Microsoft Dynamics NAV Partners Targeting Customers of Struggling CDC Software’s Ross ERP

In October, CDC Corp., parent company of business-management software maker CDC Software, filed for Chapter 11 bankruptcy protection to "facilitate a restructuring, which is designed to restore the company to long-term financial health." Additionally, both organizations have been suspended from NASDAQ.

Now, some Microsoft Dynamics NAV partners in competitive verticals are spotting opportunities to offer a more attractive roadmap to ERP customers of beleaguered CDC Software.

CDC Software is a collection of software products assembled through acquisition and OEM partnership relationships, including ties to Microsoft Dynamics ERP.  They have purchased Dynamics-related firms in the past like c360, and they became a GP and AX partner.  But they have their own ERP product acquired in 2003 from Ross Systems, now called CDC Ross ERP.

Marc DiGiorgio, vice president of JustFoodERP, whose food industry ERP solution is based on Dynamics NAV, believes CDC Software customers may be shaken by the series of events surrounding their vendor.

"The word on the street is that the customers are a bit uneasy and they're shopping around," DiGiorgio said. "Customers aren't sure if they're going to get the support they need for the product. Although the product is running, they're concerned about the long-term viability. We're hearing this from a handful of customers we've known over the years. So we've decided to offer these customers a bit of a security blanket and an easier transition to the NAV community through our own promotions of a pricing model and a streamlined process to take a little bit of the sting about the reimplementation process."

"From our perspective they had a viable solution-they have about 1,000 customers running the ERP product but in the last few years they're had a number of setbacks with multiple lawsuits from customers and former employees," DiGiorgio added.

According to Computerworld, there were four lawsuits filed against Ross/CDC Software from May 2005 to April 2008, and all four alleged what customer lawsuits against ERP vendors typically allege: that the software functionality promised by the vendor wasn't delivered.

And in 2007, William McKenna, a former sales executive with Ross Enterprise, filed a lawsuit against the company, alleging widespread fraud, price inflation and cover-up, according to Computerworld.  CDC Software settled with McKenna, disputing all of the allegations in the suit and admitting to no wrongdoing. Terms of the settlement were not disclosed.

In 2010, a jury ruled against CDC Software in another lawsuit in which a customer alleged fraud related to the sale and implementation of a beta Ross ERP system in 2005. The jury awarded a total of $61 million in damages to Sunshine Mills, of which approximately $16 million were compensatory damages, and $45 million of which were punitive damages. Ross denied these allegations and planned to appeal the verdict.

To convince CDC Software customers to migrate to the JustFoodERP system, Dynamics partners must first explains how they can match significant portions of functionality from CDC Software's Ross ERP system.

"There are other solutions out here that can support [Ross ERP] business processes but because the JustFoodERP system is in Dynamics family, there's little to no risk of that platform disappearing," DiGiorgio said. "There's tremendous R&D behind it and tremendous adoption-there's a much larger circle of customers than with Ross. There's no that you have to transition off [a Dynamics ERP-based product] because of insolvency or the lack of support. And we can make that transition easier from a budget perspective as well as from a timeline perspective."

Microsoft declined to comment for this story.

It appears that CDC Software knows that there's a move afoot to get its customers to commit to another ERP platform.

In its earnings statement on Dec. 13, CK Wong, interim CEO of CDC Software, said, "CDC Software is an independent public company that has a fiscally-sound foundation with virtually no debt. "However, confusion continues to exist in the market between CDC Corp. and CDC Software, and this important distinction is often overlooked."

Wong said that While CDC Corp.'s bankruptcy filing doesn't significantly affect the day-to-day operations and assets of CDC Software, it will have a significant adverse impact on CDC Software's revenues in the fourth quarter of 2011. He said CDC Software is taking affirmative, proactive steps to help address this situation, but the company believes that this effect will continue, to some extent, until CDC Corp. emerges from the Chapter 11 process.

"It is also worth emphasizing that contrary to some of the inaccurate and confusing messages communicated by competitors to our current customers and prospects, CDC Software has not filed for bankruptcy and our positive operating results is testament to the financial health and viability of our organization," Wong said. "Despite the several, significant challenges we have faced, we believe we achieved a solid performance during Q3 2011," Wong said. "Although we continue to face additional issues, as disclosed in our recent public filings, we continue to remain committed to delivering world-class solutions to our customers by continuing to invest in our products and providing outstanding customer service."

About Linda Rosencrance

Linda Rosencrance is a freelance writer/editor in Massachusetts. She has written about information technology for 10 years. She has been a journalist since the late 1980s. She wrote for numerous community newspapers in the Boston area, where she covered politics and was a high-profile investigative reporter. She has freelanced for the Boston Globe and the Boston Herald. She is the published author of four true crime books "Murder at Morses Pond," "An Act of Murder," "Ripper", and "Bone Crusher" for Kensington Publishing Corp. (Pinnacle imprint). She has just started her fifth true crime book for Kensington.

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