Bank Of America MASTERNET

1
Bank Of America / MASTERNET

• CIS 761
• Project Management
• Failure of the Masternet Project
• Presented by Erald Troja

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Why talk about MasterNet

• It deals with IT Project Management
• Those who forget the past are condemned to repeat
  it
• Displays how a Project Management should not be
  run, and attempts to highlight critical failures
  which need to be avoided

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Layout of presentation

• PART 1 INTRODUCTION
• History of Bank Of America
• Masternet History
• PART 2 MASTERNET
• Project Critical Success Factors
• What was MasterNet,
• What Happened During All Project
• PART 3 REASONS FOR FAILURE
• Why did Masternet Fail?
• The Lessons we Learned From Masternet
• Well go over a few of the 9 Project Management
  Knowledge Areas which we have covered in class
  and attempt to highlight how they apply to
  Masternet

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What was Masternets projected usage?

• The system, called MasterNet, was to consist of a
  large trust accounting system, called TrustPlus,
  plus eight smaller modules that would enhance the
  core processing system.
• Each system was to be integrated in order to
  provide the full complement of trust automation
  and would be accessible to remote clients on a
  real-time basis

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Introduction and a high level description of the
major highlights

• Bank of America (BOA) started to develop the
  Masternet trust accounting system
• 78 million in losses on the project
• A few years past the due date dateline

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Bank of America technological advancement
history The timeline up to Masternet Project

• 1920s - Local Bank of America merged with Bank Of
  Italy
• 1940s 1950s - BoA increased use of checking
  accounts and committed itself to advantages in
  technology.
• Developed a computerized banking system that
  automated checking accounts, this system was
  named ERMA / Electronic Recording Machine
• 1960s - Used technology highly in banking.
• 1970s - Technological process slowed
• 1980s - Still using 1960s technology.

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Masternet History Masternet Project timeline 1

• 1981 - Spent a year to develop a trust accounting
  system and failed after spending 6 million
• 1982 - Bank officials decided planned to
  implement a better trust accounting system
• 1983 - BoA formed a consortium of banks to share
  the developed technology
• 1984 - Masternet Project starts. Bank officials
  set a goal , Masternets initial budget was 420
  million and the completion date December 31,1984

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Masternet History Masternet Project
timeline 2

• 1985-1986 - Project continued until May 1986.
  After this time they began to prepare to
  conversion to Masternet
• End of 1986 - The first tries failed to
  conversion to new system
• 1987 - Conversion Date was extended till
  march,1987
• January 1988 - Masternet project was entirely
  abandoned

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Overview/Review of general Project Critical
Success Factors

• Scope Definition
• Top Management Support
• Client/User Involvement
• PM Efficiency/Experience
• Others, happy work environment

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Project Starts

• Need to leap-frogg into the 1990s
• BOAs ultimate goal was to sell the trust
  accounting services of the system to small and
  midsize banks.
• Yet project was never defined properly
• Masternet's initial budget was 420 million and
  the completion date was set at December 31, 1984.
  

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The Initial Deadline Passes

• MasterNet development continued through 1985 and
  into 1986
• Though after a long overdue release date,
  Masternet was officially attempted to be put to
  use during March 1986.

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What Happened During Masternet ?

• Top Management Has Changed (initiated from
  Armacost/continued and abandoned from Tom
  Clausen)
• BASE Location Has Changed (development for the
  core system was switched from East Coast to
  suburbs of San Francisco, also in the later
  stages, college grads were hiredlower morale
  amongst regular staff)
• Experienced Technological Issues-issues with the
  Prime computers, skewing from the standards of
  using IBM computers
• Previously agreed banks dropped out of the
  consortium-lack of client involvement

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Project Ends

• Four years after the start of the project, not
  only was the system a major failure, but the
  whole trust business was lost.
• Clients pulled their accounts from BOA
• BOA had 78 million in losses on the project
  the 420 originally budgeted and spent towards
  the project
• A few years past the due date dateline
• BOAs trust business was being given to a
  subsidiary because they couldnt handle.

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IS Failure Types

• According to leading scholars there are 4 types
  of IS failure
• Corresponding Failure-failure to meet design
  objectives
• Process Failure-failure to complete on time
  within budget
• Interaction Failure-system not used, or ignored
  from users
• Expectation Failure- the system doesnt meet
  stakeholder expectations

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IS Failure Reasons

• Lack of Client Involvement
• Lack of Top Management Support
• - project champion helps
• Lack of Project Definition
• - includes clear plan, goals
• - also standards for testing

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Lack of Client Involvement

• BOA failed to bring to the Project Analysis and
  Requirements the key future clients of the
  Masternet project
• Philadelphia National Bank dropped out of the
  consortium two years before the project started.
• United Virginia Bank intentionally would have
  MasterNet only for its custodial trust business
  and they were not involved into the requirement
  gathering process
• Seattle-First National appeared to have delayed
  adopting MasterNet in its employee benefits
  business

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Lack of Top Management Support and heavy usage of
consultants

• Under Clausen , investment in computers and
  telecommunications was delayed .
• BOA made significant use of consultants
  throughout the MasterNet project
• - of the bank's personnel also found Katz
  difficult to deal with
• - team member conflict was another issue

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Lack of Project Scope Definition

• BOA failed to define a clear scope and failed to
  divert scope creep, which along with other
  failures managed to result into final project
  failure.
• hardware problems
• - CPU
• - RAM
• Problems in Scheduling the Project

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Time Management

• Clear violations from the Time Management
  standpoint
• System schedule and deadlines were not met and
  realistic schedule should have been
  defined-initial Jan Dec 1984 was not realistic
  for such a project
• Deadlines were not properly set and enforced
  schedule slips became very acceptable

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Cost Management

• There were no real cost management techniques
  performed so that a preview of what defects would
  cost if they were to be found at each level such
  as
• Coding and Unit Test
• Integration and System Test
• Beta Testing ...etc
• Following Cost Management standards would yield
  in a product which would cost the company much
  less. Errors would have been caught before going
  Live and we know that a bug caught at that stage
  would generally cost an average of 35 times when
  compared with earlier testing

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Project Risk Management

• Project Risk Management calls for proper methods
  to identify risk and risk symptoms.
• No Project Risk Managementunaccountability
  towards the use of Prime chips when compared to
  old reliable IBM chips
• Decision trees in order to calculate value lost
  or gained were not implemented

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Quality Management

• Obsolete Quality Management Plan
• Incomplete Quality Assurance, and acceptance of
  External Failure malfunction was not
  circumvented until Masternet system went LIVE

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Conclusion

• BoA made two huge mistakes leading to the failure
  of Masternet
• The difficulty and scope of Masternet was not
  realized sufficiently
• They couldnt control the project once it was
  started
• Schedule of the project was unrealistically set,
  which put the project into a failed mode from the
  start

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End of Presentation

• Questions/Comments??