Does the court judgment against Electronic Data Systems (EDS) and in favour of their customer BSkyB mark a significant change in the balance of power in IT outsourcing?
EDS was found to have fraudulently misrepresented the time it would take to design and build a customer relationship management system. This means that their liability is unlimited and, as a result, EDS has been ordered to pay £200 million in interim damages, with BSkyB claiming a total of £700 million in damages. The original contract value was £48 million.
On the surface, it appears to be a clear victory for BSkyB, yet the verdict in this case does not change the fundamental fact that litigation is never going to restore the customer to the position they would have been in if the project had gone to plan. BSkyB commissioned the project in 2000 and it was due to complete in 2002. It was finally completed by an in-house team in 2006. The court case began in 2007 and was only concluded earlier this year. So, the costs and delays for BSkyB have been significant.
So does the judgement change the way organisations should be sourcing work? For most companies, the objective must remain to avoid getting in a position where litigation is the only option.
What is needed is a clear process and open, transparent relationship with the supplier which:
allows the client to make sure that the supplier can deliver what they have sold
provides for ways of addressing issues quickly if things start going wrong
is realistic about what might be involved in turning a project around.
It is in both the customer’s and the supplier’s best interests to get the right solution and understand each other from the start. In order to achieve this, customers should provide a detailed brief to the supplier that clearly states their requirements, and keep communication open throughout the relationship. This can reduce the risks of a project going wrong and of ending up in costly litigation.
To find out more about sourcing the right solution for your organisation, please contact us now.