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EDS takes on BSkyB over CRM implementation

25th Oct 2007
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EDS and BSkyB are squaring up in court over claims that the systems giant deliberately misled the broadcaster when it pitched for a CRM services contract.

BSkyB has accused EDS of making a "deliberate, cynical and dishonest" pitch for the £48 million contact, signed in 2000. The broadcaster subsequently terminated the agreement in March 2002 and claims to have spent £170 million on a replacement customer relationship management system. BSkyB is suing EDS for £709 million.

The contract is understood to have been terminated in 2002 after failed attempts to renegotiate the terms, but EDS claimed some of its engineers remained on site until 2003. It is understood that EDS will not only dispute the case itself but challenge the disparity between the value of the contract, £48 million, and the £709 million sum it is being sued for.

In opening remarks in a Holborn court, a barrister for BSkyB said that EDS had made a “dishonest” sales pitch for the contract, and that the firm had been negligent and deceitful in its presentation of what it would do. Opening the prosecution case, Mark Howard QC described EDS' performance as "woeful" and alleged that the company had "put forward a sales pitch knowing it was being done in a misleading way."

Howard said EDS had failed to use any recognised form of time and cost estimation system when tendering for the work, and simply produced a reflection of what it thought BSkyB wanted.

By July 2000, BSkyB had selected EDS as systems integrator for the project, beating out a competing bid from PricewaterhouseCoopers. But Howard said: “If the misrepresentations had not been made, Sky would not have selected them [EDS].”

He said that performance of the contract over the next nine months was “woeful”. In the summer of 2001 there was an effort to renegotiate the deal. However, this failed to resolve matters and BSkyB claims the contract was then terminated in March of the following year.

Howard quoted from documents written by some of the other companies working on the project with EDS. One, written in March 2001, assessed the project as being “in freefall”, and commented that the EDS team’s ability to deliver was “exceedingly low”.

Mark Barnes QC, for EDS, said the BSkyB allegations were deceptive, adding that they emerged only after the contract collapsed in 2003. "We suggest this is an artificial claim," he said. "It allows Sky to claim absurd and extravagant amounts of damages."

Barnes said that deceit was the "one sure way" BSkyB could use to try to ignore its responsibilities under the contracts it had agreed with EDS. "People do not make claims of fraud unless they need to, and they need to for that reason," he said.

Barnes said BSkyB made no mention of having been deceived until some time after the problems emerged. He said the main difficulty with the work was that BSkyB did not know what it wanted from EDS, meaning that new requirements "kept on emerging like handkerchiefs from a magician's sleeve."

"The one problem with this project was that it was totally unspecified," he said. "They knew they wanted a super-duper system, but had little idea beyond that."

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