GSIS sues IBM, subsidiary for P100 million

MANILA, Philippines – The Government Service Insurance System (GSIS filed yesterday a case against IBM Corp., IBM Philippines, and IBM business partner Questronix Corporation for allegedly supplying defective software to the state pension fund.

In a 19-page complaint filed before the Pasay Regional Trial Court, GSIS asked the court to order IBM to pay GSIS P100 million in damages and to be liable for breach of contract when it allegedly supplied defective software to GSIS.

The case stemmed from IBM’s database management software, called the IBM DB2, which GSIS said has resulted in intermittent crashes in the GSIS system.

This, the agency said, has paralyzed the agency’s operations.

In its complaint, GSIS said that in 2006, Questronix won the bid to implement the Integrated Loans, Membership, Acquired Assets and Accounts Management System (ILMAAAMS) project of the GSIS worth P80 million.

The project was supposed to handle all information and processing requirements of membership, loans origination and administration, acquired assets, and accounts management of the GSIS.

Questronix used the IBM DB2 to manage the database.

However, the system crashed last March 30 which GSIS said affected 90 percent of its operations, including processing of loans and claims and updating of membership records.

“Weeks passed but no one was able to explain the cause of the crash, much less, provide a solution,” the GSIS said in its complaint.

Last May 12, the GSIS sent a demand letter to IBM Philippines, Questronix, and SAP Philippines, among others, threatening legal action if the database crashes remain unresolved within the next three days.

GSIS said that IBM has yet to provide a new platform that would permanently solve the database crashes.

The GSIS is also suing Questronix because the IT contractor failed to honor a provision in its contract, which said the supplier must remedy defects in the project.

IBM, for its part, said that it played no role in the supply, installation and support of the GSIS system.

“Nonetheless, since being contacted about GSIS’ problems, IBM has worked with its partners to try to help resolve the problems apparently caused by GSIS’ failure to follow industry norms and best practices in the handling of its data. IBM DB2 has thousands of clients globally, and to date, GSIS is the only organization to report these type of issues. IBM has been a dedicated partner and corporate citizen of the Philippines since 1937, and thousands of satisfied customers rely upon IBM products and solutions every day.”