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Author: Katharina Grimme
14 December 2006
Yesterday, the budgetary committee of the German Bundestag (Lower House) agreed the go-ahead for the Herkules project, the large-scale modernisation of the German army's IT. The outsourcing project, worth €7.3 billion over 10 years, is awarded to the consortium of Siemens Business Services (SBS) and IBM who will form a public-private partnership (PPP) with the government.
Comment: The service providers and the government will form a new company, BWI Informationstechnik GmbH, in which the government will hold 49.9%, SBS 50.05% and IBM 0.05%. Further partners, for example, for the provision of PCs and servers, will be subcontracted but it is expected that SBS will get the majority of revenues (60%). For SBS, it is excellent news that, despite its recent troubles, it is still able to win such a large-scale, long-term project.
A major stumbling block could be the filing of an objection from the earlier consortium Isic 21 (CSC, EADS and Mobilcom), which would lead to a re-negotiation, but we believe this is unlikely.
This project has seen long delays and received much criticism. Experts claim that an in-house solution would have been significantly cheaper. However, so as not to delay the start of this high-profile project even further, it has now been signed off. After Toll Collect (which proved very problematic), it is the second large-scale public sector outsourcing project, and acts as another test-bed for the feasibility of PPP projects in Germany. The key challenge in such projects is project management that can effectively bridge the corporate cultures of government agencies and professional service providers. Associated with this is the challenge of managing the evolution of such projects to meet changing technical and business requirements over ten years. This requires good communication between the parties. It is also important that the government maintains a strong and informed client-side capability that is able to work with the suppliers to ensure its requirements are well understood and that as issues and problems arise they are dealt with in a sensible and cooperative way by both sides.
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