BSkyB beats HP in outsourced CRM suit

The broadcaster expects to win at least £200m in costs and damages, after a judge decided that HP's EDS had lied in order to secure a contract
Written by David Meyer, Contributor

British Sky Broadcasting has won its long-running court case against EDS over the failed design and implementation of a customer relationship management system.

On Tuesday, Mr Justice Ramsay found in the Royal Courts of Justice that EDS "had lied to Sky in order to secure a contract", according to a statement released by BSkyB. HP, which bought EDS in 2008, said in its own statement that it would be seeking permission to appeal the judgment.

BSkyB appointed EDS to build a new CRM system in 2000. The outsourcing contract was terminated by BSkyB two years later, after which the broadcaster completed the system in-house. It began legal action against its supplier in 2004, alleging "deceit, negligent misrepresentation and breach of contract" and seeking £709m in recompense. The case reached the courts in 2007.

In its statement on Tuesday, BSkyB noted that the final amount of costs and damages were yet to be determined by the court, but the company anticipated that HP Enterprise Services, as EDS is now known, would have to pay it at least £200m.

Referring to the case as a "legacy issue", due to the fact proceedings began before it bought EDS, HP pointed out in its statement that the court had dismissed most of the allegations in the suit.

"While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB," the company said. "As the world's largest technology company, HP has built a solid reputation based on strong governance and adherence to the highest ethical standards."

Martyn Hart, chairman of the National Outsourcing Association, said on Wednesday that it was unlikely any appeal by HP would go far.

"The dispute has been raging since 2004, and it appears HP/EDS will finally have to bite the bullet and cough up almost £200m for misrepresenting its talents," Hart said in a statement. "This is a painful result for the company, especially after the copious legal fees it has, no doubt, incurred through years of legal wrangling."

Hart said the case set an important precedent for outsourcing, and would lead to changes in the way companies go about tendering, due diligence, selection and contracting.

"Some of the most important changes will of course be in the way an end-user assesses a supplier's ability to do the job," Hart said. "This is where things went so significantly wrong in this case — promising the earth and delivering something rather different."

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