Fallout from EDS-BSkyB: higher prices, more red tape

So HP-EDS has finally been told to pay £200m as an interim penalty in the latest installment of the saga surrounding the failure of an ancient CRM implementation at BSkyB. Like a lot of couples that end up facing each other in an expensive day in in court, EDS and BSkyB must have wondered how it ever came to this. One assumes that back in the day they looked at each other with dewy expressions, clinked champagne flutes and looked forward to a lifetime of, well, if not uninterrupted bliss then at least mutual tolerance and understanding.

Outsourcing, however, like all relationships carries inherent risks and the findings in this case make acknowledging that variability upfront more important than ever. It’s likely that outsourcers will build in that risk profile to pricing – edging costs upward — and Ts and Cs. Clients will need to spend more time than ever controlling governance and legal terms.

In the final analysis the case is a damning confirmation of what many have suspected and few have had the nerve to express. Many outsourcing relationships remain immature and too often these are not so much partnerships than hard-fought deals that can easily fall into chaos when parties overpromise and under-commit.

EXTRA: For those who want a legal expert view of the case, Alistair Maughan of law firm Morrison & Foerster has written an excellent article here.