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562 Part Four Building and Managing Systems

the problem because that would force the utility to have encountered bugs and issues that should never
pay more than originally planned on the project. have made it to a live version.
Despite all of the blunders, Austin Energy continues Roughly one in four Austin customers has had
to hold out hope for a successful and amicable solution problems with IBM’s system. Some customers had
to the problem. Austin Energy has a relationship with their accounts canceled and could only correct
IBM dating back several years, when the companies the errors after several phone calls. The billing
contracted together to develop an inventory manage- system woes have come at a bad time for Austin
ment system for the city. Though that system also expe- Energy, which was preparing to institute its first
rienced problems, they pale in comparison to the billing rate increase in 17 years. In the wake of the public
system fiasco. Austin Energy also claims that IBM’s relations disaster brought about by the botched
errors have cost the company $8 million since the proj- billing system, the company has had to rethink
ect’s outset, so switching vendors might simply make those plans.
matters worse for Austin Energy with so much invested As of February 2012, most—but not all—of the
in IBM’s project development already. When asked for billing system errors had been fixed. Claypool
comment, IBM has only said that it is working with remained hopeful that Austin Energy would be able
Austin Energy to resolve the billing system issues. to maintain an amicable relationship with IBM and
IBM has successfully managed other projects like finish the work successfully. IBM has been respon-
this one in the past. The IBM billing system consists sive, Claypool noted, but Claypool felt its response
of Oracle databases running atop IBM’s WebSphere was too “incremental. . . . We would like to see a
middleware and Tivoli management tools. The faster response.” Going forward, Austin Energy’s out-
problems with the system have not stemmed from sourcing contracts will include stronger penalties for
one root cause. The new billing system is complex, vendor nonperformance, including the question of
with 73 different interfaces, and getting them all system availability.
to work seamlessly with one another has been an
arduous process. Customers have been unable to Sources: Paul McDougall, “Chronology of an Outsourcing Disaster,”
Information Week, February 23, 2012; “Austin Energy Fixes Billing
access the system’s online portal, and Austin Energy System Bug,” MyFoxAustin.com, February 22, 2012; and www.
employees have described their experience with the austinenergy.com, accessed March 22, 2012.
system as if they are “alpha testers,” meaning they

CASE STUDY QUESTIONS

1. Is the Austin Energy project a failure? Explain 4. What were the specific organizational or technical
your answer. factors as well as management factors involved in
2. Describe the business impact of the faltering this project failure?
Austin Energy project. 5. Describe the steps Austin Energy and IBM should
3. To what degree was IBM responsible for the prob- have taken to better manage this project.
lems countered by the Austin Energy billing
project? Was Austin Energy at fault for the prob-
lems? Explain your answer.

Scope defines what work is or is not included in a project. For example,
the scope of a project for a new order processing system might be to include
new modules for inputting orders and transmitting them to production and
accounting but not any changes to related accounts receivable, manufactur-
ing, distribution, or inventory control systems. Project management defines
all the work required to complete a project successfully, and should ensure
that the scope of a project does not expand beyond what was originally
intended.

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