SAP, IBM slammed for role in Quebec auto insurance board ERP overhaul fiasco

Investigations into a controversial Canadian ERP implementation involving SAP SE and LGS, an IBM subsidiary, took a bizarre turn Wednesday when the Quebec anti-corruption squad conducted raids at the headquarters of the organization which commissioned the system overhaul.

According to a report from the Canadian Broadcasting Corporation (CBC), the raid at the head office of Société de l’assurance automobile du Québec (SAAQ), the provincial auto insurance board, was in relation to the rollout in 2023 of its online platform, SAAQclic. It was conducted by the Permanent Anti-Corruption Unit (UPAC), a government agency that combats corruption.

In a statement to CIO.com, UPAC spokesperson Mathieu Galarneau said Wednesday, “we confirm that we are conducting a search today at the SAAQ head office concerning allegations in regard to the SAAQclic platform. We will not provide any details about this search to protect our investigation.”

He said the organization is not providing further information “to avoid compromising intelligence gathering, to protect the integrity of the evidence, and the safety and reputation of those who may be involved. We maintain this position because we are committed to the proper conduct of our investigations.”

Galarneau went on to explain, “generally speaking, a search in a fraud or corruption investigation is used to obtain evidence that will allow us to confirm or deny the commission of wrongdoing. The seized documents must then be analyzed, and may subsequently require interviews with witnesses.”

Board ‘blew through the budget’

In February, the CBC reported that Quebec’s auditor general, Guylaine Leclerc, had found that the insurance board “blew through the budget … and has nothing to show for it. Two years later, the SAAQclic system still doesn’t work properly… The true cost of the SAAQ’s digitization attempt is now likely to climb over C$1.1 billion.” That is C$500 million over budget.

As a result of that scathing report, a public inquiry into the issues with the SAAQclic rollout is already in progress.

While an IBM spokesperson declined to comment, SAP issued the following statement: “SAP is committed to the highest standards of ethics and compliance and has a robust approach to compliance management.”

The company’s policy, it said, “is to carry out all company activities in accordance with the letter and spirit of applicable laws in the more than 180 countries in which we operate. We have zero tolerance for those who do not adhere to our Global Code of Ethics and Business Conduct and will fully co-operate with the authorities.”

Look in the mirror

When asked how an organization can avoid this kind of situation, Scott Bickley, advisory fellow at Info-Tech Research Group, observed that it is quite common to see large-scale ERP project failures in both the private and public sectors.

He enumerated a series of such failures involving multiple vendors, including the US Department of Defense’s (DOD) litany of issues with their DEAMS and ECSS project debacles (Oracle), Australia’s Queensland Health payroll system implosion (SAP and IBM), UK NIH IT modernization program (Oracle, Accenture), and the ongoing US DOD Veterans Affairs EHR Modernization project with Cerner (Oracle). 

“It is unfair to cast blame on the IT vendors and consultants, however, without first looking in the mirror,” he said. “The success of IT ERP projects rests on a cascading set of success factors, and research shows that a small set determines success or failure. Large-scale, highly complex ERP projects with immature program sponsors and implementation teams on the part of the client overwhelmingly fail.”

Blame resides on both sides of the fence

In most cases, he added, “client organizations have not invested enough in upfront preparations such as a Phase 0 initiative, detailed requirements mapping, and data governance assessments before plunging headfirst into a multi-million/billion-dollar project.”

 In fact, he noted, “I have never witnessed a large-scale program failure of this type where blame did not reside on both sides of the fence. The issues are exacerbated when the customer has not properly invested in their own human resources, training, and re-structuring of the organization in such a way as to set themselves up for success.”

According to Bickley, “a primary root cause of large IT project failure is decision latency; the longer it takes to make a decision, the more mired and stuck the project becomes, initiating a doom loop of delay and rising costs.”

And “[success] requires organizations to prioritize advanced planning, investment in a capable internal team, a highly mature program sponsor, organization change management, and a mature vendor (specialist consulting) selection process to ensure a level playing field with the ERP vendor,” he said. “[Organizations] must take ownership of their projects and not rely on the technology vendor to prescribe business process changes or to manage the change management components of these initiatives.”

Describing SAAQclic as a “trainwreck,” he added, “mega-scale projects are very difficult to deliver on under the best conditions. It is better to break these projects up into smaller, more digestible phases and contract in chunks. While the per unit/hour pricing may be higher, the control provided under a more manageable number of smaller projects is invaluable. Nobody eats an elephant in one bite, as the saying goes, so why do we continue to design elephant projects?”