Lawson Software, customer embroiled in ERP project lawsuit

Lawson Software is embroiled in the latest instance of an allegedly failed ERP (enterprise resource planning) software project to become public.

CareSource Management Group, a Dayton, Ohio, health care 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, according to a lawsuit CareSource filed in July in US District Court for the Southern District of Ohio.

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

As the project proceeded, a series of problems cropped up with data transfers between the LTM module and a financials component, S3, according to the suit. 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 program for the LTM module, according to the suit.

During a June 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 US$1.5 million in damages, a sum representing the cost of licensing the software, purchasing hardware, consulting fees and other costs.

In a counterclaim filed Sept. 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.

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.

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

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