solution

Please read the case below and answer Critical Thinking questions:

Bridgestone versus IBM

Bridgestone Americas, Inc., a subsidiary of the Japan-based Bridgestone Group, is a provider of tires and rubber-related products and services with operations in North and South America. Bridgestone North American is a major tire supplier in the United States, and on average, its customers submit one product order per second, eight hours per day, five days a week. In order to process such a high volume of orders, Bridgestone requires front- and back-office systems that work together seamlessly. To meet that goal, Bridgestone contracted with IBM in 2009 to replace its legacy information systems using software from SAP (one of the world’s largest software suppliers) to automate and accelerate the entire order-to-cash process. This process is considered the lifeline of any organization as it supports the tasks associated with order entry, order fulfillment, order shipment, invoicing, customer payment, and cash application to general ledger. Under the contract, IBM agreed to develop necessary new programs and implement a new system in such a manner that it integrated with other Bridgestone software. The project, which ran from 2009 to early 2012, was both large and complex. Ultimately, IBM charged Bridgestone almost $80 million for its services on this project—$30 million over budget. The system went live in January 2012, five months behind schedule, with all aspects of the system “going live” simultaneously across all of Bridgestone’s North American tire operations. According to IBM, this high-risk flash cutover was done only at Bridgestone’s insistence, over IBM’s objections that the system was not ready. IBM also alleged that one reason the system was not ready is that Bridgestone failed to fulfill certain contractual obligations. According to Bridgestone, the launch was a disaster. The system lost scheduled customer orders, would not process some orders, and duplicated or partially processed other orders. In addition, critical follow-up actions were not completed for the few orders that the system did initially process. In an effort to more quickly resolve the critical issues that arose after the system launched, Bridgestone chose to hire SAP directly to fix the many problems. IBM’s work in the months following the launch was focused on fixing problems in the programs it had written; unfortunately, according to Bridgestone, IBM’s failed troubleshooting work often resulted in new problems. In late 2013, Bridgestone filed suit against IBM in federal court in Nashville, Tennessee, alleging breach of contract, fraud, gross negligence, and misrepresentation on the part of IBM. Bridgestone is also pursuing claims under the Tennessee Consumer Protection Act. The tire company is seeking treble damages ($600 million) from IBM. Bridgestone claims it incurred more than $200 million in lost sales and additional costs as a result of the faulty implementation. Bridgestone also alleges that it relied on misrepresentations by IBM to award it the contract for this work. In addition, Bridgestone contends that IBM concealed and/or negligently failed to disclose material facts regarding the implementation of the system that would have resulted in different decisions regarding the project. Bridgestone further complained that the system was not sufficiently advanced to meet its needs and that IBM had assigned personnel lacking the necessary skills and experience to the project. For its part, IBM claims that Bridgestone failed to provide the necessary leadership for the project, asserting that the tire company replaced its CIO six times during the course of the project and failed to staff the project with employees who sufficiently understood its own legacy systems. In addition, IBM pointed out that the project had been attempted with other vendors who had failed to upgrade the system and that IBM had been called in to rescue the project. IBM also claimed that Bridgestone had refused to do necessary testing prior to the system going live and that IBM had strongly recommended that the system launch be delayed until known bugs were fixed. IBM said it had made some concessions to Bridgestone for some problems that came up during the project and that Bridgestone had signed a release absolving IBM of responsibility. It is highly unusual for two companies in such a dispute to make their issues so public as it results in bad public relations for both firms. Legal expenses and employee time and effort are expected to be quite high for both sides in this case. During pretrial discovery, Bridgestone turned over 1.6 million documents related to the case. Each side is permitted to present 30 expert witnesses who can be disposed for up to seven hours each.

Critical Thinking Questions

1. With 20-20 hindsight, what could each side have done differently to improve the outcome of this major project?

2. Which company’s reputation was harmed more by the publicity surrounding this project? What might have been done to better protect this company’s reputation?

3. At the time of this writing, the case has not been decided. Do research online to find out how things turned out.