The Anatomy of an ERP Implementation Dispute

Over the past 16 years, we have been involved in hundreds of disputes involving failed ERP software implementations. While the specific facts are always different, the claims and allegations involving a failed ERP implementation are remarkably similar. If you are, or have been, involved in a problematic ERP software implementation, the claims, allegations and counter-allegations outlined below will sound familiar.

Misrepresented Experience And/Or Skill Set:

  • Customer Allegations: (i) the ERP Software Vendor misrepresented its experience or skills in the customer’s industry or its experience or skills in implementing the particular software; (ii) the ERP vendor assigned inexperienced consultants who were using the customer’s implementation project as a training ground; (iii) the vendor’s consultants showed up late to work or failed to attend project meetings.
  • ERP Software Vendor Response: (i) the customer’s project manager and decision makers were unavailable when needed; (ii) the customer experienced employee turnover; (iii) the customer’s resources assigned to the implementation project had a limited understanding of how the business was actually run; (iv) the customer’s resources lacked the power to make decisions; (v) the customer’s steering committee members were not fully invested in the conversion to a new software system.

Misrepresented Software Functionality, Capabilities Or Features:

  • Customer Allegations: (i) the software does not work as represented; (ii) the software does not meet the customer’s business needs disclosed by the customer to the ERP Software Vendor during the sales cycle; (iii) significant functionality basic to the customer’s industry is missing; (iv) the software lacks basic functionality common to all software and included in the customer’s legacy system.
  • ERP Software Vendor Response: (i) the software met the agreed upon acceptance testing criteria; (ii) the software performs as warranted because it substantially conforms to the documentation; (iii) the sales process was open and transparent; (iv) the customer was able to conduct reference checks and site visits; (v) the software and its functionality were demonstrated; (vi) the customer’s expectations are unreasonable.

The Software Is Unusable Post Go-live:

  • Customer Allegations: The customer claims that after the software has gone live it cannot use the software because it is experiencing: (i) excessive overtime; (ii) the inability to ship product; (iii) ongoing loss of revenue; (iv) the inability to invoice customers; (v) loss of reputation and brand equity; (vi) loss of customers; or (vii) the inability to comply with federal or state regulations.
  • ERP Software Vendor Response: (i) the customer failed to re-engineer its business processes; or (ii) the customer failed to implement organizational change so it could properly use the system.

Training In The ERP Software Was Inadequate:

  • Customer Allegations: (i) the ERP Software Vendor’s consultants responsible for training were not knowledgeable; (ii) the application training environment was not suited to the customer’s industry or was broken; or (iii) the training did not utilize real data.
  • ERP Software Vendor Response: (i) “super users,” “champions,” managers or employees failed to attend training; (ii) the training was conducted in addition to full user work schedules so the customer’s employees were not adequately focused on learning the new system; (iii) the customer failed to allocate adequate time and resources to the training.

The ERP Software Vender Underbid The Implementation And Failed To Follow Best Practices:

  • Customer Allegations: (i) the ERP Software Vendor intentionally provided an unrealistic estimate of the cost of the implementation to secure the contract; (ii) the ERP Software Vendor failed to follow best practices for software implementation and/or project management without alerting the customer to the associated risks; (iii) the ERP Software Vendor cut corners and provided inaccurate status reports to conceal issues and meet deadlines; (iv) the ERP Software Vendor approved go-live without adequate testing; (v) the ERP Software Vendor never developed or followed a project plan; (vi) the ERP Software Vendor never conducted acceptance testing; or (vii) the ERP Software Vendor ignored defects and issues prior to go-live in favor of “fixing them later.”
  • ERP Software Vendor Response: (i) the customer prevented the ERP Software Vendor from following best practices; (ii) the customer failed to delegate tasks; (ii) the customer unreasonably refused to push back deadlines; (iii) the customer prioritized cost savings over mitigating risks; or (iv) the customer took shortcuts on important tasks that were the customer’s responsibility, including data conversion.

The Customer Believes That The System Will Never Work:

  • Customer Allegations: (i) the system cannot be saved; (ii) the system has too many errors and functionality gaps; or (iii) the system is now highly customized and too expensive to maintain.
  • ERP Software Vendor Response: The ERP Software Vendor counters by asking for more time, more patience, and most importantly, more money.