Epicor lawsuit may show danger of going solo on ERP

BOSTON – Epicor is being taken to court by a customer over an allegedly failed ERP (enterprise resource planning) implementation, but the case may illustrate the potential dangers customers engender by embarking on such IT projects by themselves.

Group Manufacturing Services, a contract manufacturer for sheet metal and plastic fabrication, began speaking to Epicor about a potential software purchase in March 2011, according to the company’s lawsuit filed last week in U.S. District Court for the District of Arizona.

Epicor representatives showed up the next month and conducted an on-site inspection meant to determine how well its software would meet the company’s needs, it adds. Those Epicor employees told the company that the Epicor 9 software was “a perfect fit,” and that “the installation process would be smooth, straightforward and timely given Epicor’s expertise,” the lawsuit stated.

No “significant customizations” would be needed and any minor tweaks could be done by Group Manufacturing’s own employees, Epicor allegedly said, according to the lawsuit.

Based on those representations, Group Manufacturing signed a deal with Epicor for the software and implementation and has so far paid it about US$70,000, it added.

However, despite Epicor’s pledges, the project “consumed countless hours of Plaintiff’s staff time, was sporadic, and problems endlessly erupted throughout,” according to the lawsuit.

But in pre-sales demonstrations, Epicor told the company that it had “wonderful tools,” including manuals and training guides, that would make the installation easy, Group Manufacturing Vice President Roger Kelling said in a letter to Epicor, which was filed with the suit. But as it turned out, those materials were inadequate, Kelling claimed.

In addition, Epicor’s platform couldn’t handle Group Manufacturing’s “Quote IT” function, and the vendor said it would cost between $16,000 and $24,000 in consulting services to add the capability, the lawsuit said.

Epicor wanted to charge another $32,000 for creating the ability to easily generate profit and loss statements for Group Manufacturing’s three divisions, according to the lawsuit.

Group Manufacturing ultimately told Epicor in November that it wished to spike their agreement, according to the complaint. It is seeking a refund of its money as well as attorney’s fees and any other damages the court deems necessary.

Epicor hadn’t submitted a formal response to the lawsuit as of Tuesday. But in a Dec. 14 letter to Group Manufacturing’s lawyer that was filed with the suit, Epicor’s senior vice president and general counsel, John Ireland, called the company’s allegations “completely baseless.”

“The facts are quite the opposite,” Ireland wrote. “There is not any significant disparity between what was demonstrated or represented to Group by Epicor and what has been delivered.”

Epicor 9 is “excellent ERP software which contains the functionality represented to Group, and then some,” he added. “Unfortunately, and quite candidly, the evidence seems clear that GMS really never gave the software or Epicor’s consulting implementation services a change.”

Hundreds and perhaps thousands of companies quite similar to Group Manufacturing are running their operations on Epicor 9, making Group’s claims of its shortcomings “simply and patently untrue,” Ireland wrote.

That said, Epicor never expressly guaranteed that the software would meet all of Group Manufacturing’s needs and actually “represented quite the opposite to Group in writing,” he added.

In addition, the project would have gone as smoothly as Epicor pledged, Ireland said. However, Group Manufacturing’s complaint doesn’t mention “that Group and its personnel, after signing up for such remote implementation process, immediately deviated from it, essentially fired the project manager and adopted a go it alone mentality which in no way relied upon or utilized Epicor’s expertise,” Ireland said.

Group Manufacturing’s staff wasn’t prepared to handle the job on their own and their frustrations boiled over in the form of “caustic emails” to Epicor staffers, Ireland added. Ultimately, the company approached Epicor again to discuss on-site implementation services, but further disputes arose and no deal was ultimately struck, according to Ireland.

All software projects are “a two-way street” requiring flexibility and cooperation between vendors and customers and Group Manufacturing failed in this regard, Ireland added.

That sentiment rang true to one industry observer who reviewed both documents this week.

“As with all of these things, we don’t really know what the accurate story is, but let’s assume at face value that it’s true the customer tried to do it on their own,” said Michael Krigsman, an expert on IT project failures and CEO of the consulting firm Asuret. “If that’s the case, then it’s not surprising the customer had trouble.”

For one thing, Epicor 9 is packaged, not custom, software, Krigsman said. “If you buy custom software then by definition it’s going to fit. The reason to buy packaged software is to save money and, by nature, you will have some adaptation. That’s the tradeoff that’s being made.”

It seems very unlikely that Epicor wouldn’t be able to execute the project successfully, given its limited scope, Krigsman said.

“It sounds to me like the customer got cold feet after purchasing the product and overall the size of the implementation was too large for this customer to absorb comfortably, both in terms of cost and ability,” he added. “They bit off more than they could chew.”

In his letter, Ireland left the door open for the dispute to be resolved, saying that if Group Manufacturing pays its outstanding amounts owed, Epicor is willing to “reengage.”

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Jim Love, Chief Content Officer, IT World Canada

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