IBM Rips Into Bridgestone's Alleged Lack Of 'Leadership' In $600 Million Lawsuit

IBMIBM CEO Ginni Rometty

As we previously reported, tire company Bridgestone is suing IBM over a $75 million computer system it says performed so poorly it threw Bridgestone's "entire business operation into chaos."

IBM is vigorously defending itself. It insists it was Bridgestone's mismanagement of the project that caused all of the problems.

In fact, IBM tells Business Insider, the company "lacked leadership" in the tech area, and replaced its chief information officer six times during the two-year project, among other failings.

The new computer system, built on SAP software, controls Bridgestones' customer orders and fulfillment. Bridgestone's complaint alleges:

"IBM's defective system lost or deleted scheduled customer orders, would not process orders, duplicated, or partially processed orders and, for those limited orders that were processed, did not complete critical corresponding business applications."

It's seeking up to $600 million in damages, reports the Tennessean.

We contacted IBM and asked a spokesperson to clarify. How was this customer at fault for the troubled computer system?

We got an earful via a phone call, followed by a long written statement from an IBM spokesperson. To summarize, IBM alleges:

• The computers system was started, and messed up, by previous computer consultants. IBM was called in to fix it.
• Bridgestone "lacked leadership." It replaced its chief information officer 6 times during the two-year project.
• Bridgestone refused to do "necessary" testing before the system went live.
• IBM warned Bridgestone about bugs and recommended the "go live" data be pushed back until the bugs were fixed.
• IBM agreed to fix some of problems with the system if Bridgestone agreed to sign a release absolving IBM of responsibility. This lawsuit "reneges" on that release, IBM alleges.

This is an unusual internal insight into how a multimillion enterprise computer project can go awry. Almost half of them do, according to research from McKinsey.

Bridgestone did not respond to a request for comment.

But here's the full statement from IBM:

Bridgestone filed a lawsuit claiming breach of contract and fraud against IBM regarding a recent SAP implementation. These claims against IBM are exaggerated, factually wrong and without merit. From the outset of this project, Bridgestone failed to meet critical commitments upon which the performance of IBM's obligations were predicated.

Ultimately, Bridgestone's repeated failures had a significant impact on the project's cost and schedule, and its decision to prematurely roll-out the implementation across its entire business negatively impacted its operations.

• Bridgestone understood that this would be a challenging project. It had tried several times with other vendors and failed to upgrade its system. IBM was the only vendor to succeed in completing the upgrade to SAP.
• Notwithstanding the complexity of the project and its negative history, Bridgestone failed to staff the project with people who sufficiently understood its own legacy systems and could assist IBM in designing and converting them into a new SAP system. Throughout, Bridgestone lacked the necessary leadership to effectively manage the project; it replaced its CIO on six occasions in a 2 year period during the project term.
• Bridgestone failed to supply the necessary software, hardware and network infrastructure for the system to operate properly. In many instances, Bridgestone supplied inferior resources or no resources at all.
• After insisting that it have control over the design and final approval of the system, Bridgestone failed to timely approve those designs, failed to provide the necessary design documents for IBM to complete its work, and failed to conduct the required user testing necessary to understand how the system would work under real world conditions.
• IBM made concessions to Bridgestone for some problems that arose on the project and Bridgestone gave IBM a release. Bridgestone's suit reneges on its release
• Bridgestone ignored the clear and repeated recommendations from both IBM and members of its own IT staff to implement a staggered roll-out of the new system to mitigate risks to its business operations. Instead, Bridgestone's management insisted on a "big bang" go-live in which all aspects of the SAP system were required to be implemented simultaneously, across all of its North American tire operations.
• Bridgestone continued to demand that the system be implemented in this manner and on the scheduled go-live date, even after IBM had advised, for a period of at least six months prior, that the go-live date was premature and therefore fraught with business risk. As the go-live date drew near, IBM urged Bridgestone's management, in writing, to reconsider its decision. Bridgestone elected to proceed regardless of the identified risks, even after acknowledging that the system would fail to meet the go-live criteria that Bridgestone itself had set.
• At go-live, the system did experience some of the errors that IBM had predicted. In response, IBM provided extra personnel and resources to quickly address those errors and operations returned to normal. Since the implementation, Bridgestone has achieved record-setting financial results.

IBM has implemented thousands of successful SAP projects and is consistently rated by Gartner and other independent analysts as the premier SAP implementation firm. IBM will vigorously defend itself in this matter.