You can find out how crucial an enterprise resource planning (ERP) software rollout can be for a company from a single word: billions—as in, lawsuits over failed ERP and customer relationship management (CRM) implementations are now being denominated in the billions of dollars. Greg Crouse, managing director at Navigant Consulting, has learned all about this from inside the belly of the litigious beast, serving as an expert court witness or consultant after spending 25 years managing large-scale projects.
Twenty-one percent of companies who responded to a 2015 Panorama Consulting Solutions survey characterized their most recent ERP rollout as a failure. So there are a lot of disasters out there. But the high stakes in these projects, and the uptick in litigation, have meant that they’re simultaneously more and less visible than ever. When lawsuits go public, that’s a flag that there’s a juicy story out there — but legal necessities often mean that the full details of the dispute never come out. “You’d have a hard time finding anyone who will talk about it — cases either litigate forever or get settled and sealed,” says Crouse.
Nevertheless, we’ve assembled some dramatic ERP flops from over the years and tried to suss some wisdom out of the wreckage. (All comments from Crouse are about his general experience with these kinds of cases; he hasn’t actually worked on any of the specific disasters we’re discussing here.)
1. Vodafone: The long arm of the law
When British telecom provider Vodafone consolidated its CRM systems onto a Siebel platform, they ran into problems: not all the customer accounts migrated properly. The company didn’t go out of its way to advertise this, of course, but people started to notice when their accounts weren’t properly credited for payments made.
The upshot: a £4.6 million fine from the British telecom regulator. And while this incident was concluded with just the fine paid, Crouse points out that regulatory oversight can, somewhat surprisingly, lead to private litigation down the road. “If there’s problems with large scale implementations, people are going to find out about it — because you have to report it to your regulator if things go bad.” Whereas a company might’ve been previously tempted to keep quiet about the whole affair, with regulators revealing screwups, that company might decide its best bet is to cast blame on someone else through litigation.
2. Washington community college system: When third parties flop
But that litigation can go both ways. For instance, students at Washington State’s community colleges have been paying a portion of their tuition every year to help the schools upgrade to a PeopleSoft ERP system that was supposed to go live in 2012. Instead, the project is still limping along. One cause of delay was internal: the 34 campuses in the system had widely varying business processes that needed to be standardized, which wasn’t clear until well into the rollout.
But now another crisis has emerged: Ciber, the third-party company hired to roll out the PeopleSoft system, went bankrupt in April of this year, only to have its assets scooped up by HTC, a Michigan company — and HTC then cancelled its contract with the school system and sued for $13 million, claiming the failed rollout was due to “internal dysfunction” on the colleges’ part.
Crouse says that this sort of mutual animosity is not uncommon. “You get into cases where the client is unhappy with the work the implementation firm has done and so they sue them. You also get into issues of the client’s not happy so they stop paying the bills. Then you have the third parties that sometimes get involved from a vendor reseller perspective. You can see either side being the plaintiff or the defendant, based on who got mad first.”
The rollout is meanwhile stuck in limbo.
3. Woolworth’s Australia: The death of institutional memory
The Australian outpost of the venerable department store chain, affectionately known as “Woolies,” also ran into data-related problems as it transitioned from a system built 30 years ago in-house to SAP. One of the biggest crises that arose was that profit-and-loss reports tailored for individual stores, which managers were accustomed to receiving every week, couldn’t be generated for nearly 18 months.
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