Case Study - Taurus Brian Varela 4/20/2010 Management Information Systems

What was Taurus? Taurus was a project with the goal of: – Developing an automated transaction settlement system for the London Stock exchange –Successfully accomplish de-materialization of all transactions

Background of Securities Business Securities involves 2 processes: –Dealing A trade is dealt when a broker is to buy or sell shares for a client at a specific price –Settlement Settlement involves the transfer of money and shares, amending the company’s register of shareholders and either issuing and/or cancelling a share certificate

Inefficiencies of Securities Business (at the time) It is no surprise that a system that can be traced back to the 18 th century could be inefficient –due to the large number of transactions occurring within a day, the paper trail was becoming unmanageable –In 1987 the antiquated paper driven system almost collapsed under the sheer volume of trades resulting from a rising market

Project: Taurus The Taurus project began in The aim was to create a simple system for the large investment houses, which account for over 70% of the value of transactions on the London Stock Exchange.

Collapse of Taurus From the beginning there were signs of failure which included: –An ambitious 18 month time frame –It used new and untested technology (untested due to the time frame) –Too many different interests from organizations which would later cause complexity in the project

Collapse of Taurus 1 st Warning: –the original project design called ‘Taurus 1’ was abandoned due to the broker constituency, who believed that it placed them at a commercial disadvantage. –This was a project that could have been completed in 6 months with tested technology Conflicts of interest: –There were over 30 committees linked to the Taurus project, each with its own special interest Not on schedule: –The design stage, which was scheduled for 2 months, lasted 2 years

Final Design Finalized by John Watson, hired by a consultancy firm to direct the project. The final design was a hybrid structure comprising of over 17 alternative versions of Taurus welded together to reflect existing business practice. The CEO at the time was opposed to this solution but he was not in a position to stop it

Faults in the Final Design The design phase was constantly being changed by securities –It made everything more complex –Too much control was given to too many bodies and this lead to constant changes in the software design There was a lack of leadership and ownership was too spread out –The best firms/people in the industry headed the Taurus project –Power and control were the variables that steered the Taurus project into failure

Faults in the Final Design Use of “off the shelf” software –Their intention was to speed up development –They used this state of the art technology and software on 20 year old hardware – which made no sense –The different builds were constantly not matching –It was noted that the re-engineering of the software package at the time of the failure of Taurus cost £14 million

Faults in the Final Design The system design –There was no logic behind it –Its goal was to speed up project implementation –It was believed that by building the outward part of the system first, and then the central architecture would speed things up and make the interested parties happy.

Conclusion In mid-1991 the board granted a time extension and extended budget, but by 1993, with no visible sight of the finished Taurus project, it was cancelled. The original budget of £6 million and with estimate cost at time of abandonment was £800 million; this was 13,200 % over budget, five years over time and without a viable solution in sight