Co-op files its defence to IBM’s counterclaim in its £130m tech upgrade lawsuit, alleging Innovation Group’s software led to major problems

Co-op has blamed Innovation Group software for its tech upgrade “disaster” in a bitter £130m court battle with IBM.

IBM has accused Co-op of failing to pay up an £2.89m bill for using its software licensing. 

But Co-op has hit back, accusing IBM’s sub-contractor Innovation Group of not being up to scratch. 

 “The project was a disaster because Innovation Group did not have a configurable software product which could meet the contractual requirements,” Co-op said in its defence against the accusations by IBM. 

The big issue was that IBM failed to carry out a review before the project to make sure the Innovation Group’s Insurer Suite software was viable, Co-op had argued. 

Co-op says it has minutes showing an IBM staff member admitting in a meeting that IBM  “had not carried out a detailed audit of the source code”.

A third party eventually did carry out a review, but Co-op says this took place as late as 2017.

The £130m battleground

The battle between Co-op and IBM is a turning out to be an ongoing and bitter feud, which erupted into the public eye in December last year. 

Co-op originally kicked off the court proceedings, claiming that “reckless” IBM pulled out of its contract to upgrade its IT systems as part of a £55m deal, which included £46m of Innovation Group’s software.

In its claim, Co-op argued that IBM had performed “intentional breaches” of its contract to wriggle out of the agreement.

IBM vowed to “rigorously defend” against the claim.

In its counter claim, the technology giant alleged that it had no choice but to terminate the project, after Co-op failed to pay an outstanding invoice.

IBM argued that the insurer owed it £2.89m for unpaid software licensing, court documents show.

Co-op has now refuted its allegations, saying that it did not owe “inconsistent” IBM the money for the software, because, following “chronic and serious delays”, the project was behind schedule and agreed milestones had not been met.

If IBM does not think that Innovation Group is culpable for the delays, the documents show, Co-op argues that IBM must square up to its responsibilities and pay up.

Innovation Group has been contacted for comment.