The Satyam effect

We are starting to get some feedback around the Satyam scandal and its impact on local organisations.

There is chit-chat about what NAB are doing to minimise any critical noise after they selected Satyam to manage their core business systems – and sent them offshore. The setup costs of such a venture are huge and if Satyam folds then this will have been a very poor choice indeed. Plus it looks like they don’t have a "Plan B" – because all their experienced staff are long gone.

There are whispers that Telstra is in a similar position – although details are less forthcoming – the *cone of silence* enforced by the amigos seems to be working.

And there are a number of other projects that look as though they won’t proceed. One is a venture between Satyam, Deakin University and the Victorian Government that was going to create yet another "Silicon Village" in Geelong. By my count this is the fourth such attempt of a State Government – all failures.

The amazing thing about all of this is what it says about the "due diligence" processes of these local companies/institutions. Perhaps their negotiators were all asleep in business school on the day when they were supposed to be learning about *risk* and how to ask the important questions.

It just reinforces for me the amazing failures that have resulted from this religious pursuit of *lowest cost* outsourcing. One of the things that would have helped manage the risk would have been to retain some older, experienced, "grey heads" in the selection and evaluation teams. Instead, they were all discarded as being too expensive – it seems that much corporate memory went out the door with them.

When I was working in the outsourcing business we had a saying that goes like this - "All of our assets walk out the door each evening – and some of them choose to come back tomorrow – we should manage that instead of letting it run as a random process".