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ScanSource Sues Avanade, Alleging "Bait-and-Switch"

GREENVILLE, S.C., Jan. 2, 2013 /PRNewswire/ -- Avanade, Inc., a joint venture between Accenture (NYSE: ACN) and Microsoft (NASDAQ: MSFT), has been sued by ScanSource, Inc. (NASDAQ: SCSC) for what ScanSource calls a "bait-and-switch," after ScanSource saw Avanade's initial estimate for the installation of enterprise resource planning (ERP) software system Microsoft Dynamics AX balloon from $17 million to nearly $66 million and from 11 months to three years, with the ERP system still not live.  ScanSource's project is believed to be one of the largest global enterprise level Microsoft Dynamics AX implementations to date. 

ScanSource contracted with Avanade in 2009 to replace its aging information technology infrastructure with a new core system that would support ScanSource's continued global expansion.  Avanade's implementation was originally scheduled to be completed within 11 months.

The lawsuit, which was filed in U.S. District Court in Atlanta, alleges - among other things - fraud, tortious misrepresentation and breach of contract, and seeks tens of millions of dollars in damages that ScanSource has incurred and will continue to incur, as a result of Avanade's misconduct.

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.  The suit also states that Avanade engaged in "bait-and-switch" sales tactics that defrauded ScanSource into believing that Avanade had, and would assign, highly-skilled consultants to perform the implementation.  Instead, as the lawsuit alleges, 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.  The result was an incomplete and defectively designed system that suffered from numerous flaws and required extensive remedial work.  Avanade's incompetence was reflected in, among other things, the staggering 500,000 lines of software code it wrote in an attempt to have the Microsoft Dynamics AX platform meet ScanSource's business requirements.

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