Microsoft, Accenture Joint Venture Avanade Sued over Alleged ERP Project Failure | News | ChannelWorld.in

PARTNER HOTLINES

Microsoft, Accenture Joint Venture Avanade Sued over Alleged ERP Project Failure

Added on Jan 04, 2013 by Chris Kanaracus, IDG News Service (Boston Bureau)

A half-million lines of custom code wasn't enough to produce a viable Dynamics AX ERP (enterprise resource planning) system for point-of-sale and RFID products distributor ScanSource, according to a lawsuit it has filed against Avanade, the joint venture between Microsoft and Accenture.

ScanSource reached a deal with Avanade in 2009 for an implementation of the Dynamics AX system, according to the suit, which was filed Wednesday in U.S. District Court for the Northern District of Georgia. The project was supposed to cost US$17 million and take 11 months, but ultimately the cost estimate grew to about $66 million and it has failed to go live after three years, the suit alleges.

AX is one of four ERP products sold under the Dynamics brand, and is aimed at larger companies. The ScanSource project "is believed to be one of the largest global enterprise level Microsoft Dynamics AX implementations to date," ScanSource said in a statement. ScanSource reported $3 billion in net sales during its fiscal 2012 and has 26 office locations around the world.

Some allegations in ScanSource's suit have a familiar ring to ones lodged in other recent legal actions by customers against ERP vendors and systems integrators.

For example, Avanade allegedly told ScanSource that it would assign experienced and skilled staff to the project but instead sent in a continually changing cast of consultants without the ability to do the job or even familiarity with AX. It also said it would be able to customize AX 2009 to meet ScanSource's business requirements, according to the suit.

However, "Avanade also knew, or should have known, that the level of software customization required to perform the implementation to meet [ScanSource's] functional needs far exceeded the effort it was capable of delivering at the cost, and within the timeframe, it proposed."

Avanade's team came up with a "defective and deficient system design that resulted in a staggering amount of modifications made to the core software code." Ultimately, Avanade programmers wrote more than 500,000 lines of custom code, according to the suit.

When searching for an ERP system, ScanSource had initially taken proposals from Oracle, SAP and Dynamics, the suit states. Avanade officials went to ScanSource's headquarters to study its systems and gather information from users. Subsequently, Avanade gave ScanSource a "day in the life" presentation that showed how AX would be a good fit.

However, "As Avanade knew but did not disclose to ScanSource, this pre-contract product demonstration, which consisted of mocked-up simulations of the Microsoft AX software, did not reflect the software's actual capabilities or functionality," the suit states.

Avanade also allegedly conducted a "classic bait-and-switch" on ScanSource, by "drastically increasing" its estimated fees after being on the job for a few months.

ScanSource has had to scale down some of its project requirements in order to rein in costs and stick to a schedule. It has also had to keep using some older applications and write a number of new ones to fill functional gaps, according to the suit.

Microsoft and Accenture weren't unaware of the problems with the project, the suit adds. In fact, the parent companies performed ongoing quality assessments, and Microsoft was highly critical of how Avanade was customizing the code, according to the suit. Accenture has a majority stake in Avanade.

Microsoft and Accenture also proposed a project plan meant to get the effort back on track, but ScanSource ultimately decided to sever ties with Avanade.

The project has cost ScanSource $37 million so far, and will take another $29 million to finish, according to the suit.

ScanSource is seeking tens of millions of dollars in assorted damages from Avanade.

"We don't comment on pending litigation," an Avanade spokesman said via email. "However, we can tell you that we believe the allegations are without merit. We intend to defend our position."

Microsoft has since released an updated version of AX, version 2012. A second installment of AX 2012 that became generally available in December has new features meant to make it easier to run global operations. It wasn't immediately clear Thursday whether these features would have helped avoid the problems ScanSource's implementation allegedly faced.

ScanSource's allegations "read like a textbook about consulting gone wrong," said analyst Michael Krigsman, CEO of the consulting firm Asuret. At the same time, it's worth asking why it took so long for ScanSource to dump Avanade, he said. "The project timeline exceeded plan by 300 percent and the budget went over by almost 400 percent."

"Although it sounds like a royal screw-up on Avanade's part, there are always two sides to these stories," Krigsman added.

For example, ScanSource's complaint notes that it had no prior experience with ERP projects. "It sounds like the customer did not possess sufficient experience to oversee Avanade's work," Krigsman said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

EDITOR'S PICK

Forecast 2015: IT Spending On An Upswing

As purse strings loosen up, CIOs blend innovation into 2015 IT budgets, but security and cost containment remain top priorities.

‘Security Compliance is Not a Proactive Phenomenon in India’

Pavan Duggal, Cyber Law Expert at the Supreme Court of India, explains why channel partners need to look beyond the IT Act 2000 as the security standards, given today’s fast-changing threat landscape, rapidly evolve.

IT is Indispensable for Business Optimization: David Aires, Intel

David L. Aires, VP, Information Technology Group, and GM, Information Technology Operations, believes security to be the biggest challenge in the current IT environment.

Is the CIO Role Nearing Extinction?

New technologies are shifting power to the hands of the user, endangering the CIO role. But do Indian CIOs consider that a threat or an opportunity? 

The Authentication Market is Big Play for Channels: Gaurav Chawla, Gemalto

We are building a partner network to address the increased demand for authentication solutions across India, says Gaurav Chawla, Director, IAM, Gemalto India.

Versatile Infosecurity: Riding the Security Wave

It takes vision and persistence to stay on top of the security curve. Versatile Infosecurity has mastered that art.

How Futurenet Technologies Helped Sterlite Copper Adopt Next-gen Client Computing

Sterlite Copper was able to successfully adopt next-gen client computing facilities with hand-in-hand assistance from Chennai-based Futurenet Technologies.

DigitalTrack Solutions: Right on the Security Track

DigitalTrack is keeping pace with the changes in the IT security space through DDoS and WAF solutions and is pushing security audits as part of its next move.

SLIDESHOWS

6 Leaders Who Headed for an Abrupt Exit

The abrupt exit of top leaders of Indian and global tech companies this year, with many of them citing ambiguous reasons, surprised the technology world.

Gartner Executive Summary Survey 2014

Gartner's Annual CIO Survey highlights the trends that will drive organizational IT spend in 2014.

10 Overhyped Tech Products That Crashed and Burned

The demos blew everyone away. Then reality hit.

Gartner Executive Summary Survey 2014

Gartner's Annual CIO Survey highlights the trends that will drive organizational IT spend in 2014.

ChannelWorld Survey: State of the Market 2014

Partners poll their sentiments, expectations, pain points, and challenges for the coming year.

FAST TRACK

Mudra Electronics

A vendor-agnostic strategy helped us sustain business, says Bharat Shetty, CMD, Mudra Electronics.

Systematix Technologies

Our USP is a customer-friendly approach backed by services, says Akhilesh Khandelwal, Director, Systematix Technologies.

CorporateServe Solutions

Our ability to turnaround complex ERP projects in record time is what gets us customer referral, says Vinay Vohra, Founder & CEO, CorporateServe Solutions.

KernelSphere Technologies

We are emerging as an end-to-end systems integrator, says Vinod Kumar, MD, KernelSphere Technologies.

Uniware Systems

We constantly validate emerging technologies for first-mover advantage, says Vergis K.R., CEO, Uniware Systems.

Astek Networking & Solutions

An innovative approach helps us stay successful, says Ashish Agarwal, CEO, Astek Networking & Solutions.

CSM Technologies

Our approach is backed by innovation and simplicity, says Priyadarshi Nanu Pany, CEO, CSM Technologies.

ETSC Computers

We want to be recognized as a complete solution provider, says Kailash Gupta, Director, ETSC Computers.

VIDEOS

Arun Parameswaran on VMware’s Cloud, Mobile, SDx Strategy

Arun Parameswaran, MD, VMware India, talks about transformation, strategy, roadmap, and VMware’s role in driving the shift to cloud, mobile, and SDx.

Parag Arora, Citrix: Our Portfolio Will Augment Our Strategy

Parag Arora, Area Vice President, Citrix India, elaborates on his action plan for the company after taking over operations in India.

Shibu Paul, Array Networks: ADN is a Great Business Opportunity for Channels

Shibu Paul elaborates on how Array Networks is empowering its partner ecosystem to address the modern datacenter challenges in India.

Scott Robertson, WatchGuard: We are an End-to-End Security Solutions Company

Scott Robertson of WatchGuard elaborates on the company’s partner roadmap in India and its subsequent shift in the security space.

Gaurav Ahluwalia, R&M: Channels Will Accelerate Our Datacenter Business

Gaurav Ahluwalia of R&M speaks on the company’s renewed focus to build its channel ecosystem and address the datacenter demands of India Inc.

Venkat Murthy, 22by7 Solutions: Real Value is in Solutions

Venkat Murthy, Prime Mover, 22by7 Solutions, elaborates on the need to look at a solutions approach rather than a mere hardware approach.

What Channel Partners Can Learn from a Sahara Adventurer

Steve Donahue, a desert adventurer and a best-selling author, takes experiences from this travels in the Sahara and turns them into lessons for channel partners, as they navigate the shifting sands of today's business and IT environment.

Rahul Agarwal, Lenovo: Profitability and Value Proposition are Vital

Rahul Agarwal, executive director, Commercial Business Segment, Lenovo India, talks about Lenovo’s renewed channel strategy and why the company is now an attractive proposition for its partners.

EMC PARTNER SHOWCASE

Partnering for Profitability

Atul H. Gosar, Director, Network Techlab, shares how the company’s association with EMC has provided it with a competitive edge and a wide customer base, leading to increased profitability.

Sponsored Content

Promising Pipeline

Venkat Murthy, Prime Mover, 22by7 Solutions, shares how EMC brings in competitive edge by enabling technology, GTM and lead generation, helping 22by7 acquire new customers and retain old ones.

Sponsored Content

Powerful Performance

Deepak Jadhav, Director, VDA Infosolutions, says initiatives by EMC around training and certification have helped the company’s staff improve its performance and enhance customer experience.

Sponsored Content

Performance Booster

Rajiv Kumar, CEO, Proactive Data Systems, says that the solution provider’s association with EMC has helped expand its customer base and added value to existing offerings.

Sponsored Content

Pursuit of Profitability

Santosh Agrawal, CEO, Esconet Technologies, shares insights on how the systems integrator’s association with EMC has spelled sustained success over the years.

Sponsored Content

Non-Performance is Not an Option

Nitin Aggarwal, Director, Trifin Technologies, shares insights on how the association with EMC has helped the system integrator stand out and empowered its personnel to deliver consistent performance.

Sponsored Content

STRATEGIC DIRECTIONS 2014

Driving IT to Make an Impact: IDC

IT is being increasingly viewed as something which would help drive revenue rather than just another cost line-item.

Software-Defined Infrastructure: Forrester

Firms must invest in transforming infrastructure to eradicate complex infrastructure to keep pace with business needs.

Better Safe Than Sorry: PwC

Organizations should create a culture of security that starts with commitment of top executives and cascades to all employees and third parties.

New Skills for a New Era: Gartner

A new talent strategy is required—one that is a key part of the evolving IT strategy and one that focuses on a blend of business and modern IT skills.

The Rise and Growth of Big Data: Ernst & Young

Leading organizations are reaping rich rewards on their investment in big data even as competition struggles to keep pace.

SOCIAL MEDIA @ CW India
SIGNUP FOR OUR NEWSLETTER

Signup for our newsletter and get regular updates.