Fujitsu’s public shame could become a trend

Fujitsu’s public shame could become a trend

Outsourcing is evolving fast and a new breed of person is being employed to run the supply interface and recommending legal and other forms of confrontation. Frustrated clients are openly fighting back and attempting to hold the Outsourcer to their promises and to force restitution and for heavy financial compensation for any subsequent failures to deliver.

But now the Highland Council in Scotland has gone the extra step of posting the proceedings of their council chamber meetings on their website, where Fujitsu was lambasted by councillor after councillor and finally by the chair, Mrs Wilson. A host of failures was catalogued but the most important one was Utility Billing that is running 18 months late. Councillors Rimnell and Marsden complained of Duncan Tait, Fujitsu’s CEO “not knowing how bad things were” and that “a succession of people had been promising and not delivering”. Fujitsu’s new man in the headlights is Brody Shepherd, a man of excellent reputation, however he was unceremoniously made to eat large slices of humble pie over “the correction plan (that) was completed six months ago and there has been zero action just delays”. It makes unpleasant viewing, but try viewing the public torture at – start about 37 minutes in if you want to stay sane.

If local government can do this, how long before Unilever, RBS or Sainsbury’s broadcast their televised versions of proceedings. I am not being fanciful in saying this, for example Shell a couple of years ago went to the then extreme by openly videoing their ICT RFP tendering process, the bidders presentations and what the winner promised for a variety of ICT services. The purpose, one assumes, must be to one day evidence promises made and subsequently under delivered.

Shell’s rather unorthodox approach could have been as a result viewing the judgement handed down to HP in the BSkyB court case. BSkyB hit the headlines in 2011 with the successful suing and a subsequent initial interim award of £270m in damages and interest. The subsequent award was kept secret but is rumoured to be around an extra £450m, certainly making it in excess of a £700m payout. Bear in mind that the offending project in question had a total contract value of a mere £47m. The lessons of this case were on the importance of recording the service provider’s promises on the off-chance of them failing to deliver once the contract is awarded!

This February and after years of alleged under performance, AstraZeneca’s successful lawsuit against IBM on determining the termination obligations that a service provider has to provide, showed that “IBM could, in principle, have to continue to provide services from its shared data-centres for up to 12 months after the end of the Exit Period” according to Paul Barton at Field Fisher Waterhouse. This was a watershed ruling on the need for very clear, concise and up to date exit planning clauses.

In the past there have been relatively few major public outings or court cases that capture the imagination of the users of outsourcing services. However, one can be forgiven for thinking that client attitudes have hardened and like the cash strapped Highland Council perhaps shareholder broadcasts involving highlighting service provider performance issues might be both cheaper and quicker to solve than resorting to legal actions – BSkyB’s case took 6 years to come to court, included over 500,000 documents, cost £50m to mount, called on over 70 witnesses, was 109 days in court and the judgement ran to 426 pages.

An hour of agonising embarrassment for Fujitsu seems mild in comparison!

Posted in Suppliers Comments: 3 comments


3 Responses to Fujitsu’s public shame could become a trend

  1. Sir Roger of Aldershot says:

    A significant case of déjà vu for those of us young enough to remember the formative days of outsourcing in the UK.

    Many will be aware that Fujitsu acquired ICL many years ago along with its various outsourcing channels.

    One of the earliest court cases within the sourcing business was that undertaken by St Albans City Council against ICL for the non delivery of a fully functioning council tax collection system.

    Its failure to work fully in compliance with reasonable expectations resulted in the Council not being able to bill its customers for a considerable period, at a great expense to the Council, let alone the impact on cash flow.

    If I recall correctly, the defence was that the provision normally secreted in clause 95 sub section 1.1.1. which says that not all software will work error free for all etc.etc applied.

    Those in our profession will be familiar with this historic type of “get out of jail free” provision.

    However it was held that the contract was for the provisions of services that a reasonable person would expect to work – especially as tax collection was a core expectation.

    The judgement woke up both sides of the service industry and subsequent expectations were modified to reflect the decision.

    What goes around comes around and today we see customers with great experience sometimes aided by legal firms with equally great experience and specialism refusing to be bullied by providers and customers demanding that “it does what is says on the tin”.

    In addition we see, especially in public bodies a lessening reluctance to “keep it quiet” but, rightly in my opinion, showing their stakeholders that they are taking positive action to get the providers to correct the defaults.

    With elections and accountability coming high up the agenda in many public sector customers, we can expect to see an increase in the number of actions taken to obtain the expected services.

    Let us hope that this does not result in too much formal and expensive externally led litigation but more openness and honesty between customer and provider.

    Long gone are the days when the providers’ legal teams could attempt to ride roughshod over internal teams – the quality and focus is now much more balanced.

  2. David Jones says:

    Excellent insight on the changing nature of buying in services. Why did you not include the suing of intermediaries such as Deloitte and KPMG? The latest one one being KPMG and covered in Computer Weekly awhile back. See
    We are all sick of promises not being kept!!!

  3. piCZrXBxx1n says:

    I tried to submit a comment earlier, although it has not shown up. I will remember this.

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