The fight over the liability for business losses among information technology (IT) service and solution companies have escalated to legal battles. This has clearly revealed the issues of Joint Implementation Method, and it is pointed out that system improvement is urgently needed. According to the industry on the 11st, KCC Information and Communication recently filed a lawsuit against 'settlement payment claim' with the Seoul Southern District Court. This is in response to S net ICT and S Cube-I, which KCC has worked as business partners, raising an objection to the provisional seizure of the business balance and requesting a lawsuit order. KCC Information and Communication, Sent ICT, S Cube-I, and Sysone have been arguing over the liability for losses in the reconstruction of the computer center for Korea Securities Depository computer since March, when the project was completed.
KCC Information & Communication argues that the loss should be shared as much as the consortium's stake as much as the project was carried out through the Joint Implementation Method. The three participating companies of the consortium countered that each of them shared their work, and that KCC was trying to hold the entire consortium liable for the fault of the main operator, even though there was no loss from their own responsibilities. KCC Information and Communication claimed that it had foreseen losses during the project and attempted to negotiate with the participating companies. But the companies countered that there was no interim consultation, and that there was only one-sided notice of loss at the time of completion of the project.
KCC Information and Communication applied for a provisional seizure of 3.4 billion won, equivalent to the loss share of three companies, out of the balance of 10.5 billion won, and the Court approved it. Sysone has reached an agreement with KCC Information and Communication, but SnetICT and S Cube-have not received 1.5 billion won and 800 million won respectively. SnetICT and S Cube-I are preparing a reply to the complaint received from the court. Although there was one consultation between the two sides in the meantime, they could not reach a consensus but there was a big difference of opinion.
This is not the only case of disputes regarding the Joint Implementation Method. Last year, in a public software (SW) business, SME A participated in a public project as a consortium with another SME B and a startup, but the startups went bankrupt. A was held liable for schedule delays and costs due to startup bankruptcy. It also considered a lawsuit against the startup but couldn't afford to file a lawsuit due to time and cost. This is also a harmful consequence caused by the Joint Implementation Method. The Joint Implementation Method, in which companies carry out projects together and share liabilities, was considered a major cause of disputes between companies and was in constant demand for system improvement. However, most clients choose the Joint Implementation Method rather than the shared implementation due to the convenience of management.
The Ministry of Economy and Finance, which regulates contracts, started listening to the voices of the industry last year. It also received the issues regarding the Joint Implementation Method from the Korea SW Industry Association twice this year. Various discussions took place, such as whether it was appropriate to mandate specific methods such as joint and shared implementation by the ordering party. No clear solution was reached. It is necessary to change the perception of the client who insists on taking the Joint Implementation Method. Another stumbling block is that roles and responsibilities are not clearly separated in SW or system integration (SI) projects, like sorting out fish bones.
An official from a large IT service company emphasized, “To ensure that the Shared Implementation Method is adopted widely, clarifying the division of work in the industry must first be discussed. Policy support is also needed to induce the ordering party to choose the Shared Implementation Method.”
By Staff Reporter Ho-cheon Ahn hcan@etnews.com