BSkyB’s legal tussle with EDS has concluded and it’s now timely to reflect on the allegations made by claimant, the judgement reached by Justice Vivian Ramsey and the case’s consequences for IT outsourcers and their clients.

The bare bones of the matter are these.

In 2000, BSkyB, the UK’s largest satellite broadcaster, called for tenders to design, build, manage, implement and integrate processes and technology for a new CRM system for Sky’s Scottish contact centres. EDS won the bid in the face of keen competition from PwC, but then failed to deliver the project. Sky eventually sacked EDS and, in 2002, brought the project in-house.

Instead of the intended CRM project going live in July 2001 and being completed by March 2002 at a baseline budget of £47.6 million, Sky contended that the functionality for the CRM System was only completed in March 2006 at a cost of about £265 million.

The claim

Sky alleged that EDS made fraudulent and negligent misrepresentations as to resources, cost and time which led to EDS being selected in preference to PwC.

Visitors to these pages hear a lot about social CRM, and the ability of networks of customers to self-serve.

One of the assertions that is sometimes made is that customer service delivered by a customer-generated wiki is equivalent to service delivered through a company-generated knowledge base.

Here's the question. Is this really true? And if so, where is there a good illustration of this principle at work?

I recently sat on a Society of Consumer Affairs Professionals panel for a discussion on consumer rage. It was a fascinating event, and, sadly as it turns out, quite timely.

The consensus of the panel and attendees was that consumer rage was on the increase and in extreme cases posed a threat to the health and safety of customer contact staff. You can find my presentation at http://tinyurl.com/y9v6y9j

We now have a tragic example of the catastrophic effects of consumer rage.

Police in Northern Territory (Australia) have charged a 45-year old male, known as Bird, with nine counts of attempted murder, one count of unlawfully setting fire to a building, one count of intending to cause serious harm by causing an explosion and one count of recklessly endangering life.

Nineteen people were injured in an explosion allegedly caused by Bird, and four remain in hospital.

The man allegedly wheeled a shopping trolley loaded with jerry cans of fuel and fireworks into the downtown office of the Territory Insurance Office and set fire to it. Witnesses described it as a series of explosions that sounded like bombs.

Sir Vivian Ramsey, judge in the long-running BSkyB vs EDS case has instructed Hewlett Packard, owner of the EDS business, to pay interim damages of £200m (US$317 million).

Sky had alleged that EDS had made fraudulent claims and negligent misrepresentations to win the bid to design, build, manage, implement and integrate the process and technology for a new CRM system for Sky’s customer contact centres.

The judge has found in favour of Sky who claimed damages of £709 million (US$1.13 billion).

Damages must be paid by February 17th 2010, though HP is seeking permission to appeal the judgement.

Sky has won its English and Welsh High Court case against EDS, claiming damages of £709 million (US$1.13 billion).

In 2000, Sky called for tenders to design, build, manage, implement and integrate the process and technology for a new CRM system for Sky’s Scottish contact centres. EDS won the bid in the face of keen competition from PwC, but then failed to deliver the project. Sky eventually sacked EDS and, in 2002, brought the project in-house.

Sky alleged that EDS had made fraudulent claims and negligent misrepresentations to win the bid. Justice Vivian Ramsey found for Sky, asserting somewhat understatedly in his 468-page judgement that “the relationship [between Sky and EDS] was not a success.”

Instead of the intended CRM project going live in July 2001 and being completed by March 2002 at a baseline budget of £47.6m, Sky contended that the functionality for the CRM system was only completed in March 2006 at a cost of about £265m.

EDS’s defence that it did not make fraudulent claims about how long it would take to develop and install a £48 million CRM system for BSkyB was seriously damaged when a senior staff member committed perjury in the English and Welsh High Court.

Sir Vivian Ramsey, who presided in the BSkyB vs. EDS case, found that Joe Galloway, managing director of CRM for EDS at the time it pitched for Sky’s business, had misled BSkyB about how long it would take to complete the work when it emerged that he had lied in court about his academic qualifications.

Galloway claimed that he had attended Concordia College in the US Virgin Islands in person to earn his MBA. This was shown in cross examination to be a lie. In fact, Galloway had bought his qualification from an online 'diploma mill'.

It emerged that Mark Howard QC, who was acting for BSkyB, had also procured a similar degree for his pet dog, Lulu. The mill had awarded Lulu somewhat better results than it had Galloway. This revelation led the judge to rule that Galloway was not a credible witness.

Mr Justice Ramsey said that Galloway had been cavalier in providing estimates of timing for the project that he knew were not supported by adequate analysis.

In a landmark decision of the English and Welsh High Court, Justice Vivian Ramsay has ruled that the EDS bid team did act dishonestly and fraudulently by misrepresenting its expertise and resources in order to win the contract to develop and implement a new CRM system for BSkyB.

BSkyB, the UK’s largest satellite broadcaster, alleged that it had to sack EDS for failure to deliver, and to develop the system in-house, increasing costs from an expected £48 million to £265 million, and delaying roll-out by several years.

BSkyB has claimed £709 million (about US$1.6 billion) in damages from EDS. EDS’s failure to deliver meant that the customer service delivered by BSkyB’s contact centres was poor and that customer churn levels were unacceptably high. Lost business benefits are the primary basis for the damages claim, which EDS had called “absurd and extravagant”.

The full judgement is likely to be released within the next day or two. Because EDS is judged to have acted fraudulently the limits established in the contract on liability between the two parties no longer stand.

The quantum of damages has yet to be determined, but BSkyB is expecting at least £200 million.

EDS, which is now owned by Hewlett-Packard, will be appealing.

Worried outsourcers and systems integrators will have to wait a little longer for judgement to be passed in a landmark legal case which has massive implications for the CRM industry and beyond.

BSkyB vs. EDS is a case which industry insiders are watching very carefully. There are massive amounts of money at stake.

BSkyB, the UK’s largest satellite broadcaster, is claiming £709 million (about US$1.6 billion) in damages from EDS. It alleges that in 2000 the EDS bid team dishonestly and fraudulently misrepresented its expertise and resources in order to win the contract to develop and implement a new CRM system for BSkyB's contact centres. In the end, BSkyB says they had to sack EDS for failure to deliver, and to develop the system in-house.

The hearing in the Technology and Construction Court of the Queens Bench Division of the English and Welsh High Court ended in July 2008, after more than 9 months of evidence, but the complexity of the case and sheer quantity of argument presented by both sides has meant that the judge, Mr. Justice Ramsey, has yet to hand down his judgment.

Westpac is one of the big 4 banks in Australia. For the time being.

Displaying an amazing insensitivity to its customers, Westpac recently raised the cost of its variable home mortgage product by 45 basis points following the Reserve Bank's decision to raise the central bank lending rate by 25 basis points.

The other big banks sat on the sideline and watched Westpac being pilloried. Even Kevin Rudd, Australia's prime minister, felt compelled to comment.

Westpac then released an 8 minute animated video justifying the rate rise. In a tone that was both condescending and patronising, Westpac explained that raising mortgage rates was analogous to a banana smoothie producer having to increase the prices of its smoothies because of a shortage of bananas caused by a natural disaster. The natural disaster for the bank was the GFC, and the cost of Westpac's most basic input, money, had gone up. So costs had to be passed on. Geddit?

To make the explanantion clear to its idiotic customers, the Westpac voiceover borrowed from the traditional opening sentence of many a children's story: "Once upon a time there were big, lush fields of banana crops.."

Astroturf, we all know, is the grass that you have when you don’t have grass. It is faux lawn; plastic turf masquerading as the real thing. I might add it’s a pretty good proxy for many greensward applications, but there are serious doubts about its merit in the world of social media.

Marketers are skilled in delivery of carefully constructed outbound messages to chosen customers. If it’s advertising, the sponsor of the message is clearly the brand owner. If it’s PR-generated editorial, the sponsor’s identity is often ambiguous. If it’s viral campaigning, the sponsor is concealed.

Just as there are established conventions for communicating via email (don’t SHOUT by using CAPITALS) there appear to be emerging conventions in social media interactions. One of them is to be honest about your identity.