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Anya Ciecierski, CAL Business Solutions

ERP Customer Sues Epicor for Project Inflated to $1 Million


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 Things do not always go as we expect. Imagine planning out a home improvement project to put a new floor in your kitchen. The estimate for the project is $700 and all seems to be going well, but halfway through the project the contractors tell you it will actually cost $7,000. Now imagine adding a few zeros to the end of that cost, and picture it as the ballooning cost of an ERP implementation your company is depending on to get work done.

When Epicor inked a deal with Whaley Foodservice Repairs in Lexington, South Carolina, the estimate for implementation was $190,000. By the time the two sides had worked through many of the kinks in the system, Whaley was looking at a $1 million bill for its ERP implementation. Accoring to ComputerWorld.com the company felt cheated and is now suing Epicor for fraud, breach of contract, unfair trade, and negligent misrepresentation.

The scary part of all of this is that such disputes are not uncommon. Oracle and SAP are also both involved in high-profile disputes over failed ERP projects, and there are undoubtedly many others that do not make the headlines.

It is easy to put all of the blame on the ERP vendor, and some, if not all of the customers have every right to be angry. After all, there was a time when every business upheld the motto: “the customer is always right.” But simply assigning blame will not help others learn from these disasters. For that we need to look deeper into the reasons for these mishaps.

It usually starts with a company that has very specific ERP needs, beyond anything a pre-packaged system can deliver. It may also have legacy systems and databases in need of conversion. All of that means the vendor has to pay special attention to the customer’s needs when it comes to implementation.

Problems usually arise when two things occur:

 1. The ERP system is not flexible enough to make the customizations. In the case of Epicor, the suit alleges it sought the help of a third-party software developer, which only complicates things.

 2. The customer is not quite sure what they actually need, and new realizations arise as the project develops.

In these situations, the customer usually lacks a clear implementation plan, or the plan needs time to mature. It may even need to have the contingency built into it allowing for flexibility and growth as needed, especially for larger projects. That requires patience on the part of the customer and the service provider.

 The easiest way to avoid a disaster like the Epicor one, is to do your research ahead of time. Are you buying from the vendor or from a local partner with local accountability? Are you choosing an ERP vendor because their product can truly meet your needs or because the vendor promises it can? Is it known for being customizable? Do others in your industry use it? Ask the difficult questions up front, and be clear about the costs included in the ERP implementation plan. (To assist you with this, download our white paper: How to Estimate the Cost of ERP Software Implementation Services) Make sure the vendor (or the partner) is not allowed to be too vague about additional expenses. Finally, make sure you have a clear ERP implementation plan for every step of the project. You must know your business well to know how to implement your ERP system well. With patience, and planning, you will reach your goals without disasters or lawsuits.

 By CAL Business Solutions, Connecticut Microsoft Dynamics GP Partner serving New England

One Response to “ERP Customer Sues Epicor for Project Inflated to $1 Million”

  1. Thank you for the article and insight. There are several documented examples of ERP implementations that went over budget or did not hit the original go-live date. There are also many explanations out there to explain why these ERP implementations did not meet budget or timeline. Instead of repeating common information out in the ERP blogosphere, I would like to speak to a root cause that is typically overlooked by our industry – inaccurate ERP implementation estimations. In the next sections we will take a closer look at building a better ERP estimate.

    http://gbeaubouef.wordpress.com/2012/07/04/building-erp-estimates/

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