Deloitte hit with $30M lawsuit over failed ERP project

California's Marin County says ERP system was substantially worse than legacy system it was meant to replace

California's Marin County has sued Deloitte Consulting LLP for $30 million over a botched SAP Enterprise Resource Planning ( ERP ) project.

The lawsuit, filed in Marin County Superior Court last Friday, accuses Deloitte of misrepresenting its skills and capabilities when originally pitching for the project back in 2004.

The 38-page complaint alleges that Deloitte was lying when the company promised to assemble a team of its "best resources" for the project and when it claimed to have "deep SAP and public sector knowledge" when marketing itself to the county.

Deloitte's misrepresentation of facts resulted in a defectively designed and deficiently implemented project that resulted in the county having to pay millions of dollars to remedy, the lawsuit alleged.

Meanwhile, Deloitte is claiming that it fulfilled all of its obligations under the contract. The company filed an administrative claim last week with the Marin County Board of Supervisors seeking more than $444,000 in unpaid dues, and an additional $111,000 in late charges.

"To be clear, the SAP software was working properly when we completed our work in November 2007," a company spokesman said by e-mail.

"Although we are confident that we will prevail in court, it remains our belief that this dispute can and should be resolved in a more logical fashion that benefits the County and its taxpayers," the statement said.

According to Marin County's complaint, the county hired Deloitte to replace its aging financial management, payroll and HR systems because the county did not have the skills to accomplish the task in-house.

At the time it was hired, Deloitte knew that the county would depend exclusively on Deloitte's resources and on its recommendations for the project, the complaint noted.

"Throughout the months-long selection process County officials stressed to Deloitte that County officials did not have experience working on projects," such as the SAP implementation, the complaint said.

Deloitte knew that its consultants were the only ones with SAP knowledge on the project and that it would be the "lead party" on the entire effort.

Deloitte was selected from a pool of 13 vendors, based on its claims about its skills, its integration testing processes and its change management abilities.

The company's failure to deliver on any of these fronts resulted in a SAP system that that was full of errors and substantially worse than the legacy system it was meant to replace. For instance, the error rate on the new payroll system was about five-times higher compared to the legacy system forcing the county to limit its use of the system and turn to manual processes instead, the complaint noted.

The problems became so bad that the county fired Deloitte in late 2007 and instituted a "Get Well" project to stabilize the system. Deloitte treated Marin County as little more than a "trial-and-error public sector training ground" for its inexperienced consultants, the lawsuit claimed.

Much of the system had to be re-designed, re-tested and re-implemented over the past few years at substantial taxpayer cost, the complaint alleged.

Deloitte did not have the ability or intention to provide the skilled resources needed for the project, but it claimed otherwise, just to secure the county's "lucrative" contract, the complaint noted while asking the court's to order Deloitte to pay back the $30 million the county has spent so far on the project.

In its administrative complaint, Deloitte noted that Marin County officials had not informed it of any deficiencies nor of any breach of contract, and neither had it withheld any payments even though the agreement between the two parties clearly allowed for action.

If the county had any issues with Deloitte, it never made them known until after a specific change order was placed in June 2007, shortly before the company was fired. "We fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project," the company noted.

Numerous lawsuits have been filed over the past several years in connection with failed ERP implementations. The only difference with Marin County's lawsuit is that it targets the systems integrator rather than the ERP vendor. Almost all other cases have involved customers suing ERP vendors directly for botched implementations.

Just two months ago for instance, a lawsuit between SAP and one of its customers Waste Management was quietly settled for an undisclosed amount .

Waste Management had earlier sued SAP for fraud after incurring what it said were significant damages from a $100 million ERP project that it said had turned out to be a complete disaster. Similarly, last August, Public Health Foundation Enterprises, sued Lawson Software over a failed ERP implementation.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags ERPDeloitte

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jaikumar Vijayan

Computerworld (US)
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?