Very common situation in government contracts and dealing with consultants in general. I am sure IBM and Accenture are in there some how. NYC government could have created a small crack-team of internal IT people who could build the system for less than a 5th of the current cost. Unfortunately most organizations view IT work as something fit for mercenaries and if you ask any King who has ever had to rely on mercenaries, they'll tell you it should be your choice of last resort.
Hmm... sounds like an opportunity.<p>Juan Gonzalez says this is happening all around the country with cities and states converting to digital systems.<p>The consultants are being paid $400,000 a year. Nice. Because it is a capital expenditure no one knew what these people were being paid so you have to dig into the city records.<p>For what?<p>Basically a digital payroll and time-keeping system with features such as "biometric hand scanners to avoid city workers punching in for other workers" and digital timecards.<p>Anyone up for going after cities and governments who are doing this or looking to do this? It's taken 7 years in New York at a cost of almost $1 billion, I say we can do it for... oh, I don't know, 1% of that and in 1/7th the time?
<i>The city is paying some 230 "consultants" an average salary of $400,000 a year for a computer project that is seven years behind schedule and vastly over budget.</i><p>This is misleading. The figures in the article are based on the hourly rates charged by the contractor that employs these consultants, <i>not</i> their take home salaries.<p>This is noted only later in the article:<p><i>The actual amounts individual SAIC employees took home are most likely lower than their stated rates, since computer firms typically take a cut of each consultant's charges. Nonetheless, these are breathtaking numbers.</i><p>This too is misleading because it suggests that the hourly rate is comparable to the individuals' salaries except for a "cut". In reality, this "cut" is likely 50 percent or more. 60-70% would not be unusual.<p>This is typical of newspaper coverage of "scandalous" IT contractor pay. The project may indeed be a disaster, but those consultants are not making nearly the money that the article suggests.
722m on a fucking payroll system and it's 7 years behind date. Have you ever tried to contemplate counting the amount of stars in the sky or the number of grains of sand in the world? Your mind just gets blown, because you cannot process the scale of information. The same thing just happened to me when trying to figure out how this is possible.
Most of these consultants themselves are not making all of that money. They work for companies like Accenture which bill their time out at several hundred dollars per hour, but then pay the consultants much less.<p>For example, the 400k/year figure quoted only amounts to about a $200/hr bill rate. That's far from the worst I've ever heard on a project like this.
This in a nutshell is why the new U.S. health care bill is really a stimulus package for the IT and healthcare industries.<p>Integration of systems can be a nightmare.<p>As the UK can attest, large systems fail from sheer complexity, if the politics, internal resistance, and silo mentality don't screw you.<p>One of the reasons SAP succeeded was that in order to implement the software you had to rearrange how your company worked - not the other way around, modify the software to fit your unique business processes. Yes, SAP consultants make a lot modifying the software but those modifications are constrained.<p>Enterprise software is lucrative but you give up the freedom to do what you ever want. Design by committee.<p><a href="http://business.timesonline.co.uk/tol/business/economics/pbr/article6946336.ece" rel="nofollow">http://business.timesonline.co.uk/tol/business/economics/pbr...</a>
Why does NYC need a custom payroll system? Government agencies are supposed to be staffed by employees who can be trusted by the public not to abuse sensitive personal information such as is contained in tax returns. Yet, these same employees are considered so personally untrustworthy by the government that it is justified in spending hundreds of millions of dollars to design a payroll system whose primary feature seems to be innovative techniques for preventing fraud. Is there any evidence that government employees are more untrustworthy than other employees so as to justify such a system?
Both of my in-laws work for the USDA and they have been complaining for quite a while about a new system that was also way behind schedule and really didn't solve the needs of the department anyway. It's a typical case of "gather some requirements, go off into a black whole and build it for a few years, than come back and act surprised when it isn't relavent anymore and half the features don't even work." There are a lot of companies out there making a lot of money for doing a really bad job, waste is everywhere, and unfortunately I'm not getting any of it :-)
There is a market for an off-the-shelf system or maybe customizable system with the same core that cities can purchase and install without the need to do development. Maybe with different levels of strictness as far as scanning in employees is concerned (biometric scanning vs. RFID cards, etc).
How are these contracts being awarded? Are we talking public RFP's? If so, that should have produced competitive rates per project, no?<p>Unless these 'consultants' were already promised the job and the RFP was just a formality, as is in most city contracts.
I've always said that 2 smart people can get way more done than an army of consultants in a shorter amount of time. (for the record, I'm an ex-consultant)<p>But this is business and this is why these companies make as much money as they do. When you are in charge of such a project and your ass is on the line who better to blame than a large Fortune 500 type of company (i.e. Accenture, Deloitte, IBM, etc). You can't get fired for failing a project with a vendor that is considered the "best" but you can for using "Jim's Custom Development Shack".
A friend of mine works as a trainer on this project and he does a great job because the software is so convoluted - you need a great trainer.<p>He likely bills $60/hr to a sub-contractor, who then adds in his likely $100 profit and bills SAIC (the main contractor on this project). SAIC probably bills the city $250/hr for my friend's services!<p>The numbers are guesses but I spoke to my friend and he said that the vast majority of the billing goes to the main contractor and subcontractors.<p>At any rate, its a big waste.
Government is a giant Principal-Agent problem.<p><a href="http://en.wikipedia.org/wiki/Principal-agent_problem" rel="nofollow">http://en.wikipedia.org/wiki/Principal-agent_problem</a>
State Government RFP opportunities can be frustratingly bureaucratic at first, but there are real opportunities for IT staff augmentation and IT project proposals, but there is a ton of competition for these limited opportunities. For instance: State of Texas has 400+ approved vendors on their roll, S. Carolina has 200+ vendors. Some states are more progressive and permit electronic proposal submissions. Others still require submitting 6 identical binders for each proposal plus a CD or USB drive will all documents in electronic form. Because they can.
You know what they say about spending other people's money.<p>There seems to be a huge opportunity for a website like ChallengePost to get local governments to post IT contracts online.
The story:
<a href="http://www.nydailynews.com/news/2010/03/26/2010-03-26_city_pours_722m_down_consulting_contracts_black_hole.html" rel="nofollow">http://www.nydailynews.com/news/2010/03/26/2010-03-26_city_p...</a>
Accenture, one of the primary beneficiaries of this $722m, operates offshore.<p>They're now in Ireland after having been in Bermuda for the sole purpose of avoiding paying the US governtment taxes on their international business.<p>So in reality our tax dollars are going to fund a multi-national conglomerate that's making the spread between the $100/hr consultants and the $400/hr billings.<p>I can't wait to see the tricks these companies come up with to service the $100,000,000,000 a year that we just dumped in the pork barrel for health care.
Man it must really suck to be the guy thats only making 100k but doing all the work, and finding out that some guy in the next cubicle negotiated 600k, and he spends all his time dickin' around with the secretary.