New Hampshire-based Connection charges IBM with failed software upgrade

In lawsuit, firm says it lost ‘millions’ in botched switch to new system

IBM botched a $9.2 million contract to upgrade Merrimack-based Connection’s financial software, disrupting the tech vendor’s business and causing it to lose “millions of dollars,” according to a lawsuit filed Friday in U.S. District Court in Concord.

The suit squares off two publicly traded technology firms: Connection, with annual revenue of just under $3 billion, with IBM, which has over $57 billion in revenue.

According to the suit, Connection contracted with IBM in 2017 to implement a new enterprise resource planning system, which companies rely on to manages customer purchasing, billing order fulfillment, financial accounting, inventory tracking and payment/credit card procession. Connection had been using a system known as JDE World since 1998, but in 2013 IBM recommended upgrading to a newer JDE platform, EnterpriseOne, saying it would be faster and less costly to implement.

IBM, charging $600,000 for a preliminary investigation, concluded that it could do a “vanilla” upgrade of the “out-of-the-box” software that would be suitable for Connection in 17 months. IBM charged the company $9.2 million for the switch, says the suit, even though it “knew that the complexities of Connection’s business required extensive configuration and high customization.”

The contract took longer than 17 months. Indeed, it didn’t go live until May 2020, with an added cost of $2 million, according to the complaint. When Connection officials expressed concerns about whether the system was ready to go live, IBM officials allegedly assured them that it was ready, that Connection was “too conservative,” suffering from “change management issues” and had to be willing to “rip off the Band-Aid,” since any issues could easily be resolved with a “workaround.” Besides, the lawsuit says, if something went wrong, it could always go back to JD World.

But when Connection switched to the new system it was allegedly unable to do a myriad of tasks reliably, including accepting orders, invoicing, accurately processing credit cards and tracking inventory. Taxes were charged to those who were tax-exempt, some orders were shipped when credit card actions were declined and other orders were accepted for goods Connection didn’t have, the complaint charges.

And, the complaint contends, Connection couldn’t return to the old system.

Connection contends it spent almost 81,000 hours fixing the deficiencies and that the disruptions cost the company to lose both customers and revenue. It charges IBM with eight counts, including breach of contract, professional negligence, fraudulent misrepresentation and violation of the NH Consumer Protection Act and asks for unspecified damages.

Connection attorney Christopher Carter of Hinckley, Allen & Snyder, declined comment at deadline.

IBM’s attorney hadn’t put in a court appearance at deadline, but the company released the following statement: “IBM rejects every allegation in the complaint and will defend itself vigorously in this case.”