BSkyB Ltd and Another v HP Enterprise Services UK Ltd and Another

There are issues as to the extent to which BSkyB can pursue claims and the extent to which EDSC has liabilities arising from the matters alleged in these proceedings. It is therefore generally convenient to refer to the Claimants in the neutral term "Sky" and the Defendants as "EDS" in this judgment as a general description of one or both of the Claimants or Defendants without entering into that particular debate when rehearsing and dealing with the facts and allegations.

This case is concerned with the procurement of a new customer relationship management ("CRM") system so that Sky could provide improved service to its customers focussed, at least initially, on telephone contact between customers and the Customer Advisors ("CAs" also known as Customer Service Representatives "CSRs") at Sky call centres.

Following a tender process in 2000, Sky selected EDS to design, build, manage, implement and integrate the process and technology for the CRM System. After an initial Letter of Intent, SSSL entered into a contract with EDSL ("the Prime Contract") to provide the CRM System at Sky's existing contact centres located at Dunfermline and Livingston.

The relationship was not a success. There was a renegotiation in 2001 which led to a Letter of Agreement. Then in 2002 Sky took over the performance of EDS' role of Systems Integrator and a Memorandum of Understanding was signed. Sky alleges that EDS made fraudulent misrepresentations which led to EDS being selected, to a Letter of Intent and to the Prime Contract. They also allege that EDS made negligent representations prior to the Letter of Agreement.

Sky went on to provide a CRM System. Instead of the intended CRM Project going live on 31 July 2001 and being completed by 1 March 2002 at a baseline budget of £47.6m, Sky contend that the functionality for the CRM System was only completed in March 2006 at a cost of about £265m. In the Particulars of Claim as they stood at the commencement of the hearing Sky claimed damages of some £709m.

Sky Customer Relationship Management

The main method of contact between Sky and its customers is a telephone call to one of Sky's call centres, which are also referred to as contact centres. In addition to the telephone there are other channels of communication including fax, email, WAP, the internet and, in particular, Sky's digital set-top box.

The CRM System is therefore important to Sky's business and forms an essential part of all contact centre dealings with customers, as well as other "self-service" dealings by customers. It facilitates, governs and records all customer related transactions, such as setting up a new account, closing an account, reporting a fault, calling out an engineer or changing a package. It also allows Sky to bill and process payments from their customers.

In 2000, Sky perceived an urgent need to replace the existing Digital Customer Management System ("DCMS"). It was an old system built up over the years and there were concerns in its ability to allow Sky to deal with the increasing number of customers and services. It was also recognised that a new CRM system with enhanced functionality would bring business benefits to Sky, including a reduction in the number of customers who "churn" or leave Sky each year, known as the "churn rate". Sky therefore decided to undertake a project, referred to as the Sky CRM Project which included the provision of a new CRM system.

At the time, Sky operated a number of legacy systems in addition to DCMS. In summary, the systems consisted of:

(1) DCMS – which included billing and payment processing.

(2) The Subscriber Card Management System (SCMS): a system by which SSSL provided conditional access services to broadcasters including BSkyB and the management of 'smart' cards distributed to customers.

(3) The Management of Information for Digital and Analogue Systems (MIDAS): this was a data warehouse for the storing and retrieval of marketing and financial information.

(4) The Field Management System (FMS): a system that provided for all aspects of Sky installations.

The SCMS did not form part of the new CRM system but it was a system then...