There is one word that best sums up the lawsuit between Oracle and Oregon over the vendor's work on the state's failed Obamacare website: Ugly.
After years of back-and-forth legal dueling, the dispute has been settled in a deal that looks pretty good for Oracle on the financial front, as the Oregonian newspaper reports:
The settlement, valued at more than $100 million, includes cash payments to Oregon as well as a six-year license agreement for products and services that Brown said can be used to "significantly modernize state government's IT systems."
Oracle's $100 million consists largely of technology. Only $25 million will come in the form of cash. And all of that will go to pay the state's legal fees and other costs. Oracle also agreed to contribute $10 million to a state technology education program.
All in all, it's a far cry from the $240 million the state paid to Oracle for the failed Cover Oregon project.
The state spent more than $300 million overall on the project, and had originally sought $6 billion in damages from Oracle.
The website, which was known as Cover Oregon, suffered massive performance problems upon its launch in October 2013 and never reached full operational capabilities. The problems led to a partisan political maelstrom in the state, the departure of a number of officials and at one point the FBI even got involved.
Ultimately, the state decided to scrap Cover Oregon altogether and have residents use the federal Healthcare.gov site to enroll in health plans.
The reasons why Cover Oregon failed have been scrutinized ad nauseum both through the political debate, the lawsuit and a number of independent investigations. But the newly reached settlement presents a valuable opportunity to summarize some of the lessons IT organizations as well as vendors should draw from the debacle. Here's a look.
Writing A Blank Check?: Oregon hired Oracle on a time-and-materials rather than a fixed-fee basis. It also decided to serve as its own systems integrator rather than hire one, despite warnings from various parties that its IT staff wasn't capable of managing such a large project. Moreover, the state often failed to spell out clear deliverables for Oracle in its contracts, limiting its leverage to hold Oracle accountable.
Poor Project Management: The project's management centered heavily on coding the software, with little attention paid to training and communication, a federal report concluded. Also, while Atlassian's JIRA tool was used for issue tracking, there was no formal project management software in place. Moreover, a "homegrown" agile methodology was used, rather than more formal practices, the report found.
Don't Boil the Ocean: As originally envisioned, Cover Oregon had many more bells and whistles than other states' Obamacare websites. This was a crucial error in judgment on the state's part, as it was facing a tight deadline for the system's completion. In addition, state officials wanted to modernize some other IT systems simultaneously with the Cover Oregon project.
Oracle's Judgment Call: Oracle was the last remaining bidder for the Cover Oregon contract, but that doesn't mean it couldn't have walked away from what should have seemed like a risky endeavor. While no vendor has a crystal ball, not every project is worth taking if it may lead to an unhappy customer, bad publicity and expensive legal fees.
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