Bridgestone are suing IBM for US$600 million for damages resulting from a botched business systems implementation.  IBM are fighting back.

The damage to Bridgestone was huge, unable to fill orders inventory piled up to the extent that they had to hire extra warehouse space, frustrated and angry customers, customers going elsewhere, every CEO's nightmare and yet Bridgestone thought they had gone the safe route of IBM and SAP!

This series of articles analyses in detail what went wrong and how you can avoid making the same mistakes in your organization.

In this article I look in detail at the major governance problems associated with the Bridgestone project and outline a robust approach to managing projects of this nature effectively.

I also look at major flaws in the procurement process and how to avoid these.

The first article provided an overview of the Bridgestone versus IBM business systems failure in which Bridgestone are suing IBM for US$600 million in damages.

The article introduced the topic and then headlined each of the major components of the situation based on my "Critical Factors" approach.

This article goes into more detail with regard to the Governance and Procurement aspects of the project failure.

The previous article stated that the fact that Bridgestone's existing systems were written in Cobol did NOT constitute a valid business reason to change their systems and referred to further material on my website  that elaborates on this point.

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

They went with SAP because SAP is supposedly THE leading brand although a look at my Failure Catalogue has SAP occurring rather frequently.

They went with IBM because IBM is a household name and surely to be trusted -- although a look at my Failure Catalogue has IBM also occurring rather frequently.

Two supposedly good reasons for the executive of Bridgestone to believe they were making a good decision -- SAP and IBM!

So, what went wrong?

Well, Bridgestone had some governance problems -- they are alleged to have replaced their Chief Information Officer no less than 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 establish who the CIO reported to but it seems clear that the Chief Information Officer was NOT really a "Chief".

Yes, it IS so that in about 70% of cases the Chief Information Officer reports to a member of the executive team, most frequently the Chief Financial Officer -- because somehow businesses mistakenly believe the CFO is better qualified to manage the systems that run the company than anyone else.

One of the reasons there is so much failure and so many sub-optimal outcomes is exactly because the CFO has NO formal training that in ANY way equips them to manage technology.

IF you are NOT prepared to have the IT Manager -- a person who reports to a C level executive who reports to the Chief Executive is NOT a Chief Information Officer, they are an IT Manager and calling them a CIO does NOT make them an executive.  Sitting them at the top table with a reporting line directly to the CEO and operating on a FULL peer basis with the rest of the executive team is what determines if a manager is a CIO.

So, it seems probable that Bridgestone changed its IT Manager six times during the two year project NOT their CIO.

Thus IBM have some basis to allege lack of leadership on several fronts.

Most importantly, the so-called OTC (Order to Cash) project involved almost the entire spread of the business.  The custodian of this integrated view of the business and the ONLY person with the muscle to make decisions stick across multiple operating components of the business is the CEO.

Since the CEO does NOT have the knowledge or the time to manage a project of this size and complexity they need an advisor and Project Leader -- someone to direct the project.  This needs to be a person who has done this before, a gray beard so to speak, someone at least over 50 years of age who specializes in managing this type of project on behalf of the client.  The IT Manager simply does NOT have the clout and, in all likelihood does NOT have the experience to manage something like this.

Remember that when you put in place a massive new integrated system it touches just about every part of the business, it touches just about every person in the business and, by definition, it RIPS THE GUTS out of the business and replaces them with something that is supposedly better.  The Bridgestone debacle provides graphic evidence of what happens when you rip the guts out of the business in a badly planned and badly managed project -- you cannot ship product, you lose customers, you lose millions of dollars!

IF you get the picture of what can go wrong you will recognize that for ANY organization embarking on a project of this nature pretty much the FIRST thing you do is go out and find a REALLY senior, REALLY experienced expert who has done this a number of times before and knows what works and what does NOT work.  Make sure that they have rapport with the CEO, make sure that they demonstrate intuitive understanding of YOUR business and then bind them contractually for the duration and give them an open door to the CEO as an Interim Executive.

On the face of all the evidence Bridgestone did NOT do this -- probably because no one told them it was necessary -- probably because almost no one does it that way which is a major reason why so many projects fail or come in seriously short of expectations.

That said there was obviously something TOXICALLY WRONG with the way Bridgestone were managing their IT Manager -- remember, since he or she was NOT on the Executive Team they were NOT really CIO -- that alone could be enough reason for all the resignations.  Bridgestone embarked on a massively complex and very large project and, seemingly put a lot of responsibility on this person they called CIO and then did NOT give that person the muscle and support needed to do the job.  OR did something else that made the position totally untenable.

A recipe for failure!

So, does that let IBM off the hook?

NOT from where I sit.

Given that there clearly WAS a problem, it is a key element of IBM's defence, then IBM should have done something about it.

Something like raising a "red flag" on the project and advising the CEO that in the absence of a robust and sustainable solution to the CIO problem they would have to cease work and withdraw their team until a suitable person was put in place.  But that would have been bad for planned revenue so I am guessing that typical IT person temerity (people who are good with computers are generally NOT good with people, particularly when faced with conflict) coupled to quarterly revenue target driven greed got in the way of IBM's integrity !

That is a major problem with the business information systems industry, for the most part it is driven by people who are in the game for the money and NOT for the passion of exceptional solutions delivered to high quality standards that meet or exceed client expectations and come in on time and on budget.  The folk who are turned on by good solutions generally do NOT make it to the top.  So, if your fundamental commercial driver is NOT aligned with a quality outcome you will make technically BAD mistakes.  It seems that IBM did this.

After all, it seems they were working with an IT person who was punching below IBM's weight and Bridgestone, according to their pleadings, was counting on IBM to provide the wisdom and maturity necessary to deliver the required outcome.  Problem is that in this case IBM were, seemingly both the main player AND the referee, because there was NO in-house referee of any substance, they changed on average every four months and you CANNOT learn about the business or the project in four months let alone manage a major player like IBM. 

Not to mention deal with whatever ugly governance toxicity caused all your predecessors to leave!

So, YES Bridgestone were at fault and NO that does NOT exonerate IBM -- they should have intervened one way or another to stabilize the situation.  Perhaps they were cutting costs and deploying light weights on their side too?  Bridgestone allege they were.

The lesson for your organization?

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.

James A Robertson and Associates offer a range of services directed at enabling clients to put in place comprehensive measures to prevent the occurrence of the sort of problems experienced by Bridgestone starting with procurement, through contracting, discovery, solution design, construction, configuration, laboratory testing, certification and deployment with solutions designed to give lasting high value low life time operating cost outcomes -- this includes offering the Project Leadership service referred to in this article

I also offer short, sharp diagnostic interventions to determine why your business system, department or project is NOT delivering or is stalled plus easy to understand actionable advice on how to turn the situation around and, where required, taking charge and turning a stalled project around

The diagnostic can be extended to providing expert witness services where required

I will also give you an independent evaluation of the health of your existing systems and give guidance on whether they need to be replaced or not

Please click here to email me for more information

From the fact that Bridgestone are litigating against IBM one has to conclude that the contract was shaky.  In fact, if one reads the full pleading document it is apparent that whatever contract existed did NOT have teeth.

One of the reasons that the construction industry consistently produces high quality deliverables is that the construction industry makes use of well-established tough contracts that provide all the basis necessary for legal action against the contractor in the event of failure or sub-optimal outcomes.  So litigation is seldom required.

Signing the contractors contract, as it appears that Bridgestone did, after all everyone does it, is the first step in a journey to a sub-optimal outcome.  Having that contract signed by an IT Manager dressed up to look like a CIO is a recipe for disaster.

Before you can sign a tough contract you must follow a tough procurement process.  From the documents it appears that IBM were appointed on a "sort of negotiated basis", they were already there, they drew up the requirements specification and then negotiated to execute it so, in a sense, they were again judge and jury.

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.

It must provide for detailed discovery BEFORE the price is finalized and the contract is signed so that there is NO room for "change of scope".

There must be a comprehensive and highly detailed project plan and "Bill of Services" such that there is NO ambiguity about what the contractor quoted to do and how much they quoted for each component so that in the event that there really IS a legitimate basis for a variation order this can be managed effectively.

Please read the material on my website for more information.

James A Robertson and Associates offer a range of services directed at enabling clients to put in place comprehensive measures to prevent the occurrence of the sort of problems experienced by Bridgestone starting with procurement, through contracting, discovery, solution design, construction, configuration, laboratory testing, certification and deployment with solutions designed to give lasting high value low life time operating cost outcomes -- this includes offering the Project Leadership service referred to in this article

I will also give you an independent evaluation of the health of your existing systems and give guidance on whether they need to be replaced or not

Please click here to email me for more information

4. The Business Process Myth -- irrelevant, distracting and DANGEROUS

5. Absence of engineering rigor -- sloppy projects and sloppy solutions

6. Lack of formal Business Simulation Laboratory testing

7. NO certification

8. NO roll-back plan

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.

Remember that "if you do what you have always done you will get what you have always got, in this case, if you do what the IT and Business Information Systems / ERP industry has been doing for the last twenty years you will get what they have been delivering for the last twenty years -- expensive projects that run over time and over budget and deliver sub-standard outcomes or outright failure.

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 an outcome 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 management 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 Bridgestone and failed!

Please browse my website for more information, 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.

Back issues of articles in this series are listed at the end of this email.

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 on the child pages 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

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 client organization size and problem complexity, will deliver you a concise face to face report together with a supporting written report that will accurately diagnose what is wrong with your current systems OR your project OR your IT / IS  Department and prescribe understandable, meaningful and actionable treatment for the conditions I identify.  I offer a full range of services to implement my recommendations.  This same service can be used to evaluate whether you REALLY need to replace your existing systems or not.

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

James A Robertson and Associates offer a range of services directed at enabling clients to put in place comprehensive measures to prevent the occurrence of the sort of problems experienced by Bridgestone starting with procurement, through contracting, discovery, solution design, construction, configuration, laboratory testing, certification and deployment with solutions designed to give lasting high value low life time operating cost outcomes -- this includes offering the Project Leadership service referred to in this article

I will also give you an independent evaluation of the health of your existing systems and give guidance on whether they need to be replaced or not

Please click here to email me for more information

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
2: Bridgestone versus IBM -- The REAL Issues -- Overview

James A Robertson and Associates offer a range of services directed at enabling clients to put in place comprehensive measures to prevent the occurrence of the sort of problems experienced by Bridgestone starting with procurement, through contracting, discovery, solution design, construction, configuration, laboratory testing, certification and deployment with solutions designed to give lasting high value low life time operating cost outcomes -- this includes offering the Project Leadership service referred to in this article

I will also give you an independent evaluation of the health of your existing systems and give guidance on whether they need to be replaced or not

Please click here to email me for more information