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Is the Worst Software Purchase in History?

Published by in How to Buy Software

As someone who has been in the business of helping other businesses find the right software for the last 14 years, watching the federal online health insurance exchange disaster unfold begs the question – how does this stack up against other software purchase disasters? is worst software purchase

There have been some real doozies over the years, so unfortunately, there’s no shortage of competition. Thomas Wailgum of CIO Magazine has documented several of those disasters, and Tom Salonek of Intertech has recounted others. The primary measures they and others have used to assess the extent of the failure have been total dollars spent/wasted, total number of people impacted, and the severity of that impact.

I would put the technology component of the Affordable Care Act in serious contention for worst software purchase ever for the following five reasons:

  1. The final price tag of the system itself is not yet known, but as reported in the New York Times it is already in the hundreds of millions of dollars. That’s a lot of money to waste, especially when we’re talking about tax dollars. It’s bad enough for a business to waste the money of its private shareholders. It’s much worse when it’s wasting the money of American tax payers.
  2. Major glitches have riddled the software and website for the first three weeks and made it almost impossible for citizens to enroll and for insurance providers to handle even the tiny amount who have. Technology experts familiar with the implementation and infrastructure, including former Federal Government CIO, Vivek Kundra, and Salesforce CEO (and Obama supporter), Marc Benioff, claim that much of the technology uses is outdated and inefficient.
  3. As reported in the Washington Examiner, there has been a complete lack of transparency behind the bidding and selection process of CGI Federal. Why were they selected? How did they explain their past, similar failures in a satisfactory way? How were the budget and scope of the project developed? This sort of documentation should be freely available to the public.
  4. The website is performing so poorly that the government invented fictional testimonials. For example, it turns out that Chad Henderson, who was promoted as one of the early adopters and able to overcome the glitches to buy insurance, did not actually, in fact, buy insurance. He was, however, a paid activist for Obama’s political advocacy organization.
  5. Most damning of all, the technology purchase and construction of was not even necessary. As Jeffrey Young of the Huffington Post points out, there are plenty of other solutions already in play. For example, is a perfectly functional healthcare insurance exchange that has been providing health insurance choices for the uninsured since the late 1990s. It works in all 50 states and the District of Columbia. And they are not the only one. If the government decided all books should be freely accessible, would they really create their very own competing website to Why nationalize an industry instead of utilizing existing channels that are already working?

None of this should be a surprise to anyone.  When you combine a large IT project with hundreds of millions of dollars and government bureaucracy, disaster is lurking around the corner. How much more tax payer money will we spend to salvage this, and, assuming it does ever get fixed, how long will the insurance exchange even last?

At least when companies make mistakes like, they eventually shut them down. Other than our national parks and veterans memorials of late, does our government ever shut anything down? Let’s hope so.

Was this the worst software purchase ever? The jury is still out, but with close to a billion dollars already spent and tens of millions of Americans affected, it’s not looking good.

Looking for Insurance Agency software? Check out Capterra's list of the best Insurance Agency software solutions.

About the Author

Michael Ortner

Michael Ortner

Mike started Capterra in 1999 as the first website dedicated to helping people find the right software for their business. Today, Capterra lists over 30,000 software companies, displays more than 250,000 software reviews, and receives over 3,000,000 monthly visitors. He's been featured in the Wall Street Journal, Washington Post, Fox News, and Inc. Magazine, among other publications, where he's spoken on topics ranging from the business software industry to running and growing a business in the 21st century. Mike received a business degree from Georgetown University and a philosophy degree from the University of London. He lives in McLean, VA with his wife and six children.


Comment by Aida on

Very good article.Really looking forward to read more. Want more.


Comment by James Watt on

I am the owner of an IT firm with locations in Pittsburgh and Cleveland. We do websites in addition to providing IT to many local businesses. Small websites can be as little as $1,000, but most dynamic multifunction sites are somewhere between $10k-$20k. What kind of site would cost $100k? But I’m sure there are some big sites out there, YouTube, Facebook, etc that you would need around $100k to reproduce. $1 million? No site I can think of could ever cost that much money. And that’s enough money to build pretty robust infrastructure, especially if you are using technologies like nginx, php-fpm and memcache to reduce the processing power needed to serve data to customers. $10 million? $100 million? $600 million? I can’t come up with any reason to justify those costs. None. Zero. Well, I can think of one, the company in question has successfully scammed the government.

I looked at last night, expecting it to be something extremely complicated. If you haven’t gone through the prompts, I suggest you do. It doesn’t even ask your age, it only asks if you are below 50 or above 49 and how many adults in your household will be applying for insurance. It then brings up a list of insurance prices in the area that you can’t click or do anything with. I presume you have to contact the insurer directly.

Based on what I saw, I could have built the same site for under $10k. If they have all their own infrastructure and we had to set up our own datacenter instead of just using Amazon’s cloud hosting, we could still have done this project for under $1 million dollars (even cheaper if you use the cloud.) Someone needs to explain this to congress and the senate and they need to take the company responsible for this to court and put the owner in jail.

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