WSRcg - ERP Expert Witnesses

On this webpage we present:

ERP Expert Witnesses

What We Do As ERP Expert Witnesses

Our ERP consultants and expert witnesses have consulting expertise on projects and/or testifying experience in litigation involving the following ERP vendors/systems:

  • SAP and SAP Retail,
  • Oracle Applications Suite, Oracle e-Business Suite,
  • PeopleSoft,
  • J. D. Edwards,
  • Retek (grocery stores),
  • Cerner (healthcare),
  • Microsoft Dynamics,
  • Lawson Software,
  • Baan,
  • Others.

In addition, some WSRcg Expert Witnesses have first hand experience designing and developing ERP software, including the Andersen Consulting (now named Accenture) “MacPac” ERP systems and the “Patient Management” ERP System for hospital management and/or have led projects to select and implement third party ERP systems as CIOs , IT department heads and/or consultants.

As “ERP System Experts” we analyze, assess and opine on the reasons why a particular project is failing and what can and must be done to turn around that project and prevent failure in the future. We oftentimes will become independent consultants to the project and report to the Board of Directors of one of the parties and the Steering Committee consisting of all of the parties. We assess current project status and what efforts and resources it will take to complete the job. We help identify the root causes of failure, redefine “success” so that all parties can live with that measurable definition, and implement recommendations to mitigate problems and risks as the project recovers and renews.

We typically recommend changes to the project charter and reduce the scope of the project, or recommend how to deliver the system in smaller segments – no more “big bang” strategy for this project. In addition, we will recommend adjusting project staffing, party roles and responsibilities, and work with counsel(s) to change or amend the contracts to reflect the new understanding and the position going forward. Finally we customarily will assist the parties to identify on paper the project management and SDLC methodology, testing strategy and environment, and criteria for acceptance and go-live – agreed to by all parties.

As “ERP Expert Witnesses” we have consulted on legal matters, and/or provided expert witness reports and/or testimony at trial, arbitration, mediation and special hearings regarding ERP systems:

  • performance,
  • functionality,
  • architecture and structure,
  • ease of use,
  • readiness for go-live,
  • quality and testedness,
  • suitability for purpose or customer situation/needs,
  • adherence to specifications and documentation and conference room pilot demonstrations,
  • adherence to contracts and related agreed-to service level objectives
  • meeting government requirements (SOX, HIPAA, IRS, among others),
  • Faithfully, completely, and accurately processing all transactions end-to-end,
  • Recovery & restart capability; ability to correctly back out partially committed atomic transactions.

In ERP system and/or project litigation matters, we review related project discovery including documentation of all kinds, read depositions and declarations, test software if necessary, perform internet searches, and conduct interviews with fact witnesses and other experts, if applicable, to determine the root causes of ERP project failure.

While the various contracts or course of conduct may define success or failure, we usually are asked to clarify ambiguous or non-existent contracts, roles and responsibilities, and the need for and quality of certain deliverables and decisions made to help determine success, failure and accountability in regards to:

  • Cost overruns,
  • Schedule delays,
  • Quality of deliverables,
  • Scope and depth of functionality delivered,
  • Performance of the products delivered,
  • The risks identified and mitigated,
  • The expectations of the stakeholders.

Thus, in ERP litigation matters we typically determine which party undertook or failed to undertake specific responsibilities or decisions, or otherwise performed in such a manner as to cause the project to fail (in terms of cause and effect, and degree of responsibility for the success or failure).

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Typical Issues/Complaints between Parties in ERP System Failure Litigation

The “HE SAID… SHE SAID…” Chartfor Failed Software Projects
# Category:
"-abilities"
Areas of High Experience & Expertise Expertise Level
1 Feasibility System doesn’t work; Not what we wanted You changed your minds; You don’t know what you want or need
2 Capability You delivered limited functionality You continually changed project scope
3 Compatibility The system failed in the field & in production
You didn’t perform required “business process reengineering” to make it work
4 Credibility Your software, services & expertise were oversold You conducted your reference checks & due diligence; What didn’t you know?
5 Usability No one can use system! Poor training “Required staff” never came to primary training or refresher training
6 Stability The system is “fundamentally flawed”
We only need 2 months to fix issues
7 Culpability You never told us that! You gave poor advice! You didn’t follow our recommendations; You changed/delayed making decisions
8 Reliability The system is full of bugs! Bad data conversion & interfaces caused problems. Systems always have bugs!
9 Responsibility You failed as Systems Integration Project Manager (SIPM). No! YOU failed as the SIPM. That role was not my job!
10 Availability You baited & switched! You provided unqualified, unstable, uncommitted staff, project manager(s), Steering Committee YOU baited & switched! You provided unqualified, unstable, uncommitted staff, project manager(s), Steering Committee
11 Suitability You abandoned good Project Management & System Development Life Cycle (SDLC) methodologies You were unwilling to comply with agreed to, promised & necessary methods (to save $$ w/o associated risk)

While it is usually true that all parties could have contributed to the causes of the software or system project failure in a given area, it is our experience that:

  • One party usually contributes more to the failure and its root causes,
  • One party will have done something (or did not do something it was supposed to or should have done) to set the wheels in motion or the dominoes falling to create the root causes of project failure – although it was not evident until we discovered that during our investigation and review of discovered materials.

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Selected WSRcg ERP Litigation Experience

Format: Case Reference – Case Type

Engaging counsel’s client (Plaintiff or Defendant) – Party’s role in matter

Very Large e-Commerce Retailer v ERP Vendor – ERP systems project and unsuitable software failure
PLAINTIFF – CUSTOMER

Dispute: A customer licenses e-commerce software from an ERP vendor only to find that the vendor’s Platinum Implementation Partner is unable to configure, customize and install the system per agreement. Additionally the system has insurmountable scalability problems and is unable to meet the required volumes of the customer. Plaintiff sues for fraud.

Our Role: WSRcg’s Expert Witness was deposed and testified at trial about: the failure of the vendor to properly estimate the project and the special customization requirements of the customer; the unsuitability of the software for the job; serious strategic software design and architecture decisions made by the vendor regarding the software and the suite that would prevent a “successful” implementation without much more investment and cost – information that the vendor allegedly withheld from the customer.

Result: Pending.

 

Health Care Provider v ERP Vendor – ERP computer project failure
JOINT DEFENDANTS – CUSTOMER & VENDOR

Dispute: An integrator/outsourcer sues hospital defendant for $10 million claiming it was ready to go-live with the system several months earlier, but for delays caused by the vendor and customer.

Our Role: Both Warren Reid and Randy Brown (of WSR Consulting Group, LLC) were deposed and testified in arbitration that the Integrator had: poorly staffed this mission critical project; discarded reasonable project management practices, standards, and tools for a project of this size and nature; abandoned industry standard/contractually promised SDLC methodology; failed to execute a reliable test strategy/plan; never stabilized system’s infrastructure; contributed to concurrent delays.

Result: Plaintiff wins. Judgment being appealed.

 

Big 5 Consulting Firm – systems integrator role in ERP failure
DEFENDANT - INTEGRATOR

Dispute: The Fortune 500 customer alleged that for the $50 million fee, the integrator failed to properly develop and implement a large ERP software project.

Our Role: Our expert report covered: role of System Integration Project Manager; control over subs; system stability, performance, functionality; scope creep; database design; go-live readiness.

Result: Settlement favorable to Integrator.

 

Developer of ERP/Wholesale Distribution Software – misappropriation of trade secrets and bad faith
PLAINTIFF - DEVELOPER

Dispute: Misappropriation of trade secrets & bad faith as large company pretends to perform due diligence – but in the end rejects purchase of Plaintiff company in bad faith for alleged poor performance, and instead very quickly develops/releases competing system with a different GUI.

Our Role: We demonstrated that Defendant’s system had a virtually identical suite of functionality & underlying algorithms; opined that Defendant stole these trade secrets. Also proved Defendant stacked due diligence testing to purposefully fail by applying unrealistic data volumes and criteria.

Result: The Defendant settled in favor of the Plaintiff the day before the trial.

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Other Thoughts & Issues About ERP Systems/Software and ERP Projects

ERP Project IssuesEnterprise Resource Planning systems, better known as ERP systems, are considered by many as the most complex business application(s) to implement in any business regardless of the industry. ERP software systems are implemented in an organization to increase productivity and enable efficient utilization of resources.

ERP can substantially lower inventory costs, reduce rework, relieve bottlenecks, reduce transportation time and cost, reduce A/R write-offs, focus and improve marketing and sales efforts, permit growth without concomitant increase of employees, and more if the information produced is accurate and if properly applied into action. Using this information, company employees and business managers can gain a better understanding of what’s going on in the company so that they make better business decisions.

Ideally, ERP systems centralize data into a consolidated single data base (typically relational) containing all data for the software modules to manage information, such as employee records, customer data, purchase orders and inventory, so that everyone in the company relies on the same database, allowing employee in different departments to view and use the same information.

ERP systems consist of various and numerous business functions, which by and large are packaged and sold in separate modules, that are connected to the different types of departments and business functions in large companies, as shown in the diagram above. These modules oftentimes break down as follows:

  • e-Commerce: front-end ordering application that allows customers who make internet purchases to: browse products/services offered (using images, audio, videos and/or text); to register their billing information to process an order; check credit card validity; use a shopping cart function; calculate shipping date(s); recommend new items based on your past purchases; create a wish list and more.
  • Manufacturing: Engineering, Bills of Material, Scheduling, Capacity Planning and Control, Workflow Management, Quality Control, Cost Management, Manufacturing Process (job, process, hybrid, other), Manufacturing Projects, Manufacturing Flow.
  • Supply Chain Management (SCM): Inventory, Order Entry, Purchasing, Product Configurators, Supply Chain Planning, Supplier Scheduling, Goods Inspection, Claim Processing, Commission Calculation.
  • Financials: General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets.
  • Projects: Planning, Costing, Billing, Time and Expense, Activity Management
  • Human Resources: Human Resources, Payroll, Training, Time & Attendance, Rostering, Benefits.
  • Customer Relationship Management (CRM): Sales and Marketing, Commissions, Service, Customer Contact and Call Center support.
  • Data Warehouse: Various self-service reporting and inquiry capabilities/interfaces for customers, suppliers, and employees.

ERP Alternatives. Some organizations — typically those with sufficient in-house IT skills to integrate multiple software products — choose to implement only portions of a vendors ERP system and develop an external interface to other ERP or stand-alone systems (such as financial, human resources, warehouse management and logistics applications) for their other application needs. The decision of whether to buy a whole ERP application suite or specific single application products which must be integrated by the customer’s staff or consultant, is often referred to as the “Best of Breed (BoB) applications solutions vs. the integrated multi-product suite (ERP)” dilemma.

Many of these ERP systems have been tailored by ERP vendors to particular industries such as the Oil and Gas industry, or the retail industry, or the grocery store industry, or the fast-food restaurant industry, requiring modified or additional functional applications such as front end POS (Point Of Sales) devices to capture orders, process coupons, collect payment, etc.

ERP implementation utilizes various ERP software applications to improve the performance of organizations for resource planning, management control and operational control. These systems are built with logic and work flows touted as “industry best practices” that a customer can configure, to make the system more relevant to the way the business operates. Some customers prefer writing new modules and/or customizing current modules. This can pose serious problems when the core software is updated by the vendor and your system is “one-off” (i.e., different than the system all the other customers have). In such cases, it may be very relevant to change the company’s operations and work flow to correspond to the best practices codified in the ERP system to avoid upgrade and support problems, AND to improve company operations so that the new ERP system doesn’t simply re-automate bad practices and procedures.

ERP systems work in real-time, meaning that the exact status of everything is always available. Further, many of these systems are global. Since they can be deployed at sites around the world, they can work in multiple languages and currencies.

ERP selection and implementation is so difficult because it ordinarily involves not only implementing new software, but also accomplishing the following tasks, among others, in a tight timeframe:

Difficult issues in ERP development, selection, Implementation
  • Identifying and prioritizing real functional requirements (including : must have, nice to have, can defer, can live w/out functionality),
  • Preparing a Request for Proposal (RFP) and identifying selection criteria,
  • Performing independent research on short-listed vendors, plus “appropriate reference checks”,
  • Negotiating clear, enforceable contracts that incentivize parties to work thru difficult parts of project and clearly identify “agreed-to”:
    • Party roles, responsibilities, deliverables,
    • Project Management methodology to use,
    • SDLC/software development and implementation methodology(ies) to be used & when/how they may be relaxed,
    • Staffing requirements,
    • Deliverable content, format, due dates, and approval and escalation processes,
    • Dispute escalation/resolution process(es),
  • Acceptance criteria for:
    • software functionality; performance ability (e.g. scalability, maintainability, usability, testability, reliability, security, archiving, processing speeds, recovery/restart, etc.)
    • Testing strategy & plans throughout system development at all levels; criteria for software promotion to next level of tests,
    • Payment schedules,
    • Levels of acceptable project/product risk; responsibility/system to id/mitigate ris
  • Acceptance criteria for:
  • Changing user jobs & skills requirements,
  • Changing, upgrading, acquiring, configuring new hardware, netware, peripherals
  • Changing the role and skills required of internal IT department,
  • Altering company processes,
  • Shifting functional organization structures,
  • Cleansing, reformatting and mapping data,
  • Interfacing with other 3rd party applications,
  • Creating new policies, procedures, work flows and controls,
  • Retraining staff,
  • Rewiring the organization with new telecommunications networks,
  • Hosting company applications offsite with the ERP vendor,
  • Outsourcing all or part of the system and system support applications and functions,
  • Identifying the tasks needed to accomplish all of the above and more (can be 5,000 to 10,000 tasks; budgeting and estimating each task; staffing the project; determining critical path, and managing the toughest project that a corporate project manager may have ever managed.

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Call Warren S. Reid at (818) 986-8842 if you have any questions or wish to discuss your case.

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