Waste Management, which spent $100 million on SAP software and characterized the project as a “complete failure” in a lawsuit filed March 20, is out for blood. The company seeks damages, including punitive damages, from SAP, whose Waste and Recycling Software software was excoriated by Waste Management in the text of the lawsuit. In part, the lawsuit alleges that, “Unknown to Waste Management, this ‘United States’ version of the Waste and Recycling Software was undeveloped, untested and defective.”
Waste Management came to SAP via the “Safe Passage” program that was supposed to entice PeopleSoft users to SAP during Oracle’s drawn-out bid for PeopleSoft. At the time, Waste Management was a company in crisis. SEC Administrative Proceeding No. 3-10513 had found the following: “As early as 1988, members of Andersen’s audit engagement tram recognized that Waste Management employed ‘aggressive’ accounting practices to enhance its earnings.” In the brouhaha that followed, Waste Management’s board fired the company’s management.
Waste Management’s executive suite attained their current positions in 2004. As such, it seems that the company had a lot on its plate at once: overcoming an crisis, appointing new leadership, and launching a major ERP project.
This is not to say that Waste Management’s lawsuit is mistaken. No one can know for sure until after the wheels of justice turn. However, as it is, something seems lost in the telling. How could a company spend $100 million on software that is “undeveloped, untested and defective”? More pertinently, how could these facts about the software be “unknown” to management? ERP implementations can take years, and are accompanied by rigorous testing and planning. If SAP’s software is indeed a “complete failure,” Waste Management’s executives might well have been asleep at the wheel; no one should pay $100 million and wait two years to find out they’ve bought a defective product. If SAP’s software turns out not to have been to blame, Waste Management will still have done damage to SAP’s share price and reputation — for how long, no one can tell.
Demir Barlas, Site Editor