EDS

Risk identification and management

In regards to the overall risk identification and management of the system, complications were very profound. As is often the case with government contracts, there seemed to be juxtaposition between EDS’ metrics of success and that of the Navy/Marine Corp. EDS by virtue of being awarded the largest outsourcing contract in history would be under intense scrutiny from both the management and risk identification perspective. EDS however was unaware of many of the nuances that are embedded within the Navy and Marie Corp systems. Due in part to this ignorance completion of the project was delayed due to unclear methods of communication between the two parties (Venton, 2003). This created a large risk in regards to both security and risk management. For instance, Navy deployments are kept relative secret in many instances. On one occasion, a ship was unable to deploy due to the lack of integration with the EDS network. Both the management of the EDS project and the management of the ship were not communicating properly. The nature of the military however is not to divulge too much information to civilians for security reasons. As such, complications arise that ultimately will postpone the implementation and integration of the EDS network infrastructure (Kock, 2000). In addition, management of the EDS project did not consider the amount of disparate and often diverge applications within the system overall. In many instances, EDS needed to streamline nearly 40,000 different applications into one system. In this instance, management’s lack of knowledge regarding naval systems postponed the implementation of the entire system. Management did not anticipate the complication and risks associated with streamlining so many different applications into one system. EDS could have lessened this propensity for inefficient behavior by communicating more intensely with senior Navy and Marine Corp personnel. In addition, more collaboration throughout the entire product cycle would have been more beneficial to both parties involved. Process improvements are of particular interest to the entire supply chain of the EDS network. Collaboration, communication, and symmetry across all channels of the supply chain can help increase the effectiveness of process improvements in regards to both management and security. In regards to security, a coordinated effort to reduce costs and increase productivity would be enhanced through process improvement. For instance, one common system used by all members of the supply chain allows for a reduction in both cycle times and overall cycle times (Harrington, 1997). Information sharing with both the Navy and Marine Corp through process improvements allows more individuals to collaborate and synchronize their efforts accordingly. Information sharing is critical in regards to efficiency as it’s allows cross functional teams to collaborate with one common purpose. In this instance the purpose would have been to implement the system as quickly as possible without impeding on military actions and security. As such, process improvements can be extended to all areas of logistical planning with both EDS and the military. By extending process improvements to the entire supply chain, the logistical functions of all parties are enhanced (Lettice, 2000).

Scheduling

In regards to scheduling both EDS and the Marine Corp. had numerous problems. For one, as mentioned earlier, coordination between the two parties was difficult due to the nature of both parties’ obligations. Scheduling delays were due in part to the lack of integration from legacy related applications and security related delays. Both the military and EDS attempted to avert these delays bypass required security certification. I believe this decision to install as many seats as possible by avoiding security clearance was a misguided one which ultimately hindered scheduling for both parties. The fully phased in roll out was designed to cover an estimated 411,000 desktops. The problem with averting security clearance is that applications that don’t pass security evaluations or that don’t run on Windows 2000 will be installed on kiosks that were not connected to the N/MCI network. This attempt to expedite the scheduling process by avoiding security clearance actually prolonged scheduling by forcing many users to rely on two separate computers to conduct their jobs properly. Captain Chris Christopher, deputy director in charge of overseeing the project was stated saying, “The legacy applications [challenge] is something the Navy did not understand when it started the N/MCI effort.” According to NAVAIR, which was one of the major testing facilities used for EDS network, two-thirds of the organization’s users were being forced to use two computers to access EDS infrastructure and various legacy applications (Venton, 2002). In many respects, some individuals were using computers to access the EDS system themselves, while using another computer to access legacy issues that were prevailing prior to installation. As such due to testing delays at the NAVAIR, and legacy issues across the entire spectrum of infrastructure, scheduling issues undoubtedly occurred. One method in which EDS could have mitigated these concerns would have been a more comprehensive overview of the legacy issues within the military’s infrastructure. Many of the scheduling conflicts occurred due to lack of knowledge, oversight, and preparation regarding legacy issues. As indicated above, many within EDS did not anticipate the extent of legacy issues embedded within the military system. As such, they had overall scheduling errors attempting to adjust. It would have been more prudent to have been proactive with these concerns to reflect the urgency needed to implements the entire N/MCI program in the designated time interval. To do so effectively, the transition from contract approval to implementation should be consolidated. Furthermore, their should be one method of managing performance of the provider. Instead of having two distinct methods of evaluation: one from the military and one from EDS, there should instead be only one. The military must also do a better job of oversight regarding performance and scheduling regarding implementation of strategic initiatives.

Budgeting

Budgeting on the part of EDS was flawed as the company recording a net loss in the first quarter of 2003 of over $100 million. This loss was due in part to many of the reasons mentioned above. Scheduling delays within the implementation of the over 400,000 seats combined with legacy issues created a budgeting loss for the company. In addition due to the delays mentioned earlier, the company had to write off of $334 million on the NMCI contract. This was the direct result of a “decline in the average seat price based on the types of seats ordered and expected to be ordered” by the Department of the Navy, EDS said in its quarterly filing with the SEC. Through hindsight the actual contract was not cash flow positive until 2005 which was a full year behind expectations. In addition, the financial results were well below financial expectations from the company. This was a result of poor budgeting on the part of EDS. Many of their expectations and assumptions regarding cash flow were flowed. Scheduling of the over 400,000 seats was delays, legacy issues plagued actual implementation, and the decline in the average set price created a net loss for the company in the first quarter. A very simple method in which to avert these circumstances is to become very conservative with financial forecasts. This is particularly true if the forecast is in a previously unfamiliar industry or customer segment. By conservatively forecasting, EDS would be able to have provisions in losses to help offset delays or legacy issues (Joyce, 2003).

Manner of project execution

Given the prevailing circumstances of the overall project, EDS did a great job of delivering the product to the company as expected. However, overall, there were some learning’s from both parties that should be applied to the next contract assignment. For instance, more collaboration prior to contract implementation is required to insure that the deliverables arrive as scheduled. Delays, particularly those within the department of defense are unacceptable given the nature of the operations. National security is very important. Any delays in the implementation and furthering this ideal are unwarranted. The project execution due in part to these delays was flawed. EDS did not adequately forecast many of the legacy issues prevailing within the department of defense. I believe in this instance the DOD should have a more profound role within the overall implementation of the project from inception to completion. This way, execution can be fulfilled to the standards of the government. Finally, lack of oversight and communication provoked an otherwise sound arrangement. Both EDS and the DOD had divergent expectations and assumptions regarding execution. The DOD expected 400,000 seats to arrive irrespective of any legacy issues. EDS however, had to first work through legacy issues, cost issues, and scheduling issues to provide those 400,000 seats. The lack of collaboration provoked a delay that ultimately harmed both parties. The shareholders lost nearly $100,000 million dollars in the first quarter alone, while the DOD did not have a full integrated IT infrastructure. As such, the overall execution had many flaws that could have easily been eliminated through communication and teamwork (Baca, 2007).

Reference:

1) Baca, C.M. (2007). Project management for mere mortals. Boston, MA: Addison Wesley.

2) Harrington, H.J. (et al.) (1997). “Business process improvement workbook: documentation, analysis, design, and management of business process improvement.” McGraw-Hill. Retrieved March 16, 2012. ISBN 0-07-026779-0

3) Joyce, Erin. “SEC Checking EDS Navy Contract.” – InternetNews. N.p., 16 May 2003. Web. 11 Nov. 2012. .

4) Kock, Nereu F. (et al.) (1994). The nature of data, information and knowledge exchanges in business processes: implications for process improvement and organizational learning.

5) Lettice, John. “October 2000 Archive

• The Register.” October 2000 Archive

• The Register. N.p., 09 Oct. 2000. Web. 11 Nov. 2012. .

6) Verton, Dan. “Huge Navy IT Outsourcing Deal Passes First Hurdle.” Computerworld. N.p., 13 May 2002. Web. 11 Nov. 2012. .

7) Venton, Dan. “Delays, Technical Problems Plague Navy’s Intranet Program.” Computerworld. N.p., 15 Oct. 2002. Web. 11 Nov. 2012. .

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