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Our 'solution is killing us in a number of areas' IBM said about doomed £175m Co-Op Insurance project

High Court hears from delivery lead in high-stakes trial

IBM's delivery lead on the collapsed £175m Co-Op Insurance IT platform project told a colleague the project was "hurting" Big Blue, the High Court has been told.

The claim came amid the ongoing legal proceedings between the two companies in London, England. As reported at the start of the trial, the Co-Op alleges IBM was squarely to blame for the collapse of a £175m project intended to produce a new IT platform for powering the insurance company's operations. IBM, alleges the Co-Op, bungled it so badly that the insurer had no option but to terminate the contract because it was so far behind schedule.

IBM denies this, relying on various contract clauses and what it describes as the Co-Op effectively tearing up the contract by refusing to pay for work done by IBM before "Project Cobalt", as the scheme was named, collapsed in a fireball of lawyers' letters and bitter recriminations.

Alex Charlton QC, lead barrister for Co-Op Insurance, put it to IBM's Steve Allen last week that work on the contract "progressed co-operatively" between the two until IBM subcontractor the Innovation Group dropped the ball.

Innovation Group was brought in by IBM to customise its US-specific white label insurance platform for the Co-Op's use. It rapidly emerged during Project Cobalt that the product needed significant work before it was fit for use in the UK market.

Speaking in Court 29 of the High Court's Rolls Building on Thursday, Charlton said that Innovation Group's "breach of contract" ended up "causing IBM delays", which in turn meant the Co-Op's new insurance platform fell behind schedule.

Delay, defects and testing

Allen, IBM's bespectacled delivery lead for the Co-Op project, was also closely questioned on suggestions that IBM wanted the platform to go live with a significant number of defects.

"That," said the plummily voiced Charlton, "was simply not going to be acceptable at any level, was it?" The Co-Op's barrister suggested that user acceptance testing (UAT) kept throwing up defects that IBM wasn't fixing, linking this to its legal claim it was IBM's fault the £175m project collapsed.

Carefully avoiding the barrister's eye and appearing to address the computer screen in front of him in the witness box, Allen replied: "It wasn't just that we'd go live with severity 3 and severity 4 defects." These, it was evident, were lower-level flaws in the newly developed software system, with Allen suggesting they weren't critical to the platform's workings.

He added that IBM had asked whether it could "go live without the aggregators", referring to functionality that allowed insurance aggregator websites (you can go compare these through your search engine of choice) to plug directly into the Co-Op's systems.

"The point is," explained Charlton for trial judge Mrs Justice O'Farrell's benefit, "that aggregators form a very, very substantial amount of the insurance business in the UK and for [Co-Op Insurance]."

Agreeing with this, Allen replied: "Originally [aggregator functions] were part of Release 1, due to go live in April 2017."

Later on, Charlton asked Allen whether IBM had tried to shift the blame over aggregator functionality, or rather the lack of it, to the Co-Op. "Would that be right?" he asked.

"The responsibility for getting that work done was theirs," said Allen. The Co-op's barrister then referred to minutes from a meeting between the two sides about the project and read an extract out to the court: "Aggregator plan: No plan was available to be produced." Charlton continued: "If that was an accurate note it suggests there was no aggregator plan available in November 2016."

Allen riposted that this was "because CISGIL [the Co-Op] didn't provide it." A theatrically unimpressed Charlton replied: "How on earth could CISGIL produce an aggregator plan when it is the responsibility of [Innovation Group] and IBM to produce it?"

IBM's delivery lead said: "I don't know the detail… we were waiting for a plan. They needed to do their internal ‘sausage machine'," he said, using a phrase explained earlier as internal IBM shorthand for a Co-Op process that created formal project requirements. "We had the plan for the integration testing but we didn't have the plan for the sausage machine."

The Co-Op's barrister, thumb confidently hooked into his belt in the small of his back, asked: "So what possible plan can CISGIL produce, in the absence of a delivery schedule from IBM, as to when the aggregator interfaces would be ready for testing?"

Allen, gazing steadily at his screen, murmured: "I can't comment."

We're going through changes

Showing the court one of Allen's emails referring to a "change in scope" of an Agile sprint intended to deliver the first batch of agreed functionalities, Charlton asked: "What's that about?"

Allen replied: "There were a lot of discussions around scope on the programme. A lot of contested items. That [the email] is us trying to manage our costs, programme overrunning. I think all I'm trying to say there is we're trying to do it in a way that doesn't upset the client."

Charlton pulled up another one of Allen's 2017 emails on the court screens, this one having been sent to a colleague within IBM. One eyecatching line of the IBM delivery manager's message said:

We need to discuss delivery status – the current solution is killing us in a number of areas.

Answering Charlton's question about this, Allen offered: "There was an issue with the relationship between the two parties at the time."

It emerged during cross-examination that IBM, in what appeared to be an attempt to soothe an increasingly angry Co-Op, had commissioned a third party to write a report on Project Cobalt's progress. This was called the Branko Report. Charlton was dismissive of the report in court, telling Allen that the insurer "reviewed the Branko Report and their view is the report is too high level to be fair."

The IBMer replied: "My recollection [is] there was an agreement out of that," suggesting that, far from being dismissive, the Co-Op had used the Branko Report to form common ground with its IT contractor.

The Register is seeking access to inspect some of IBM's documents deployed in open court during the ongoing hearing, and these are proving surprisingly difficult to view for reasons that are not immediately obvious. The case continues this week. ®


At one point IBM's legal team pulled up a letter marked "without prejudice" on the courtroom screens. Nigel Tozzi QC, IBM's lead barrister, got to his feet and politely remonstrated with Charlton: the point of without prejudice letters is that they're not meant to be used as part of courtroom proceedings, he said.

Charlton agreed, saying it was an innocent mistake and trial judge Mrs Justice O'Farrell concurred. There was a suggestion that the trial bundle, the agreed list of documents the barristers are allowed to refer to while cross-examining witnesses, had not been set in stone (as is normal) before the hearing began.

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