IT Management Slideshow: Dirty Dozen: Inside 12 IT Disasters

By Ericka Chickowski  |  Posted 04-14-2009

Dirty Dozen: Inside 12 IT Disasters

The State of Texas partnered with IBM to consolidate data centers across the state. Service levels have dropped so low that many agencies gave IBM failing ratings and complained it was taking too long to perform routine tasks.

Dirty Dozen: Inside 12 IT Disasters

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What Went Wrong: Chalk this one up to poor project requirements and a lowest-bidder vendor pick.

Fallout: Texas Governor Rick Perry stepped forward in November 2008 and announced IBM was in jeopardy of losing the entire contract after it failed to back up certain critical systems.

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The ambitious plan to arm U.S. Census Bureau employees with handheld computers to compile and transmit 2010 census information to headquarters was mostly scrapped after almost two years of work.

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What Went Wrong: The culprit here was IT Project Enemy Number One: scope creep.

Fallout: The government agency spent more than $595 million on handhelds and must still resort to the pen-and-paper method of census taking next year.

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A rocky ERP initiative by firetruck-maker American La France set off enough inventory problems at the company to cause shortages in parts and disruption in production of new trucks.

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What Went Wrong: A rushed implementation after spinning off from Freightliner likely factored into the system's complications.

Fallout: The issues were so severe at American La France that it lost $56 million in revenue in 2007 and eventually had to file for bankruptcy in 2008.

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The Denver-based retail jewelry outfit Shane Co. experienced such a troubled ERP upgrade that costs ballooned from an estimated $10 million to over $36 million, causing major inventory problems in the process.

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What Went Wrong: Large cost and deadline overruns point to poor vendor selection and relationship management.

Fallout: Massive overstocks in the wrong products, combined with a faltering economy in 2007 and 2008 prompted losses that caused Shane Co. to file for bankruptcy in January.

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Difficulties merging commission-payment systems at Sprint and Nextel following their merger prevented thousands of employees from being paid their cut of sales for years.

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What Went Wrong: Bad technology implementation is made worse by an overcomplicated system for employees seeking back pay.

Fallout: Sprint-Nextel may now have to pay up to $5 million to more than 19,000 retail employees if these employees are successful in a class action suit filed in February 2008.

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A botched $95 million payroll system upgrade to SAP triggered errors on paychecks of thousands of LA Unified School District employees for months on end in 2007.

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What Went Wrong: Lack of leadership internally coupled with runaway consulting makes for a nightmare project.

Fallout: Costs were more than $35 million over budget, and the teachers' union was irked. Teachers boycotted faculty meetings for month and pressed for interest and damages related to payroll issues.

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Hardware malfunctions in a decades-old core processing system at HSBC bank in August 2008 caused a close to a week of banking disruption for US-based customers.

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What Went Wrong: Hardware failure exacerbated by legacy infrastructure at root of an extended outage.

Fallout: HSBC experienced a big hit to its brand as IT banking experts wagged their fingers at such an extended outage for a relatively simple disaster-related scenario.

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The London Stock Exchange went down for almost an entire day on Sept. 8, 2008 due to network connectivity issues associated with its computerized trading platform.

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What Went Wrong: Experts speculate a system upgrade to its trading platform before the event contributed to the disruption.

Fallout: Brokers lost millions of pounds in commissions on what was to be the busiest day of the year. Competing stock exchanges began courting dissatisfied LSE customers shortly after the event.

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Poor information management and system migration procedures at the Kaiser Kidney Transplant Center delayed hundreds of patients from receiving life-saving transplant surgeries.

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What Went Wrong: Non-existent governance kept the center from developing the right policies and procedures.

Fallout: Less than two years after opening, Kaiser was forced to close its transplant center, amid a regulatory crackdown and exposure by a whistle-blowing former employee.

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A software calibration problem in 2005-2008 Ford Mustangs inflated airbags forcefully enough to cause serious injury to small females not wearing seatbelts.

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What Went Wrong: A breakdown in Quality Assurance testing likely kept this error undiscovered before product went out the door.

Fallout: Ford spent millions recalling close to 500,000 vehicles in 2008 to area dealerships for upgrades to the vehicle computer systems.

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Inadequate security at the credit card processor Heartland Payment Systems allowed hackers to steal sensitive information from more than 100 million credit card accounts.

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What Went Wrong: This Payment Card Industry Data Standards-compliant firm fell into the old security trap of relying on checkbox compliance to cover itself.

Fallout: Heartland faces sanctions from regulators and lawsuits totaling in the hundreds of millions of dollars from banks and consumers due to its lack of best practices.

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The ticketing system built to handle public sales for the 2008 Summer Olympics broke two times in the run-up to the event.

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What Went Wrong: Organizers failed to accurately predict the load their ticketing systems would need to bear.

Fallout: A big black eye for event organizers, it system failure eventually cost the Beijing Organizing Committee for the Olympic Games director of ticketing his job.

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