Agilisys-Guernsey contract termination: When IT partnerships unravel

I've been around in this industry long enough to know that when a contract between an IT services supplier and its client goes awry, there are usually two sides to the story. Moreover, quite often it is the supplier that quietly takes the rap, despite the blame often falling elsewhere. That's why we have to approach any comment on the termination of Agilisys' contract with the States of Guernsey with caution.

The States of Guernsey announced last week that it is terminating its substantial £200m, 10-year contract with Agilisys, citing "performance issues" as the reason. The contract, which began in 2019, was set up to provide better IT services at reduced cost, deliver a programme of transformation projects, and enable economic development. However, the official narrative surrounding the termination tells only half the story.

A closer examination of the Scrutiny Management Committee's review, published in January 2025, reveals a more nuanced picture. The review's principal findings were damning – not of Agilisys, but of the States' own capabilities. The report concluded that "the implications of entering the 10-year partnership with Agilisys were not fully understood" and that "the level and volume of retained technical expertise within the public sector needed to effectively manage and oversee the contract with Agilisys was totally inadequate."

Most tellingly, the Committee found that "effective oversight and monitoring of the Agilisys contract was not in place." This lack of client-side capability led to what the review described as "significant problems," "programme implementation delays," and "money being wasted."

These findings raise serious questions about the States' decision to terminate for performance issues. If the client lacked the expertise to properly manage and oversee the contract, how can it definitively attribute failures to supplier performance rather than its own contractual shortcomings?

Recent comments from Deputy Bob Murray of Policy & Resources to the Guernsey Press further underscore these issues. Murray admitted that when the contract was signed, "Agilisys made it very plain they wouldn't take on direct responsibility for the legacy estate because, unfortunately, it wasn't sufficiently documented." When asked whether the States was expecting 'miracles' from Agilisys, Murray conceded there was "some truth in that," adding: "I think that came out of our lack of understanding of the state of play we were already in when we entered into the contract."

Perhaps most damaging to the States' position, Murray revealed that the IT team managing this transformational contract had been reduced to just six people, acknowledging: "We should have probably recognised much earlier that we couldn't do it with only six people. They were actually getting overwhelmed with this."

The timing of this termination is also noteworthy given Agilisys' strategic pivot toward software-oriented services. The company has significantly invested in Agilisys Transform, its GenAI-focused product division, which targets more profitable engagements beyond traditional IT services outsourcing.

While the States makes its intended move to a multi-vendor model post the 31st July 2025 contract termination date, this approach presents its own challenges. There is a big question mark over how it will run and finalise multiple procurements in just two months. But, in addition, managing multiple suppliers can be significantly more complex than overseeing a single prime contractor, raising serious questions about whether the States has addressed the fundamental capability gaps identified in the Scrutiny review before embarking on an even more demanding contractual structure. Meanwhile, Agilisys maintains there are no performance issues and considers this wrongful termination. Legal action by Agilisys appears likely.

The truth, as always in these situations, likely lies somewhere between the official announcements and the defensive responses. What's clear is that this case study will serve as a reminder that successful IT partnerships require competent management from both sides of the contract – something that appears to have been lacking in Guernsey.

Posted by: Georgina O'Toole at 16:57

Tags: IToutsourcing   transformation   IT+services   public sector   contract dispute