According to this article in the Toronto Star, Ontario’s social assistance computer system was down for 16 days last year, with a loss in productivity of over $2 million. The Province of Ontario, in Canada, paid $500 million for the system to manage administering benefits. Use of the system is shared with municipalities in the province. Apparently the system is unable to calculate a 3 per cent across-the-board increase to welfare and disability benefits for 670,000 people without $10 million in upgrades and testing.
I’ve been in the software business for a couple of decades, and I’ve seen some pretty fair sized contracts, but this one is a milestone of impressive salesmanship. Getting $500 million for essentially a database and calculator is good. Getting $10 million more for what amounts to less that 10 lines of code and some testing is amazing.
It seems that you hear of these kind of situations everyday. It used to be just government that got involved, but more and more I hear of companies that spend more than $100 million on ERP implementations, about 50% of which fail from what I recall reading. I’ve written a number of ROI calculator for use in the sales cycle that suggest what kind of savings as customer will see, but I honestly wonder of these companies ever see a payback on a $100 million investment. It would surprise me to say the least.