Prudential Europe

Business Summary and Analysis

04-70-358
Accounting Information Systems
Professor Roth


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Overview
There is no question that the world we live in is highly competitive and prone to change.
Technology is always advancing and business needs are always changing. Every year,
businesses spend billions of dollars on software projects in order to improve or replace their
information systems. (Romney & Steinbart, p. 579.). This includes insurance company Prudent
Europe and how they had intended to expand their business by developing their own information
system with IT Company Unisys.
The project was ultimately terminated and 12 million of its 35 million total investment
was already spent by the end of August of 2001. Management of Prudential Europe did not feel
the software met their expansion needs especially with the increasing costs. The purpose of this
writing assignment is to analyze Prudential Europes development project along with the
successes and failure of it. (Prudent firms, n.d.)
System Analysis
The first step of the system development life cycle is to determine whether a new
information system is needed. Prudential Europe figured that a project to increase its processing
ability would be economically feasible given that management calculated the capital budgeting
of 35 million. If successful, the project would have given the company a huge competitive
advantage and improved business processes over other companies, otherwise known as a
business process management system. Prudential Europes board of directors then decided to
look for a vendor to help the companys needs and gave the approval to work with worldwide
information technology company, Unisys. They found the decision to be appropriate for

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Prudential Europe as Unisys product Unisure, was greatly followed by major insurance
companies, including Norwich Union (Prudent firms, n.d.).
The first failure here was the fact that Prudential Europe did not research more
thoroughly to figure out that Unisys had lawsuits from two other insurance companies. This may
had Prudential Europe to find alternatives like prototyping and outsourcing. The lawsuits could
suggest that the company does not have reliable experience in the insurance industry. It also
suggests that Unisys does not have a clear or in-depth understand of how an insurance company
conduct its business. It is important for companies such as Prudential Europe to select reliable
project developers and there are certain guidelines that can be followed regarding selecting a
developer (Prudent firms, n.d.).
There is also success within the System Analysis phase. Prudential Europe was able to
clearly define the information needed to purchase and develop the software. Due to a well
written project development plan and master plan, Prudential Europe was able to determine the
cost/benefit analysis of the project, as well as the developmental and operational requirements
needed to complete the project. There was also a set schedule that management followed to
ensure that the project was developing smoothly. The system specifications were clearly defined
and information was available to the information systems steering committee. As the project did
not meet project requirements and time deadlines, Prudential Europe had made the successful
move to terminate the contract and cut losses before the system would be implemented. If
Prudential Europe had not of terminated the contract, Unite could have created complications in
the business processes and damage operations and sales within the company (Prudent firms,
n.d.).


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Conceptual & Physical Design
After sending the system analysis report to Unisys, the two companies worked together
with over 200 staff and managers. This is a success as combining assets and resources from
both companies will allow consistency and supervision. Unisys accepted and was required 20
acceptance criteria to be met by the end of August 2001. By that time, 12 million was already
spent while senior management were deciding whether or not to terminate the project. This was
because deadlines were not met and costs were steadily increasing, all with Prudential Europe
management feeling that Unisyss information system does not meet the companys
requirements. (Pru falls back, n.d.). Before Prudential Europe terminated the project, they were
able to define conceptual design specifications that were created for the output, data storage,
input, processing procedures and operations of the system. These specifications were made to
help guide the system into the physical design using the conceptual systems design report
(Finextra, 2002).
Robinson, who was projects sponsor messaged to the joint employees of both
companies, announcing that the project was no longer viable from a financial perspective. The
project was terminated and negotiations to recover millions of pounds spent began the following
year. This was considered a success as Prudential Europe noticed that the payback period was
not worth the investment, and that further time and finances would need to be invested.
Unisys on the other hand explained that the needs of Prudential Europe were unclear and
the deadlines given for this project were not achievable. As this statement is unclear, the system
analysis report is what identifies the needs of Prudential Europe and it might have not been
specifically clear about the requirements. The company may also not be aware that the two year
deadline for this 35 million project is too unrealistic. Another factor is that Unisys at that time

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may not have had an understanding in the insurance industry and their needs; this could have
contributed to Prudential Europes requirements not being met if the requirements are not clear.
In the physical design stage, Unisys would have been responsible for determining the user
needs and software requirements. By using that information, developers would start to create and
document a development plan while writing program instructions (computer code). As online
reports do not specify whether or not Unite has reached this stage, Unisys would have also
needed to test the program, document and train users on how to use the system. If successful,
they would install the system and make any modifications that might be needed to ensure it
functions correctly (Phases of System, n.d.).
Implementation & Conversion / Operations & Maintenance
These stages did not happen as Prudential Europe decided to terminate the project. If
they had not decided to terminate the project, the company would have incurred more expenses.
These include training personnel, installing hardware and software, converting old to new
system, and modifying the system. Assuming if Prudential Europe had kept the project, a
systems implementation plan is written which would consist of implementation tasks, expected
completion dates, cost estimates and responsibilities of these tasks. Unisys would need to follow
this schedule and stay within requirements or Prudential Europe can simply terminate the
contract at any time. In addition to the implementation plan, Unisys would need to complete
three types of documentation. Firstly, they would need to create development documentation,
which describes the new system, and contain samples of input and output data to help end-users
understand what the system is capable of. They would also need to create operational
documentation which would consist of operating schedules and security requirements, and lastly
they would need user documentation. User documentation teaches users how to operate the new

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system and includes guidelines and training materials (Romney & Steinbart, p.650.). By the time
the system is physically designed, Unisys would be responsible for testing the system. There are
three different ways to test the system, including walk troughs, processing test data and
acceptance tests. If Prudential Europe had allowed the project to continue, this would be the
stage where the system would be evaluated and a decision would be made whether or not to
continue the project (Phariss, 2006).
If the project received a positive test score, the system would have reached the
conversion stage. The best possible conversion methods to implement this system would be
either parallel or pilot conversion. Parallel conversion would be effective because both the
existing and the new system would run simultaneously and it will allow end-users to reconcile
the differences, correct problems and discontinue the old system after the new system proves
itself. This method provides the least risk but it costs the most to implement. On the other hand,
the pilot conversion method is beneficial as well. It is less expensive than the parallel method
and yields positive results as well. Unisys could have implemented the system at a pilot location
and until it could prove its worth, the development and implementation time will decrease. When
problems are resolved at the pilot location, implementation in other locations would become
easier and allows effective training in a live environment (Phariss, 2006).
Lastly, after the system is successfully implemented, a post-implementation review is
conducted and management would determine whether or not the system has met its planned
objectives. Unfortunately, since Unite did not make it past the implementation stage, if the
project were to go through, management would have still concluded that the system would have
no met its objectives. The project did not reach project requirements or time deadlines, which led
to its termination early on in the Systems Development Life Cycle (Phariss, 2006).

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Alternative Options
Prototyping
Prototyping is a very good alternative for Prudential Europe as they will be able to meet
all of their needs without having companies like Unisys to interpret their needs. It also helps
employees, managers, and other end-users by having a simpler system to use. Once the prototype
is successful, Unisys can construct the prototype into a final product in order to reduce chances
of error during implementation (Romney & Steinbart, p. 623.). Using a prototype will simplify
the working model of a system in the system development life cycle and speed up some analysis
and design tasks. Using a prototype will provide a better definition of user needs, as prototyping
generally requires intensive involvement from end-users. It also provides higher user
involvement and satisfaction as users requirements are met. Most importantly, there will be
fewer errors and as prototypes are modified regularly, errors would be easily detected and
corrected early. This would ensure that when a project is implemented the system will have the
least chance of error (Romney & Steinbart, p. 624).
Canned Software
Canned software is less expensive than the other approaches and has the most technology
support. However, canned software might not meet all the needs of a company. What Prudential
Europe could have done was purchasing modified canned software to have their own
programmers changing it to meet their needs (What is Canned Program, n.d.). Using canned
software would eliminate certain stages in the System Development Life Cycle. This will reduce
the expenses.


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Summary of Successes & Failures
Successes
- Was able to find a well-known vendor to customize their information system. Canned
software would not have helpful since they will not meet all the needs of the company.
- Utilize their resources and assets to help the vendor.
- Was able to terminate the project before the implementation stage; the project was no
longer financially viable.
- Calculated feasibility and capital budget.
- Had clear requirements and schedule for the developing the project.

Failures
- No research on the lawsuits of other insurance companies on Unisys (three law suits in a
decade)
- Systems analysis report was poorly written since Unisys argued that the requirements were
unclear.
- Has not researched alternatives since business process management has a very low success
rate. Asking another vendor like Unisys to tailor your needs requires a lot of work and will not
be perfect. Should have tried alternatives like a prototype.
- No Gantt or PERT chart to keep deadlines met.

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Summary
In the end, Prudential Europe and Unisys had failed to implement the new system. There
have been both successes and failures in the management of the project but the project has
undoubtedly failed. Prudential Europe made the correct and successful decision to terminate the
project before it would be implemented because it was inconsistent with their schedule and
requirements, thus saving Prudential Europe the full cost of the project. Both companies worked
together and communication was present between the two companies which led to a clear
understanding of all aspects of the project development. The failure of the project resides on
Unisys as they were unable to provide a system that would meet Prudential Europes specified
schedule and project requirements. Even if the schedule and requirements were unrealistic, it was
still Unisyss responsibility to complete the system under contract with Prudential Europe.


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References
Finextra: Prudential sues Unisys for project failures - Computer Weekly. (2002, September
19). Finextra Research: Latest financial technology news, analysis, jobs and features. Retrieved
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Phariss, R. (2006, November 29). The Importance of Requirements Definition in IT Systems
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http://www.umsl.edu/~sauterv/analysis/ f06Papers/Phariss/

Phases of System Development Life Cycle - NIOS. (n.d.). Welcome NIOS-OER wiki. Retrieved
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Prudent firms should learn from Prudential's project. (n.d.).ComputerWeekly.com | Information
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deal-collapses

Romney, M. B., & Steinbart, P. J. (2012). Introduction to Systems Development and Systems
Analysis. Accounting information systems (12th ed., p. 579). Upper Saddle River, NJ: Prentice
Hall.

Romney, M. B., & Steinbart, P. J. (2012). Introduction to Systems Development and Systems
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Romney, M. B., & Steinbart, P. J. (2012). Introduction to Systems Development and Systems
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Hall.

Romney, M. B., & Steinbart, P. J. (2012). Introduction to Systems Development and Systems
Analysis. Accounting information systems (12th ed., p. 624). Upper Saddle River, NJ: Prentice
Hall.

Romney, M. B., & Steinbart, P. J. (2012). Introduction to Systems Development and Systems
Analysis. Accounting information systems (12th ed., p. 650). Upper Saddle River, NJ: Prentice
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What is Canned Program? definition and meaning. (n.d.). Investment and Financial Dictionary
by InvestorWords.com. Retrieved July 30, 2013, from
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