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TheStreet Open House

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

Stocks in this article: ACN MSFT SCSC

According to the lawsuit, "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% price increase for delivery of the global ERP implementation that is years behind the originally scheduled initial go live..."

The suit also states, "Avanade's inability to accurately estimate the effort required for the implementation caused ScanSource to de-scope some of its Minimum Business Requirements in an attempt to reduce the Project's escalating cost and keep the scheduled go-live dates intact.  As a result of this de-scoping exercise, ScanSource had to retain some of its legacy applications to perform certain processes that the new Microsoft AX system was supposed to handle.  For other de-scoped functionality, ScanSource was required to write its own applications to fill the gaps." 

"By forcing ScanSource to de-scope functionality, Avanade performed a classic bait-and-switch on ScanSource.  Specifically, after being engaged on the Project for only a few months, Avanade drastically increased its fees estimate, thereby forcing ScanSource to make the following choice:  either pay substantially more for functionality that Avanade was supposed to deliver as part of the initial quote, or forego that functionality to reduce a ballooning budget far in excess of what Avanade had represented and agreed to."

The lawsuit continues, "At regular intervals throughout the Project, Microsoft and Accenture performed quality assessments of the Project (the 'QA Reports').  Both Microsoft and Accenture concluded that the Project was being mismanaged and made recommendations, including the preparation of an integrated project plan, to stabilize the Project and get it back on a track toward go-live."

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