On April 19, 2019, Hertz Corporation filed a civil complaint in the Southern District of New York against Accenture, a “global management consulting, technology services and outsourcing company” for allegedly paying “tens of millions of dollars in fees” only to never be “delivered a usable website or mobile apps.”
Hertz describes a normal project structure of multiple phases with their respective statements of work and letters of intent governed by some master agreement. Yet, in full, there seemed to have only been two phases that ultimately cost Hertz approximately $33 million dollars.
The complaint reads like the all too-common tale of businesses, big and and small, not getting what they paid after outsourcing its web development. It’s always the same. Web development firm/team/person puts on their dog and pony show to get that ink signed with only months later a law firm like ours gets a call about the developers they hired who they paid for a site that was delayed and after delivery was not up to the specifications they originally requested.
Often not heard from, like in Hertz’s complaint, is the other side of the story–the perspective that describes how the client was late in making their deliverables and how the client’s specifications kept changing.
Hertz alleged that Accenture caused multiple delays, eating into actual monetary loss. But, delays in projects are inevitable. Of course, developers try to build in some extra runway to accommodate, but they often miss the mark. Some may say it is due to incompetence, overselling, or even dishonesty; but it could merely be that they never studied the “blow-up factor” like Erik Bernhardsson did. He suggests that “people estimate the median completion time well, but not the mean.” He further says “let’s say you estimate a project to take 1 week. Let’s say there are three equally likely outcomes: either it takes 1/2 week, or 1 week, or 2 weeks. The median outcome is actually the same as the estimate: 1 week, but the mean (aka average, aka expected value) is 7/6 = 1.17 weeks. The estimate is actually calibrated (unbiased) for the median (which is 1), but not for the the mean.”
Hertz’s allegations provide some details on how Accenture failed to meet certain clear specifications:
For instance, the contract documents required Accenture to develop a responsive website – one that automatically scales content and elements to match the screen size of the device on which the website is viewed – with breakpoints for small (phone), medium (tablet), and large (desktop) displays. Accenture ignored the specification that called for a medium-sized layout and developed the website for only small and large breakpoints, and demanded hundreds of thousands of dollars in additional fees to deliver the promised medium-sized layout.
As another example, the Architecture Specifications for the Project expressly specified that a fundamental principle of the design of the website was its extensibility – that is, the use of a common core of libraries that could be extended across the websites and mobile apps for each of Hertz’s brands. Without Hertz’s knowledge or approval, Accenture deliberately disregarded the extensibility requirement and wrote the code so that it was specific to the Hertz brand in North America and could not be used for the Hertz global brand or for the Dollar and Thrifty brands.
The quality of Accenture’s programming was deficient as well. Accenture’s developers wrote the code for the customer-facing ecommerce website (the “front-end development” or “FED” code) in a way that created serious security vulnerabilities and performance problems. The defects in the FED code were so pervasive that all of Accenture’s work on that component had to be scrapped. For other components of the system, substantial portions of the code were also unusable.
From Hertz v. Accenture
Though this site focuses on the legal aspects of business news, it is hard to ignore one ex-employee’s perspective of Hertz’s decision to hire Accenture after they alleged they “did not have the internal expertise or resources to executive such a massive undertaking….”
People are talking about building in-house talent. I was part of the in-house talent at Hertz. We were executing the strategic initiatives (at some level we came up with them), and we were doing a damn fine job at it.
In early 2016, they fired us all. We were made to train up our replacements (at IBM in India) in order to receive severance packages. Later we found out that Accenture had picked up the initiative. And now the world knows the rest of the story.
All the points made here (ie warning signs, organic initiative) were passionately made at the time to Hertz brass. But someone, no doubt on a golf course somewhere, sold them the idea that they can save millions on paper. And, on paper, they were right: Shortly after firing us all, the CIO received a $7 million bonus. Unfortunately for everyone involved (except the CIO, of course), paper doesn’t reflect reality.
It seems very plausible that Hertz did not have the internal expertise to manage outsourcing this massive undertaking either.
