Detroit’s Biggest Liability: Obsolete IT Systems

The bankrupt city's CFO and CIO testify that Detroit's information systems infrastructure is "fundamentally broken."
Vincent RyanSeptember 8, 2014
Detroit’s Biggest Liability: Obsolete IT Systems

Think your company’s computer systems are a mess? Thank your lucky stars you are not working for the city of Detroit. In Detroit’s bankruptcy trial on Monday, the city’s chief information officer testified that Detroit’s information technology is eons behind what other cities are using, according to USA Today.

detroit bankruptcyPeppering her testimony with descriptors like “atrocious” and “fundamentally broken,” CIO Beth Niblock made a good case for Detroit’s need to invest more than $1.4 billion in city services.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Nine in 10 of the city’s computers are still running Windows XP, and “can take almost 10 minutes to boot up,” said Niblock, who was formerly CIO for the city of Louisville. City employees send emails that never reach their destination. And the antiquated software Detroit is using makes it hard to “issue paychecks, collect taxes and … dispatch police and firefighters,” USA Today says.

The finance department’s IT systems are also in disarray, said Detroit’s CFO last Thursday, according to the Associated Press.

John Hill Jr. told the court that Detroit has very poor internal controls and that “the biggest risk is actually not knowing whether all of the transactions have been recorded in the system, and also not knowing on a quick, fast pace whether revenue was coming in as … intended or expenditures going out,” according to the AP.

Detroit is trying to shed $7 billion in liabilities in bankruptcy, but its plans for restructuring are being fought by bond insurers Syncora Guarantee and Financial Guaranty Insurance. Detroit apparently plans to pay the insurers less than the face amount of their claims.

Sources: USA Today, Associated Press

Case Study: How Edgewood Tahoe’s CFO Saved 500 Jobs From the Ashes