A bad, bad, bad project.

Author:Hubbard, Andrew

HYPOTHETICAL MORTGAGE COMPANY (HMC) was a major player with a 25-year history of growth and profitability Out of the company's January executive meeting emerged an idea: Overlay the existing computer systems with a blanket system that would allow production, operations and servicing to view each other's data. This would allow information to flow seamlessly and quickly among the divisions. Also, it would allow data mining by marketing, secondary marketing and advertising, creating millions of dollars in opportunities by enabling faster creation times for new products, better fit of products to market segments, better profiling of customers, better customer retention and huge cross-selling opportunities.

In February, a task force was formed to implement this idea. The task force represented all areas impacted by the project--37 people. The task force was headed by a project manager hired specifically for the job. Since it was patently impossible to free all 37 people for regular meetings at the same time, task force members selected alternates, and much of the communication was handled by keeping and distributing minutes from the meetings. At the first task force meeting, subcommittees were formed to create a project timeline, estimate costs and benefits, and begin vendor selection.

By the end of April, a timeline of eight months to implementation had been submitted to top management, along with a cost estimate of $300,000 and a five-year-out estimate of $2.2 million in benefits. Eight potential vendors had been identified. Top management gave the project a final go-ahead.

Vendor interviews and demonstrations were held throughout August and a contract was signed in September. Vendor costs were higher than anticipated, because it was discovered that some retail branches were taking applications on a nonstandard system that they had been using before HMC acquired them. Also, there were legal and compliance issues with the vendor's system accessing data from HMC's automated underwriting system suppliers and credit-reporting suppliers. This delayed the vendor from beginning "real" programming work until February.

In April, a disaster occurred. The servicing division received its annual, automatic upgrade from the servicing system vendor. When this upgrade was loaded, it wiped out random chunks of the new vendor's programming. Accusations flew. A month was lost rebuilding the program. At this point the budget was exceeded.

During this period some...

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