Case Study - Taurus

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

2. 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

3. 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

4. Inefficiencies of Securities Business (at the time) • It is no surprise that a system that can be traced back to the 18th 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

5. Project: Taurus • The Taurus project began in 1998. • 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.

6. 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

7. Collapse of Taurus • 1st 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

8. 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

9. 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

10. 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

11. 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.

12. 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