Marc Vael

HP EDS settles biggest lawsuit on CRM project failure

Amazing.  HP EDS has settled a major project implementation failure at BSkyB in the UK this month. 

In 2000, EDS won a GBP48 million contract to provide BSkyB with a new CRM system. The project ran into trouble and in 2002 BSkyB brought a claim alleging that during the tender stage EDS had misrepresented its ability to deliver the project.

In 2004 BSkyB terminated the contract, eventually completing the project itself using in-house staff. BSkyB filed suit, claiming that it was fraudulently induced to award EDS the contract because EDS misled BSkyB about the project's budget and time frame. EDS was acquired by HP in 2008.

In January 2010 the U.K. High Court found that EDS had lied to the British pay-TV group in order to secure a contract as part of the company's investment in a new CRM system. The settlement sum includes interim payments of GBP270 million that EDS has already made to BSkyB in February 2010.

This will hopefully wake up IT service providers all over the globe, especially the larger ones, that they can not get away anymore with failing to produce tangible results in implementation projects and only expect to pay penalties limited to the size of the project sum.

Outsourcing will take a new dimension.  Cloud computing might be more and more a valid alternative for expensive and long implementation projects. 

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