ScanSource Sues Avanade For Alleged Botched ERP Project

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Distributor ScanSource has filed a lawsuit against Avanade, the joint venture between Accenture and Microsoft for what ScanSource calls a "bait-and-switch" tactic on a Microsoft Dynamics AX project.

The cost of the ERP software system project ballooned to $66 million and three years implementation after an initial estimate was given as $17 million and 11 months implementation, according to ScanSource. The ERP system is still not live, ScanSource added.

The suit, filed in U.S. District Court in Atlanta, alleges that Avanade committed fraud, tortious misrepresentation and breach of contract, according to ScanSource. The Greenville, S.C.-based distributor is seeking tens of millions of dollars in damages as a result of the alleged misconduct, according to ScanSource. Microsoft and Accenture are not named as defendants in the suit. Avanade does not comment on pending litigation, according to a company spokeswoman, who added "We can tell you that we believe the allegations are without merit. We intend to defend our position."


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ScanSource said the project is believed to be one of the largest global enterprise-level Microsoft Dynamics AX implementations to date.

The project began in 2009 when ScanSource signed a deal with Avanade to replace its legacy ERP with a new system to support ScanSource's planned global expansion. The lawsuit alleges that Avanade knew it was not capable of performing the Microsoft AX implementation for ScanSource and misrepresented its skills and abilities to land the lucrative engagement.

Avanade engaged in "bait-and-switch" sales tactics, ScanSource alleges, by telling ScanSource that highly skilled consultants would perform the implementation.

"Instead, Avanade provided ScanSource with a revolving door of consultants who knew little or nothing about implementing Microsoft Dynamics AX software or managing large-scale global ERP projects," according to a statement from ScanSource.

ScanSource alleges it was left with "an incomplete and defectively designed system that suffered from numerous flaws and required extensive remedial work," according to ScanSource.

Avanade allegedly wrote a "staggering" 500,000 lines of software code to try to have the Dynamix AX platform meet ScanSource requirements, according to the suit.

"As a result of Avanade's fraud and breaches, an implementation that was initially budgeted for $17 million has now cost ScanSource approximately $37 million -- and is estimated by Accenture, Avanade's parent entity, to require an additional $29 million to complete. This ballooning of the project cost estimate from $17 million to approximately $66 million represents an almost 300 percent price increase for delivery of the global ERP implementation that is years behind the originally scheduled initial go live ... ," according to ScanSource in the lawsuit.

NEXT: Microsoft, Accenture Conclude Project Mismanaged

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