CIO
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Reader ROI
Understand how IT litigation can undermine your position in the company
Identify litigious situations developing right under your nose
Learn how to defuse problems before they come to a head
CIO and Senior Vice President of Operations Edward Nesta, had no idea that a language barrier could cause so much trouble until his company, The Leading Hotels of the World (LHW), nearly got hauled into a Japanese court over a contract dispute with an outsourcer.
LHW, a New York City-based marketing and reservations service for exclusive hotels across the globe, hired a Tokyo computer-support company to hook up the local-area network in its Tokyo office with its wide-area network. Midproject, the Japanese-speaking vendor misinterpreted a series of casual English-language e-mails from Nesta’s IT personnel in New York as a go-ahead to perform extra services. Suddenly Nesta got hit with a $50,000 bill for services he never asked for. Naturally, he refused to pay. Naturally, the vendor threatened to sue—in Japan. "Considering we didn’t have a lawyer over there, it would have cost four or five times the amount in question just to deal with the case," says Nesta. "We would have had to find local counsel and develop some understanding of their system."
Nesta resolved the dispute without a lawsuit by expanding the outsourcer’s labor-support role, which meant more money for the vendor in the long run. But he dodged a bullet, because IT-related litigation—whether it’s your company doing the suing or getting sued—is the ultimate failure for the CIO. Be it a vendor, a partner or a competitor who’s really at fault, the other executives will be coming to you for answers. And as the company spends hundreds of thousands of dollars—if not millions—litigating the case, everyone will blame you for putting the company in this situation in the first place. In the end, it can cost you time better spent on important projects, hard-earned influence in the boardroom and even your job.
"It’s just not good for your career," says Robert Collins, CIO and vice president of information services at Cognos, a business intelligence company in Ottawa. "It all comes down to the fact that you didn’t set out to achieve what you started. It’s a credibility issue, and you’ve hurt the business."
In Nesta’s case, even the threat of litigation created a huge headache that he’d love to forget. When the situation broke, he had to back-burner everything else for a week so that he could deal with anxious senior execs and pool together enough data and documentation to refute the outsourcer’s claims. So now he forces himself to remember the situation as a guidepost. Whenever his staff deals with vendors in other countries, he makes sure their e-mails are succinct and leave no room for misinterpretation. He also relies more on his onsite staffers, who understand the local language, to act as go-betweens. And when the project carries significant costs, he deals with the vendor directly.
