Sainsbury's warehouse automation
Sainsbury's, the British supermarket giant, was determined to install an automated fulfillment system in its Waltham Point distribution center in Essex. Waltham Point was the distribution center for much of London and southeast England, and the barcode-based fulfillment system would increase efficiency and streamline operations. If it worked, that is.
Installed in 2003, the system promptly ran into what were then described as "horrendous" barcode-reading errors. Regardless, in 2005 the company claimed the system was operating as intended. Two years later, the entire project was scrapped, and Sainsbury's wrote off £150 million in IT costs.
Lesson learned: A square peg in a round hole won't fit any better as time goes on. Put another way -- problems that go unaddressed at rollout will only get worse, not better, over time.
Canada's gun registration system
In June 1997, Electronic Data Systems and UK-based SHL Systemhouse started work on a Canadian national firearm registration system. The original plan was for a modest IT project that would cost taxpayers only US$2 million -- US$119 million for implementation, offset by US$117 million in licensing fees.
But then politics got in the way. Pressure from the gun lobby and other interest groups resulted in more than 1,000 change orders in just the first two years. The changes involved having to interface with the computer systems of more than 50 agencies, and since that integration wasn't part of the original contract, the government had to pay for all the extra work. By 2001, the costs had ballooned to US$688 million, including US$300 million for support.
But that wasn't the worst part. By 2001, the annual maintenance costs alone were running US$75 million a year. A 2002 audit estimated that the program would wind up costing more than US$1 billion by 2004 while generating revenue of only US$140 million, giving rise to its nickname: "the billion-dollar boondoggle."
The registry is still in operation and still a political football. Both the Canadian Police Association and the Canadian Association of Chiefs of Police have spoken in favor of it, while opponents argue that the money would be better spent otherwise.
Lesson learned: Define your project scope and freeze specifications before the requests for changes get out of hand.