Retailer sues over botched cloud project

Mobile phone accessories retailer Platinum Communications has sued its IT services partner over a problematic install of SAP Business ByDesign.

Platinum appointed Computer Networks to implement SAP Business ByDesign across its chain of 28 retail outlets Australia-wide in March this year.

Platinum previously used software from Pronto to power its retail operations. 

The retailer entered an agreement with Computer Networks to implement and maintain the hosted SAP software, for an annual license fee, from July 1, 2012.

Under the contract, Computer Networks was to provide consultancy services during execution and solution expansion phases of work, at a cost of $1000 a day.

The entire bill came to approximately $103,000, made up of around $85,000 in implementation costs and $15,000 in licensing fees.

Once the SAP solution was switched on, Platinum claimed its stores experienced "serious problems", with an undisclosed number of staff unable to log in, print receipts, open cash registers, complete returns and enter stock levels. 

The SAP software remained in operation until July 20, when Platinum decided to terminate the contract and switch back to Pronto.

Platinum alleged it incurred losses in excess of $400,000 during July as a result of the "failed installation of the system".

Computer Networks filed a statutory demand against Platinum in August seeking to have the $103,000 bill paid.

In response, Platinum filed Federal Court proceedings in October to have the bill set aside.

Computer Networks had earlier offered to reduce the sum of the implementation aspect of the bill by 20 percent, but the offer was rejected.

Justice John Edward Griffiths ruled the $103,000 could be set aside, on condition that Platinum file separate Federal Court proceedings against Computer Networks over the losses it claims to have incurred from the project.

The Federal Court would then test the merits of the $400,000 cross-claim.

Justice Griffiths said the proceedings had to be filed no later than 7 December 2012, and also sought written assurance that Platinum would "diligently prosecute those proceedings".

Computer Networks was ordered to pay court costs. It did not respond to a request for comment by the time of publication.

Computer Networks is headquartered in North Ryde, NSW, and has five offices around Australia. It deals predominantly with small and medium enterprises, and in 2010 became the first SAP hosting certified partner in the country. 

Platinum Communications has been in operation since 2003 and carries a range of devices and accessories from Apple, Nokia, Blackberry, Sony and HTC, among others. The retailer did not respond to request for comment by the time of publication.