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News flash: Businesses still hate bathroom bills

IBM hates them.

As state lawmakers return to Austin for legislative overtime, tech giant IBM is stepping up its fight to defeat legislation it says would discriminate against children and harm its Texas recruiting efforts.

In an internal email sent Monday to thousands of employees around the world, IBM’s human resources chief outlined the New York-based company’s opposition to what the letter described as discriminatory proposals to regulate bathroom use for transgender Texans. IBM sent the letter to employees the same day it dispatched nearly 20 top executives to the Lone Star State to lobby lawmakers at the state Capitol. A day earlier, it took out full-page ads in major Texas newspapers underlining its opposition to legislation that Lt. Gov. Dan Patrick and a cadre of far-right lawmakers have deemed a top priority.

“Why Texas? And why now? On July 18th, the Texas legislature will start a thirty-day special session, where it is likely some will try to advance a discriminatory ‘bathroom bill’ similar to the one that passed in North Carolina last year,” wrote Diane Gherson, IBM’s senior vice president for human resources. “It is our goal to convince Texas elected officials to abandon these efforts.”


The email IBM sent to employees on Monday echoed concerns businesses voiced in their letter to Abbott earlier this year, saying the company — which has more than 10,000 employees in Texas — is focused on defeating the bathroom proposals because they’re detrimental to inclusive business practices and fly in the face of “deep-rooted” values against discrimination targeting LGBT people.

“A bathroom bill like the one in Texas sends a message that it is okay to discriminate against someone just for being who they are,” Gherson, the company’s HR chief, wrote.

As do other companies.

CEOs from 14 leading employers in the Dallas area, including AT&T, American Airlines and Texas Instruments, are taking a public stand against a “bathroom bill” that would discriminate against transgender people in Texas.

On Monday morning, they delivered a letter to Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Joe Straus. A bathroom bill, the letter says, “would seriously hurt the state’s ability to attract new businesses, investment and jobs.”

“Our companies are competing every day to bring the best and brightest talent to Dallas,” the letter says. “To that end, we strongly support diversity and inclusion. This legislation threatens our ability to attract and retain the best talent in Texas, as well as the greatest sporting and cultural attractions in the world.”

The letter is signed by Randall Stephenson of AT&T, Doug Parker of American Airlines, Gary Kelly of Southwest Airlines, Kim Cocklin of Atmos Energy, Matthew Rose of BNSF Railway, Mark Rohr of Celanese, Harlan Crow of Crow Holdings, Sean Donohue of Dallas/Fort Worth Airport, Emmitt Smith of EJ Smith Enterprises, Fred Perpall of the Beck Group, David Seaton of Fluor, Thomas Falk of Kimberly-Clark, Trevor Fetter of Tenet Healthcare and Richard Templeton of Texas Instruments.

As the story notes, these efforts join other efforts by businesses to stop this thing. Such efforts have been met with an indifference bordering on hostility and contempt by Abbott and especially Patrick. I appreciate what all these companies and groups like TAB and the various chambers of commerce and visitors’ bureaus have done so far, which has been a tremendous help in keeping this awful legislation from reaching Abbott’s desk. But the big question remains what they will do after the special session gavels out, whatever the outcome of these efforts. I’ve had this question for a long time now. Between potty politics and the anti-immigration fervor of SB4, a lot of damage has already been done to our state’s reputation, and the men in charge keep wanting to do more. They’re not going to go away if they lose this session – they have the zealous will and a crap-ton of money powering them. Will these business interests, who have been getting so badly served by politicians they have generally supported, or at least tacitly accepted, in the past, put their money where their press conferences are and actively oppose Abbott and Patrick and their legislative enablers? Or will they bend over and take another lash from the paddle? One wonders at this point what they think they have to lose. The Chron has more.

State officially begins the IBM termination process

Been a long time coming.

The state gave notice to IBM [last] week that it will terminate the troubled $863 million data center consolidation contract. The process could take a full two years as the Department of Information Resources finds companies to finish the mammoth job and they take over the merger of 28 state agency data centers.

In the meantime, the existing contract requires IBM to provide “termination assistance” by maintaining staffing and providing the necessary information to ease the transition, said Ed Swedberg, DIR’s deputy executive director.

This break-up was telegraphed months ago when DIR said it would restructure the project and seek new companies to do the work. The restructured project will be broken up into several smaller, more manageable pieces in contrast to the the huge IBM-led effort.

That rebidding process will hit a critical milestone in January when interested companies must submit their plans. The objective is to have the new companies selected in August.

Swedberg said that process is now far enough along that the state felt comfortable starting the two-year clock on dismantling its relationship with IBM.

The first signs of trouble were reported two years ago, and after an attempt to fix things in January, it all fell apart in a hail of fingerpointing, with the beginning of the end in August. Let’s have a moment of silence for yet another failed privatization project on Rick Perry’s watch.

Bye-bye, IBM

Better luck next time.

The Department of Information Resources appears to be giving up on IBM — once and for all. The agency isn’t formally terminating its contract with the information technology and business consulting giant, which was supposed to coordinate the data centers and disaster recovery operations of 27 state agencies. But state officials sent a letter to IBM [Wednesday] saying they have no other choice to rebid the contract because they believe the company has failed to meet almost all of its obligations.

May the next outsourcer have better success. I mock, because it’s easy and fun, but outsourcing is hard. There’s a million reasons, and a million ways, things can go wrong. Still, it’s important to keep the mockery in mind for the next time some state official makes a grandiose pronouncement about how much money an outsourcing arrangement will save. Betting against it is the more likely winner.

One more thing about outsourcing in general, from the Statesman story.

IBM ran into problems from the very beginning, slowing progress and fueling frustration among the agencies. IBM has laid responsibility for the persistent problems at the feet of the participating state agencies, in particular, the Department of Information Resources.

“Ceding control of their individual (information technology) environments in favor of a centralized, common system was (and continues to be) unpopular with the constituent agencies, and without strong leadership from DIR, those agencies not only failed to cooperate, but in many cases actively resisted the project,” IBM wrote in a letter last week.

The main conceit of this kind of project is that you can save money by centralizing and standardizing. And that’s certainly true, although in some ways it’s basically a tautology. If you force everyone onto the same desktop, and you force all of your server-based applications onto the same back end, you will certainly spend less money on your IT. If that means that some specialized applications that a handful of people used to do their jobs are no longer available, or if it means that some specialized processes that were used to manage or present data are no longer allowed, well, that’s just the cost of saving money. One size seldom fits all, but you can pretend it does if it makes the bottom line prettier.

Anyway. Here’s a more recent letter from IBM disputing what DIR has to say. Again, I don’t know who’s right or wrong in this fight. I strongly suspect both sides have some validity to their claims. What I do know is that any outsourcing project is hard enough if everyone works together well. When communications break down like this, they’re impossible.

The State of Texas versus IBM: IBM responds

In July, the state gave IBM thirty days to respond to various charges relating to its ability to fulfill outsourcing contract obligations. IBM has now given its response.

In a letter released [last] Friday, IBM executive Cynthia McLean defended the company’s performance and said it will continue to meet with the agency to resolve issues in the 7 ½ -year, $863 million contract with the Texas Department of Information Resources.


Instead of a formal response, McLean said IBM would meet with state officials and attempt to hammer out a plan.

“As you know, we do not agree that IBM is responsible for the problems that you outline in that letter,” McLean wrote, adding that the company nevertheless recognizes that the information resources department, “is dissatisfied with the current state of the project.”

IBM said earlier that the department delivered too few of the state IT experts it promised and has balked at pushing 27 leery state agencies into consolidating their computer, Internet, printing and mailing services into two privately managed data centers.

Once again, we have to wonder if this marriage can be saved. And perhaps if it’s worth the bother.

In 2005, the Legislature forced more state agencies into the privately serviced IT pool. The new effort was supposed to save the state $178 million from April 2007, when IBM took over from previous vendor Northrop Grumman, to August 2014.

However, last year Grant Thornton, a consultant hired by the department, estimated that the state saved only about $10 million during the contract’s first two years.

Our Republican leadership in this state fervently believes that the private sector can always do better than government. I guess that’s true if you use government run by them as the basis for comparison. It’s certainly a low enough bar to clear.

The State of Texas versus IBM: Down dooby doo down down…

It just keeps getting worse, doesn’t it?

All the finger-pointing and fault-finding over the state’s troubled data center contract has technology analyst Tom Starnes wondering if Texas and IBM Corp. want this marriage to work.

“It’s like they don’t want to be together and that’s bothersome to me,” said Starnes, who has been researching public-private technology partnerships, including Texas’ $863 million data center consolidation project.

Breaking up, Starnes said, will do no one any good.

IBM’s business reputation would take a hit, Starnes said.

And the state would have to start all over again with another vendor to merge the data centers of 28 state agencies into two updated and secure facilities. There is no guarantee the next relationship will work any better, he said. In the meantime, the agencies are stuck in a technological limbo.

But a split might be imminent.

You know where I’m going with this, right?

You just can’t go wrong with Neil Sedaka, I always say.

The State of Texas and IBM: Not getting any better

No group hugs are expected any time soon.

Agencies that help Texans renew their automobile registrations, draw unemployment benefits and apply for food stamps and Medicaid face crushing demands – and IBM, the technology contractor for those agencies, isn’t even providing mundane services, a top state technology official testified today.

“We’ve experienced significant service delivery problems” that force state employees to wait many days for routine help with computer matters, said Ed Swedberg, a deputy executive director at the Department of Information Resources.

Speaking of a troubled, $863 million state contract with IBM, Swedberg described to a House budget panel “a major backlog of work requests” that, he said, have gone unheeded by the contractor.

“These are day-to-day requests, such as adding memory to a server, restoring a file or re-setting a password,” he said. “This is of course frustrating … and more importantly affects the agencies’ ability to serve citizens and other constituents.”

An IBM spokesman responded that the state is to blame for any problems.

“We are looking at each of [the department’s] numerous shortcomings since the very beginning of the contract,” said IBM spokesman Jeff Tieszen, who dismissed Swedberg’s testimony as simply more “misguided accusations” from the state.

See here for the previous entry. Did I mention that this has “lawsuit” written all over it?

The State of Texas versus IBM

It’s never a pretty sight when an outsourcing relationship goes bad.

IBM Corp.’s $863 million data center consolidation contract with Texas is teetering on collapse.

Seven months of negotiations aimed at righting the troubled project and salvaging the partnership fell apart at the end of June.

On Friday, the state gave IBM 30 days to fix the myriad problems that have plagued the effort to merge the data centers of 28 state agencies into two upgraded and secure facilities.

Turning around the mammoth project in a month will be a formidable task for IBM because some of the problems have been known for years and still persisted. Many industry insiders expect IBM and the state to part ways.

Karen Robinson , executive director of the state’s Department of Information Resources, provided IBM a seven-page litany of alleged contractual violations and “chronic failures.”

For example, Robinson said IBM had abandoned its obligation to provide enough people to do the work outlined in the contract.

IBM had reduced the personnel in one key project area from 124 in October to 40 in June. That pullback, in part, has brought the merger process to a virtual standstill.

The original contract set December 2009 as the completion date for the transition. So far, less than 12 percent of that work has been completed.


Jeff Tieszen , a spokesman for IBM, said the company “has fulfilled its obligations under the contract and today’s action by DIR was unnecessary and unjustified.”

“IBM very much regrets the state’s action and will aggressively protect its interest going forward,” Tieszen added.

Tieszen would not comment beyond the terse statement.

I don’t know about you, but I smell a lawsuit coming. As noted these problems are not new, though as recently as six months ago it looked like IBM was going to get another chance. So much for that. Just remember, when all is said and done, the point of this exercise was to save the state money. Unlike some other privatization fiascoes I could mention *cough* *cough* Accenture HHSC TIERS *cough* *cough*, this project needn’t have been controversial or on the fast track to Failsville. There’s nothing particularly unusual about data center consolidations. I don’t know enough to be able to say how or why it all went wrong – this would make a great topic for one of those sweeping Texas Monthly investigative stories, Jake; I’ll bet the Trib could do a bang-up job, too, not that I’m hinting or anything – but from what I can see it looks like individual departments had no choice but to participate, and if the state is to be believed, IBM didn’t have enough employees working on it. There’s nothing unusual about the former, though that doesn’t make it a good idea, but the latter sure is curious. Anyway, as I said before, never underestimate the potential for a Rick Perry-initiated privatization process to get screwed up. The DMN has more.

Accounting tricks

Everyone knows that the current budget shortfall means the Lege will be searching for cutbacks and new revenue sources. But there is a third option, too, one that doesn’t usually get much attention but which has certainly been done before: Accounting tricks. Delaying payments, sometimes as little as a day, to push them into the next fiscal year, is the main trick in the bag.

The state’s accounting tricks really came into their own in 1991, during yet another budget crunch — one so bad that lawmakers approved a new tax bill, some “efficiencies” in existing programs, the state lottery and hundreds of millions of dollars in “smoke and mirrors” budgeting that moved costs out of the troubled period and into a future budget. They delayed state payments to local school districts by a day, “saving” an astonishing amount of money. They held money that was destined for state highways, along with other payments that would ordinarily come due in the last days of a biennial budget.

A few years later, lawmakers “repaid” the money they’d borrowed from themselves, adding an extra payment to, for instance, the Foundation School Program, to make up for the payment they “borrowed” from the previously cash-strapped budget.


Delaying the school payment by a day would chop $1.4 billion from the total, without the political pains of a new tax or spending cuts. Delaying payments to the employee and teacher retirement systems, Medicaid payments and transfers of gasoline taxes into the state highway fund — all will be on the table.

As the story notes, some of the old tricks won’t work any more, but quite a few of them are still available. The main downside to all this, of course, is that by putting off payments from one budget cycle to the next, you’re artificially increasing expenditures for the next biennium, just as you reduce them for this one. If we’re still facing a shortfall in 2013 – and given the structural deficit caused by the irresponsible property tax cuts of 2006, we almost surely will be – it’ll be that much more difficult to deal with it.

By the way, if you don’t like this kind of accounting sleight of hand, please be aware that the reason for it is the artificial requirement that the books need to be in balance as of a certain date. If the state were allowed to carry a balance forward into the next fiscal year – that is to say, if it were allowed to run a deficit – none of this would happen. The effect would still be the same – lawmakers would either gamble that the finances in the coming years would be good enough to wipe out the remaining amount due, or they’d be forced to take concrete steps to make it happen – there would just be less chicanery about it. For better or worse, this is the way we prefer to deal with it.

And I must say, I’ll take a dozen accounting tricks any day over hair-brained privatization schemes and the hundreds of millions they claim to save but never actually do.

The most touted budget-shrinking initiatives have rarely lived up to the political hype of providing better state services for less. And the promised savings have often proved elusive.

Consider, for example, the 2005 legislation that mandated the consolidation of 27 agency data centers that house mainframes and servers. The data center consolidation was sold as a money-saver – $178 million over seven years – that would also improve operations and security.

The project, which is being run by IBM Corp. under an $863 million contract, has been mired by delays, equipment failures and service complaints. The contract is being amended, and IBM is said to have asked for as much as another $500 million to complete the task.

Then there is the sweeping 2003 legislation that aimed to save $1.1 billion in health and human services spending in 2004-05.

About half of the actual $927 million in savings from that legislation came from policy changes that trimmed the rolls of health care programs, including the Children’s Health Insurance Program.

“The last time when we cut the budget, we did not do it by operating a more efficient government. We did it by not offering services,” said Eva DeLuna Castro , a budget analyst with the Center for Public Policy Priorities , which advocates for low-income Texans.

This is one of those places where having experience in the business world ought to be an asset as a legislator, but as that usually means possessing deal-making skills and having connections, it rarely works out that way. Frankly, a Lege full of Dilberts would have done a much better job assessing the baloney that IBM and Accenture managed to sell us. The good news, I suppose, is that there don’t seem to be any such plans being floated at this time. The bad news is that it’s still early days, and the allure of Great Big Savings at the invisible hand of the privatization fairy is just too tempting for a lot of folks in Austin to resist. EoW has more.

Trying again with IBM

Maybe the second time will be the charm.

The turnaround of the troubled $863 million data center contract between Texas and IBM Corp. has cleared its first major hurdle.

On Tuesday, state officials released an “agreement in principle” for restructuring the contract to consolidate the data centers of 27 state agencies into two streamlined and upgraded facilities. The agreement provides a broad framework for hammering out a final deal by late February.

The mammoth data center project, launched in 2007, has been bedeviled by delays, equipment failures and poor service. State agencies involved in the project had raised more than 800 issues with the contract and the service they have been getting from IBM.


Details are scarce in this early agreement, and the next step will be to negotiate the nuts and bolts of the modified contract, including narrowing the scope of IBM’s responsibilities.

One possible change could be that IBM will no longer maintain the thousands of remote servers across the state.

Turning that responsibility back over to the agencies may be cheaper, more efficient and fall in line with the agencies’ wishes, the agreement says. It would also free IBM from some its most persistent and costly problems.

Well, so much got screwed up with this the first time around that you’d think it’d have to be better this time. But never underestimate the potential for a Rick Perry privatization project to go south.


Ah, memories.

As hot new servers have grabbed more attention, mainframes have been plugging away behind the scenes. For decades, they have been the technological backbone for banking, finance, insurance, defense, health care, education, government and other industries.

“The perception is we’re old and gray,” said Jim Porell, an engineer who works on mainframes at IBM, the only company that still makes them.

Lately, more software has been written for mainframes, and they support everything from ATMs to Web-hosting to cell phones, not exactly ancient technology.

But while mainframes are evolving to handle more applications, the number of mainframes is shrinking, said John Phelps, the lead mainframe analyst for technology research firm Gartner. IBM has lost more than 75 customers who left mainframe platforms, and it has gained about 50 new ones. Mainframes are operating more efficiently, handling more MIPS — millions of instructions per second — year after year.

“The actual number of mainframes has shrunk, but the capacity has gone up,” he said. Better efficiency has become more important as users’ sensitivity to electrical usage, both for financial and environmental reasons, has increased, he said.

I haven’t used or supported PROFS in a decade, but I could still split a message file if I needed to. And don’t tell anyone, but the expense statement program we had on VM back in the day was easier to use than any of the PC and web-based programs I’ve had to use since then. There are many things about this environment that I don’t miss. But it had its good points, too.