Taking the fall

Waving big sticks

Mackinnon says he would only consider 'outing' a vendor under legal advice and only after all other avenues of escalation have failed.

Even then, it appears inadvisable.

Mackinnon is critical of Queensland Health's blaming of IBM for the failed payroll project.

"I think them outing IBM as they did was really a poor reflection on Queensland Health ... because the governance processes had clearly broken down," he says.

"The senior executives, it would appear from having read the [audit] report, were not well informed of what was going on and they absolved responsibility themselves and left IBM to sort out problems that they should have been deeply engaged in themselves."

When Mackinnon personally inherited a troubled retail systems integration project with a "major US multinational IT firm" in the past, he chose not to shame the supplier, he says.

"They'd [the vendor] put up a product that really wasn't fit for purpose that they were going to re-craft into something suitable for this organisation," he says.

"I came in as CIO, was there for a few months, watched some of the cycles of testing and realised this thing was never going to work.

"We ended up going to a lawyer but never actually going to litigation, settling the matter out of court."

While legal action in this instance resulted in a payout, Mackinnon warns of the potential pitfalls involved.

"It's often large US-based companies that are in the firing line for these things, that's almost always been my experience," he says.

"You've got to be pretty careful ... in their case because some of the large US-based IT companies are incredibly litigious and aggressively so."

Liburti says that threatening the pursuit of penalties can be an effective tool.

"Sometimes it's about keeping the penalty clause up your sleeve and using it as the big stick when you need it, but you don't have to actually hit anyone," he says.

But enacting penalty clauses and legal avenues are signs the vendor relationship is over.

"Once you pull the contract out, the relationship [with the vendor] is dead," Weiser Consulting principal strategic consultant Sonya Weiser says.

Tips for dealing with vendor meltdown

• Look inside your own house first: Blaming the vendor may be symptomatic of deeper issues.

• Surprises are bad: "You need to have a culture of allowing mistakes to be talked through," Weiser says. "If everyone tries to hide it and gloss over it, the problem will just get bigger if you don't attack it and look for the root cause."

• Try to make it work: If you authorised the project, it's on your head to make it work or step away.

• Mitigate risk with independent advice: But remember, "you still have to accept that [advice]," Liburti says. "If the world changes sometime between a minute-and-a-half after you've accepted it and now, the [advisor] can't be held responsible."

• If you dump a vendor, communicate internally: "So everyone in the organisation understood what had been done, why it had been done; [that] the product wasn't suitable and the organisation would go hell for leather in effect finding a replacement that would better suit the needs of the business," Mackinnon says.

• Keep quiet publicly: Especially if you wish to pursue penalty clauses or legal avenues.