Media giant BSkyB sues EDS over troubled CRM system

The relationship between the U.K.'s largest digital television service provider and the systems integrator it commissioned to install a cutting-edge CRM software system has ended in court.

On Tuesday, James Murdoch's British Sky Broadcasting Group (BSkyB) announced that it had filed a legal claim against Electronic Data Services for "deceit, negligent misrepresentation and breach of contract" during the implementation of a multimillion-dollar CRM system to support operations at BSkyB's call centers.

BSkyB rolled out the system with EDS in 2000, but severed the relationship in early 2002 and, after failed discussions, decided to take legal action.

The original contract was worth US$109 million, according to an EDS spokesman, who said he hadn't seen any court documents related to the case. But EDS disagrees with its former client's charges and is ready to fight it out in court, he said. "We're going to vigorously defend our position, and there will be a counterclaim in the several millions of pounds for unpaid bills. It's absolutely outrageous."

At issue is a system that was to be built around CRM software from Chordiant Software, which specializes in business-to-consumer applications. The system, running on Sun Microsystems hardware, was to be housed at BSkyB's contact centers in Livingston and Dunfermline in Scotland, where as many as 1,000 agents field calls at any given time.

A company spokesman declined to offer details about the project or discuss the amount of money BSkyB is seeking. However, in an announcement in 2000 about the EDS-Chordiant rollout, BSkyB said it planned to integrate previously disparate data sources and create more comprehensive customer profiles. Richard Freudenstein, the company's chief operating officer, said at the time, "EDS provided a technically advanced solution that will make a valuable contribution to BSkyB's drive to lead innovation in customer service and maintain Sky Digital's industry-leading levels of customer retention."

In addition, subscribers would be able to access account, billing and other information and services via agent, phone, the Web or the television service itself.

However, according BSkyB's statement Tuesday, the relationship between the two companies ended after EDS "failed to perform its contractual obligations." After the severance, BSkyB subsidiary Sky Subscribers Services Ltd., which supports the company's operations, took over the integration work for the project, which is expected to wrap up "in the near future," according to the statement.

So far, BSkyB has spent US$310.8 million on software, systems integration, infrastructure costs and the revamp of the call center facilities. Moreover, the company said in its statement that it expects to spend another US$91 million during the next four years to finish the current implementation and continue to "maintain leading-edge" CRM systems for its growing subscriber base, which now stands at about 7 million customers.

The BSkyB spokesman confirmed that the Chordiant software is still running but declined to offer further details on the implementation's status until completion. According to a Chordiant statement, the applications being used include its Enterprise CRM platform, as well as its campaign management automation tool.

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More about British Sky BroadcastingChordiant SoftwareEDS AustraliaLivingstonSun Microsystems

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