Global CIO: IBM Took 'Goldmine Of Taxpayer Money,' Claims BureaucratGlobal CIO: IBM Took 'Goldmine Of Taxpayer Money,' Claims Bureaucrat

It includes a charge of $40 million to be paid to subcontractors as well as the $43 million "deferred fee" mentioned above, which the JournalGazette.com story says is "part of the original cost of the contract, which was spread out over 10 years."

The article also points out that Indiana penalized IBM for underperformance in five separate months last year, with the monthly fines for those infractions amounting to $115,000, or 1% of the $11.5 million monthly fee IBM was paid by the state.

The "disengagement" exercises and the tough talk underscore the potential dangers in big-bang deals like this 10-year arrangement, and the concluding few sentences of the article highlight the very hard work facing Indiana following its decision to reclaim the project from IBM:

While IBM’s role on paper is set to end June 13, Rep. Gail Riecken, D-Evansville, said legislators have a growing concern about what it will take to fix the welfare system and how much it will cost the state, especially if the costs wind up in court. It's fair to say the issue won't go away soon, Riecken said. "A final statement needs to be made on IBM and what it cost the state," she said. "How can you be responsible as a legislature if you don't have accurate information?"

I commend Indiana for cutting its losses on what was clearly a project and/or relationship gone sour, and it should be unyielding in extracting from IBM every single contractual obligation and commitment to which it's legally entitled. Because you know IBM will do exactly that--as it should.

Perhaps Indiana's learned some things, and perhaps it will be able to handle the new systems and extend those lessons across the state. And perhaps Indiana Governor Mitch Daniels will share this unfortunate outcome with the governors of the other 49 states because, as each state in this country is fighting for economic stability, they need to understand better than ever before that the technology projects and outcomes that can help reach that stability always carry with them significant risk.

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