Netdynamic Consulting Inc.: Managing ERP Implementation at SodaStream Canada Custom Case Solution & Analysis

1. Evidence Brief: Case Data Research

Source: Netdynamic Consulting Inc.: Managing ERP Implementation at SodaStream Canada (W36207).

Financial Metrics

• Original Project Quote: Approximately 150,000 CAD based on initial scope (Paragraph 8).
• Current Netdynamic Labor Investment: 220,000 CAD in billable hours recorded by May 2013 (Paragraph 14).
• Payments Received: SodaStream Canada has paid 100,000 CAD to date (Paragraph 14).
• Financial Gap: Netdynamic currently carries a 120,000 CAD deficit on the engagement (Exhibit 2).
• SodaStream Revenue Growth: Increased from 5 million CAD to 50 million CAD within three years (Paragraph 4).

Operational Facts

• Software Platform: Microsoft Dynamics NAV (Paragraph 6).
• Original Timeline: Start October 2012; Go-live target January 2013 (Paragraph 7).
• Current Status: May 2013; project is five months behind schedule and not yet live (Paragraph 1).
• Existing Infrastructure: SodaStream relies on manual Excel-based processes and a basic QuickBooks setup (Paragraph 4).
• Resource Constraint: SodaStream project lead has limited availability due to daily operational demands of rapid growth (Paragraph 11).

Stakeholder Positions

• Mark Friedberg (CEO, Netdynamic): Concerned about the 120,000 CAD loss and the precedent of working for free; seeks to preserve firm reputation while stopping the financial drain (Paragraph 15).
• Peter Atanasov (GM, SodaStream Canada): Views the project as a failure of Netdynamic to deliver on a fixed-price promise; refuses further payments until the system is operational (Paragraph 13).
• Netdynamic Implementation Team: Reports significant scope creep and lack of timely data/feedback from SodaStream staff (Paragraph 10).

Information Gaps

• The specific legal language regarding change orders in the original contract is not provided.
• The exact technical nature of the remaining bugs or unfinished modules is unspecified.
• The financial health and cash reserves of Netdynamic to sustain further losses are not detailed.

2. Strategic Analysis

Core Strategic Question

• How can Netdynamic resolve a failing fixed-price implementation for a high-growth client without incurring terminal financial losses or permanent reputational damage?

Structural Analysis: Value Chain and Power Dynamics

The primary friction stems from a misalignment between SodaStream’s rapid operational scaling and Netdynamic’s service delivery model. SodaStream’s value chain is currently broken at the Inbound Logistics and Operations stages because manual processes cannot support 50 million CAD in volume. However, Netdynamic has ceded its bargaining power by allowing the project to proceed without formalizing scope changes, effectively becoming an interest-free creditor to SodaStream.

Strategic Options

Option 1: Immediate Work Stoppage and Contractual Arbitration Rationale: Protects the firm from further labor burn. Trade-offs: High probability of litigation and total loss of the 120,000 CAD deficit; catastrophic reputational damage in the Microsoft Dynamics partner network. Resource Requirements: Legal counsel and senior management time.

Option 2: Minimum Viable Product (MVP) Go-Live with Cost Capping Rationale: Focuses on the core financial and inventory modules required to stabilize SodaStream operations while deferring custom features. Trade-offs: Requires SodaStream to accept a system that meets only 80% of their initial (expanded) desires. Resource Requirements: Focused 30-day technical sprint.

Option 3: Retroactive Time and Materials (T&M) Conversion Rationale: Netdynamic writes off 50% of the overage in exchange for SodaStream paying the remaining 50% and moving to a T&M model for all future work. Trade-offs: Requires the client to acknowledge their role in scope creep, which Atanasov currently resists. Resource Requirements: CEO-level negotiation.

Preliminary Recommendation

Pursue Option 2 (MVP Go-Live) combined with a modified Option 3. Netdynamic should offer to complete the core modules at no further cost to reach go-live, provided SodaStream signs a release on the remaining custom scope and agrees to a paid support contract for Phase 2. This prioritizes operational reality over contractual disputes.

3. Implementation Roadmap

Critical Path

• Week 1: Feature Triage. Categorize all outstanding items into Critical (must have for go-live) and Non-Critical (future enhancements).
• Week 2: Scope Freeze Agreement. Obtain written sign-off from Atanasov on the MVP definition.
• Week 3-6: Technical Remediation. Finalize core inventory and financial modules; conduct isolated unit testing.
• Week 7-8: User Acceptance Testing (UAT). Require SodaStream staff to dedicate 4 hours daily to testing; Netdynamic provides on-site support.
• Week 9: Data Migration and Go-Live. Transition from QuickBooks to Dynamics NAV.

Key Constraints

• Client Bandwidth: SodaStream staff are overwhelmed by 10x growth; they will likely miss testing deadlines.
• Technical Debt: The 220,000 CAD already spent may include poorly documented custom code created during the scope creep phase.

Risk-Adjusted Implementation Strategy

To mitigate the risk of SodaStream staff unavailability, Netdynamic must embed a consultant on-site at SodaStream headquarters. This reduces the friction of communication. If UAT milestones are missed by SodaStream, the go-live date slides automatically, but Netdynamic must maintain a hard stop on further development hours to prevent additional unbilled labor. Contingency: If the MVP fails UAT in Week 8, the project should be moved to a formal dispute resolution process immediately.

4. Executive Review and BLUF

BLUF

Netdynamic must stop subsidizing SodaStream’s expansion. The project is a financial failure but remains a salvageable professional engagement. Friedberg should immediately pivot to an MVP go-live strategy. Netdynamic will absorb the current 120,000 CAD loss as a cost of poor project management, but will refuse further custom development until the system is live and a new, paid contract for Phase 2 is executed. This path stabilizes the client’s operations and protects Netdynamic’s reputation while capping the financial downside. VERDICT: APPROVED FOR LEADERSHIP REVIEW.

Dangerous Assumption

The analysis assumes Peter Atanasov prioritizes operational stability over his desire to hold Netdynamic to the original fixed-price quote. If Atanasov remains litigious and refuses to compromise on scope, the MVP strategy will fail.

Unaddressed Risks

Unconsidered Alternative

Netdynamic could approach Microsoft directly to request partner support or market development funds. Since SodaStream is a high-profile, fast-growing client, Microsoft has a vested interest in ensuring this Dynamics NAV implementation does not become a public failure. This could provide the financial bridge needed to close the gap without further straining the Netdynamic-SodaStream relationship.

MECE Analysis of Strategic Options

• Exit: Terminate the relationship and accept the loss.
• Execute: Finish the core system to stop the burn.
• Expand: Invest more to win a larger, long-term managed services contract (unwise given current trust levels).