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Big payout by integrator after failed SAP project

Cloud and business integrator Ctac, a listed company headquartered in Den Bosch, the Netherlands, with a turnover of almost €82m and 450 employees, has been legally forced to pay Leaseweb millions of euros for a failed SAP implementation. A Dutch court has fined Ctac to repay over €1m in already paid invoices, while Leaseweb does not have to pay another €1.1m in unpaid invoices. The court in the Netherlands also ruled that Ctac will be responsible for the damage suffered by Leaseweb.

Global hosting company Leaseweb, a company with more than 80,000 dedicated servers under management with services including private cloud, virtual servers, CDN, cyber security services and more, has estimated the damage at almost €5m. It is not yet known for which part of this estimated amount Ctac will have to pay.

At the end of 2015, Ctac was hired by Leaseweb to deploy SAP business software, a project that had to be completed before January 2017. In the last months of 2016 it became clear that the project had struggled to stay afloat and that delivery of the project had to be postponed. In December 2017, Ctac described this project in internal documents as ‘out of control’. Again, delivery dates would not be met; it was unclear when the project would be completed.

At the beginning of 2017, Leaseweb refused to pay Ctac’s bills after which the cloud and business integrator stopped delivering its services to Leaseweb. Leaseweb through the court then forced Ctac to continue working. In June 2017, Leaseweb finally terminated the contract and eventually had the project carried out by another company.

Ctac had meanwhile gone to court to enforce the payment of more than one million euros in arrears. According to Ctac, Leaseweb was responsible for the project issues and delays with the project, due to insufficient cooperation and support. Leaseweb then appeared in court with this hefty counterclaim of almost €5m. As ruled by court, Ctac is responsible for the damage suffered by Leaseweb although it is still unclear if this is the amount of damage that will be awarded.

According to the judge, Ctac ‘failed imputably’ by failing to warn in time of the delays (among other things). Leaseweb was allowed to dissolve the contract, and it did not have to pay the subsequent invoices. Ctac also had to pay back more than €1m for bills already paid, because the work delivered did not represent any value.