Deloitte Sued Over ERP Project

Deloitte, an accounting and consulting firm, is being sued for $30 million over a botched ERP project. California’s Marin County will be suing Deloitte for misrepresenting the skills and capabilities of their SAP ERP implementation recommendation.

In 2004, Deloitte helped Marin County officials select an ERP program to replace their legacy system. Marin County claimed that Deloitte claimed to have “deep SAP and public sector knowledge” when marketing itself to the County for consulting work.

Deloitte recommended that the County implement an SAP ERP system to replace their legacy system. The County claimed that the ERP system had cost them millions of dollars to remedy.

Deloitte claimed that they fulfilled all of its obligations under their contract with Marin County. Deloitte filed an administrative claim with the Marin County Board of Supervisors seeking $444,000 in unpaid dues and $111,000 in late fees. A Deloitte spokesman explained: “To be clear, the SAP software was working properly when we completed our work in November 2007.”

According to Marin, the county hired Deloitte to help replace their aging ERP systems because they didn’t’ have the skills to solve their problems in-house. Deloitte knew that the county would adhere to its recommendations for the ERP replacement project.

“Throughout the months-long selection process County officials stressed to Deloitte that County officials did not have experience working on projects,” like SAP ERP system implementation, said a Marin County official. Marin County officials told Deloitte consultants that they didn’t know anything about ERP solutions.

Marin County selected Deloitte out of 13 vendors based on its claims about its experience, integration testing processes and management abilities. Marin County claimed that Deloitte failed to deliver on any of the fronts they claimed and that the SAP system Deloitte chose to implement was full of errors. Marin claimed the SAP ERP system was worse than their legacy system, which forced the country to limit its use of the system and revert to manual processes instead.

In late 2007, Marin fired Deloitte and started a “Get Well” project to fix their system. The Get Well project has been re-designed, re-tested and re-implemented at the cost of taxpayers over the last few years.

Deloitte defended themselves by claiming that County officials never made it known that they had any issues til after a change order was placed in June 2007. “We fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project,” said a Deloitte official.

This isn’t the first lawsuit over a failed ERP implementation, but it is uncommon to see a lawsuit that targets a systems integrator instead of an ERP vendor. SAP has dodged a bullet for now. We’ll keep you posted on how things settle between Deloitte and Marin County.

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