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MFI stumbles over SAP writ

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MFI Furniture Group has until Tuesday to serve a writ for compensation against IBM before its claim expires.

Former MFI chief executive John Hancock said last summer the company would seek compensation from IBM and other parties involved in the bodged implementation of a £50m SAP system that cost the retailer an additional £30m, was responsible for substantial losses, and the heads of two directors in 2004.

MFI registered a writ against IBM in August last year, almost a year after it exposed the gremlins in its SAP supply chain system, and just after it finished clearing up the mess.

The Register understands that the retailer was under pressure to file the action before it was ready to pursue it because of contractual terms that put a time limit on compensation claims against IBM.

The writ was amended on October 7, just three days after the resignation of CEO John Hancock, who had presided over the implementation, the crisis, the response, and the preparation for legal action.

MFI had four months to serve the writ on IBM, but the retailer left it in an unusual state of limbo. From Tuesday, 7 February, MFI will no longer be able to pursue the action unless it is able to convince a judge that there are extraordinary circumstances that have delayed its action.

The system was supplied by SAP, implemented by IBM, and consulting support was given by KSA.

When the crisis emerged in September 2004, both MFI and SAP said the software had not been the source of the problems. The retailer blamed the botched transfer of data from old computer systems and the failure of staff to work in new processes.

These problems arose despite the implementation being handled in stages over a period of years. When MFI was asked at the time how it could have run into such serious issues with an implementation that was phased and managed by IBM, one of the biggest names in the business, it said the question was being pursued by Hancock. IBM refused to provide any comment at the time.

MFI was also well aware of the challenges it would face in the implementation. Old retail systems tend to be built around functions, and populated with data in different formats, and people who are not used to working outside their own departmental cloisters. These characteristics can complicate the implementation of an ERP system.

Compensation claims for computer system failures are notoriously difficult to bring to court, not the least because it is difficult to identify the root cause of failure in a complex implementation. This is especially relevant in large retail implementations. MFI's supply chain system had to be implemented across around 800 stores and 20 logistics sites. This complexity may have hindered MFI in the development of a case against IBM.

Hancock had also considered seeking compensation from SAP and KSA, but no record of any action has been found.

MFI declined to comment. Neither SAP or IBM were available for comment. ®

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