Norwest Corporation and Subsidiaries - Page 15

                                       - 104 -                                        

          inescapable conclusion that Norwest would have obtained substantial         
          competitive and fiscal benefits from the SBS customer module had it         
          and the other modules been successfully implemented.                        
               The SBS system also involved significant economic risk to the          
          three entities that participated in the development of the project.         
          The Tower Group reported in 1993 that an estimated $125 million had         
          been spent at that time by the three participants.   Further,               
          substantial uncertainty existed because of technical risk that              
          those resources would not be recovered within a reasonable period           
          of time.  In 1993, the Tower Group characterized EDS' efforts as            
          "venturing into new territory for both itself * * * and its                 
          prospects".  In 1994, the Tower Group, in looking back on the               
          prospect of failure of the SBS system, stated: "The world of                
          banking is moving faster than EDS and its two development banks             
          could move SBS into production.  This fact is a commentary on the           
          time and resources required to implement a complex new system in a          
          large bank environment."  A January 1989 internal audit at Norwest          
          also revealed strong concern about the ability to complete the SBS          
          project: "In a project of this complexity and magnitude, involving          
          major new concepts, original database designs and state-of-the-art          
          technological application, by its very nature will result in                
          unforeseen problems."                                                       
               Dr. Davis stated in his initial report that size or complexity         
          of a project can create technical risk.  We agree and find that SBS         
          falls within that category.  The development of the customer-based          



Page:  Previous  94  95  96  97  98  99  100  101  102  103  104  105  106  107  108  109  110  111  112  113  Next

Last modified: May 25, 2011