Avanade sued over alleged ERP project failure

ScanSource has had to scale down some of its project requirements in order to rein in costs and stick to a schedule. It has also had to keep using some older applications and write a number of new ones to fill functional gaps, according to the suit.

Microsoft and Accenture weren't unaware of the problems with the project, the suit adds. In fact, the parent companies performed ongoing quality assessments, and Microsoft was highly critical of how Avanade was customizing the code, according to the suit. Accenture has a majority stake in Avanade.

Microsoft and Accenture also proposed a project plan meant to get the effort back on track, but ScanSource ultimately decided to sever ties with Avanade.

The project has cost ScanSource $37 million so far, and will take another $29 million to finish, according to the suit.

ScanSource is seeking tens of millions of dollars in assorted damages from Avanade.

"We don't comment on pending litigation," an Avanade spokesman said via email. "However, we can tell you that we believe the allegations are without merit. We intend to defend our position."

Microsoft has since released an updated version of AX, version 2012. A second installment of AX 2012 that became generally available in December has new features meant to make it easier to run global operations. It wasn't immediately clear Thursday whether these features would have helped avoid the problems ScanSource's implementation allegedly faced.

ScanSource's allegations "read like a textbook about consulting gone wrong," said analyst Michael Krigsman, CEO of the consulting firm Asuret. At the same time, it's worth asking why it took so long for ScanSource to dump Avanade, he said. "The project timeline exceeded plan by 300 percent and the budget went over by almost 400 percent."

"Although it sounds like a royal screw-up on Avanade's part, there are always two sides to these stories," Krigsman added.

For example, ScanSource's complaint notes that it had no prior experience with ERP projects. "It sounds like the customer did not possess sufficient experience to oversee Avanade's work," Krigsman said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com