Blame the System

John P. Mello Jr.

Sue ’em all and let the courts sort it out. That appears to be the motto of a former $5 billion wholesale drug distributor that has sued everyone connected to the installation of a computer system it blames for its financial ruin.

A bankruptcy trustee for FoxMeyer Corp., based in Carrollton, Tex., has filed lawsuits against its former accounting firm, Deloitte & Touche LLP; the software maker that ran the computer system, SAP AG Inc.; and the installer of the system, Andersen Consulting.

FoxMeyer alleges that Deloitte agreed to a damaging refinancing plan for the system. In the meantime, Andersen’s flawed implementation of the system helped drive FoxMeyer into liquidation, the suit avers, and SAP used the company as a guinea pig for its new R/3 Enterprise Resource Planning software.

When CEO contacted the defendants about the law suits, all three responded with prepared statements denying the allegations. Neither FoxMeyer’s bankruptcy trustee nor its attorney could be reached for comment.

Industry analysts don’t believe the lawsuits will seriously damage the performance of Germany-based SAP, which is the world’s fourth-largest independent software publisher. “I talk to a lot of companies that are evaluating software, and I get asked questions about the lawsuits,” observes Stacie McCullough, an analyst with Forrester Research Inc., in Cambridge, Mass. “But I don’t think the suit is going to have a significant impact on SAP’s success. It’s going to complicate its sales cycle, however, and that’s going to force them to offer concessions to buyers.”

How successful will FoxMeyer be in conferring blame for its bankruptcy on SAP and others? “There’s some validity to the lawsuit,” McCullough notes. “But the mistake many companies make when buying software systems is [believing] that, if they’re in trouble, software is going to pull them out. That’s not reality.”

COPYRIGHT 1998 CFO Publishing Corp.

COPYRIGHT 2004 Gale Group