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IBM vs GSIS

IBM's Devil's Triangle: An enterprise software soap opera

 Summary: IBM faces lawsuits and public embarrassment in the Philippines over a failed government project involving the company's

 DB2 database product.

By Michael Krigsman 

IBM faces lawsuits and public embarrassment in the Philippines over a failed government project involving the company's DB2 database

product. he situation offers a te!tboo" e!ample of the Devil's riangle# and demonstrates the tensions and conflicts that arise between

technology vendors# customers# and system integrators.

Background. he $overnment %ervice Insurance %ystem &$%I%# a Philippine agency responsible for managing the pensions of government

employees# installed DB2 in 2((). By early 2((*# the system began showing signs of wea"ness. +ocal newspaper# the Philippine Daily

In,uirer# describes what happened-

$%I% chief legal counsel /strella /lamparo0 e!plained that the software started showing problems in early 2((*# particularly in handling

voluminous chun"s of data.

 1IBM upgraded its database system purportedly to enable it to handle unlimited volumes of data# /lamparo said. 13owever# the reported

upgrade only worsened the problem because instead of fi!ing the problem# the database began mishandling data and prevented the

simultaneous use of data. 

he government threatened lawsuits in response# according to the paper-

he $overnment %ervice Insurance %ystem warned...it would launch 1a series of legal actions against IBM for 1incalculable damages that

the pension fund sustained due to defective computer software.

$%I% went on to purchase a full4page spot in major newspaper# the Manila Bulletin# and published an open letter e!plaining the situation.

he Bulletin reports-

he $overnment %ervice Insurance %ystem &$%I% has put out an open letter to its active members and pensioners# detailing how the

software installed by computer giant IBM in the $%I% system has# to borrow the 5und6s own term# 1turned into a nightmare. 

$%I% has been having difficulties processing the claims and benefits of members# pensioners and other beneficiaries# as well as the glitches

encountered in some instances in the posting of payments made to the $%I%.

7nother Daily In,uirer article describes the technical environment-

5ull swing implementation was in 2((* after $%I% tapped systems integrator 8uestroni! 9orporation. :nder the contract# 8uestroni! would

implement a full database pac"age using DB2 version * and an %7P business application.

3owever# the agency started seeing problems with DB2 version *# particularly 1bad pages on the tables. he agency later discovered that the

DB2 tables could only handle 2;) gigabytes of data# which was lower than what $%I% needed.

he database software was then upgraded to DB2 version e e!pected DB2 to "eep running

since it was only 2 terabytes. 

$%I% is now pursuing various legal measures against IBM# including filing criminal charges accusing IBM Philippines of bid rigging in

connection with the project. 5rom local newspaper BusinessMirror-

/lamparo said0 that IBM Philippines may be held liable for possibly dictating the bids of its dealers as a third party who is technically not a

bidder.

 1By giving various discount levels to its dealers involved in the bid?from @( percent to *( percent ?IBM Philippines is in effect empowering

one dealer over another# since those who had gotten a bigger discount would naturally be able to bid lower# /lamparo said.

%he brought the Aational Bureau of Investigation's attention to %ection ); of 7

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Aonetheless# in view of our long standing relationship with $%I% and out of goodwill# IBM has been wor"ing with $%I%' solution providers to

resolve $%I%' system issue.

IBM also denied violating procurement laws# according to another local station# $M7 A/>% G-

he Philippine unit of :%4based IBM said 1it does not agree with the statements made by the pension fund which earlier said that the

company as"ed one of its dealers to pull out from a bidding for an IBM +inu! server.

>hen IBM was notified of $%I%'s concerns last year# we too" immediate action to thoroughly investigate the matter and found there were noirregularities in the way we conducted our business. >e shared these findings with $%I%# IBM Philippines said in a statement.

%7P distanced itself from the situation# saying it has no contract with $%I%-

%7P Philippines said that it had no contractual relationship with the agency in the implementation of its I infrastructure software or

consultancy services.

Instead# the software company stressed that $%I% licensed %7P software from eam %ynergia# a local value4added reseller.

Whose fault is it on failed ERP implementation?

In our opinion, both GSIS and IBM have their share of the blame. GSIS purchased a

B! s"stem from IBM and then hired #uestroni$ %orporation to inte&rate thes"stem 'ith an S(P business application. IBM)s liabilit" to GSIS is simpl" to provide

the s"stem, 'ithout bein& part of the selection, customi*ation and implementation

of such s"stem. +his set up, 'hich is a te$tboo de-nition of a evil)s +rian&le) is

bound to have problems since the comple$it" of the technolo&" maes it impossible

to completel" entrust the implementation to a third part". GSIS should have

disclosed to IBM su/cient information on the pro0ect so that the" could have

arran&ed a better en&a&ement 'herein IBM taes part in the implementation of the

s"stem. 1n the other hand, IBM, no'in& that its client handles critical functions

should have been more committed in determinin& the particular needs of GSIS

http://www.gmanews.tv/story/151110/IBM-Philippines-denies-violating-procurement-lawshttp://www.gmanews.tv/story/151110/IBM-Philippines-denies-violating-procurement-lawshttp://newsinfo.inquirer.net/breakingnews/infotech/view/20090529-207830/SAP-says-GSIS-did-not-engage-its-serviceshttp://newsinfo.inquirer.net/breakingnews/infotech/view/20090529-207830/SAP-says-GSIS-did-not-engage-its-serviceshttp://www.gmanews.tv/story/151110/IBM-Philippines-denies-violating-procurement-lawshttp://newsinfo.inquirer.net/breakingnews/infotech/view/20090529-207830/SAP-says-GSIS-did-not-engage-its-services