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Lawson embroiled in ERP lawsuit with customers

Lawson embroiled in ERP lawsuit with customers

Healthcare firm alleges mismanaged project

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Lawson Software is embroiled in the latest instance of an allegedly failed ERP software project to become public.

CareSource Management Group, a healthcare plan administrator, signed a contract with Lawson in August 2010 for an ERP system, but after 10 months it has not moved beyond the testing phase and the project has experienced numerous problems. That's according to a lawsuit CareSource filed in July in US court.

Lawson also led CareSource to believe that it was getting a fully integrated product suite "seamless to the end user," but the organisation later discovered that the system was composed of two modules, one of which was Lawson Talent Management, according to the suit. CareSource was to be one of the first companies to implement the LTM application, it adds.

Ongoing problems

As the project proceeded, a series of problems cropped up with data transfers between the LTM module and a financial component, S3. The problems were so severe that at one point, CareSource had 20 open cases with Lawson technical support, it adds.

In June, Lawson revealed to CareSource that some 37 customers "were experiencing the same or similar" problems with the integration, the suit states.

Lawson also failed to provide CareSource with a workable time and attendance application after proposing two products that proved unsuitable, it adds. In addition, Lawson assigned inexperienced staff to the job, which ended up serving as a "trial and error" on-the-job training programme for the LTM module, according to the suit.

CareSource alleges that during a conference call, Lawson used Infor's purchase of Lawson this year as an excuse for the problems, saying it was "distracted" by the merger.

CareSource is demanding at least $1.5 million (£938,000) in damages, a sum representing the cost of licensing the software, purchasing hardware, consulting fees and other costs.

In a counterclaim filed September 2, Lawson denied CareSource's breach of contract claim and other alleged wrongdoing, while stating that "certain issues arose" with regard to the LTM-S3 integration. However, those matters were resolved, according to the filing.

Also, while the software remained in testing mode and did not go live, the project was "halted" by CareSource before it filed suit, Lawson added. Lawson also denied citing the merger as an excuse for problems with the project, and that it told CareSource 37 other customers had problems with the LTM-S3 integration.

The vendor is seeking $335,000 it says it is still owed by CareSource.

Mismatched expectations

Overall, the legal flap appears to be a case of "mismatched expectations" between the software vendor and its customer, a dynamic that has marked other disputed projects of late, said Michael Krigsman, CEO of Asuret, a consulting firm that helps companies run successful IT projects. ""We have to ask the question of why the expectations are so far apart. Where was the adult supervision early in the project?"

"No vendor wants to be in this situation any more than the customer does, and therefore the likelihood of pure misrepresentation seems lower than the possibility of substantial misunderstandings between the parties," he added.

Customers should also be sure to determine whether they are considered early adopters of a software product, according to analyst Ray Wang, CEO of Constellation Research.

"This case demonstrates why it's important for vendors to set expectations up-front with clients as to what it means to be an early customer, and why it's important for customers to be clear about their requirements," he said.

"The challenge is that the customer's expectations and requirements may continue to change in the middle of implementation and sometimes those requirements may not be met," Wang added. "The bottom line is if you go in early on a new product, get signed assurances that the use cases and business processes you seek to support will be delivered."

A spokesman for Lawson declined comment beyond the company's court filing.

Lawson is far from the only ERP vendor to end up in court with customers over problems with a project, with Oracle and Epicor both facing recent actions.

ERP projects in general are complex affairs fraught with the potential for cost overruns and missed goals, given the crucial roles vendors, systems integrators and customers must each play for them to be successful.

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