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Time to learn a lesson on IT contracts

This is Joanne Goldstein’s story and she’s sticking to it: The whole thing has been a big success.

That “thing” is the state’s new software for automating unemployment insurance claims. Goldstein, the secretary of Labor and Workplace Development, was describing it Monday to a legislative committee investigating the $46 million computer system’s much-criticized summer rollout.

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In fact, Goldstein and her agency have been hailing the system designed by Deloitte Consulting as a big hit with an occasional glitch from the get-go.

But many unhappy stories from people who couldn’t get the benefits system to work — including some who got bills instead of checks — create a stack of anecdotal evidence to the contrary.

At this point, the good news for Goldstein is that the unemployment software is but one of several computer projects at the state that are under the microscope.

A different software system developed by Deloitte for the Department of Revenue cost much more (official price tag: $114 million) and arguably turned out much worse.

That one was so bad the state actually fired Deloitte after it had burned through $54 million.

But don’t fret for the big consulting firm: It’s still working on a $76 million software system for the state Registry of Motor Vehicles. How’s that one working out? The head of the Registry says it’s going to be a big success.

Information technology is an important piece of state government infrastructure, and it doesn’t come cheap.

Governor Deval Patrick is pushing a plan at the moment to borrow about $800 million to spend on IT.

For such a big customer, the state seems to come out on the short end of the stick a lot. Simple questions about contracts — does the product work correctly, is it delivered on time, does it cost something like the amount budgeted? — can lead to embarrassing answers in the State House.

Why? Individual agencies — not a central state government IT office — are usually in charge of computer software projects. They are often presented low-ball bids for complex work that will probably take years to complete.

That’s a recipe for expensive additional costs and delays down the road.

Continuity is another problem. State government personnel turns over a lot during the long life of a computer system contract.

Goldstein, answering questions Monday about the unemployment system, couldn’t explain the specific original goals of the plan because she wasn’t in her current job when the contract was signed in 2006.

One other issue: the small number of vendors involved. Every big state computer system contract seems to involve Deloitte. I can only wonder why.

Call me naive, but I think you should get some interest in these parts — and many others — if you’re throwing around $100 million to write computer code.

All of these factors affect results. Consider some of those basic questions about IT contracts.

Does it work: The revenue department pulled the plug on its big project after the software failed a test run miserably last year. It couldn’t even print forms or calculate interest.

Does it arrive on time: The unemployment benefit software, originally scheduled for delivery in July 2011, missed two deadlines and was eventually delivered two years late. Software is a customized product that often arrives behind schedule, but two years is very late indeed.

Does the cost come close to plan: Price inflation is common in IT contracts, but many of the increases in state projects are troubling. The unemployment system was over budget by $6 million. Who knows what Deloitte’s final bill for the revenue department system would have looked like? All we know is that $54 million bought a lot less than anyone expected.

Massachusetts is not a unique state. The Globe’s Megan Woolhouse and Beth Healy tracked just one vendor — Deloitte — and its problems implementing IT contracts in states across the country. Many of those stories are far worse.

It may be too late to rescue the current Massachusetts contracts with Deloitte. But the governor could get a better deal and improve oversight by centralizing more of the state’s IT contract work.

To borrow a phrase, that would be a big success.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
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