Chickens Come Home
Chickens Come Home
Abstract and Keywords
The first public sign that Project Taurus was in trouble came in January 1991 when implementation was postponed for six months, from October 1991 to April 1992. The delay was blamed upon the Department of Trade and Industry's (DTI) failure to produce the regulations in time. In May 1991, a reduced compensation fund of 100 million pounds was agreed with the DTI and the draft regulations duly published. The London Stock Exchange (LSE) Council had been dissolved and replaced by a board to give the LSE a more commercial ambience. Touche Ross was to undertake the building of Taurus but it was sacked from the project as part of cost-cutting. The delays put project manager John Watson under intense pressure. Chief executive Peter Rawlins also had his doubts and considered stopping the project, but the various reassurances he had received and his preoccupation with other matters led him to act against his better judgement.
- It was slipping a hundred per cent…
- (Member of the Taurus monitoring group)
The first public sign that Taurus was in difficulties came in January 1991 when implementation was postponed for six months, from October 1991 to April 1992. The delay was blamed upon the Department of Trade and Industry’s failure to produce the regulations in time. The media reacted calmly: ‘The market felt it was under extreme pressure to meet October: so there will be a measure of relief and recognition that this is a realistic action,’ John Watson told the Financial Times.1
In May 1991 a reduced compensation fund of £100 million was agreed with the DTI and the draft regulations duly published. The following week the launch date for Taurus was again postponed, this time by one month to May 1992. ‘On the building of systems we are ninety-five per cent of the way there,’ said Watson.2
Yet even the revised timetable was to prove inadequate. The technical team did their best. Many worked long hours, struggling to maintain key project management disciplines, such as documentation and testing. John Watson’s unavoidable absence was a blow to morale and efficiency. Although project meetings continued to be held, it was not the same as having John Watson regularly in the chair.
The building of Talisman had been overseen by a team of external monitors who reported regularly to the Stock Exchange Council. It had been intended that Touche Ross would undertake this task for Taurus but they had been sacked from the project a year ago as part of a cost-cutting exercise.
I believe that our role is a valuable one, not only for the Exchange but also to reassure the wider investment community, given the great importance which the City and the Government attach to the project and given its size, complexity and chequered history.3
Observers too were dismayed. ‘I didn’t think Touche were adding much value but I quite liked their presence…To have a resident whistle-blower was extremely important,’ commented a member of the monitoring group.4 ‘Disastrous for a start,’ said a member of the Council.5
In August 1991 the Stock Exchange announced a further delay of two months. This time it was attributed to difficulties with the software. John Watson told the press that the scale of the task had been underestimated: ‘A hiccup and not a disaster,’ he said; ‘I don’t expect it to happen again.’6
By September, however, the edifice was clearly under strain. John Watson came under intense pressure to announce a new date for Taurus. He committed himself to ‘some time in early 1992’.7 There were problems, however. External constituencies continued to demand changes to the design. The rate of delivery from the Vista Corporation was failing to keep up with the timetable. Added to that were the emerging problems with the technology. Taurus incorporated a high level of security, including encryption (transmission of messages in code) and non-repudiation (storing archives for seven years). The system, moreover, utilized ‘tamper-proof’ hardware, that is, machines which automatically switch off if, for example, an unauthorized person attempts to use a screwdriver to gain entry. No prototype existed; there were delays as manufacturers who were themselves in a learning curve delivered late. Added to that, a whole module now needed to be rewritten as a result of the DTI’s consultation exercise. Even so, John Watson was given to understand that the requirements were ‘virtually finished’.8 ‘And they virtually were,’ said a junior programmer. ‘The problem was, how virtual?’9
‘That Doesn’t Sound Absolutely Right.’
Again the press reported that the market was responding calmly to the delays. Although there were calls for Watson’s resignation, (p.111) the Financial Times reminded everyone that it had been widely acknowledged that the original timetable was highly ambitious, adding, ‘There is widespread if grudging respect for Mr Watson in the securities industry, and a feeling that if he cannot bring Taurus off the drawing board, no one can.’10
The software houses undertaking work for the Stock Exchange were undismayed by the delays and the recoding.11 Likewise technical staff working in the banks and broking houses were pleasurably absorbed: ‘We couldn’t see how it would fit together,’ said one employee, ‘but we were enjoying working on the project.’12
There were signs, however, that the commercial imperative for Taurus was waning. Newsletters published by Coopers and Lybrand were continually exhorting the market to think through the strategic implications of Taurus, to attend to operational details such as staff training in new computer codes, and to familiarize themselves with the legislation: ‘Do be sure someone in your organization reads through the Stock Exchange’s weighty documentation very thoroughly,’ they urge.13 Systems designers were enjoined not to slacken their pace but in the same paragraph are warned, ‘Beware the publication later this month of the revised system specifications, which we suspect will contain some significant changes.’14
Information technology plays an important role in sustaining competitiveness in the financial services industry. As far as the banks, brokers, and investment houses were concerned, Taurus was just one project amongst many and not necessarily the most vital. An investment banker said, ‘To us, every Stock Exchange project has represented a cost and not always a lot of benefit.’15 The resource implications of Taurus were formidable. For instance, share certificates would no longer serve as collateral for loans. Lenders would therefore need to search thousands of records in order to arrange new security. ‘This is no easy problem,’ acknowledged Coopers and Lybrand. ‘Literally millions of shareholdings are held as collateral at the moment primarily by banks, and all these must be identified, verified, and recorded in the right commercial account.’16
Retail custody posed another problem. What of the many thousands of share certificates lodged with banks for safe keeping? What was to be done about the strongboxes lodged in vaults? The (p.112) banks had no idea what the boxes contained. Would Taurus result in droves of customers suddenly dispensing with the service? One clearing bank (its holdings still on a manual register) conducted a pilot study to assess what was involved in contacting customers, organizing partial refunds, and so forth. Was it worth expending time and effort on Taurus when Coopers and Lybrand were advising, ‘The following notes represent our understanding of the current position—but since the situation is very volatile, don’t be surprised if things change soon!’?17 Likewise Coopers and Lybrand observed that whilst there were advantages in joining Taurus early, those first in the queue would serve as test pilots requiring ‘verve and fortitude’.18
A custodian described his reaction to developments:
You always get the feeling in the middle of a project that it’s all going awry but you give it a chance. You let this restructure happen and that new project manager have a go. That was perpetual…Looking back, our view was, ‘Good, that’s improvement.’ But in the back of our minds, ‘That doesn’t sound absolutely right.’19
Despite an injunction from Coopers and Lybrand that: ‘We strongly advise that you do not use the recent announcement to down tools,’20 the delays and constant changes to Taurus tempted firms to do just that. As management teams asked themselves the question, ‘Are we going to put resources into Taurus?’, increasingly the answer was ‘No. Let’s wait and see.’ Discreetly, one by one, firms began transferring their development teams onto other work.21
‘There was Always an Element of Hope…’
By now the Taurus monitoring group felt Taurus was far from sounding absolutely right. ‘We were given nice timetables but they never seemed to be meeting any of the deadlines,’ said a member of the group.22 In June 1991, another member of the group wrote to the Stock Exchange to express his anxieties:
There were always new things being brought in because they had to be brought in. I felt the project wasn’t being managed properly. I felt there were far too many consultants involved, that there weren’t enough senior permanent staff with clear responsibilities.23
There was always an element of hope that we are 50 per cent of the way there, we are now 60 per cent of the way there. Now the hundred per cent was shifting away. That was my worry. Whenever I see a project where the hundred per cent starts moving, that concerns me.24
The monitoring group began asking the technical team for more information. The table became festooned with sheets indicating progress since last meeting, issues open, plans for next month, and so forth. It made little difference because the real problem was the constantly evolving state of the project. A member of the group recalls:
You’d say, ‘How many of these issues have you resolved?’ And they would say, ‘We have resolved all of them.’
And there was another page that was ‘risks’: ‘What risks are you running?’ There was a long list of risks…. every meeting they’d come with this chart and that chart and they would say ‘We have resolved all these issues, and now we have got another set of issues…’
So there was lots of progress. Every meeting lots of progress from where you were in the last meeting. However, when you sat back and said, ‘Are we any closer to the end?’
‘We-ell, not really.’
And that was really what was happening.…You knew people were working hard and they were getting work completed and putting it behind them and then they discovered there was a whole set of other things.25
Time and again the technical team reassured the group that everything was under control, despite set-backs. One member said, ‘Perhaps I listened to him [John Watson] too much but I felt that with him in charge the project would succeed and without him it wouldn’t.’26 Another member of the group said:
It’s easy to look back and say, ‘Why didn’t you see it all the time?’ Well, most disasters look obvious in hindsight. When you are in the middle of it and your objective is to get to the end you take each issue and you try and deal with it, and then another issue and you try to deal with it, and another issue and you try to deal with it.27
Peter Rawlins was asked to attend some of the meetings. ‘I hear your concerns…,’ he told the group; ‘thank-you for your contribution.’28 Members were unconvinced. The chief executive seemed to be more interested in the restructuring exercise of the (p.114) Stock Exchange which he had initiated. ‘It was very difficult to get him to focus on Taurus,’ said one member. ‘He always seemed to want to wash his hands of it’29
‘Is this Still Ok?’
Rawlins was a lot more uneasy about Taurus than appearances suggested:
The boys were having trouble with the technology…The regulations were getting more and more complex…requirements being built which were nothing to do with the original specification…Nobody is telling me there is any great problem but the time has gone. [So] I weighed in. I banged heads. I said, ‘I have been here for a year now, where is it? This will not do!’30
Richard Wilson, a partner of Coopers and Lybrand, was asked to review the project. Rawlins said, ‘I asked them, “Is this still OK guys? I am nowhere near this and it is worrying me.”’31 The review took about a fortnight to complete. It concluded that Taurus was still feasible but could not be implemented for May 1992. ‘Forget it. You have missed it by twelve months,’ Wilson allegedly told the Stock Exchange.32 The review indicated that the earliest possible date for implementation was April 1993 and then only if no further problems developed.
Meanwhile the Stock Exchange Council had been dissolved and replaced by a board. The aim was to give the Stock Exchange a more commercial ambience. The former Council, described by Peter Rawlins as ‘a load of dinosaurs’, promptly formed a private dining club and designed their own dinosaur tie.33
As the ‘dinosaurs’ retired to the sidelines, the chief executive pondered what to do about the revelations contained in Wilson’s report. Rawlins felt he had more important things to worry about than Taurus. According to one manager, the chief executive was not pleased: ‘He [Rawlins] had hoped to go to his first board meeting with a strategy for the Stock Exchange. Instead he had to eat humble pie over Taurus.’34
It was along the lines of what I came to call a ‘sharp intake of breath syndrome’…They [the board] rounded on me as chief executive: was I satisfied about these budgets, budgets to time as well as money? They were worried about how much more time because it was seen as an embarrassment. I said, ‘Fellers we can stop this.’ In my view the issue was not…is this the right cost or the right time, as to which there had to be respectively doubt, the question I said we should be asking is whether we should be doing this at all…is this the right project?35
The board returned to the issue of budgets and time-scales: ‘Peter, are you satisfied?’ they repeated.36 Rawlins replied:
I said that provided the Government enacted legislation within promised time-scale, provided there were no further changes to the project, and provided there were no more problems with the technology, then yes, I was content. But, big provisos.37
The board accepted the chief executive’s recommendation and approved funding until March 1993. Significantly, the next Coopers and Lybrand newsletter emphasized that immediate milestones were now within the ‘direct control’ of the Stock Exchange. The bulletin further notes the new date for completion was dependent upon a smooth run. Even then, the newsletter continues, the eight weeks allowed for final testing were almost certainly bound to prove inadequate.38 ‘I think the Exchange was hoping that it was going to go a damn sight better than their advisers were telling them,’ commented another.39
Peter Rawlins had his doubts too. He had considered stopping the project. However, the various reassurances he had received and his preoccupation with other matters led him to act against his better judgement:
IBM came back and said, ‘Don’t worry, we will hack it.’ The DTI said, ‘Don’t worry, we will enact these regulations, we won’t slow it up any more…’ Coopers came back and said, ‘It’s fine.’ On the strength of the answers I got, the decisions I took were correct…. Of course, with perfect hindsight I should have had the degree of probing I forced through at the end of 1992…. I can only put that down to the fact that at the time Taurus was frankly a pain in the bum, an irritation…The other things I was doing were massive, pioneering…far more challenging. They needed every ounce of my intellectual and professional energy. So, that was one opportunity that I had, and I just didn’t like the smell of it.40
(p.116) (1) . Barchard, D., ‘Stock Exchange Delays Taurus Launch to Next Year’, Financial Times (26 Jan. 1991), 5.
(2) . Dunham, R., ‘Countdown to Taurus’, Accountancy (May 1991), 107.
(3) . Letter from Rees to Peter Rawlins, 22 Jan. 1990. Rawlins’s reply (dated 25 Jan.) confirms the decision was made pending ‘a generic piece of internal work aimed at developing appropriate policy guidelines governing the use of independent external monitors’. Touche Ross never returned to the project.
(4) . Interview, member of Taurus monitoring group, Sept. 1994.
(5) . Interview, former member of Stock Exchange Council, May 1994.
(6) . Dobie, C., ‘Taurus Hit by Further Delays’, The Independent (10 Aug. 1991), 15.
(7) . Interview, member of Stock Exchange technical team, Dec. 1994.
(8) . Interview, member of Stock Exchange technical team, Nov. 1994.
(10) . Waters, R., ‘Man with a Bull by the Horns’, Financial Times (18 Sept.), 11.
(11) . Interview, independent consultant, Apr. 1994.
(12) . Telephone interview, UK clearing bank employee, Apr. 1994..
(13) . Coopers and Lybrand Deloitte (1991), issue 2, unpaginated.
(15) . Interview, investment banker, Nov. 1994.
(16) . Coopers and Lybrand Deloitte (1991), issue 1, unpaginated.
(19) . Interview, custodian banker, Nov. 1994.
(20) . Coopers and Lybrand Deloitte, issue 2, unpaginated.
(21) . Interview, senior official, UK clearing bank, Dec. 1994.
(22) . Interview, member of Taurus monitoring group, July 1994.
(23) . Interview, member of Taurus monitoring group, Nov. 1993.
(25) . Interview, member of Taurus monitoring group, June 1994.
(26) . Interview, member of Taurus monitoring group, July 1994.
(27) . Interview, member of Taurus monitoring group, Apr. 1994.
(28) . Interview, member of Taurus monitoring group, Nov. 1993.
(30) . Interview, Peter Rawlins, October 1993.
(32) . Interview, member of Taurus monitoring group, Sept. 1994.
(33) . Patrick Mitford-Slade (personal communication, Nov. 1995).
(p.117) (34) . Interview, former Stock Exchange employee, Sept. 1994.
(35) . Interview, Peter Rawlins, Oct. 1993.
(36) . Interview, member of Stock Exchange board, Sept. 1994.
(37) . Interview, Peter Rawlins, Oct. 1993.
(38) . Coopers and Lybrand Deloitte, issue 8, unpaginated.
(39) . Interview, member of Taurus monitoring group, Sept. 1994.
(40) . Interview, Peter Rawlins, Oct. 1993.