bridgestone vs ibm case study

The Bridgestone vs. IBM Case Analysis Essay

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The case of Bridgestone vs. IBM presents an example that displays the importance of communication in cooperation between businesses. In brief, the American subsidiary of Bridgestone requested IBM to develop an extensive business system that will be capable of processing a large volume of orders. Due to several complications, the system developed by IBM was released behind schedule yet way earlier than the last steps of development, which resulted in millions of financial losses and the deterioration of both companies’ images. Analyzing the details of the case provides an understanding of common complications in significant projects and how improper execution of extensive projects can influence the reputation of collaborating companies.

First, in defining what each side could do differently to improve the outcomes, one could notice immediately that both companies had issues hindering their work and left them undiscussed. IBM had trouble working with a project already attempted several times by other vendors, which caused additional obstacles not previously discussed by the management. The obstacles resulted in delays in system release, and due to a lack of understanding in communication, Bridgestone proceeded with the release of the unfinished system. The simplest solution for Bridgestone that could have sufficiently improved the outcomes, in this case, was to postpone the release and give IBM time to finish the system. While delaying the system release could have resulted in additional expenses, the order data could have been saved without any threats to the existing customer base. Moreover, it seems that IBM insisted on running a testing launch of the system. Therefore, the adverse outcomes could have been prevented if Bridgestone did not fail to process the vendor’s request and was not excessively focused on improving the existing system in a short time.

Next, there is a significant difference in the harm that publicity around this project caused to the two companies. On the one hand, Bridgestone lost a substantial portion of customers, business partners, and brand supporters. Moreover, the company seemingly suffered crucial financial damage from unsuccessful system implementation, while the development of the system was out of Bridgestone’s competence. Thus, Bridgestone suffered more losses from the project’s failure than IBM. However, IBM’s image was more harmed by the event’s publicity when Bridgestone filed a suit against IBM. In addition to being charged in breach of contract, Bridgestone company accused IBM of fraud as IBM’s budget for developing the system exceeded Bridgestone’s initial budget. Furthermore, Bridgestone accused IBM of assigning incompetent personnel that lacked the necessary skills and experience to execute the project. Therefore, even though the early launch of the system was Bridgestone’s mistake, IBM’s reputation as a vendor who failed to fulfill its functions was harmed more by the event’s publicity.

Lastly, considering the scale of the conflict between the two companies, it is surprising that both companies came to a mutual decision several years later. One week prior to jury selection in 2018, both companies decided to drop their claims, even though it was unclear whether any “monetary concessions” from the firms took place in the decision (Belden). In addition, both companies filed a motion with prejudice, which means that their decision is permanent and the lawsuit cannot be raised in the future. Therefore, it appears that in accepting their mistakes, the companies approached dealing with the negative consequences of the failed project with a more understanding approach than in the time of the system development.

Belden, J. “Bridgestone Vs. IBM: Parties to Reach Agreement.” UpperEgde, 2018, Web.

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A critical analysis of the the Bridgestone - IBM ERP Failure Dispute

This article, which is in course of preparation will analyze in some depth key observations with regard to Bridgestone's dispute with IBM with regard to the catastrophic failure of a comprehensive Business Information Systems project that caused Bridgestone to suffer massive losses, they are claiming US$600 million from IBM see IBM Rips Into Bridgestone Over $600 Million Lawsuit for a report on the case

It is planned that this article will provide an in-depth analysis of the situation applying the methods advocated on this website in order to highlight measures that executives can take to prevent their organizations being damaged by similar situations

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Bridgestone versus IBM ERP Failure -- The REAL Issues

Bridgestone are suing IBM for $600 million following a catastrophic systems implementation failure that did huge damage to the business, unable to process orders, stock piling up, losing customers, … the business information systems nightmare of every CEO.

This article examines the REAL reasons these things happen and how to prevent them by analysing the key elements of the Bridgestone – IBM situation and explaining how to prevent them occurring in your project.

Issues discussed include the viability of old software, valid governance for projects of this nature, the need for a tough and robust procurement approach and resulting contract, the Business Process myth and why the Business Process approach is dangerous, the need for a rigorous “engineering” approach, the critical need for a Business Simulation Laboratory, the benefits of tough certificates and the non-negotiable need to provide a roll-back capability in the event of disaster.

It is concluded that both parties made mistakes, that the mistakes are common place and, in reality, part of the established order and that there is a need for a radically different approach – this approach is outlined in the article.

Introduction

Bridgestone sues IBM for $600 million after suffering massive damages – tires stacked in the parking lot, hiring a third party warehouse to store stock, unable to fulfil orders, lost customers – THE business information systems nightmare of any CEO.

http://www.businessinsider.com/bridgestone-sues-ibm-for-600m-2013-11

Google “Bridgestone sues IBM for $600 million” in quotes so you get an exact match – 4,560 results!

This is big news.

It MIGHT be THE event that redefines the business information systems in the way that dramatic construction engineering failures a century earlier redefined the construction industry .

Why do these things happen?

Fact is that failure is rife – see my “Failure Catalogue” , failure that involves mainstream firms like Bridgestone, BMW , The BBC , etc as clients and IBM, Deloitte, EDS, etc as service providers.

In fact the indications are that the failures are getting bigger, more frequent and more damaging.

There is NO real indication that anyone has an answer to THE CRITICAL QUESTION “how do we prevent our organization getting hit by such a catastrophic event?”

This article seeks to answer that question from a very different point of view – a point of view that I term “the engineering approach”.

Before you ask what an engineer has to do with an industry that is the preserve of accountants and MBA graduates I ask you to note that ALL significant engineering structures are designed using computer based systems that are far more complex than business information systems and which are required to operate at exceptionally high levels of reliability.  Engineering MORE than accounting drove the creation of high performance computers over the last fifty years.

Failure is rife

Fundamentally, failure has been rife for decades but the big implementers and the NOT so big implementers continue to focus on getting better and better at what they are doing seemingly oblivious to the principle that “ if you do what you have always done you will get what you have always got ”.

A DIFFERENT approach

This article seeks to present a DRASTICALLY different, and I contend, BETTER way of looking at this sort of situation directed at enabling you, as an executive of a company faced with the prospect of replacing your systems, or sitting with a project that is failing or a system that is under performing, to take DIFFERENT decisions to your counterparts in Bridgestone, BMW, The BBC, etc.

I have been investigating failures and sub-optimal outcomes of business information system projects since 1989, speaking about the reasons they happen since 1992 and learned a large amount to the point where I am now in a position to actively publish what I have learned after undergoing an intense and lengthy process of discovery, inquiry, analysis, practical application and refinement.

Following are the points that stand out for me about the Bridgestone situation:

1.  COBOL – NOT a valid reason

The project commenced with a fundamentally unsound supposedly technical motivation, existing systems were written in COBOL, COBOL was “obsolete” and therefore needed to be replaced.

Note that this is a technology driven decision.

Reality is that in the real world there is still a huge amount of Cobol in operation and there is NO technical reason to replace it, except a CIO who is NOT prepared to invest in people and standards to maintain the software.

COBOL is obsolete is NEVER a valid reason to change software.

“ We have a vision for a far more advanced solution tightly optimized with the way we want the business to run in the future ” (NOT Business Process Re-Engineering) – IS a valid business case IF it comes from the business AND provided the old systems are properly maintained until the new system is fully operational and stable.

For more discussion on why OLD systems ARE viable and also relating to COBOL please see the article “ Old Software IS Viable ”, there is a piece on COBOL lower down the page.

Note that the existing systems at Bridgestone were working fine, they worked so well that Bridgestone had tens of millions of dollars to pour into their massive new systems project and still remained in business.

The balance of this article is based on the assumption that you DO have a sound business case for moving to new technology and want to do this with minimum risk and maximum value add.

My point here is simply that Bridgestone DID have a choice to move but apparently the executive were misled.  In the same way in a properly managed environment it should NEVER occur that the business has to go-live no matter what, as happened with Bridgestone.

2.  Governance – the BIGGEST single cause of failure

OK, so Bridgestone decided for good or bad reasons to change.

They went with SAP because SAP is supposedly THE leading brand although a look at my Failure Catalogue has SAP occurring rather frequently.

They went with IBM because IBM is a household name and surely to be trusted – although a look at my Failure Catalogue has IBM also occurring rather frequently.

Two supposedly good reasons for the executive of Bridgestone to believe they were making a good decision – SAP and IBM!

So, what went wrong?

Well, Bridgestone had some governance problems – they are alleged to have replaced their Chief Information Officer no less than SIX TIMES in two years during the project !

After some digging on Google I was unable to establish who the CIO reported to but it seems clear that the Chief Information Officer was NOT really a “Chief”.

Yes, it IS so that in about 70% of cases the Chief Information Officer reports into a member of the executive team, most frequently the Chief Financial Officer – because somehow businesses mistakenly believe the CFO is better qualified to manage the systems that run the company than anyone else.

One of the reasons there is so much failure and so many sub-optimal outcomes is exactly because the CFO has NO formal training that in ANY way equips them to manage technology.

IF you are NOT prepared to have the IT Manager – a person who reports to a C level executive who reports to the Chief Executive is NOT a Chief Information Officer, they are an IT Manager and calling them a CIO does NOT make them an executive.  Sitting them at the top table with a reporting line directly to the CEO and operating on a FULL peer basis with the rest of the executive team is what determines if a manager is a CIO.

So, it seems probable that Bridgestone changed its IT Manager six times during the two year project NOT their CIO.

Thus IBM have some basis to allege lack of leadership on several fronts.

Most importantly, the so-called OTC (Order to Cash) project involved almost the entire spread of the business.  The custodian of this integrated view of the business and the ONLY person with the muscle to make decisions stick across multiple operating components of the business is the CEO.

Since the CEO does NOT have the knowledge or the time to manage a project of this size and complexity they need an advisor and Project Leader – someone to direct the project.  This needs to be a person who has done this before, a gray beard so to speak, someone at least over 50 years of age who specializes in managing this type of project on behalf of the client.  The IT Manager simply does NOT have the clout and, in all likelihood does NOT have the experience to manage something like this.

Remember that when you put in place a massive new integrated system it touches just about every part of the business, it touches just about every person in the business and, by definition, it RIPS THE GUTS out of the business and replaces them with something that is supposedly better.  The Bridgestone debacle provides graphic evidence of what happens when you rip the guts out of the business in a badly planned and badly managed project – you cannot ship product, you lose customers, you lose millions of dollars!

IF you get the picture of what can go wrong you will recognize that for ANY organization embarking on a project of this nature pretty much the FIRST thing you do is go out and find a REALLY senior, REALLY experienced expert who has done this a number of times before and knows what works and what does NOT work.  Make sure that they have rapport with the CEO, make sure that they demonstrate intuitive understanding of YOUR business and then bind them contractually for the duration and give them an open door to the CEO as an Interim Executive.

On the face of all the evidence Bridgestone did NOT do this – probably because no one told them it was necessary – probably because almost no one does it that way which is a major reason why so many projects fail or come in seriously short of expectations.

That said there was obviously something TOXICALLY WRONG with the way Bridgestone were managing their IT Manager -- remember, since he or she was NOT on the Executive Team they were NOT really CIO – that alone could be enough reason for all the resignations.  Bridgestone embarked on a massively complex and very large project and, seemingly put a lot of responsibility on this person they called CIO and then did NOT give that person the muscle and support needed to do the job.  OR did something else that made the position totally untenable.

A recipe for failure!

So, does that let IBM off the hook?

NOT from where I sit.

Given that there clearly WAS a problem, it is a key element of IBM’s defence, then IBM should have done something about it.

Something like raising a “red flag” on the project and advising the CEO that in the absence of a robust and sustainable solution to the CIO problem they would have to cease work and withdraw their team until a suitable person was put in place.  But that would have been bad for planned revenue so I am guessing that typical IT person temerity (people who are good with computers are generally NOT good with people, particularly when faced with conflict) coupled to quarterly revenue target driven greed got in the way of IBM’s integrity !

That is a major problem with the business information systems industry, for the most part it is driven by people who are in the game for the money and NOT for the passion of exceptional solutions delivered to high quality standards that meet or exceed client expectations and come in on time and on budget.  The folk who are turned on by good solutions generally do NOT make it to the top.  So, if your fundamental commercial driver is NOT aligned with a quality outcome you will make technically BAD mistakes.  It seems that IBM did this.

After all, it seems they were working with an IT person who was punching below IBM’s weight and Bridgestone, according to their pleadings, was counting on IBM to provide the wisdom and maturity necessary to deliver the required outcome.  Problem is that in this case IBM were, seemingly both the main player AND the referee, because there was NO in-house referee of any substance, they changed on average every four months and you CANNOT learn about the business or the project in four months let alone manage a major player like IBM. 

Not to mention deal with whatever ugly governance toxicity caused all your predecessors to leave!

So, YES Bridgestone were at fault and NO that does NOT exonerate IBM – they should have intervened one way or another to stabilize the situation.  Perhaps they were cutting costs and deploying light weights on their side too?  Bridgestone allege they were.

The lesson for your organization

a. Make the CEO responsible – see my material on Executive Custody for guidance;

b. Appoint a highly experienced expert to run the project on behalf of the client and have that person report VERY closely to the CEO in an Interim Executive capacity with a VERY tough mandate to act on behalf of the CEO and a strong contract for the duration of the project – see my article on “ The Art of Project Leadership ” for some suggestions;

c.  and … see the sections that follow.

3.  Procurement – securing a robust, tough and enforceable contract

From the fact that Bridgestone are litigating against IBM one has to conclude that the contract was shaky.  In fact, if one reads the full pleading document it is apparent that whatever contract existed did NOT have teeth.

One of the reasons that the construction industry consistently produces high quality deliverables is that the construction industry makes use of well-established tough contracts that provide all the basis necessary for legal action against the contractor in the event of failure or sub-optimal outcomes.  So litigation is seldom required.

Signing the contractors contract, as it appears that Bridgestone did, after all everyone does it, is the first step in a journey to a sub-optimal outcome.  Having that contract signed by an IT Manager dressed up to look like a CIO is a recipe for disaster.

Before you can sign a tough contract you must follow a tough procurement process.  From the documents it appears that IBM were appointed on a “sort of negotiated basis”, they were already there, they drew up the requirements specification and then negotiated to execute it so, in a sense, they were again judge and jury.

For procurement to lay a foundation for a successful project:

a. It is vital that the CEO has first appointed their tough interim executive Project Leader / Project Director, someone with a large amount of procurement experience;

b. It is also vital that the procurement takes place against a tough and comprehensive procurement pack; c. with at least three to five bidders;

d. with a tough multi-stage adjudication procedure; e. resulting in a tough contract.

 See the discussion of the requirements for such a procurement approach on my website .

 Such a contract must lock the contractor into a fixed price for a clearly defined business outcome.

It must contractually bind provably competent contractor personnel individually to the project for the duration.

It must provide for detailed discovery BEFORE the price is finalized and the contract is signed so that there is NO room for “change of scope”.

There must be a comprehensive and highly detailed project plan and “Bill of Services” such that there is NO ambiguity about what the contractor quoted to do and how much they quoted for each component so that in the event that there really IS a legitimate basis for a variation order this can be managed effectively.

Please read the material on my website for more information.

4.  T he Business Process Myth – irrelevant, distracting and DANGEROUS

Next issue.

The project name “Order to Cash” speaks volumes.

This was clearly a “Business Process” orientated project.

How do I know that?

Firstly the whole industry does it that way.

Secondly “Order to Cash” is a classic example of the nonsensical gobbledegook that Business Process proponents use to describe things.

 “Order to Cash” is a substitute for -- order processing, works orders, warehousing, logistics, invoicing, credit control, …, or whatever Bridgestone exactly DID commission.

Wikipedia states “ Business process management (BPM) is a management discipline that focuses on improving corporate performance by managing and optimising a company's business processes ”.

The problem with “Business Process” is that most of the time it is NOT a “process” – a process is a sequential step wise flow of activities.  Most of business is NOT that way, yes there IS a progression from receiving an order to delivering the goods and receiving payment.  However, on a moment by moment basis it does NOT proceed in a sequential stepwise manner.

There are some people taking orders, some people making product, some people warehousing product, some people picking product, some people despatching product, some people generating invoices, some people following up overdue accounts and some people doing bank reconciliations, etc.

Each of these groups or individuals does their piece of work repetitively and reactively as phone calls and emails come in or people arrive at trade counters, as works orders come through in response to sales orders, as picking orders come through in response to sales orders, as trucks to particular destinations are filled or despatch deadlines are reached, as …, as ..., as…

Stuff happens and well trained staff keep things running.

Are there elements of process in places?

Yes, sometimes.

But the “order to cash process”?

What nonsense!

Then, to compound things expensive highly educated consultants come in and sit with client personnel and instead of listening, taking lots of notes and asking questions directed at gaining understanding – remember that the initial part of an engagement is, at least in theory, about the consultants learning how the business operates .  Remember that the staff KNOW how it works.

Instead the majority of consultants and certainly the GREAT majority of business process consultants almost immediately dive into drawing “Business Process Maps”, “Flow Charts”, etc.

In fact, the deception is so great that many of them insist on getting client personnel to learn how to draw these meaningless diagrams.  So, instead of client personnel quickly and succinctly explaining how the business works they are forced at best to digest and make sense of diagrams that make no sense and, at worst, they are forced to learn a techniques and do work that is entirely VALUELESS to them or their employer.  And then the consultants have the gall to CHARGE for this!

And, IF the consultant actually does the drawing themselves, they are so busy with their brown paper or their flip chart or their white board or their Visio or their proprietary software that they are only listening with half an ear and MISS half of what they are told.  Sometimes the miss is so severe that it only surfaces when the consultant presents a variation order because they were “NOT told about this” at which the personnel they imposed their arcane method on are either no longer there or are so intimidated that they do not argue.

Take a look at a typical business process map or flow chart of some component of an organization that you sort of understand.

What do you find?

There is MASSIVE real business complexity that is NOT reflected anywhere on the diagram because each block on the diagram needs anything from half an A4 page to MANY pages of text to fully describe it.  Yet the diagram has taken hours or days to prepare and forms the basis of the project documentation and all the work that follows.

And, because everybody does it and NOBODY really OWNS what is happening the people in the client organization who are ORDERED to sign this meaningless childish scribble do so for fear of seeming stupid!  Note that “sign-off” is one of those meaningless IT activities.

IF you want the signature to mean anything it MUST be associated with a TOUGH certificate which takes the form of “ I the undersigned John Citizen do hereby certify that this process map fully and accurately represents my business function at a level of detail such that I am ENTIRELY satisfied that IBM (or other consultant) FULLY understand my function such that they will be able to design and implement systems that will work in my area ”.

Try putting that in front of your average business representative and see if they sign it.

Going beyond that, there is a LIMIT to how much detail is accurately required about this thing they call the “as is”.

After all, we are ACTUALLY supposedly creating a NEW and better end state – that is the ONLY way we can justify the huge expenditure.

Yes, consultants DO need to understand the basics of the business and they DO need to know who is going to work with the system but, beyond that, how much detail is REALLY required?

Interestingly, NOT a lot.

The client personnel live all their lives in the “as is” so, provided the consultants CONSULT which most of the time they do NOT, mostly they storm along on their own mission and arrogantly DICTATE the solution they have decided that the client needs, the knowledge of the “as is” is always at hand.

The absurdity of the level of detail that many business information systems consultants insist on acquiring about the “as is” and getting paid for is highlighted by the following metaphor.

 There is a different and BETTER way and is discussed in some detail in my paper “ The Power of an Executive with a Blank Sheet of Paper ”.

Bring in a very experienced, very mature, executive level Strategic Solution Architect and starting with the Chief Executive have them DESCRIBE their vision of the future.  How they want the business to run when the new system is up and running.

Take off the blinkers of “as is” and focus on a practical and viable future state.  The business people know the present and its constraints and inefficiencies, facilitate them to take a view of an improved future state facilitated by someone who has the depth of experience and maturity to curb the vision when it runs away because people DO get carried away at times.  BUT focus on a high value future state and then go away and figure out how to get there.

This is NO different to the architect for a major new prestige office building sitting down with the CEO of the client company to understand their vision for the office of the future and going away to come back a few days later with sketches of concept designs.

If the architect forced the client to learn how to draw and make their own drawings the client would throw them out immediately.  Yet clients fall for this with Business Systems Consultants all the time.

The concept of a blank sheet of paper, informed by a pragmatic commercial view of what exists, which can ONLY be delivered by the top team initially, is THE way to go.

See also my article “ Business Process -- Irrelevant, Distracting and Dangerous ” for further discussion.

Using Business Process Mapping techniques to describe the desired future state of the business is so far off the mark that it hardly warrants comment.  Look at the arch bridge above – do you think that the engineers who designed that bridge studied expected traffic flow over the bridge to design it?  NO of course they did not!

The things that matter are the software functionality on a module by module basis correlated business function by business function coupled with the configuration of the system and particularly the validation data and master classification lists, see my article “ The Alternative to Business Process – the RIGHT Approach ” for a discussion of the correct approach.

Fundamentally, what is required is:

• Discovery of the strategic essence of the business – why it exists and HOW it thrives;
• High level functional definition of the components of the business;
• Definition of the key functional elements from a strategic essence perspective;
• Relate this to typical software modules available in the market place;
• High level specification of system requirements on a module by module basis;
• Tough procurement as discussed above;
• Determine what capabilities are to be delivered with standard software, what requires customization and what requires custom development;
• Detailed development of a comprehensive suite of representative configuration and master data -- determined by strategic essence;
• Specify and build software as required;
• Precision configure;
• Test, refine, test, finalize, accept;
• Laboratory program as discussed below including management prescribe workflow (aka process);
• Deploy and commission;

 There is much on my website relating to this approach.

 It is probable that IF Bridgestone had followed this approach there would have been MUCH less custom development.

This approach focuses attention in terms of deliverables on the two things that ALWAYS remain at the end of the project, the software and the configuration.  The Business Simulation Laboratory, described below, provides the mechanism to integrate this into the business and ensure that people are fully trained – the third component that remains.  The procurement approach should ensure that a rigorous project method that enforces the above points is followed.

5.  Absence of engineering rigor – sloppy projects and sloppy solutions

It is clearly apparent from the Bridgestone pleadings that IBM ran a sloppy project.  I do NOT say IBM AND Bridgestone, I say IBM – they CLAIM to be the experts.

Bridgestone in their pleadings make it clear that they appointed IBM as trusted advisors, as experts, as a leading brand in the field with a high level of confidence and trust that IBM would do right by them.

IBM failed outright and even allowed Bridgestone to go live despite acknowledging there were problems.  There is a point at which a responsible consultant stands firm and REFUSES to allow the client to go live or, at the very least requires the CEO to sign a TOUGH indemnity clause.

It is fundamentally so that success is the necessary consequence of a well-conceived project NOT failing!

Every successful engineering system and structure is successful for ONE ultimate reason, because it does NOT fail!

You can be positive and use positive language and have road shows until you are exhausted but you will NOT make a bridge stand up that has a defective design element or loading conditions massively in excess of the design.

If bridges failed the way business information systems projects fail NO ONE would ever cross a bridge, in fact there would be NO bridges to cross.  In fact, if the entire engineered environment operated to the extreme standards of sloppiness that characterizes the business information systems arena we would be living in grass huts – at least they would not kill us when they collapsed!

I am advocating a level of rigour, precision, accountability, etc that is far beyond ANYTHING that occurs in the business information systems industry, see my article on “ The Engineering Approach to Business Information Systems Defined ” for a discussion of the characteristics of this thing that I refer to as “The Engineering Approach” – it is a culture, a way of thinking, a way of doing that is unique to people who have made it their life long goal to create things of lasting value from nothing, these people are engineers and they know that without intense rigour and discipline bridges do NOT stand up!

So, you need a Project Leader who understands these principles and you need to find a contractor who understands them as well.  And then you need to apply them rigorously and conscientiously.

6.       Lack of formal Business Simulation Laboratory testing

Another very obvious element of the Bridgestone complaint and IBM’s response is that there WERE known problems BEFORE going live!

Bridgestone respond by saying that the failures that occurred did NOT correlate with the concerns purportedly raised by IBM.

So the situation degenerates to an admission by BOTH sides at some level that there WAS a decision taken to go live knowing that at some level there were problems.

BUT IT PROJECTS ARE LIKE THAT YOU SAY?

There is NO reason for them to be.

They are a field of engineering endeavour like any other, failure is inevitable UNTIL you eliminate every possible cause of failure from the solution.

In the case of software where admittedly the solution IS complex and abstract – see my article on “ The Critical Human Foundation ” on the real world human complexities that have a HUGE impact on projects of this nature it is necessary to be particularly disciplined and thorough.

The problems are compounded by the lack of formal engineering training and rigour, as discussed in the previous section but that is NOT my point here.

When an engineer is designing something that requires design elements that are different and unknown they resort to the Engineering Laboratory, a place where the REAL WORLD is simulated.  It looks nothing like the real world but the structures and test equipment behave like the real world.

The photograph shows an engineering laboratory in which a miniature steel frame bridge built by second year engineering students using accurately scaled miniature steel structural sections is being tested to destruction using a “Gravity Load Simulator”, the three triangle heavy frame in the centre right of the picture which allows a large vertical load to be applied to the miniature bridge in such a manner that the bridge will fail in a manner that accurately models the way a full scale bridge to the same design would fail if overloaded.

Engineers are schooled with this type of exposure to failure and how to prevent it.  The bulk of the undergraduate university curriculum for engineers relates to preventing failure and the construction of large buildings and other engineering structures is ALWAYS coupled to engineering laboratories that constantly test representative samples of material to destruction in order to provide required quality control.

A Business Simulation Laboratory LOOKS different, it is a room with tables and computers and a data projector or two but the principle of its design and application is the same.  The most experienced personnel of the client organization systematically work with small quantities of carefully selected representative data to do everything possible to cause the system to fail.

The dictum is “ break it until you cannot break it any more ”.

ONLY once this state has been achieved can the software then be fully configured and again tested, the workflow (that is process) dictated by management and configured, the reports, models (data warehouse), alerts, etc defined, built and tested and training material developed.  The training material should preferably be interactive.

Once ALL of the above has taken place and the system / systems have been manifestly proven to be ROBUST and reliable and ALL components are working THEN and ONLY then are ALL staff brought into the laboratory environment to be trained in SIMULATED live operations.

Rigorous application of this approach and a tough stand that management at every level and particularly the CEO WILL NOT authorize commissioning until the laboratory delivers a clean bill of health is critical to preventing the sort of catastrophe that Bridgestone suffered.

Should IBM have done this?

Categorically yes!

Were they negligent that they did not?

Well, YES BUT, there are very few people in the industry who know to do this let alone know HOW to do this.

That said, IF, as they claim, IBM told Bridgestone at some level that there WERE problems and they should NOT commission and Bridgestone overruled them then it is my contention that Bridgestone may have a different case but their present case is shaky.

On the other hand if, as Bridgestone claim, IBM grossly understated the problems and led them to believe that there might be a few issues but nothing serious whereas the entire solution was allegedly riddled with problems then it would seem that Bridgestone have a strong case.  The challenge for the judge is going to lie in establishing where the truth lies relative to those two poles.

And the ANSWER is that NEITHER position is actually defendable.  Either there were issues in which case the system should NOT have been commissioned or there were NO issues in which case the system should NOT have fallen over the way it did.

Those arguing in IBM’s defense will argue that the solution was too large and too complex to test thoroughly to which I respond that in ALL fields of engineering endeavour engineers find ways to ensure that failure does NOT occur and point to the International Space Station as an extreme example.  Accordingly, I hold that with effective engineering management of a formal Business Simulation Laboratory the Bridgestone systems would NOT have been commissioned when they were.

Ultimately it comes down to whether IBM were more negligent than the industry norm and that is a difficult question!

As a whole the evidence indicates that the industry IS habitually negligent and does NOT know a better way!

As far as I am concerned there is NO alternative to the Business Simulation Laboratory and a rigorous and robust testing program managed by a tough no nonsense senior person who will brook NO arguments for compromise.

7.  NO certification

There is an extension to the previous point, something that, on its own might have greatly reduced the risk of going live prematurely and that is a robust and tough “Readiness to Commission Certificate” or “Go-Live Certificate”.

Once ALL staff are trained in the Laboratory, THEN the entire project team are required to progressively sign a certificate of the following form – starting with the most junior team member:

Similar certificates should be required at different stages of the project.

The value of such a certificate is that it forces people to think.

Conventional IT “sign-off” concentrates on getting a signature on a piece of paper – I have seen project managers rushing round getting people to “please sign” because it is the target date for sign-off and since the goal is to get signatures it is relatively easy to do.

Turn it around, and put a tough certificate on the table that has clear contractual significance and “sign-off” suddenly becomes orders of magnitude more difficult.

Business Information Systems and IT Generally is primarily about people, see my article on “ The Human Foundation ” to better understand this point.

Thus the psychology of how one manages people on these projects is of paramount importance.  The psychology of a tough certificate with wording that clearly holds the people signing accountable cannot be under estimated – it forces people to think very carefully before putting their signatures on such a document.

And THAT is EXACTLY what you want.

You do NOT want people agreeing to the system being commissioned because of ANY pressure, you want them to ONLY agree because it is SAFE to proceed.

And you want each one of them to clearly understand that they WILL be held accountable.

So signing of the certificate might involve getting all relevant team members in a room with the CEO at the head of the table with the CEO looking each person in the eye, questioning them and ENSURING their commitment to their signature BEFORE they sign.  Make it DIFFICULT TO SIGN and easy NOT to sign.

8.  NO roll-back plan

Beyond that note that Bridgestone did NOT have a roll-back position.  They were apparently unable to roll back to the old systems.  That is an act of gross negligence that needs to be laid equally at the door of IBM and the CIO / IT Manager.

Frequently there is NO roll-back position because someone cannot figure out how to do it – that is negligence, find someone who CAN figure out how to do it and do it.

This should be NON-NEGOTIABLE!

From the documentation there are other factors.

Consideration of my factors relating to “ The REAL Issues in Business Information Systems” – the factors causing failure and the Critical Factors for Success (the subject of my book – available on the website together with the course of the same name ) will give you many more pointers to what went wrong and how YOU can avoid a similar catastrophic outcome for your organization.

Remember that “ if you do what you have always done you will get what you have always got ”, in this case, if you do what the IT and Business Information Systems / ERP industry has been doing for the last twenty years you will get what they have been delivering for the last twenty years – expensive projects that run over time and over budget and deliver sub-standard outcomes or outright failure.

I suggest for your consideration that there IS a better way that will deliver MUCH better outcomes, see my article on “ What does a HIGH VALUE Business Information System Solution look like ” for more ideas.

This outcome is outcome in which every aspect of the business runs smoothly, efficiently and effectively.  The systems “flow” with the business and most activities take LESS time than they did previously.

Most importantly executives and managers have a wealth of strategic, operational and tactical management available literally at the touch of a button.  Information that is of the highest quality and entirely reliable.

Executives and managers have time to be more creative and the business is able to sustain greater production, sales, etc with existing headcount or headcount has reduced by natural attrition over a  year or two.

The business is booming, it is growing faster than it did before, new customers, new products, new services.

All of this traceable back to the new systems that have been expertly configured to EXACTLY model the real world in which the business operates such that the systems are easy to use and FLOW with the business.

This is what IBM should have delivered to IBM and failed!

Please browse my website for more information, the home page, http://www.james-a-robertson-and-associates.com will give you a good overview of what I am advocating and help you to navigate the entire site.

The Table of Contents lists all the webpages on the site, there is a lot of deep content that is NOT immediately visible.

The Article Catalogue lists well over 150 articles on diverse topics.

The Article Keyword Cloud provides alphabetic keywords linking to many of the articles

The Conference page lists around 90 conference presentations, nearly all different with around 40 of the presentations live on the site for you to view and download -- email me if there is a presentation you would like that is not on the site.

Pulse Measurement

I offer a concise diagnostic “ Pulse Measurement ” light touch, high impact investigation that in the space of a day to ten days for most organizations, depending on size and problem complexity, will deliver you a concise written report that will accurately diagnose what is wrong with your current systems OR your project OR your IT Department and prescribe meaningful and actionable treatment for the conditions I identify.

I look forward to being of assistance to you.

Random Selection of Articles by Dr James Robertson

Dr James A Robertson PrEng

Business Systems NOT delivering?

Call the Business Systems Specialist

Dr James A Robertson  -- has been involved in the effective application of Business Information Systems, including but NOT limited to ERP, since 1987 and in the profitable and effective use of computers in Business since 1981.

Drawing on a diversity of experience, including formal military training in Quick Attack techniques at the Regimental Commander level, Dr Robertson has developed highly effective methods of investigating any sub-optimal Business Information Systems situation -- be it an established system or a stalled project or any other source of Executive frustration -- quickly and concisely diagnosing the root cause of the problem and prescribing concise practical actions that Business Executives can effectively act on see the Pulse Measurement page and also the Sample Reports page for redacted real reports.

He has also developed highly effective methods of strategically enriching systems to unlock the full potential of existing investments, see the Precision Configuration page and couples this to architecting small pieces of clever software that harness the full potential of your investment, see the Software page.

If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist [email protected]

Business System Failure is RIFE -- we offer insight into why this happens AND WHAT is required to prevent it.

Failure is at epidemic levels with massive damage done to client companies -- if you are NOT aware of the extent of the problem please visit the About Failure page for a catalog of major failures running to billions of Pounds and Dollars.

All evidence indicates that the established players do NOT know how to deliver stable, reliable high value solutions that WORK.

There HAS to be a better way!

This website provides information relating to that way with a large collection of white papers, presentations, standards documents, etc that you can use to start bringing the situation under control

We also offer high level advisory services with regard to the application of the principles advocated on this website

We offer an ENGINEERING APPROACH to addressing these issues

By Engineering I mean the formal, structured, highly disciplined, highly systematic, highly practical approach that consistently delivers results in ALL areas of human endeavor where formally trained and certified engineers are the ONLY practitioners permitted to operate -- think large buildings, factories, motor vehicles, aircraft -- highly complex systems that work at a level that we take it for granted that they WILL work and where failure is all but unthinkable and, when it happens, attracts immediate public attention and rigorous investigation directed at ensuring that such failures are prevented in the future -- in fact, everything that the management consulting industry that implements complex software systems is NOT

This approach is discussed further on the Engineering Approach page .

Search Articles

Book -- the critical factors for information technology investment success.

In 2003 I undertook an in-depth analysis of all the information and experience that I had gathered with regard to the factors giving rise to Business Information System failure including ERP and general IT and classified this information into a number of categories including " The Factors Causing Failure " and " The Critical Factors for Success " based on this I developed a two day Course " The Critical Factors for Information Technology Investment Success " which is still offered today.

Based on this I wrote the book of the same name, which is available in electronic form here for download:

Subscribe to our Newsletter

Click here to send us an email subscribing to our free newsletter -- all articles posted by James Robertson will be emailed to you

Connect with James Robertson on LinkedIn

James has a very detailed profile on LinkedIn should you require further information about him.

You can also connect with him on LinkedIn at http://www.linkedin.com/in/DrJamesARobertsonERPDoctor

James has an open networking profile -- click on "Connect" and use email address [email protected] .

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Articles by James A Robertson and Associates

There is a large body of white papers, articles and other content produced by Dr James Robertson available on this website

Please click here to visit the detailed listing of articles

Articles Issued by James A Robertson and Associates -- Article Categories

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Table of Contents

About Dr James A Robertson PrEng -- The Business Systems Doctor -- and Other Topics

Catalogue of Major Business Information System Failures

About the Engineering Approach

James Robertson's Value Add

Attributes of a HIGH VALUE solution

Recognizing Business System Failure

The Critical Human Foundation

Old Software IS Viable

From South Africa

Competencies of Dr James A Robertson PrEng

About Professor Malcolm McDonald

About my relationship with the Almighty Creator, Yah the Eternally Self-Existing

Comments relating to the Business Systems Industry and other topics

Testimonials and other positive material regarding James Robertson

Reference Articles

List of Articles

Article Catalogue

Achieving High Value Business Information System outcomes

Executive Custody -- What is it and HOW do you get it?

The REAL Issues in Integrated Business Information System Success

Part 1: Introduction

Part 2 -- Mythology and Lack of Executive Custody

Part 3 – Strategic Alignment and Precision Configuration

Why your ERP is NOT delivering and HOW to FIX it

IT Project Management

CEO Anthony Lee Comments on his experience of the Pulse Measurement

No Charge Guarantee on the Pulse Measurement Service

Examples of Pulse Measurement Outcomes

Critical questions regarding the Pulse Measurement™

The Pulse Measurement Workflow

The Critical Factors for Business System (ERP+) Investment Success in the Pulse Measurement

Indicative Pulse Measurement Durations

What is a JAR&A Pulse Measurement?

Survival of the fittest – why it makes sense to measure the pulse of your business

Examples of Pulse Measurement Outcomes over 24 years

Sample Pulse Measurement Reports

Strategic Essence: The Missing Link in Business Information Systems

Strategic Essence: Overview

Strategic Essence: Part 1 -- Strategy Defined

Strategic Essence: Part 2 -- Differentiation

Strategic Essence: Part 3 -- The Essence IS Different

Strategic Essence: Part 4 -- The Essence should be the Point of Departure

Strategic Essence: Part 5 -- Discovering Strategic Essence

Strategy -- the Essence of the Business: What is it and how do you develop actionable strategic plans?

Simple Steps to Increase the Strategic Value of your ERP Investment

Free Strategic Snapshot Toolset and Manual

A strategy focused planning system beyond traditional budgeting

Tough IT and ERP Procurement and Contracting that Works

Robust Business Systems Procurement

Part 1 -- Introduction

Part 2 -- Bill of Services, Laboratory, Go-live Certificate, etc

Part 3 -- Executive Engagement, Bid Compliance, Adjudication and other matters

Procurement Documents

Guidance and Advisory Services

The Art of Project Leadership

Why Regular Communication with the CEO is Vital

The Business Simulation Laboratory

Precision Configuration and Strategic Business Information Architecture

Precision Configuration based on Strategic Engineered Precision Taxonomies

The JAR&A Cubic Business Model

Highly Structured Strategic Chart of Accounts -- a Vital Element of your Corporate Information Arsenal

The Product Catalogue -- an Essential Element of any Precision Configuration

Attributes -- answers to the questions you have NOT yet thought to ask

Case Studies of Notably Successful Projects with high value Precision Configuration

092 Doing things differently and better -- ASCO Case Study 2-- BPM Summit 2013

088 Strategic ERP Invesment -- ASCO Case Study -- Service Management Conference and Exhibition Africa

026 Information Architecture and Design of FIS for Rennies Group -- Financial Information Systems Conf

018 CRM Risk Control: Designing and Implementing an Integrated Risk Mgmt Sys -- Integrated Risk Mgmt Conf

011 V3 Consulting Eng: Benefits of MIS to Professional Practice -- SAICE 15th Ann Conf on Computers in Civil Eng

Strategically Enriching your Business Information Systems

Part 2 -- Principles of Data Engineering

Part 3 -- Steps in applying these recommendations

Simple Steps to increase the strategic information value yield from your Business Systems Investment

The Full JAR&A Taxonomy Manual

Part 1: Introduction, Problem Statement, Definitions and Examples

Part 2: Why Use JAR&A, Required Knowledge and Experience, Cubic Business Model and Chart of Accounts and Taxonomy Software

Part 3: How to do it, Case Studies and White Papers and other References

Example General Ledger Manual

Business Process -- Irrelevant, Distracting and Dangerous

The RIGHT Approach

Custom Strategic Software Design and Oversight of Construction

Standards for Custom Software Specification

What IS Software?

IT Effectiveness

Organizing Outlook

Critical Factors for I.T. Success

A Moral and Ethical Dilemma -- Systems that Fail

Case Studies examining Business Information System failures

The BBC Digital Media Initiative Debacle

The Bridgestone -- IBM Conflict

Speaking and Training

Showcase of Conference Presentations

Most Viewed Presentations

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Why your ERP/BIS is NOT delivering and HOW to FIX it

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Other Seminars

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Conferences 80 to 99 -- 2009 to Present

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Contacting James A Robertson and Associates Limited

PR finger pointing: IBM and Bridgestone wrangle over failed ERP

A legal dispute between tire company, Bridgestone, and system integrator, IBM, over a failed ERP implementation has escalated into a war of words between the companies. Instead of keeping quiet about the details, in accord with usual practice, IBM has taken a strident public position against its customer Bridgestone. This approach represents a break from how system integrators usually handle public relations when IT projects fail.

Bridgestone Americas engaged IBM to install SAP software across the company. After spending $75 million for the system, Bridgestone claims it failed on going live, disrupting key processes such as inventory management and customer deliveries. Bridgestone says it was forced to  hire  SAP directly, to fix problems that IBM allegedly created, 

Ultimately, Bridgestone filed a lawsuit against IBM for $600 million, claiming $200 million in business losses and treble damages for fraud. You can download Bridgestone's legal complaint [pdf] here; much detail is redacted, which is surprising given how Acrobat handles such things.

It is extremely unusual for an integrator to wage a PR battle with its customer, regardless of how severe the situation.  In typical IT failure lawsuit situations, the software vendor and system integrator respond with bland statements saying they always do whatever is best for the customer. Although customer actions lie at the heart of many IT failures, software vendors and integrators are reluctant to take an official stance disputing the customer's explanation of events. (It's worth noting that an individual IBM employee once took to Twitter to call a customer's claims blaming IBM for project failure " ridiculous .")

IBM's public response to the Bridgestone claims represents a significant departure from standard public relations practice in these matters. IBM's  version of the story paints a harsh picture of Bridgestone:

Bridgestone filed a lawsuit claiming breach of contract and fraud against IBM regarding a recent SAP implementation. These claims against IBM are exaggerated, factually wrong and without merit. From the outset of this project, Bridgestone failed to meet critical commitments upon which the performance of IBM's obligations were predicated. Ultimately, Bridgestone's repeated failures had a significant impact on the project's cost and schedule, and its decision to prematurely roll-out the implementation across its entire business negatively impacted its operations. Bridgestone understood that this would be a challenging project. It had tried several times with other vendors and failed to upgrade its system. IBM was the only vendor to succeed in completing the upgrade to SAP. Notwithstanding the complexity of the project and its negative history, Bridgestone failed to staff the project with people who sufficiently understood its own legacy systems and could assist IBM in designing and converting them into a new SAP system. Throughout, Bridgestone lacked the necessary leadership to effectively manage the project; it replaced its CIO on six occasions in a 2 year period during the project term. Bridgestone failed to supply the necessary software, hardware and network infrastructure for the system to operate properly. In many instances, Bridgestone supplied inferior resources or no resources at all. After insisting that it have control over the design and final approval of the system, Bridgestone failed to timely approve those designs, failed to provide the necessary design documents for IBM to complete its work, and failed to conduct the required user testing necessary to understand how the system would work under real world conditions. IBM made concessions to Bridgestone for some problems that arose on the project and Bridgestone gave IBM a release. Bridgestone's suit reneges on its release Bridgestone ignored the clear and repeated recommendations from both IBM and members of its own IT staff to implement a staggered roll-out of the new system to mitigate risks to its business operations. Instead, Bridgestone's management insisted on a "big bang" go-live in which all aspects of the SAP system were required to be implemented simultaneously, across all of its North American tire operations. Bridgestone continued to demand that the system be implemented in this manner and on the scheduled go-live date, even after IBM had advised, for a period of at least six months prior, that the go-live date was premature and therefore fraught with business risk. As the go-live date drew near, IBM urged Bridgestone's management, in writing, to reconsider its decision. Bridgestone elected to proceed regardless of the identified risks, even after acknowledging that the system would fail to meet the go-live criteria that Bridgestone itself had set. At go-live, the system did experience some of the errors that IBM had predicted. In response, IBM provided extra personnel and resources to quickly address those errors and operations returned to normal. Since the implementation, Bridgestone has achieved record-setting financial results. IBM has implemented thousands of successful SAP projects and is consistently rated by Gartner and other independent analysts as the premier SAP implementation firm. IBM will vigorously defend itself in this matter.

The Business Insider article quoted above states that IBM's response offers "unusual internal insight" into a large IT failure. This point is actually wrong because almost every IT failures lawsuit, and the corresponding legal responses, includes detail and insight into the inner workings of the project. Even so, this detail is typically one-sided, making it almost impossible to discern what really happened from the lawsuit itself.

The article also quotes a McKinsey study stating that 45 percent of large IT projects run over-budget. The study also notes that approximately 56 percent of these projects do not deliver the entirety of their expected benefits, a critical dimension when evaluating any IT project.

Other research shows the range of failure to lie between 30 and 70 percent ; depending on the particular study, the variability can be large. The difficulty defining common measures of success or failure on IT projects drives this broad range. Nonetheless, IT failures represent an enormous level of waste, which this blog has estimated at  $3 trillion dollars per year worldwide.

On the surface, IBM's strategy seems reasonable -- attack Bridgestone's credibility by disputing claims in the lawsuit. However, my analysis indicates potential culpability on both sides. For example, Bridgestone says that IBM did not supply qualified resources throughout the project; if so, then IBM bears at least partial responsibility for the failure.

In theory, IBM's PR strategy could have worked but the execution fell short because IBM's claims seem equally unrealistic and one-sided as Bridgestone's. Although IBM's comments may be grounded in truth, they come across as little more than disingenuous legal posturing. The IT Devil's Triangle principle makes clear that no single party bears complete fault in most IT failures, so dramatic and one-sided claims in these cases generally are not accurate.

Since IT failures almost always arise from shared causes and responsibilities, PR messaging to the contrary is just not credible.

Disclosure: SAP is a client and sponsor of CxOTalk

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Robert N. Charette is a Contributing Editor and an acknowledged international authority on information technology and systems risk management.

This is already turning into one nasty, public fight.

On Monday, the newspaper The Tennessean ran an article about Nashville-based Bridgestone Americas, Inc ., which is part of the Japanese firm  Bridgestone Tire and Auto-service Corporation , bringing a US$600 million lawsuit against IBM . Bridgestone alleged in its complaint (pdf) that when the new US$75 million plus SAP-based invoicing, accounting, and product delivery system went live in January 2012, it found "that there were extremely serious defects in the IBM SAP design solution as implemented which Bridgestone had no reason to expect and for which IBM offered no explanation consistent with the purported concerns IBM had raised.”

As a result, the lawsuit states, “Bridgestone has suffered damages in excess of $200,000,000, and continues to suffer damages from injury to its reputation and customer relations.”

The lawsuit, which was filed 29 October, was sealed until recently. While the legal complaint is heavily redacted, in it Bridgestone alleges that IBM engaged in a “pattern of deception, intentional misrepresentation, and concealment” over its capabilities and the actual status of the project risks and problems. For example, Bridgestone states that IBM “assigned individuals, including the chief technical architect for the project, who did not possess the proper knowledge, skill, education, training, experience, technical expertise, and qualifications to perform the services necessary for the successful design and implementation." The lawsuit also says a lot of the work was outsourced to IBM workers in India and China who possessed less than stellar development skills and practices.

Bridgestone’s lawsuit alleges: (1) Fraud in the inducement and contract performance; (2) misrepresentation in business transactions; (3) constructive fraud; (4) violations of the Tennessee Consumer Protection Act; (5) gross negligence, and (6) breach of contract. The company wants a jury trial.

IBM, which has taken a battering over other failed IT implementations, including the Queensland Health payroll fiasco , the Indiana government outsourcing farce which is still unresolved , the Texas government outsourcing debacle , and the recent botched Pennsylvania government system implementation , has come out swinging. IBM immediately, publicly, and vehemently rejected the claims brought by Bridgestone. IBM gave its side of the story Wednesday to Business Insider , claiming in a statement that:

“Bridgestone filed a lawsuit claiming breach of contract and fraud against IBM regarding a recent SAP implementation. These claims against IBM are exaggerated, factually wrong and without merit. From the outset of this project, Bridgestone failed to meet critical commitments upon which the performance of IBM’s obligations were predicated. Ultimately, Bridgestone’s repeated failures had a significant impact on the project’s cost and schedule, and its decision to prematurely roll-out the implementation across its entire business negatively impacted its operations."

Among the claims IBM made were that:

Bridgestone understood that this would be a challenging project. It had tried several times with other vendors and failed to upgrade its system. IBM was the only vendor to succeed in completing the upgrade to SAP. Notwithstanding the complexity of the project and its negative history, Bridgestone failed to staff the project with people who sufficiently understood its own legacy systems and could assist IBM in designing and converting them into a new SAP system. Throughout, Bridgestone lacked the necessary leadership to effectively manage the project; it replaced its CIO on six occasions in a 2 year period during the project term. Bridgestone failed to supply the necessary software, hardware and network infrastructure for the system to operate properly. In many instances, Bridgestone supplied inferior resources or no resources at all.

There is a lot longer laundry list of complaints which you can read in the Business Insider piece , but you get IBM's gist. Bridgestone, when asked to comment on IBM's statement blaming it for all the system's resulting problems, said its only response is contained in the complaint filed with the lawsuit.

A careful reading of Bridgestone’s complaint includes all of IBM’s points above and says why the tire company thinks those points don’t hold any (legal) water. The redacted proprietary parts of the complaint (which due to someone’s poor understanding of how to use redaction in PDF documents, is easily readable) discusses what appears to be the specific promises by IBM regarding its skills and capabilities, as well as how IBM said it would manage the implementation and any problems that would arise.

Bridgestone in its complaint says that it brought the lawsuit after mediation failed. It also indicated that it was during the mediation effort that it found out “that IBM had been engaged in a course of intentional deception, fraud, and misrepresentation throughout the project.” This seems to indicate that some sort of out of court settlement, like what happened when Avantor brought a lawsuit against IBM a year ago for “reckless indifference"   on another bungled SAP project, is not likely.

How much of Bridgestone’s lawsuit will stand is anyone’s guess. Some of the specific allegations in the complaint, many of which include IBM’s representations in the redacted bits, could, to my distinctly non-lawyerly eye, be thrown out as IBM merely engaging in puffery over its skills and capabilities . That's what happened when Marin County, Calif., sued Deloitte Consulting for fraud over an SAP project in 2010. Other allegations including IBM's agreement to only use personnel possessing the proper expertise and knowledge to carry out the statement of work may be more promising.

I’ll keep you updated on the progress of both the lawsuit and public brawl.

Photo: Tomohiro Ohsumi/Bloomberg/Getty Images

Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.

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$4.7M Settlement Approved for IBM Workers Represented by Small Manhattan Firm

The ruling capped nearly six years of litigation in the case, which was complicated by new pleading standards and the death of a Manhattan federal judge.

July 21, 2021 at 05:29 PM

3 minute read

Tom McParland

Share with email, thank you for sharing, what you need to know.

• The ruling also approved $1.4 million in attorney fees for the Zamansky law firm, a small four-attorney shop in Manhattan.
• The long-running case was complicated by changes in the law, as well as the death of U.S. District Judge William H. Pauley III earlier this month.
• The IBM defendants were represented by Davis, Polk & Wardwell.

A Manhattan federal judge said Wednesday that she would approve a $4.7 million settlement for a class of IBM employees in a long-running lawsuit that worked its way all the way up to the U.S. Supreme Court and back again.

The ruling, from U.S. District Judge Colleen McMahon of the Southern District of New York, capped nearly six years of litigation in the case, which was complicated by heightened standards for pleading violations of fiduciary duties under the Employee Retirement Income Security Act of 1974.

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Ibm rips into bridgestone over $600 million lawsuit.

IBM CEO Ginni Rometty

As we previously reported , tire company Bridgestone is suing IBM over a $75 million computer system it says performed so poorly it threw Bridgestone’s "entire business operation into chaos."

IBM is vigorously defending itself. It insists it was Bridgestone's mismanagement of the project that caused all of the problems.

In fact, IBM tells Business Insider, the company "lacked leadership" in the tech area, and replaced its chief information officer six times during the two-year project, among other failings.

The new computer system, built on SAP software, controls Bridgestones' customer orders and fulfillment. Bridgestone's complaint alleges:

“IBM’s defective system lost or deleted scheduled customer orders, would not process orders, duplicated, or partially processed orders and, for those limited orders that were processed, did not complete critical corresponding business applications.”

It's seeking up to $600 million in damages, reports the Tennessean . (Full complaint, PDF .)

We contacted IBM and asked a spokesperson to clarify. How was this customer at fault for the troubled computer system?

We got an earful via a phone call, followed by a long written statement from an IBM spokesperson. To summarize, IBM alleges:

The computers system was started, and messed up, by previous computer consultants. IBM was called in to fix it.

Bridgestone "lacked leadership." It replaced its chief information officer 6 times during the two-year project.

Bridgestone refused to do "necessary" testing before the system went live.

IBM warned Bridgestone about bugs and recommended the "go live" data be pushed back until the bugs were fixed.

IBM agreed to fix some of problems with the system if Bridgestone agreed to sign a release absolving IBM of responsibility. This lawsuit "reneges" on that release, IBM alleges.

This is an unusual internal insight into how a multimillion enterprise computer project can go awry. Almost half of them do, according to research from McKinsey .

But here's the full statement from IBM and a comment from Bridgestone:

Bridgestone filed a lawsuit claiming breach of contract and fraud against IBM regarding a recent SAP implementation. These claims against IBM are exaggerated, factually wrong and without merit. From the outset of this project, Bridgestone failed to meet critical commitments upon which the performance of IBM’s obligations were predicated.

Ultimately, Bridgestone’s repeated failures had a significant impact on the project’s cost and schedule, and its decision to prematurely roll-out the implementation across its entire business negatively impacted its operations.

Bridgestone understood that this would be a challenging project. It had tried several times with other vendors and failed to upgrade its system. IBM was the only vendor to succeed in completing the upgrade to SAP.

Notwithstanding the complexity of the project and its negative history, Bridgestone failed to staff the project with people who sufficiently understood its own legacy systems and could assist IBM in designing and converting them into a new SAP system. Throughout, Bridgestone lacked the necessary leadership to effectively manage the project; it replaced its CIO on six occasions in a 2 year period during the project term.

Bridgestone failed to supply the necessary software, hardware and network infrastructure for the system to operate properly. In many instances, Bridgestone supplied inferior resources or no resources at all.

After insisting that it have control over the design and final approval of the system, Bridgestone failed to timely approve those designs, failed to provide the necessary design documents for IBM to complete its work, and failed to conduct the required user testing necessary to understand how the system would work under real world conditions.

IBM made concessions to Bridgestone for some problems that arose on the project and Bridgestone gave IBM a release. Bridgestone’s suit reneges on its release

Bridgestone ignored the clear and repeated recommendations from both IBM and members of its own IT staff to implement a staggered roll-out of the new system to mitigate risks to its business operations. Instead, Bridgestone's management insisted on a "big bang" go-live in which all aspects of the SAP system were required to be implemented simultaneously, across all of its North American tire operations.

Bridgestone continued to demand that the system be implemented in this manner and on the scheduled go-live date, even after IBM had advised, for a period of at least six months prior, that the go-live date was premature and therefore fraught with business risk. As the go-live date drew near, IBM urged Bridgestone's management, in writing, to reconsider its decision. Bridgestone elected to proceed regardless of the identified risks, even after acknowledging that the system would fail to meet the go-live criteria that Bridgestone itself had set.

At go-live, the system did experience some of the errors that IBM had predicted. In response, IBM provided extra personnel and resources to quickly address those errors and operations returned to normal. Since the implementation, Bridgestone has achieved record-setting financial results.

IBM has implemented thousands of successful SAP projects and is consistently rated by Gartner and other independent analysts as the premier SAP implementation firm. IBM will vigorously defend itself in this matter.

Bridgestone sent us this comment:

Bridgestone Americas, Inc. (BSA) filed suit against IBM on October 29, 2013 in federal court in Nashville, Tennessee. Due to confidentiality restrictions, BSA was required to file this complaint under seal. A redacted complaint which is available to the public was filed on November 12, 2013 . The allegations in the redacted complaint speak for themselves, and BSA has no further comment at this time.

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets, for Reuters Legal. He has previously written for Bloomberg Law and Thomson Reuters Practical Law and practiced as an attorney.

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IBM’s Implementation of SAP at Bridgestone: Don’t Tread on Me Update

• October 6, 2015

John Belden

• Reading Time: 3 minutes

According to court filings, both parties believe that an out of court settlement is not in reach and that resolution can only come through a trial. Each side has presented its theory of the case that I will attempt to summarize below.

Bridgestone claims IBM:

• Misrepresented itself as an SAP OTC expert before and throughout the implementation
• Violated provisions of the Tennessee Consumer Protection Act
• Was negligent in execution
• Breached contractual agreements

In its defense, IBM sites that Bridgestone:

• Signed agreements for change orders that impacted both cost and schedule
• Made the call to go-live against IBM’s advice
• Contractually agreed to not rely on any IBM representations outside the contract and that it would not seek damages beyond fees paid to IBM
• Did not fulfill its contractual obligations

What has been happening in the last 680 days can only be described as a ripping of the kimono open for each side. The ground rules for discovery were set wide ranging with some interesting precedents being set regarding the use of predictive coding with e-discovery tools. UpperEdge anticipates that system integrators will look to provide exclusions to the use of these tools in future agreements with customers.

Some interesting points surfaced from the court documents:

• Document discovery covers nearly a 12 year period from 12/1/2005 to 10/29/2013.
• Each side was required to provide full access to 35 document custodians (those individuals that have the greatest likelihood of possessing information relevant to the case).
• Each of the 35 custodians were subjected to e-document discovery to all email, hard drives and virtual drives for all file types with relevant extensions. These documents could be reviewed even if they were not specifically relevant to the case.
• All documents not accessible by each of the 35 custodians but considered relevant to the case were required to be turned over for discovery. Bridgestone has turned over more than 1.6 million documents as a result of this discovery.

The parties are now in the expert deposition period.   Each side is allowed to present 30 expert witnesses that can be deposed for 7 hours each. This period of expert discovery will continue until the end of 2015.

Motions for a summary judgment are scheduled to be filed in January of 2016 with briefs in opposition and reply briefs in support of the summary judgment to be filed in February.

Assuming that no summary judgment is reached, the trial is scheduled to begin on July 12, 2016, in the courtroom of Chief Judge Sharp in United States District Court for Middle District Tennessee.

UpperEdge follows these cases in an effort to improve the service offerings we provide to our clients. In this particular situation, it appears that IBM has a very strong case based nearly 100% on contract law, while Bridgestone is relying on consumer protections and the implicit trust of a business relationship.

At the start of a major project, nobody likes to think about the potential for negative outcomes. It appears to be clear in this situation that IBM was far more prepared from a legal and business perspective in the event of a negative outcome. At UpperEdge, we assist our clients by putting contracts in place that are balanced and provide guidance on managing the relationship to avoid these types of court battles while extracting the maximum value out of the consulting relationship.

If you would like to learn more about how UpperEdge has helped companies assess and avoid large IT transformation project risks, or if you have any questions or comments, please do not hesitate to contact [email protected] .

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