After a failed or problematic implementation, it is common to assume that taking your ERP vendor to court is your only option. However, many overlook that they do have another option: mediation. Mediation is the process of negotiation between two parties in dispute that is mediated by a neutral third party, who attempts to help resolve the dispute. During mediation the focus is to define an acceptable range of settlement outcomes in order to find one that you and the ERP vendor can agree on.
So, how do you know if mediating a failed software implementation is the right choice? It is first important to understand the differences between mediation and litigation. Unlike litigation where judges have the power to render judgments, mediators do not have such power. Mediators are more like facilitators in that they hold a balanced view throughout the process. Mediation also differs from litigation in that it focuses on finding an acceptable compromise, rather than a judgment in favor of one party or another. The mediator’s goal is for both sides to reduce their demands in order to find a fair compromise.
It is also important to consider your business objectives when deciding whether or not to mediate. Mediation does not allow for discovery, hearings, or formal testimony. It is only governed by mediation rules, which are established by the Mediator or agreed on by the parties. Therefore, preparation is not nearly as intensive as it would be for litigation. Parties who are not prepared to invest significant time and money may be served well by mediation. On the other hand, parties who want to optimize their claims throught a formal discovery process and receive the greatest recovery for their business may want to avoid meditation.
Many ERP customer and licensees who have been victimized by a failed ERP software implementation immediately consider litigation (and sometimes litigation is the only choice). However, if judgment is not rendered in the customer’s favor, they can be left in an even worse situation than they had been from just the failed implementation. While mediation and litigation each have their pros and cons, it is important to consider both when attempting to recover damages from a failed ERP implementation.