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Big money: Marin County and Deloitte settle ERP lawsuit under gag order

Marin County and Deloitte Consulting settled their longstanding legal battle over a failed ERP implementation. Marin taxpayers and government transparency are the big losers.
By Michael Krigsman, Contributor on

Enterprise software can be a high stakes game of big money and influence, as the saga of Marin County and Deloitte Consulting demonstrates.

Photo from iStockphoto

California’s Marin County settled a longstanding lawsuit with Deloitte Consulting over a failed ERP project involving SAP software. The agreement offers Marin County little benefit and allows Deloitte to avoid bad publicity.

It is important to note that neither Marin nor Deloitte placed any blame on the SAP software: dynamics between customer and system integrator caused this failure.

press release (.pdf download) issued by the County describes the legal agreement:

The settlement follows the Court's dismissal of several of the County's claims, and the County's conclusion, after a full investigation, that it should voluntarily dismiss its remaining fraud claim and its allegations of improper influence of a County employee who managed the project.

According to the Marin Independent Journal, the County received $3.9 million from Deloitte, which is less than the $5 million it paid in legal fees. The settlement is covered by a gag order, which allows the parties to avoid disclosing details their agreement and prevents transparency or openness.

My earlier analysis summarized the facts of this case as follows:

Marin County bought SAP software in 2005 and engaged Deloitte Consulting to perform the implementation; after spending almost $30 million dollars, the county abandoned the effort, citing problems and deficiencies, and initiated a fraud lawsuit against Deloitte.

Shared responsibility. To understand this case, we must recognize that both Marin and Deloitte seemed to make serious errors in judgment and each pursued its own agenda irrespective of shared goals. The entire situation illustrates what happens when incompetence, inexperience, and greed shape a business relationship. At least, that's how it looks to me.

My previous analysis explains that Marin held significant responsibility for creating this situation:

In my opinion, having reviewed substantial documentation, Marin's decision to replace SAP seems intended primarily to strengthen its lawsuit position and push all accountability away from itself. Marin's position is extreme and not credible.

Marin's apparent lack of organizational and governance maturity, and its inability to absorb business transformation changes associated with this implementation, seem to be a basic driver underlying this failure.

The earlier analysis also describes Deloitte's equal contribution to the failure:

Most emphatically, I believe Deloitte shares equal, or perhaps even greater, culpability in creating this situation. Deloitte's posturing and unwillingness to accept even partial responsibility for the failure appears inconsistent with the facts. Deloitte seems focused on compensation arising from the implementation process itself, without regard to whether the client achieved successful results or outcomes.

This case demonstrates how IT Devil's Triangle conflicts of interests can undermine an IT project; when active self-interest replaces shared goals and objectives then failure becomes a virtual certainty. 

In summary, it appears Marin took on more than project than it could handle while Deloitte tried to milk the situation for every possible dollar. Taxpayers in Marin County are the big losers.

Read More About the IT Devil's Triangle:
Exploring the Devil’s Triangle
The IT failures blame game (part 1)
The IT failures blame game (part 2)
‘Pain chains’ and the IT Devil’s Triangle

Read More about Marin and Deloitte:
Marin County claims racketeering against Deloitte and SAP, part 1
CIO analysis: Marin County vs. Deloitte and SAP, part 2
Marin County sues Deloitte: Alleges fraud on SAP project
Understanding Marin County's $30 million ERP failure
Marin County abandons $30 million ERP failure

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