ACC, IRD, Accenture, $2B of ICT money heading offshore, brand culpability, and the Gisborne Gold Effect

OPINION

In the past few weeks Accenture has taken the lead role for both the Accident Compensation’s programme to, no doubt, try and replace it’s core systems and IRD has also nodded that they will be moving in to bed with the multi-national. Three players in the local market are rumoured to be bit players in the regime, niche specialists for the most part that perhaps couldn’t be left out. But what do we know about Accenture and why, despite Government protestations, are we seeing billions of dollars going offshore when it could be supporting New Zealand Inc?

IRD locked the local market out of their transformation deal by using the “must have done over $100m on a similar project”, clause. Now, Accenture has two recent tax transformations in the past years, notches on it’s belt, both of which were failures. Now, whether it was Accenture that was the cause of the failure, or the organisations that they worked for, you must judge for yourself.

“Many of the failings in the ATO’s data handling stemmed from the failure of its $800 million Change Program to achieve its aim of replacing its disparate legacy systems with a standardised operating environment.” – Source

PG&E also suffered a “$2.2B transformation failure”, again, Accenture was involved in that as well…

“SAN FRANCISCO (CA)- PG&E has given the word “Transformation” a new definition to it’s 24,000 employees. “Transformation” is the $2.2 billion (U.S.) adventure with Accenture that has caused the biggest company reorganization failure in PG&E’s 100 year history.” – Source

I’ll leave you to do the reading and form your own questions and judgments.

Save to say, Accenture globally is not well-loved at all, being called the “Evil Empire” by this website that lists allegations a plenty as does this Wikipedia Page. I’ll summarise for you; had some tie up with Enron at Accenture’s birth, accused of tax dodging by using the Bahamas, alleged to have off shored American jobs to Asia, may have lost sensitive data (in multiple instances it is alleged), allegedly made a real mess of voter record databases in the U.S., has been criticised for hiring too young, and then the downright bizarre. An analyst who died at their desk and wasn’t noticed to be deceased for nearly four days by colleagues, accusations of the lowest paid staff in the consulting world, and that most naughty of sins, supposedly cutting testing in order to meet deadlines.

Everyone hates a winner baby, that’s the truth, so these should be taken with a grain of salt and we all have utmost confidence in the Request for Proposal (RFP) process weeding out the weak and choosing the best. Don’t we? Of course we do! Can I hear it? Can I hear it?

The RFP process according to local New Zealand ICT companies AND multi-nationals, is well-hated. Words that are used to describe it are unfair, unreliable, un-transparent, un-affordable, unusual, and confusing. If we want a lovely example of this in Wellington right now, then have a chat to companies, big and small, that have tendered for the Wellington City Council “Odyssey” ICT Project. Wow, that is a fun and interesting coffee conversation.

But I digress.

Why do large companies and government agencies persist in choosing multi-nationals with their corporate culture that often doesn’t suit New Zealand, the “Mexican with Cellphones” attitude, distance, and little chance of legal recourse if the programme collapses when they could choose local companies that equally capable of making the same kind of mistakes? Ok, so that was a bit tongue in cheek.

Ah, the Mexicans with Cellphones thing, some of you asked last time I used it. It is rumoured that when Peter Jackson was filming the first three Lord of the Rings movies the Americans were not well-loved due too… cultural differences. Supposedly it came to a head one day when an exasperated American likened the New Zealand workers to being “no better than Mexicans with cellphones.” A near revolt apparently ensued…

I think there are a couple of reasons that they do. First, culpable deniability and brand. Or branding that provides culpable deniability. Second, the “Gisborne Gold” effect.

Brand lends culpable deniability. This means that if you choose one of the largest consulting companies in the world and the entire programme collapses in a multi-billion dollar disaster, as a Board Member, Chief Executive, and Auditor, you can shrug your shoulders and say “We chose the best in the world, it wasn’t our fault.”

The Gisborne Gold effect.
Gisborne Gold is one of New Zealand’s earliest craft brewers with well over twenty-five years of business and a strong following in Wellington, Auckland, and Christchurch. Guess where they don’t sell much of their beer, and never have. Gisborne. That’s right, a local, home-grown business effectively exports the bulk of its product to other markets and its home town doesn’t much care for it.

The New Zealand ICT market is similar. While we are taking on the world outside of our borders from Auckland, Wellington, and Christchurch, dealing with customers that are massive in comparison to government agencies (I know of one local ICT company that has a customer base that is sixty times the size of IRD), with innovative product, smart people, providing billions in revenue to the country, they don’t impress the local market much.

I am for a level playing field. I think that there are a number of things that need to occur in order to do that. Those being:

• RFP’s should not be allowed to have statements in them that automatically rule out vendors on a detail basis. That being, for example, must have created a tax system in another country with a value no less than $100m… It’s naughty. We all know it is.
• That means we need more transparency. It’s not good enough to hire a probity lawyer (referee) from New Zealand Audit to watch the entire audit, agree a result, then once it is rubber-stamped by said auditor and they have left, change the decision. Yes, that happens.
• We need more business people on RFP’s, less ICT people, and far less accountants and commercial managers. ICT Programmes of work fail because the business makes the mistake of thinking that ICT is the answer when all ICT is really is an amplifier. In other words, if you don’t change your business to be less complex, combative, silo’d, complex, and plain dumb, then any ICT system will simply make all of that worse. Fix the business, THEN introduce the ICT. NOT the other way around. Commercial ICT people and Accountants really need to be left to the contract and the spreadsheet of costs. Far too many RFP’s are decided on commercial terms and price, leading to disaster. Cough, ACC, cough cough.
• It needs to be consistent and affordable to engage. Every RFP is different and the quality of some, actually the majority, is awful. Awful quality and inconsistency leads to massive costs to engage and figure out WTF it is that customers want.
• Government needs to either create room for local New Zealand ICT companies to compete, or just butt out of it all together. This half-arsed mucking about, promises, and fiddling is counter-productive. Either change the market, or step out of it, but don’t give it mixed messages.
• We nearly missed one. Accountability. If a government agency chooses a provider for an RFP then the entire Board and management team should be collectively accountable for the success of that programme with a good dose of external oversight to ensure that a meltdown can’t be hidden.

New Zealand ICT companies are world-class and we are not taking advantage of them. We have an RFP process that is sub-standard and produces the same results from history again and again, the number of examples of this is astounding. We need to alter the RFP process to allow all players to fairly compete, rather than stack the odds in the favour of companies that provide great brand culpability.

Ian Apperley is the director at Isis Group and blogs at Whatisitwellington