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November 27, 2013

MARCUS: Confusion in world of computers

— It was not surprising to see the confusion and attacks generated by the federal government’s effort to make the purchase of health insurance easier. We have seen it before.

In business, universities, governments at all levels, new computer applications fail before they succeed.

Generally, there is nothing wrong with the computers. They work. The problems most often arise with the people who design and write the complex programs needed to run the machines. This work often involves innocents who think they know what they need and experienced skeptics who know how difficult it is to integrate diverse systems and objectives.   

Hoosiers, in particular, should understand these problems. It was Gov. Mitch Daniels who brought in IBM to design and implement a new computer system for our welfare programs in 2006. Something went wrong.

Perhaps our people failed to make clear Indiana’s needs to the IBM folks. Or maybe the problems were too complex for the team IBM assigned to the tasks. Whatever the cause, those Hoosiers on public assistance and the employees who worked with them were not well-served by the new system.

 Of course, neither the Daniels administration nor IBM could be at fault. The administration was known for its sharp-minded, analytical approach to all matters. And IBM …. What can be said about the most famous and experienced computer company in the world?

Yet, somehow, something did go wrong. This marriage built upon the best intentions, ended in divorce court in 2009, with the state suing IBM for $150 million. That was a modest demand considering the state had already paid $437 million to IBM for its failing effort.

Naturally, IBM counter-sued for $113 million for breach of contract. No alienation of affections was charged, nor did anyone name a guilty third party.

The state kept $12 million in equipment for which IBM wanted payment. Apparently they were not wedding gifts. The judge also ordered the state to pay IBM another $40 million for the breakup.

The total cost of all this to the taxpayers of Indiana has yet to be determined. The matter is still in the courts and attorneys for both sides are still billing.

As far as I know, the federal health insurance debacle has not produced any similar law suits thus far. Yet the situation seems remarkably similar to the Indiana experience.

Health insurance, governed by politically appointed commissioners in the various states, is as sensitive an area as welfare. In addition, health insurance has many more interested parties capable of expressing their discontent with any attempt to modify the existing system.

The computer companies contracted by the federal government are not household names like IBM. They may become such by the time this current news cycle is over. But clearly, there must have been the same type of disconnect between the government and the contractors as we had in Indiana.

Perhaps Mitch could call Barack Obama and tell him how to come out untarnished from this foul-up.

— Morton Marcus is an independent economist, writer and speaker. Contact him at mortonjmarcus@yahoo.com

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