Ross Systems Lawsuit Another Costly Case of Mismatched ERP Expectations

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My initial reaction to a lawsuit that included e-mails in which a technology vendor apparently referred to some of the employees of a client as "incompetent" and "clueless" was shock. It's one thing to blow off steam in a conversation with a coworker. It's another to vent in an e-mail. Is any e-mail, especially one discussing work matters, ever really private?


While not really excusable, it's perhaps understandable, given the case centered around an ERP system. An Alabama jury awarded $61 million in damages to Sunshine Mills, a pet food manufacturer that accused Ross Systems, Inc. of fraud related to the sale and implementation of ERP software. Ross Systems wasn't the first company to lose a high-profile lawsuit over a troubled ERP implementation and it won't be the last. Nor was this the first such case to involve lots of finger pointing with a vendor and its client each insisting the other was largely responsible for problems that led to the lawsuit.


It appears to be a case of mismatched expectations. This is a problem in many software implementations. However, resulting problems can quickly get out of hand and really blow up with ERP since it involves so many critical business processes, a large number of which relate directly to revenue-generating activities.


An attorney representing pet food maker Sunshine Mills said the sale of an ERP system to replace the company's aging legacy platform was "based on deception." But doesn't Sunshine Mills bear some responsibility for selecting Ross Systems and its software in the first place? Ross Systems apparently cited a lack of executive buy-in and user training, among other factors, as contributing to Sunshine Mills' problems. Though a good system integrator can educate executives and users, their efforts won't amount to much if those folks aren't prepared to listen.


I wonder if many organizations don't underestimate the complexity of ERP projects. If they do, I expect vendors may not exactly be eager to educate them, lest they lose a sale.


I'm not laying the blame on Sunshine Mills. I don't know enough about the particulars of the case to do so. But I don't think it's realistic to expect any implementation partner, no matter how qualified, to do their job without lots of support from the client.


Writing on Focus.com, Asuret Inc. CEO Michael Krigsman offers five best practices for buying and implementing ERP. This piece is filled with great tips. I especially like this bit of advice under Best Practice No. 2, choosing the right software:

Organizational change and adoption are the most overlooked and underestimated areas for ERP implementation success. Therefore, try to find ERP software that closely aligns with your organization's current business processes. The greater the change required, the more effort your organization must undertake to become ready to adopt and use the new software.

It meshes well with some of the points made for Best Practice No. 5, prepare for business transformation. (This is the toughest of them all, in my opinion.) Calling lack of planning for change management "the silent killer on many ERP projects," Krigsman shares these thoughts from Sameer Patel, partner at the Sovos Group:

Establishing baselines is extremely important in large technology-enabled business transformation projects. Early in the project examine current business inefficiencies, help workers understand how the new system will benefit them according to the WIFM ('what's in it for me') principle, anticipating objections from owners of existing systems that you are replacing.

Some similar advice is included in a post I wrote back in 2009, relating some ERP lessons learned from a successful implementation at Peet's Coffee & Tea. To make users aware of the sometimes steep learning curve involved with ERP systems, the company's CIO shared with them a statistic from a Panorama Consulting Study that found 70 percent of all ERP implementations fail. As he explained, he wanted to "put a little fear into everyone to say that they were signing up for a project that a company of our size had never been through and it would be business-changing."


As for the $61 million judgment against Ross Systems (which it says it will fight), some $45 million was for punitive damages. I suspect those internal e-mails may have had something to do with that. So there's a lesson there, as well.