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Matthew Vella
The British firm short-listed to provide Mater Dei’s IT system, iSoft, has had its ratings revised downwards by industry experts Gartner, the same consultants government chose to assist the committees evaluating the offers from tenderers.
This hiccup risks delaying the opening date for Mater Dei. isoft’s beleaguered financial situation and MaltaToday’s probing have been featured in the London Financial Times this week.
Issued as recently as 28 July, Gartner revised its rating of iSoft downwards from “promising” to “caution” since the troubled IT firm landed itself in a financial hole after a change in accounting policy and two profit warnings in April.
But since issuing its previous financial rating in April, Gartner are now stating that iSoft’s reduced profitability could impair its ability to accelerate work on an IT project for the UK’s national health service.
Gartner are the experts which the finance ministry’s evaluation committee would be relying upon when assessing the solidity of the tenderers for the provision of Mater Dei’s integrated health information system.
Since April, iSoft has been facing negative press in the UK after the value of its shares were slashed by 90 per cent.
The finance ministry has stated the evaluation committee “prefer to rely on the official and professional advice of (Gartner) than on that dispensed by any other sources,” referring to reports in the British press over the uncertain future of iSoft.
Mater Dei’s crucial IT system has to be in place by December 2006 if Prime Minister Lawrence Gonzi wants to cut the inauguration ribbon on 1 July, 2007, his fifty-fourth birthday.
The decision on the crucial contract is now expected to be taken shortly after iSoft and AME consortium presented their final offers earlier this week. The consortium – Austrian firm AME, Intercomp and Italian firm Inso SpA, the suppliers of Mater Dei’s medical equipment – presented a EUR29,133,600 bid. iSoft presented a higher price at EUR29,630,153.
But in its most recent rating update, experts Gartner confirmed that “recent events have led us to adjust our rating of iSoft downward from Promising to Caution” after iSoft issued a second profit warning back in April. iSoft is also facing an investigation into possible accounting irregularities, and has delayed its full-year results indefinitely. It is also in negotiations with banks to amend its banking covenants.
In June 2006, iSoft announced a change in accounting policy which reversed GBP165 million of revenue it had booked upfront in the past three years. As a result, CEO Tim Whiston resigned in June 2006, with chairman John Weston taking over.
According to Gartner, new chief operations officer Bill Henry has “no experience with complex clinical information systems”.
iSoft’s share value dropped by 90 per cent this year after issuing a warning that revenues and profits from the UK’s National Health Service IT project (NPfIT) would be lower than expected, due to delayed delivery of iSoft applications.
Irrespectively, iSoft spokesperson John White claimed last week that the company was a “strong” company, in a letter to MaltaToday. London’s Financial Times reported iSoft’s diatribe earlier this week, but iSoft denied it had complained about the coverage through the British High Commission.
iSoft is providing three of the five regional contracts for the NPfIT. According to Gartner, iSoft’s Lorenzo software will require substantial investment and that iSoft “must ensure it will have the resources to make this investment. iSoft appears to have seriously underestimated the time and effort necessary to develop the Lorenzo application suite.”
Although Gartner notes that such delays are unsurprising given the large scale of the project, it noted that iSoft’s reduced profitability and capitalisation “could impair its ability to accelerate this work, because delays in delivery Lorenzo applications will require iSoft to maintain its existing applications longer than anticipated.”
iSoft provides software for the transmission of information from patients to doctors. Software licences are usually spread out over several years. While some companies pay a lump sum upfront, others pay in staggered amounts over the life of the agreement. Under CEO Tim Whiston however, iSoft often booked the full value of contracts and services as revenue upfront, regardless of how customers paid. This meant that in many cases it booked revenue which the firm would not see for several years.
mvella@mediatoday.com.mt
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