Is the Austin Energy project a failure? Explain your answer.
- Austin Energy’s efforts of improving its billing system through IBM led to much failure. Firstly, the amount Austin Energy put into the project can be totaled to $110 million. Because Austin Energy was losing revenue due to various technical factors, Austin did not have the proper budget to cover the costs. In addition, there was a delay in the billing system update, the system itself was too complex, and instead of improving the company it created more costly, technical issues that needed to be corrected.
Describe the business impact of the faltering Austin Energy project.
- Austin Energy’s billing system lacked customer assistance options and other updated online billing services. As it became updated, the system had several software errors and bugs causing inaccurate customer billings to occur. The system was not user friendly
To what degree was IBM responsible for the problems countered by the Austin Energy billing project? Was Austin Energy at fault for the problems? Explain your answer.
- IBM responsibilities: There was a delay in the system implementation, as mistakes were repeated on their part. The system was not fully operational, while leading managers for the project were being replaced.
- Austin Energy responsibilities: Austin Energy was responsible for not properly penalizing IBM for their poor performance. Roles were not clearly defined and no reinforcement was available when the system began to fail.
What were the specific organizational or technical factors as well as management factors involved in this project failure?
- Organizational Factors: Austin Energy and IBM lacked coordination. Due to technical errors and the delayed billing system update, thousands of customer complaints rose. Austin Energy was unable to properly manage the complaints in a timely approach.
- Technical Factors: Several technical factors include software and system errors, customers not receiving bills, inaccurate billings (overcharges), and overall the new billing system was too complex as it attempted to integrate 73 different interfaces into working well with each other. Revenue was lost due to these technical factors.
- People Factors: IBM’s Global Business Services unit heads (Marc Lautenbach and Frank Kern) undergone two replacements before any actual implementation of their proposed plans for Austin Energy’s billing system project.
Describe the steps Austin Energy and IBM should have taken to better manage this project.
- On the topic of project management, in order for effective processes to take place certain variables must be reviewed. These variables are scope, time, cost, quality, and risk.
- Scope: Both Austin Energy and IBM should have discussed the exact work processes that are involved in the system update, while ensuring the work is being conducted.
- Time: Estimate and determine how long will the project take and perhaps set deadlines for certain parts of the project to be accomplished before continuing. It becomes more orderly as a schedule to complete the work required is developed.
- Cost: Budget should not overweight the costs. A reasonable budget should be made that details the difference expenses that come with project.
- Quality: Ensure that the updated system will run effectively and that it operates well in assisting with operations and performance.
- Risk: Search for any potential issues that may rise during the process of fully updating the system. Find effective solutions that will fix the issues in a timely manner without adding other expenses.
