I have been studying the Cyber Ed project for the past few weeks. All of a sudden one night last week it dawned on me--proponents of overpriced government mega-projects use the same strategy as ERP (enterprise resource planning) vendors.
They sell the idea that having a single vendor guarantees that everything will work together and this best for the customer (or government).
Seven years ago the Manila Polo Club bought a Club ERP from Micros-Fidelio at P12 million because they thought if they bought everything from a single vendor they would have an integrated system.
The Club did not get an integrated system now seven years after the club's management says that the various subsystems--POS, receivables, F & B management, and accounting do not work well together.
It is a pity because if the club had bid the various subsystems independently the cost could have been only about P6 million instead of P12 million.
Many vendors could have offered IBM based POS Systems at about half the price of the Micros-Fidelio POS.
My company had offered a Windows based F&B System for P250,000 instead of the DOS based Micros Fidelio F&B system at P1,415,000.
The advantages to the customer of breaking down bids into loosely coupled subsystems can be very significant.
Deeper analysis shows that the ERP single vendor integrated systems strategy is not for the good of the customer or the government.
It is a vendor strategy to
1. Eliminate competitors who cannot offer everything in the mega RFP (request for proposal)
2. Get all the business.
3. Be able to get very high margins.
The ERP selling strategy includes:
Sell high (to top management)
Make single vendor and integrated mandatory
Offer total solution (hardware, training, implementation, project management)
Sow FUD (fear, uncertainty, and doubt) about smaller specialized vendors.
In the NBN-ZTE and Cyber Ed projects, we see that the project proponents advocate the ERP single vendor integrated system concept (religion!) as well as the strategy of selling high. How much higher can you get? It's not everyday that you get the President of a country flying to another country to witness the signing of a commercial contract (which subsequently gets lost!).
In both projects a single vendor provides everything (hardware, software, training, project management, etc.).
If one studies both the NBN-ZTE and Cyber Ed projects it becomes obvious that the Arroyo administration is not focused on good governance nor does it follow good procurement practices:
1. Both projects looked like they were being rushed.
2. Both projects avoided any semblance of competitive bidding.
3. Both projects do not show evidence of any effort to save money for the government.
4. In fact there seems to be an effort to borrow and spend as much as possible.
5. Both projects are designed to award everything to a single vendor.
Rushed projects
Those with malicious minds would think that some people in power are intent on making a lot of money before 2010. Let the next generation pay for the projects and the substantial overprice.
Both projects were obviously rushed. There is no evidence of careful study to show why either project is really needed.
Good governance and good procurement practice would require that for projects in the multimillion cost range would start with feasibility and engineering studies that would justify why the projects should be undertaken and what the bidders should bid for.
Usually such studies would be funded by international institutions like the World Bank, the Asian Development Bank, etc.
No effort to save money
The drive to maximize the cost of the projects is obvious. Two UP professors pointed out that existing communications companies already had the broadband backbone capacity.
There was no reason for the government to invest in redundant facilities.
For government to save money, it could negotiate volume discounts from the major telecom companies. But for people who want to maximize the bribe they can get, asking for discounts is a dysfunctional strategy. A better strategy is to eliminate competing vendors, create a mega project, and let the vendor increase its prices. This will make bribes exceeding 22 percent of the price affordable.
There seems to have been very little attention paid to effectiveness and efficiency. It looks like NBN and Cyber Ed were hatched without any interest in saving money for the government. In fact, the intent seemed to be to maximize the cost of projects!
$329-million NBN-ZTE project was supposed to provide the government with its own broadband backbone, WiMAX, and communication facilities. Why should the department of education again build its own network in the Cyber Ed project?
In fact, the Department of Education already has a LAN in its central office and is interconnected via the Internet to 17 regional offices and 187 division offices. The LAN was founded by the World Bank at a cost of P24 million.
Questions about Cyber Ed
The Cyber Ed project does not seriously address the following questions squarely:
1. Why satellite driven education is needed in 26,618 schools?
2. What is really needed?
3. When should things be done?
4. Should a P26.4 project be awarded to a single vendor like Tsing Hua University?
The Department of Education seems to have assumed that having live telecasts was the most efficient way to fill the education gaps nationwide.
No analysis seems to have been made on what subject matter requires immediate creation and transmission versus what can wait for careful development of course ware with subsequent distribution of very inexpensive CD or DVD.
My gut feel is that the only courses that would benefit from live TV broadcast would be current events and political science courses. And students already get a lot of this through TV or radio.
In order to use these materials in a classroom setting you would merely have to record the broadcast and replay it in class for discussion.
No need for master teachers and expensive studios for Dep Ed. The TV and radio stations already have Korina, Tina Monzon Palma, Ricky Carandang, etc.
Other subjects like history, English, physics, math, and even IT have much longer shelf life.
Should the P26.4-billion project be given to Tsing Hua University?
The Department describes Cyber Ed as turn key solution produced by the partnership of DepEd and Tinghua University of China:
Best Technology University in China (no. 17 in the world)
Pioneered the long-distance education platform for China
Manages the Chinese CERNET Backbone (320 M beneficiaries)
Runs E-education Project for almost 500,000 schools
Has cutting edge Live Interactive Class software System
Has extensive Courseware Development experience
It seems strange that the major partner in a P26.4 billion project would be a University when 70% of the project is PC hardware, TV sets, and communications.
Only 1.56 percentis allocated for courseware, 0.47 percent for ICT based training, 0.17 percent for Quality assurance and monitoring.
I do not think the University is into PC, TV, and communication equipment manufacturing. Why should it be the prime and only contractor?
I would even doubt that a Chinese university developing courseware for Chinese grade schools and high schools is in the best position to develop courseware for Filipinos?
Should the P26.4-billion project be awarded to a single vendor?
The main reason the Cyber Ed project is shamelessly expensive is because it is being awarded to a single vendor under the mistaken notion that this is the best way to have a system that works.
Unfortunately, the Department of Education Cyber Ed team does not seem to understand the value of software, communications, and television standards.
With the Internet, a smart teacher who does not even own a PC can go to an Internet café and browse the web for teaching materials residing in different servers, PC's, mainframes running UNIX, Linux, Windows, or Mac OS.
An Australian farmer in an isolated farm in an isolated area can use a VSAT antenna to watch satellite TV on his TV set regardless of brand.
There is no reason other than desire to maximize bribes to buy 26,618 sets of PCs, TVs and VSAT antennas from a single vendor.
In small volumes of 100 each you can buy PCs for less than P10,000 and 29-inch TV sets for about P10,000!
There is no question that some crooked elements in government are eager to place the country in deep debt to China for them to pocket billions.
In the old days we used to talk about "10 percenters." The Arroyo government has focused on the economy of "50 percenters"!
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is president of Systems Sciences Consult Inc. Feedback at mapsec@globenet.com.ph)
