National Grid sues Wipro over alleged botched SAP implementation

National Grid, an electric and gas utility company, has filed a lawsuit against IT services provider Wipro Ltd., alleging it delivered an ERP implementation project "that was of virtually no value to National Grid." It said the contractor was paid $140 million for its work.

This lawsuit, filed Dec. 1 in the U.S. District Court in New York, described a series of problems with an SAP deployment. 

For instance, National Grid alleged the "new SAP system miscalculated time, pay rates and reimbursements, so that employees were paid too little, too much or nothing at all." 

With respect to the supply chain functions, the ERP implementation project "devastated" the utility's procurement, inventory and vendor payment processes. Two months after going live, "National Grid's backlog of unpaid supplier invoices exceeded 15,000, and its inventory record keeping was in shambles."

Wipro, a global IT services provider based in India, with about $8.5 billion in revenue and nearly 170,000 employees, quickly refuted the lawsuit's allegations in a securities filing.

"National Grid has been a valued customer of Wipro in the U.S. and U.K. for several years," the firm said in its filing. "Wipro strongly believes that the allegations misstate facts and the claims are baseless. Wipro will vigorously contest the allegation in court."

Wipro said the ERP implementation project began in 2009 and had multiple vendors. The provider said it joined the project in 2010, and "the post go-live process was completed in 2014."

"During the course of this ERP implementation project, National Grid gave Wipro many positive evaluations. Wipro also received an award from National Grid U.S. with respect to this project in 2014," the firm said in its statement. 

It is not unusual to see a large ERP project end up in court. Earlier this year, MillerCoors filed a lawsuit against IT services firm HCL Technologies, an India-based IT services firm, over problems relating to a $100 million ERP implementation.

MillerCoors, in court papers, accused HCL of failing to provide leadership and to adequately staff the project. In its counterclaim, HCL said MillerCoors' leadership team "did not understand the operations of their own business."

National Grid is a multinational firm that provides utility services in the U.K. and in Massachusetts, New York and Rhode Island. The ERP deployment project began with the goal of upgrading back-office systems that run financials, HR, supply chain and procurement.

National Grid alleged that Wipro designed an "overly complex" SAP project.

"Rather than taking advantage of certain design and configuration options available within the out-of-the-box SAP software to minimize system complexity and reduce risk, Wipro's inexperienced consultants engaged in excessive customization of the base SAP system," according to the lawsuit.

The lawsuit claimed by September 2013, the continuing efforts to stabilize the new SAP system were costing approximately $30 million per month, totaling over $300 million.

National Grid did not respond by press time to a request for comment about the current usefulness of its SAP system.