Scansource sues Avanade, alleging 'Bait-and-Switch'

Avanade a joint venture between Accenture (ACN) and Microsoft (MSFT), has been sued by ScanSource (SCSC) for what ScanSource calls a "bait-and-switch," after ScanSource saw Avanade's initial estimate for the installation of enterprise resource planning, or ERP, software system Microsoft Dynamics AX balloon from $17M to nearly $66M and from 11 months to three years, with the ERP system still not live. ScanSource's project is believed to be one of the largest global enterprise level Microsoft Dynamics AX implementations to date. ScanSource contracted with Avanade in 2009 to replace its aging information technology infrastructure with a new core system that would support ScanSource's continued global expansion. Avanade's implementation was originally scheduled to be completed within 11 months. The lawsuit, which was filed in U.S. District Court in Atlanta, alleges - among other things - fraud, tortious misrepresentation and breach of contract, and seeks tens of millions of dollars in damages that ScanSource has incurred and will continue to incur, as a result of Avanade's misconduct. According to the lawsuit, "As a result of Avanade's fraud and breaches, an implementation that was initially budgeted for $17M has now cost ScanSource approximately $37M- and is estimated by Accenture, Avanade's parent entity, to require an additional $29M to complete. This ballooning of the Project cost estimate from $17M to approximately $66M represents an almost 300% price increase for delivery of the global ERP implementation that is years behind the originally scheduled initial go live..."

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