IBM’s Implementation of SAP at Bridgestone: Don’t Tread on Me Update


Gavel_Oct 2015The wheels of justice turn slowly when it comes to Fortune 500 companies with deep pockets and big egos. The court date for trial in a suit brought by Bridgestone against IBM has been set for July 12, 2016… a long awaited 973 days following the initial filing. At the center of the 600 million dollar lawsuit is a flawed go-live of an order-to-cash (OTC) implementation of the SAP enterprise software product. In our previous article, we spoke about how Bridgestone went live with the implementation in January of 2012, 5 months late and 60% over the original budget. The implementation caused significant disruptions in Bridgestone’s supply chain and claimed losses of 75 million in profits and an additional 38 million in additional costs to repair the flawed implementation.

According to court filings, both parties believe that an out of court settlement is not in reach and that resolution can only come through a trial. Each side has presented its theory of the case that I will attempt to summarize below.

Bridgestone claims IBM:

  • Misrepresented itself as an SAP OTC expert before and throughout the implementation
  • Violated provisions of the Tennessee Consumer Protection Act
  • Was negligent in execution
  • Breached contractual agreements

In its defense, IBM sites that Bridgestone:

  • Signed agreements for change orders that impacted both cost and schedule
  • Made the call to go-live against IBM’s advice
  • Contractually agreed to not rely on any IBM representations outside the contract and that it would not seek damages beyond fees paid to IBM
  • Did not fulfill its contractual obligations

What has been happening in the last 680 days can only be described as a ripping of the kimono open for each side. The ground rules for discovery were set wide ranging with some interesting precedents being set regarding the use of predictive coding with e-discovery tools. UpperEdge anticipates that system integrators will look to provide exclusions to the use of these tools in future agreements with customers.

Some interesting points surfaced from the court documents:

  • Document discovery covers nearly a 12 year period from 12/1/2005 to 10/29/2013.
  • Each side was required to provide full access to 35 document custodians (those individuals that have the greatest likelihood of possessing information relevant to the case).
  • Each of the 35 custodians were subjected to e-document discovery to all email, hard drives and virtual drives for all file types with relevant extensions. These documents could be reviewed even if they were not specifically relevant to the case.
  • All documents not accessible by each of the 35 custodians but considered relevant to the case were required to be turned over for discovery. Bridgestone has turned over more than 1.6 million documents as a result of this discovery.

The parties are now in the expert deposition period.   Each side is allowed to present 30 expert witnesses that can be deposed for 7 hours each. This period of expert discovery will continue until the end of 2015.

Motions for a summary judgement are scheduled to be filed in January of 2016 with briefs in opposition and reply briefs in support of the summary judgement to be filed in February.

Assuming that no summary judgement is reached, the trial is scheduled to begin on July 12, 2016 in the courtroom of Chief Judge Sharp in United States District Court for Middle District Tennessee.

UpperEdge follows these cases in an effort to improve the service offerings we provide to our clients. In this particular situation, it appears that IBM has a very strong case based nearly 100% on contract law, while Bridgestone is relying on consumer protections and the implicit trust of a business relationship.

At the start of a major project, nobody likes to think about the potential for negative outcomes. It appears to be clear in this situation that IBM was far more prepared from a legal and business perspective in the event of a negative outcome. At UpperEdge, we assist our clients by putting contracts in place that are balanced and provide guidance on managing the relationship to avoid these types of court battles while extracting the maximum value out of the consulting relationship.

If you would like to learn more about how UpperEdge has helped companies assess and avoid large IT transformation project risks, or if you have any questions or comments, please do not hesitate to contact jbelden@upperedge.com.

 

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