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Government selected software companies – once is unfortunate, twice is careless

Frank Spencer in the BBC sit-com is described on Wikipedia as a “well-meaning and optimistic, but naive, clueless, accident-prone tank top-wearing character”. Apart from the tank-top wearing part, this description could very well be used to describe our Department of Transport – and in particular when it comes to their handling of the M50 tolling on the West Link toll bridge.
After the expensive decision to get rid of NTR (for what reason – certainly not to benefit consumers), we now appear to be moving to the next illfounded decision through the Departments selection of Payzone as the new operators of the barrier free tolling.
In a scenario that has uncomfortably similar overtones to what happened the suppliers of the infamous PPARS system for the health service (iSoft), it appears that the board and chairman of Payzone are attempting to oust the incumbent Chief Executive and Chief Financial Officer of the company. As of yesterday, it took these two company officers court injunctions in order to prevent themselves being kicked out of the company (sub required).
According to that article (Cardpoint and Alphyra together make up the Payzone company):

It is understood that Cardpoint had experienced difficult trading in October and
November while Alphyra’s business grew.
Mr Nagle (Chief Executive) is believed to have wanted to issue a trading statement to the stock market in advance of an investor roadshow this week but the board decided against this move.

In January 2006, the iSoft company itself was actually forced to issue profit warnings itelf, some time after the initial discovery of the difficulties with the PPARS application within the HSE (but not related). The Comptroller and Auditor General, for example, issued its “Value for Money” report in December 2005.
So, we’re seeing problems now with the new suppliers of the barrier free tolling of the M50 only days after the contract was announced. Will Payzone follow the path of iSoft – since that initial profit warning, iSoft virtually imploded after it was forced to change its accountancy practices:

It had to adjust the accounts for earlier years plunging the company into a
£344m loss for the year ended April 2006. An internal investigation identified
accounting irregularities in 2004 and 2005.

The iSoft company was eventually taken over in June of last year in an attempt to put all it’s problems behind it, including an investigation of it’s accountancy practices by the UK Financial Regulator, the Financial Services Authority.
In the end of it all, we won’t be getting PPARS because the HSE has determined that it’s not worth continuing – even though it still cost us another €11m in 2007.
Last night, by coincidence, I was speaking to the representative of a relatively small international software supplier who bemoaned the fact that despite the fact that they provided what has been universally acknowledged as a superior product compared to their competitors, the small size of his company prevented them from getting larger contracts with large financial and government organisations.
Their difficulty was that becase it was a part of due dilligence prior to signing software provision contracts that these larger organisations will assess the software company balance sheet, future prospects, ongoing performance, business continuity, and many other items to get an idea of the software company. In many cases, smaller software suppliers will not come out well in such analyses compared to larger more established ones. In some cases this may be justified, and others it may not.
However, given what’s happened/happening with two software suppliers selected by Irish govermental departments in the past few years, one wonders what kind of due dilligence they’re carrying out at all to ensure that our money isn’t wasted on these high profile and expensive projects.

5 comments On Government selected software companies – once is unfortunate, twice is careless

  • The Irish Tims piece says –

    “secured injunctions in the High Court in Dublin yesterday preventing the recently formed electronic payments group” referring to Payzone…..

    So how the f**ck des a ‘recently formed’ oufit get such a high profile job??

    Wouldntya think that even the morons in Transport would realise after PPARS that they could get shafted??

    Most likely is that one or the other of the original constituents that became Payzone were ‘advising’ Transport on a) the spec and b) the selection of the implementor…..and then got the job…. too far-fetched??


  • A point of correction : PPARS was nothing to do with iSoft. PPARS was Deloittes screw up of an implementation of SAP. A monumental one at that. iSoft on the other hand, was responsible for the HIS system (Health Information System) – not nearly as costly a screw up – but a screw up nonetheless.

  • Do remember that the Gov got hammered when they gave the Aquatic Centre contract to a recently formed company.

    The media/opposition tend to groan if an unestablished company gets contracts as they somehow perceive it to be some sort of scam. This makes contracting authorities feel pressured to go for the established drones (” no-one ever got fired for buying IBM”)…

  • Payzones shares have recently plummeted from 76p to 5p.
    Surely only a matter of time before they become insolvent and nobody can pay their tolls…

  • they also posted a loss of 153 million sterling for their first quarter.
    David Mills shouldn’t be in the company at all, he’s completely unqualified to do the job.

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