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   Web Issue 3240 September 7 2008   
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Agency bosses botched £14m IT system
ROBBIE DINWOODIE, Chief Scottish Political CorrespondentAugust 11 2007

Auditors have identified a catalogue of serious management failings behind a botched £14m computerisation project at Scottish Enterprise.

As revealed in The Herald two months ago, the scheme to standardise handling customer information across the entire network, including its computer and telephone system, was approved in 2003 and only completed last year. Now it is being replaced.

The agency initially admitted the extent of the problem after an information request from the SNP's Alex Neil, and for the past two months auditors KPMG have been looking at the whole project.

The key problem was that after it was decided to use a system supplied by PeopleSoft the company was taken over by Oracle Corporation, undermining the system. However, KPMG also found management and procurement failings from the outset.

Staff were informed of the damning findings of the auditors yesterday, but chief executive Jack Perry has assured them criticisms have been fully accepted and changes implemented to avoid any repetition of the errors.

Scottish Enterprise (SE) insists the principle of creating a single computer system remains sound, although the anticipated savings were overestimated. They have been forced to reduce their estimate of the annual financial benefits from £6m to £1.5m, making staff cuts to compensate for this and achieve their efficiency target of £16m last year.

Mr Perry said in a memo to staff yesterday: "The vast majority of the identified shortcomings are historical and would not now happen, particularly given changes we have made to our procurement and project management processes.

"Nonetheless, I am keen to share the report with you. As an organisation committed to continuous improvement, it is important that we share the lessons about potential pitfalls in delivering complex projects as well as best practice."

KPMG found the "customer relationship management" project, replacing up to 50 systems with a single unified system, was launched without a proper business assessment.

There was no initial approval from SE's own technology department and they did not appoint an outside partner company to share the risk, which it is now accepted was "ill advised".

There was then a failure to track progress of the project and the proposed timescale imposed was unrealistic. Contracts worth £8m were awarded without competition and no evidence was retained for market testing - against legal advice.

Lack of competitive tendering left SE unable to demonstrate it got value for money, and the failure to appoint an outside partner left SE paying contractors on high day-rates. The auditors said in future there must be better scrutiny.

A spokesman for Scottish Enterprise said: "Establishing a single CRM system across local, national and international offices for Scottish Enterprise was an ambitious and complex programme of work. Although it has helped us deliver better, more consistent services to Scottish businesses across the country, there are a number of lessons to be learned in how the system was implemented.

"We set out a series of improvements made in recent years in our response to KPMG's recommendations that should help assure people the vast majority of these issues are historical and could not now happen."

The KPMG findings have already gone to the Scottish Executive, where a spokesman said the report highlighted serious flaws in the procurement and project management processes associated with that project dating back to 2003.

He said: "The Scottish government welcomes the fact that Scottish Enterprise commissioned the report and have largely addressed the historical issues raised. We expect Scottish Enterprise to be committed to the continuous improvement of the services it delivers to its customers."


© All rights reserved. Reproduction in whole or in part without permission is prohibited.


Posted by: Scamp on 11:15pm Fri 10 Aug 07
Anyone ever tried getting funding out of SE? It's like pulling hen's teeth yet they can cheerfully piddle away £14m on themselves and nobody will get the boot..

Priorities, priorities !!
Posted by: C, Atlantic Quay on 11:29pm Fri 10 Aug 07
Each and every individual "trained" on this system knew how basic and underdeveloped it was. Clearly the result at SE will be the guilty parties will receive bonuses and look forward to lining the next ICT consultants pockets.
Posted by: Business owner, Glasgow on 11:32pm Fri 10 Aug 07
Setting out an IT project with no business case, not tracking progress or timescales, no market testing - this is stupid, amateurish, basic stuff, and the omission of just one factor would be astonishing. The omission of all of them to the tune of £14 million is deliberate. Don't kid yourself - the bloated over-budget, the lucrative dragging on for the IT vendors, and the happy consultants at KPMG were the only ones who were ever going to benefit from this. They never intended for the project to succeed nor to work at all.

It's time the Scottish business community stood up against these morons. They've been extracting the urine onto us for too long. Ban this farce of an agency altogether, let these users fend for themselves in the open market, and let the business community take this country where it needs to be without these sad wastes of space. We don't need this agency and we don't need another agency to replace it.
Posted by: pehman, sussex on 1:31am Sat 11 Aug 07
Bussiness owner, 11.32,
You could be right . Just advertise on the net, show the package and the expansion plans. Also Use the expat community to Promote Scotland
Posted by: Mark, Glasgow on 2:52am Sat 11 Aug 07
Ever met a manager who can manage? They just make it up as they go along reacting to whatever mess they've made. By which time all the capable folk have left leaving the manager in line for further promotion and a good few quid wasted. Sound familiar?
Posted by: Budding businessman, Scotland on 8:59am Sat 11 Aug 07
Scamp & Business owner

I agree with both of you as I have wasted my time and money trying to get this organisation to fulfil its duty. It is a total waste of tax-payers' money. It is stuffed with inept people who have never worked in an organisation that needs to make a profit.

Scrap SE now!
Posted by: Niall Aslen on 9:10am Sat 11 Aug 07
Budding businessman wrote:
Scamp & Business owner

I agree with both of you as I have wasted my time and money trying to get this organisation to fulfil its duty. It is a total waste of tax-payers' money. It is stuffed with inept people who have never worked in an organisation that needs to make a profit.

Scrap SE now!
Quite right too! Scottish (un)Enterprise(ing) should be scrapped immediately and the task of attracting new business start ups be left to the local chambers of commerce who do such a good but unreported job. I, as aa accountant have dealt with SE a number of times on behalf of clients and the end result? A complete waste of time especially when it took them 18 months to make a decision on funding.
Posted by: Jack Irvine, Glasgow on 10:51am Sat 11 Aug 07
On the subject of wasting taxpayers' money on dodgy computer systems, I suggest you pop across the river to the new BBC HQ and ask why they have three seperate software production systems which are finding great difficulty in talking to each other. Isn't it strange that nowadays we are overwhelmed by Procurement Officers (thanks to the EC) yet incompetence and waste of money are still the order of the day?
Posted by: Pennan, Glasgow on 11:54am Sat 11 Aug 07
Every member of staff at SE knew this was a waste of money. It was being lead by Jack Perry and Lena Wilson personally and through their arrogance they believed they were above using normal procedures. And now the harvest of their incompetence is £14m down the drain. In the private sector they would be out the door - sacked! In SE they just blame somebody else and move on to the next disaster. Surely there must be an enquiry into who is responsible and action taken swiftly.
Posted by: James on 1:02pm Sat 11 Aug 07
With an annual budget of around £550 million this figure of £14 million is relatively small. Nonetheless it is £14 which would have been better spent on helping business secure and create much needed jobs.

Scottish Enterprise is an organisation wit a lot of fat on it. Niall Aslen above comments on the 18 months it can take SE to reach a decision on funding: surely it cannot be right for businesses to suffer at the hands of Scottish Enterprise in this way.

We should not forget the primary reason why this organisation exists; and remember that the employment of the quango multitudes who pondered the cases Mr Aslen cited is no end itself.
Posted by: George Laird, Glasgow on 3:23pm Sat 11 Aug 07
"Auditors have identified a catalogue of serious management failings behind a botched £14m computerisation project at Scottish Enterprise".

If that was a pleb who did this they would be sacked with much fanfare to show that this type of thing would n't be tolerated.

Since it is senior management "lessons will be learned".

Oh look without reading the piece;

"Nonetheless, I am keen to share the report with you. As an organisation committed to continuous improvement, it is important that we share the lessons about potential pitfalls in delivering complex projects as well as best practice."

You don't really need to know the Nuts and Bolts of how corrupt Scotland is, just tune into the standard rethoric used.

After a while you can write the learning outcome yourself.

£14 million pounds down the drain, we have such talent in depth here in Scotland.

Yours sincerely

George Laird
The Campaign for Human Rights at Glasgow University

Posted by: Neil Robertson, Dundee on 5:11pm Sat 11 Aug 07
The 'lack of competitive tendering left SE unable to demonstrate it got value for money and the failure to appoint an outside partner left SE paying contractors on high-day rates'; and 'there was no initial approval from SE's own technology department' and no 'proper business assessment'. Scottish Enterprise have now 'been forced to reduce their estimate (sic) of the annual financial benefits (sic) form £6m to £1.5m, making staff cuts to compensate for this (sic) and achieve their efficiency (sick) target of £16m last year.' £14m
has meanwhile been wasted on a customer tracking system that does exactly what? Log on computer all the complaints that SE has received since its inception from job-seekers, small businesses, MSPs, local authorities, members of the general public, and the press? And to what purpose? So that they can 'learn lessons' or employ even more PR consultants to spin their nonsense to the wider world while hiding in their plush new offices pushing the buttons in their paperless offices and calculating their bonuses
while growth rates in the rest of Scotland flatlined and ordinary
people saw their own pension entitlements reduced? This is unacceptable, and should not be accepted by the people of
Scotland. I happen to believe that the public sector does have
a role to play in economic development but this organisation
has never embraced a public sector ethos - and has it never understood either how the private sector functions. It is just a
rent-seeking, parasitical Quango stuffed with overpaid time-
served bureaucrats who are terrified of any free competition.
Posted by: Gerry on 8:24pm Sat 11 Aug 07
...and what happened to the manager that was responsible for realising Jack's CRM system ? - oh! ...she got promoted!
Posted by: Yok Finney, Ross-shire on 11:20pm Sat 11 Aug 07
I needn't add much to the above devastating comments from Neil and George. £14M? I could have built you a substantial ship for that including its own computer system that would also interface with radars, sonars, GPS, radio, fax, emails and telephone complete with backups and recovery mode.
Posted by: Mike, Edinburgh on 11:07am Sun 12 Aug 07
Wasnt that Wendy Alexander who was responsable for this drain on Scotlands much needed money. She was the Enterprise Minister,
I understand from the comments here that it was a complete waste of time trying to deal with this monstrousity. After the SNP took over, didnt a former head of this place suggest it should be dismantled because it didnt actually benefit in any way Scotland. The problem with the small business owners who have commented on this forum is you actually accomplish something because you have to or you shut the doors and pay everyone off. This mob just wait for the new budget allocation. What exactly did they achieve for Scotland with their 550 million. How many Jobs were created and how many companies actually have something to show for their approach to Scottish Enterprise.

I am a supporter of the SNP and a business person. I expect Alex Salmond to do something radical with SE. I understand that they took over a mess in this and many other areas but If they cant show me a significant improvement in this organisation performance in helping business and securing new business, I would honestly have to rethink my voting intentions at the next election. The only problem with that is there isnt exactly a great field to pick from other than the SNP.
Posted by: Red Ayrshire, Ayr on 1:48pm Sun 12 Aug 07
Gerry wrote:
...and what happened to the manager that was responsible for realising Jack's CRM system ? - oh! ...she got promoted!
Pennan and Gerry's points are interesting. Remember that SE's Dumfries CEO got sacked last year for trying to keep a Scottish organisation afloat.
http://news.bbc.co.u
k/1/hi/scotland/sout
h_of_scotland/507682
4.stm


If Perry and Wilson were responsible will they be "resigning" after this fiasco.
Posted by: CA Shinwell, Glasgow on 4:40pm Sun 12 Aug 07
I'm beginning to think that some of the supporters of the SNP, in their enthusuasm for their cause are in danger of talking themselves into
advocating a Scottish one party state. Anyone who disagrees with them is subjected to ridicule at best or sheer abuse. In the 1970s, the idea of a of having a one party state was certainly mooted by Winifred Ewing. She thought that in an independant Scotland there would be political sub-divisions, but they would have to remain under the umbrella of the SNP. Those who are so zealous in their hatred to a UK government could , in the future see people applying for political asylum from Scotland.
Posted by: Pennan on 5:04pm Sun 12 Aug 07
In response to Red Ayrshire, of course they won't resign because in their heads they're never responsible for anything that goes wrong. They always have scapegoats. And the SE Board is so spineless it will only engage in the cover up. The most senior management were warned repeatedly about the technical risks of implementing this project in this cack handed way by several parts of SE but in their arrogance they simply charged ahead because they though it would bring them praise. And how they like their egos to be massaged. The question should be asked - having wasted £14m will they be awarded bonuses this year? But more importantly, KPMG are pointing the finger, who has the balls to follow through with the necessary disciplinary action
Posted by: Red Ayrshire, Ayr on 5:16pm Sun 12 Aug 07
Pennan - If the SE Board will not act because they are "spineless" surely any administration's, let alone the SNP's, "fresh start" approach to government must enforce accountability?

Additionally the KPMG work must must be viewable under FOI?? Can SE really sweep £14m under the carpet??
Posted by: Business owner, Glasgow on 5:34pm Sun 12 Aug 07
Red, past KPMG reports on SE have been made available.

http://www.scotland.
gov.uk/News/Releases
/2006/04/21183841
http://www.scotland.
gov.uk/Publications/
2006/11/03151839/0

Keep an eye on the Executive web site for the latest report. If it doesn't get posted there, request it.

http://www.scottish-
enterprise.com/sedot
com_home/about_se/fr
eedomofinformation.h
tm?siblingtoggle=1
Posted by: Red Ayrshire, Ayr on 6:45pm Sun 12 Aug 07
From the Scot Exec website it appears that SEnt ran a series of workshops and provided "best practice" advice for Scottish Companies on how to respond and win competitive public sector procurements.

Hmmmm, maybe someone needs to go and visit the Mr Perry and Mrs Wilson and explain that before they advise the rest of us they should follow their own advice. "Walk the talk" is the American expression I believe.

I re-read the earlier comments and I spotted that Robbie commented "There was no initial approval from SE's own technology department ". So even their own people thought it would nae work!

So why do they have a technology department? Either the technology department is very poor or someone thought they knew better (Unlikely!). If they are that poor that even their own managers don't pay any attention to them why are we paying them to hold down a role?
Posted by: Figba, Glasgow on 10:51pm Sun 12 Aug 07
"Approved in 2003"? Was it not Robert Crawford's empire then?? At least not everyone does well out of mismanagement.
Posted by: SE employee, Renfewshire on 8:36am Mon 13 Aug 07
14m over a number of years on a system that we're still using and will do for next two years. It replaced 50 other systems, saving nearly 6m in the costs of these and another £6m in productivity efficiencies. As a staff member I've actually read the KPMG report into the project and while there are issues, it's not been the waste of time and effort that seems to be represented in these comments. During that time frame, some 20,000 businesses were helped to start up, over 1500 were helped to expand overseas, over 100,000 people (mainly young people) were trained, huge investment along the Clyde, Scotland put on the global map in sectors like life sciences........
Posted by: Business owner, Glasgow on 8:50am Mon 13 Aug 07
What typical yet still breathtaking SEnt arrogance to list those statistics as YOUR successes, not the successes of the Scottish business community. Surely all progress in Scotland must be down to your benevolence, not down to the ingenuity and entrepreneurship of the businesses themselves. It's not even 9 AM on Monday and I already smell the effluent.

What part of this don't you understand - we don't need you, we don't need your "help" and "assistance", and we don't need shallow excuses from any SE staffer. This is indefensible and you know it, so save yourself some dignity.
Posted by: The West Awake, Argyll on 11:25am Mon 13 Aug 07
I know people who work for SE. They all are scathing about the Peoplesoft system. which apparently has never been able to perform as expected from day 1. One of the main functions and benefits of a CRM system is to replace multiple databases in an organisation, this apparently has almost never happened and when it has the result has been chaos. The result is that the legacy datatbases are still being used and huge efforts are used trying to get the systems to work together, which is a big no-no in these situations, as it basically produces more work rather than less..
The system is apparently designed for a multi-national sales organisation rather than a public sector development agency and it is proving impossible to reconcile the requirements with the functionality.
I have heard that up to 30% of employees time is taken up in inputing data, which cannot afterward be used for producing relevent reports.
The £14m was the purchase price for the software only, this does not include commissioning and training, as well as auditors costs. I have heard that a figure of up to £30m would be more realistic as a cost over the 4 years or so this system will have been used.
If you ask any good IT company involved in this sector they will tell you that this exercise could easily feature in case studies as a classic way NOT to implement a CRM system.
A complete ****-up and a disastrous waste of tax-payers money. In any sensible organisation Perry's and Wilson's heads would roll.
Posted by: SE Employee, Edinburgh on 11:31am Mon 13 Aug 07
Everyone worth their salt in SE knows that there are major flaws with the system. However too many people have too much to lose to admit their mistakes. There is a major gap in SE between those with commercial experience and business nous and those with political skills who are able to speak diplomatic nonsense and believe it.
We are told by our esteemed leaders that it (the system) has led to a 45% increase in customer facing time. This is complete nonsense and typical of the inept leadership in this organisation! It is patronising in the extreme to expect staff to swallow this basic lie. The nature of the thing is that it causes us to spend much more time in front of a screen feeding the beast. There is no remote access and in the Lothian it runs and always has at the equivalent speed of a old dial up connection. Meanwhile do we really expect credibility when we advise business on best practice? Roll on the changes!
Posted by: Red Ayrshire, Ayr on 12:59pm Mon 13 Aug 07
SE employee, Renfewshire claims the organisation has delivered benefits to Scotland. But the employee in Edinburgh describes the system as having major flaws. That can only lead to the conclusion that the organisation would have delivered the benefits even without the system.... Does'nt that mean its a complete waste of money??????
Posted by: The West Awake, Argyll on 1:27pm Mon 13 Aug 07
SE employee - "roll on the changes". I'm not being funny, but given that the SNP and SE have never been soul-mates and SE is seen (correctly in part) as a Labour "creature" - add the SNPs mutterings to the effect they are considering significant cuts, are you not in danger of appearing a bit turkey-like just before Xmas?
Posted by: SE Employee, Edinburgh on 1:28pm Mon 13 Aug 07
SE were right to replace existing systems with one system and perhaps saved some money by doing so. This should not be applauded as it was basic business sense. What should be questioned is the lack of control that led to so many systems in the first place. However the replacement is completely wrong for vast swathes of the organisation and there are serious questions about the way the project was managed. It is cumbersome and non intutive resulting in people spending time on data input instead of more valuable activities. The supposed benefits, particularly in relation to increases in customer facing time, are largely based on people playing the system. For example if you meet 6 clients at a Network event lasting 1 hour then that can be recorded as 6 seperate 1 hour meetings or 6 hours of client facing time. There are lies **** lies and statistics! Meanwhile it seems we are to replace the existing solution with a new one yet no one knows what is coming. More valuable time will no doubt be wasted in migrating data and learning how to input the answers we want.
Posted by: SE Employee, Edinburgh on 1:33pm Mon 13 Aug 07
No one likes to lose their jobs and change can be disturbing. However if we don't believe that we add value and have something to offer then why are we here? If we do believe that then we can be confident of coping with change. In my opinion, too many SE employees, particularly at a senior level, spend too much time trying to justify and protect what they have instead of concentrating on adding value.
Posted by: The West Awake, Argyll on 4:18pm Mon 13 Aug 07
SE Employee "SE were right to replace existing systems with one system and perhaps saved some money by doing so"
- Buying an appropriate CRM system would probably have constituted a sensible purchase and use of public funds, although any saving would only have been realised in the long-term.
What happened thgough was that the wrong system was bought, which did not and could not do the job. All it therefore constituted was a complete waste of money with no savings whatsoever, since a new will will be purchased again next year apparently.
Posted by: Pennan on 4:45pm Mon 13 Aug 07
The real shame is that these comments will never be seen by either the seniiotr management of SE or those who could actually do something about their gross incompetence. Unless people are prepared to raise their voices more publicly this sheer bad management and waste of money will continue with no accountability. Let me give an example. I've just noticed that SE is holding its public meeting in Dumfries, last year it was Aberdeen. Now I've no problem with SE getting closer to these parts of Scotland, indeed it's right that they do. However it means it will be 3 years since they've faced directly the bulk of their customer base and funders. Why are they hiding from the central belt. Oh yes, I forgot, that's where most of their critics are located. And how long has Perry been in post. Ah yes, 3 years!!
Posted by: John, Leven on 7:55pm Mon 13 Aug 07
Just a thought, how many apprenticeships in Scotland would 14ml fund.

Can we not scrap this now and plow the money into local firms taking on apprentices instead, a better way to use our money.
Posted by: neil robertson, dundee on 9:40pm Mon 13 Aug 07
SE employee wrote:
14m over a number of years on a system that we're still using and will do for next two years. It replaced 50 other systems, saving nearly 6m in the costs of these and another £6m in productivity efficiencies. As a staff member I've actually read the KPMG report into the project and while there are issues, it's not been the waste of time and effort that seems to be represented in these comments. During that time frame, some 20,000 businesses were helped to start up, over 1500 were helped to expand overseas, over 100,000 people (mainly young people) were trained, huge investment along the Clyde, Scotland put on the global map in sectors like life sciences........
This is precisely the kind of crap that Scotland is heartily sick of. It is Scotland's university scientists (most of them in Dundee!) who "put the country on the global map in sectors like life sciences". The SE employee who wrote this should go out into the real world and get a proper job. He/she may then find that rather more difficult than life inside the ivory towers of SE's well-padded complacent quangoes.
Local authorities, and chambers of commerce, are accountable -
Scottish Enterprise are not, never have been and it must now go.
Posted by: Adie, West Lothian on 11:16am Tue 14 Aug 07
I've seen enough of SE to know that a] in its current form its a monster and b] it has some good people on the ground. I say take the good bits and make it lean but don't throw the baby out with the bath water. Suggestions that the role would be better performed by local councils are way off the mark
Posted by: neil robertson, dundee on 7:32pm Tue 14 Aug 07
I have to disagree with Adie. The issue is not the competence of the individuals but the democratic accountability of managers. But it is also worth just pausing to remember how effective the old regional councils were in promoting economic development in Scotland. It was a Peida Report by the first chairperson of Scottish Enterprise that assured the Tory Government that his 'albatross' would be a good deal cheaper. He forgot to say that they'd be useless -- and more expensive; but by the time that this was pretty clear to most
observers, the regional council economic development teams had been dispersed and Donald Mackay was on a Scottish Enterprise retainer giving him a very high chairman's salary and a sweetheart deal for his own firm of consultants. That was where the rot sets in for Scottish Enterprise: overpriced, monopolistic, over-reliant on consultants, very large PR budgets, and nae bloody idea of how
the Scottish economy functioned. 'Dolly The Sheep' as mascot,
and Rosemary McKenna on the board: a recipe for mediocrity.
Posted by: neil robertson, dundee on 8:13pm Tue 14 Aug 07
The old SDA had its flaws - but it was never a huge bureaucracy like this monster. They used to come and cry on our shoulders about the problems of internal communication between their excellent small business teams, the sites and services people - who had a very different attitude to life that was always valued by local authority
planning officials with similar backgrounds, and the 'glitter generation' guys in special projects with their alligator shoes who were always full of ideas and needed bringing down to earth in the pub. And the Joint Economic Initiative area meetings (which were expanded to take in a few mad keen private sector innocents) did actually bring these interesting elements together with the Regions and the District Councils to produce some useful innovations on the ground. But most of that creativity and cross-institutional flexibility is lost with local government reorganisation and the rise of a Scottish Enterprise wedded to Wendy's thoosands of targets, software that
rewarded the tick-box desk wallahs rather than the 'intrepreneurs', and a fixation with trying to talk their own organisation up as being a world leader when every insider knew fine that SE bought their own senior managers into those World Bank placements that allowed Lena Wilson & Robert Crawford to double their salaries on return.
For those of us who got our jobs in the US on merit in the face of international competition that too is a sign of mediocrity at the top.

And they have never understood either the labour market or how to tackle problems of deprivation either - something that in Glasgow the District Council has always known more about than most .......
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