Failed Software Implementation : Is It Your Company , Bad Luck or Fraud ?
By Derek Howard and Sara MacWilliams
December 2020 MiMfg Magazine 15
Michigan manufacturers depend on expensive software to streamline operations , keep up with regulatory requirements and ensure that employees in multiple locations can seamlessly collaborate to accomplish tasks . While enterprise software can bring increased efficiencies and profits across an organization , implementations are costly , complex , time consuming , daunting and sometimes do not go as planned .
If you ’ ve ever been through a costly software implementation , the scenarios below may look familiar which leads to the question , “ whose fault is it when something goes wrong ?”
Failed Implementation : Is it my Company ?
When a costly software implementation does not go smoothly , software companies typically point fingers at the customer — commonly complaining that the client ’ s staff is not competent , management overestimated the utility of the product or management is keeping the software company from completing implementation . Software engineers may also advise that everything works fine and the manufacturer should just “ invest ” more money to have implementation professionals do all of the work . These complaints can be valid but manufacturers should take a close look at the true cause of any delay .
What If it ’ s Not the Company ’ s Fault ?
In pursuit of profits , some software companies oversell products or implementation services that will never deliver the anticipated value for the time and money invested . Some software companies sell themselves as having Michigan offices dedicated to providing on-site help for complex manufacturing enterprises only to staff the job with a rotating cast of remote , marginally qualified “ engineers .” We have experienced horror stories of manufacturers spending many months in “ pre-sales ” discussions — carefully vetting the software product and explaining its needs — only to have the software company send an entirely different team of implementers after the contract is signed , who have no idea what was sold . When this happens and the implementation is delayed , manufacturers have the option of trying to negotiate a price discount or , in egregious cases , suing .
Big Tech : Nothing is Our Fault
Software companies often have armies of lawyers who prepare extensive contracts that attempt to exculpate software companies from even the worst misconduct . Software professionals are not licensed in Michigan , so even if the capabilities of the product are misrepresented , a malpractice claim is not an option . But even the best contracts cannot be used to shield companies from blatant misrepresentations , and Michigan courts are increasingly receptive to such claims .
Fraud v . Not Fraud : How to Tell
Michigan law recognizes a type of fraud that occurs when the seller deprives the buyer of the ability to make an informed choice — but that line is a fine one . For example , if a manufacturer was told that certain software would help streamline accounting functions but it does not work quite as expected , that is probably not fraud . If , on the other hand , a manufacturer told the software company that it needed certain software to work within its accounting and payroll systems , and the software company falsely assured it would , the manufacturer may have been defrauded .
If a manufacturer finds itself in a failed or failing software implementation , it is important to understand that there are options . Attorneys well versed in these highly complex cases can help to determine who was at fault and your legal options . 6
Sara MacWilliams is a business attorney based in Bloomfield Hills who represents Michigan manufacturers in a variety of software malfeasance cases . She may be reached at sm @ macwilliamslaw . com .
Derek Howard is a Bloomfield Hills-based business attorney representing Michigan manufacturers in a variety of software malfeasance cases . He may be reached at derek @ howardfirmplc . com .