally, what is required is:

a. Discovery of the strategic essence of the business -- why it exists and HOW it thrives;

b. High level functional definition of the components of the business;

c. Definition of the key functional elements from a strategic essence perspective;

d. Relate this to typical software modules available in the market place;

e. High level specification of system requirements on a module by module basis;

f. Tough procurement as discussed above;

g. Determine what capabilities are to be delivered with standard software, what requires customization and what requires custom development -- determined by strategic essence;

h. Detailed development of a comprehensive suite of representative configuration and master data;

i. Specify and build software as required;

j. Precision configure ;

k. Test, refine, test, finalize, accept;

l. Laboratory program as discussed below including management prescribe workflow (aka process);

m. Deploy and commission;

n. Operate.

There is much on my website relating to this approach.

It is probable that IF Bridgestone had followed this approach there would have been MUCH less custom development.

This approach focuses attention in terms of deliverables on the two things that ALWAYS remain at the end of the project, the software and the configuration.  The Business Simulation Laboratory, described below, provides the mechanism to integrate this into the business and ensure that people are fully trained -- the third component that remains.  The procurement approach should ensure that a rigorous project method that enforces the above points is followed.

It is clearly apparent from the Bridgestone pleadings that IBM ran a sloppy project.  I do NOT say IBM AND Bridgestone, I say IBM -- they CLAIM to be the experts.

Bridgestone in their pleadings make it clear that they appointed IBM as trusted advisors, as experts, as a leading brand in the field with a high level of confidence and trust that IBM would do right by them.

IBM failed outright and even allowed Bridgestone to go live despite acknowledging there were problems.  There is a point at which a responsible consultant stands firm and REFUSES to allow the client to go live or, at the very least requires the CEO to sign a TOUGH indemnity clause.

My point?

I am advocating a level of rigour, precision, accountability, etc that is far beyond ANYTHING that occurs in the business information systems industry, see my article on "The Engineering Approach to Business Information Systems Defined " for a discussion of the characteristics of this thing that I refer to as "The Engineering Approach" it is a culture, a way of thinking, a way of doing that is unique to people who have made it their life long goal to create things of lasting value from nothing, these people are engineers and they know that without intense rigour and discipline bridges do NOT stand up!

So, you need a Project Leader who understands these principles and you need to find a contractor who understands them as well.  And then you need to apply them rigorously and conscientiously.

Another very obvious element of the Bridgestone complaint and IBM's response is that there WERE known problems BEFORE going live!

BUT I.T. PROJECTS ARE LIKE THAT YOU SAY?

Why?

There is NO reason for them to be.

They are a field of engineering endeavour like any other, failure is inevitable UNTIL you eliminate every possible cause of failure from the solution.

Engineers are schooled with exposure to failure and how to prevent it.  The bulk of the undergraduate university curriculum for engineers relates to preventing failure and the construction of large buildings and other engineering structures is ALWAYS coupled to engineering laboratories that constantly test representative samples of material to destruction in order to provide required quality control.

A Business Simulation Laboratory LOOKS different, it is a room with tables and computers and a data projector or two but the principle of its design and application is the same.  The most experienced personnel of the client organization systematically work with small quantities of carefully selected representative data to do everything possible to cause the system to fail.

The dictum is"break it until you cannot break it any more".

ONLY once this state has been achieved can the software then be fully configured and again tested, the workflow (that is process) dictated by management and configured, the reports, models (data warehouse), alerts, etc defined, built and tested and training material developed.  The training material should preferably be interactive.

Once ALL of the above has taken place and the system / systems have been manifestly proven to be ROBUST and reliable and ALL components are working THEN and ONLY then are ALL staff brought into the laboratory environment to be trained in SIMULATED live operations.

Should IBM have done this?

Categorically yes!

Were they negligent that they did not?

Well, YES BUT, there are very few people in the industry who know to do this let alone know HOW to do this.

As far as I am concerned there is NO alternative to the Business Simulation Laboratory and a rigorous and robust testing program managed by a tough no nonsense senior person who will brook NO arguments for compromise.

There is an extension to the previous point, something that, on its own might have greatly reduced the risk of going live prematurely and that is a robust and tough "Readiness to Commission" Certificate or "Go-Live" Certificate.

Once ALL staff are trained in the Laboratory, THEN the entire project team are required to progressively sign a tough formal certificate of "Readiness to Commission".

The value of such a certificate is that it forces people to think.

The psychology of how one manages people on these projects is of paramount importance.  The psychology of a tough certificate with wording that clearly holds the people signing accountable cannot be under estimated -- it forces people to think very carefully before putting their signatures on such a document.

And THAT is EXACTLY what you want.

Make it DIFFICULT TO SIGN and easy NOT to sign.

Beyond that note that Bridgestone did NOT have a roll-back plan.  They were apparently unable to roll back to the old systems.  That is an act of gross negligence that needs to be laid equally at the door of IBM and the CIO / IT Manager.

This should be NON-NEGOTIABLE!

From the documentation there are other factors.

Consideration of my factors relating to "The REAL Issues in Business Information Systems" -- the factors causing failure and the Critical Factors for Success (the subject of my book -- available on the website together with the course of the same name ) will give you many more pointers to what went wrong and how YOU can avoid a similar catastrophic outcome for your organization.

I suggest for your consideration that there IS a better way that will deliver MUCH better outcomes, see my article on "What does a HIGH VALUE Business Information System Solution look like " for more ideas.

This outcome is one in which every aspect of the business runs smoothly, efficiently and effectively.  The systems "flow" with the business and most activities take LESS time than they did previously.

Most importantly executives and managers have a wealth of strategic, operational and tactical information available literally at the touch of a button.  Information that is of the highest quality and entirely reliable.

Executives and managers have time to be more creative and the business is able to sustain greater production, sales, etc with existing headcount or headcount has reduced by natural attrition over a  year or two.

The business is booming, it is growing faster than it did before, new customers, new products, new services.

All of this traceable back to the new systems that have been expertly configured to EXACTLY model the real world in which the business operates such that the systems are easy to use and FLOW with the business.

This is what IBM should have delivered to IBM and failed!

My website contains considerable information in the form of articles, white papers and presentations that discuss what I recommend in considerable detail with information that you can take on board and apply immediately, please have a look -- the home page, http://www.James-A-Robertson-and-Associates.eu will give you a good overview of what I am advocating and help you to navigate the entire site to locate information that you can apply immediately.

The Table of Contents lists all the webpages on the site, there is a lot of deep content that is NOT immediately visible.

The Article Catalogue contains well over 150 articles on diverse topics.

The Article Keyword Cloud provides alphabetic keywords linking to many of the articles

The Conference page lists around 90 conference presentations, nearly all different with around 40 of the presentations live on the site for you to view and download -- email me if there is a presentation you would like that is not on the site.

If you would like to know more about me there is detailed information on the website and further detailed information on LinkedIn

Visit the Testimonials page to hear and read what clients and others have to say about me

The full version of this article is available on the website

Particularly relevant recent articles are listed after the signature in this email

Diagnostic Pulse Measurement
I offer a concise diagnostic "Pulse Measurement " light touch, high impact investigation that in the space of a day to ten days for most organizations, depending on size and problem complexity, will deliver you a concise written report that will accurately diagnose what is wrong with your current systems OR your project OR your IT Department and prescribe meaningful and actionable treatment for the conditions I identify.  See special offer at the end of this email.

I look forward to being of assistance to you.

Yours faithfully,

Dr James Robertson PrEng

James A Robertson and Associates Limited
Assisting clients to thrive through effective and efficient application of Business Information Systems

Mobile: +44 (0) 776-862-2875
Landline: +44 (0) 207-059-0007

eMail       : James@James-A-Robertson-Associates.eu
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Linked In  : http://uk.linkedin.com/in/DrJamesARobertsonERPDoctor

A discussion of how strategic essence should inform ALL business improvement projects and particularly business information system projects.  This thread discusses the analysis of strategy, the planning of strategy and feeding strategy through into business system specifications and the management of business improvement projects.  Articles to date include:

Summary
1: Strategy Defined
2: Differentiation
3: The Essence IS Different
4: Strategic Essence is the Point of Departure
5: Determining Strategic Essence

A discussion as to why business information systems fail to deliver on expectations or fail outright.  Coupled to discussion of the Critical Factors that must be taken into account in order to achieve successful outcomes.  This thread is progressively discussing more hands-on specifics of achieving high value outcomes and builds on the Strategic Essence series.  Articles to date include:

1: Introduction
2: Mythology and Lack of Executive Custody
3: Lack of Strategic Alignment and Lack of Precision Configuration

Discussion of practical specific measures that can be taken in order to greatly improve the information yield of business information systems at both the operational and executive strategic level.  A number of simple steps that can be taken immediately and more complex measures that can be taken over time. 

This thread is discussing increasing business system and data warehouse value yield using techniques that lead to significantly improved business intelligence capability, including support for the ability to "obtain answers to questions we had not previously thought to ask ".  This builds on the content in the Strategic Essence and Real Issues threads.  Articles to date include:

1: Introduction
2: Principles of Data Engineering
3: Steps in Applying these Recommendations

In order to fully apply the methods and principles discussed in the threads above with regard to new systems it is vital that a robust and effective approach to procurement is applied.  This requires a tough procurement approach directed at achieving a tough business outcomes orientated project that ensures a high value outcome.

This thread discusses the components of such a procurement approach.  The individual documents and processes that make up the approach are outlined.  Thereafter the components are discussed in more detail.  Articles to date include:

1: Introduction
2: Bill of Services, Laboratory, Go-live Certificate, etc
3: Executive Engagement, Bid Compliance, Adjudication and other matters

Comment on some of the dramatic business information system investment failures of recent years.  Articles to date include:

1: The BBC Digital Media Initiative £100 million write-off

I would like to present you with a special offer for my intense executive level diagnostic service which I term a "Pulse Measurement " because it is quick, concise and delivers high value diagnostic and treatment information with regard to any business related information systems concern or problem including sub-optimal system operation, stalled and failing projects and under performing Business Systems and Information Technology Departments.

I would like to offer you a standard Pulse Measurement of one to ten days at a discounted rate to explore any issue of concern with regard to your business information systems, business systems project or business systems (I.T.) department.  At the end of the day you will receive a headline diagnostic assessment and recommended treatment of the situation.  Method is outlined on my website together with some example reports .

This is my premier offering and has been delivered dozens of times -- headlines of some examples are available on my website.  Over the last 25 years I have developed diagnostic techniques, based on Military "Quick Attack" principles and Engineering methods, which enable me to rapidly identify the REAL issues with regard to project, system or departmental under-performance and drill down to concrete indicators that business executives can relate to, understand and act on.

As discussed in my articles on "The REAL Issues in Business Information Systems" the factors that give rise to under-performance and the Critical Factors for Success are more obscure and intangible than many people realize.  Much of what is published about methods of obtaining successful outcomes is fundamentally flawed, as evidenced by the ongoing high level of sub-optimal results, witness recent reports regarding BMW, Bridgestone and the BBC .

If you have the slightest doubts about whether your systems, project or department are performing to full potential, a Pulse Measurement will give you a fresh and independent second opinion.  Some Pulse Measurements have enabled client executives to take major directional decisions in areas where there was significant uncertainty, refer the examples on my website .  In some cases very substantial planned expenditure was averted.

I guarantee that you will find this intervention of high value, failing which you may terminate the assignment at the end of the first day and I will NOT bill you for my fees for the day, only for my travel and accommodation costs outside of London.  This guarantee is subject to full cooperation during the investigation and all meetings proceeding as scheduled.

To inquire about purchasing any of the above services simply click on the link above, enter your details in the resulting email and send it to me.  If for some reason the email does not open please just hit reply to this email and enter your contact details.  I will revert to you in the manner you request to answer your questions and make arrangements.

Should you require further information please email me and I will be delighted to connect by email, phone or Skype to answer all your questions.

I look forward to being of service to you.

Yours faithfully,

James Robertson