Failed Software Implementation: Is It Your Company, Bad Luck or Fraud?

This article appeared in the December 2020 issue of MiMfg Magazine. Read the full issue and find past issues online.

Michigan manufacturers depend on expensive software to streamline operations, keep up with regulatory requirements and ensure that employees in multiple locations can seamlessly collaborate to accomplish tasks. While enterprise software can bring increased efficiencies and profits across an organization, implementations are costly, complex, time consuming, daunting and sometimes do not go as planned.

If you’ve ever been through a costly software implementation, the scenarios below may look familiar which leads to the question, “whose fault is it when something goes wrong?”

Failed Implementation: Is it my Company?

When a costly software implementation does not go smoothly, software companies typically point fingers at the customer — commonly complaining that the client’s staff is not competent, management overestimated the utility of the product or management is keeping the software company from completing implementation. Software engineers may also advise that everything works fine and the manufacturer should just “invest” more money to have implementation professionals do all of the work. These complaints can be valid but manufacturers should take a close look at the true cause of any delay.

What If it’s Not the Company’s Fault?

In pursuit of profits, some software companies oversell products or implementation services that will never deliver the anticipated value for the time and money invested. Some software companies sell themselves as having Michigan offices dedicated to providing on-site help for complex manufacturing enterprises only to staff the job with a rotating cast of remote, marginally qualified “engineers.” We have experienced horror stories of manufacturers spending many months in “pre-sales” discussions — carefully vetting the software product and explaining its needs — only to have the software company send an entirely different team of implementers after the contract is signed, who have no idea what was sold. When this happens and the implementation is delayed, manufacturers have the option of trying to negotiate a price discount or, in egregious cases, suing.

Big Tech: Nothing is Our Fault

Software companies often have armies of lawyers who prepare extensive contracts that attempt to exculpate software companies from even the worst misconduct. Software professionals are not licensed in Michigan, so even if the capabilities of the product are misrepresented, a malpractice claim is not an option. But even the best contracts cannot be used to shield companies from blatant misrepresentations, and Michigan courts are increasingly receptive to such claims.

Fraud v. Not Fraud: How to Tell

Michigan law recognizes a type of fraud that occurs when the seller deprives the buyer of the ability to make an informed choice — but that line is a fine one. For example, if a manufacturer was told that certain software would help streamline accounting functions but it does not work quite as expected, that is probably not fraud. If, on the other hand, a manufacturer told the software company that it needed certain software to work within its accounting and payroll systems, and the software company falsely assured it would, the manufacturer may have been defrauded.

If a manufacturer finds itself in a failed or failing software implementation, it is important to understand that there are options. Attorneys well versed in these highly complex cases can help to determine who was at fault and your legal options.

About the Authors

Sara MacWilliamsSara MacWilliams is a business attorney based in Bloomfield Hills who represents Michigan manufacturers in a variety of software malfeasance cases. She may be reached at


Derek HowardDerek Howard is a Bloomfield Hills-based business attorney representing Michigan manufacturers in a variety of software malfeasance cases. He may be reached at