SAP Watch

Apr 1 2008   11:50AM GMT

Waste Management versus SAP: Allegations and details

JackDanahy Jack Danahy Profile: JackDanahy

Waste Management is suing SAP for over $100 million in damages alleged to arise from SAP’s “fraud” in misrepresenting its waste management software to the company. Those interested in learning more about the lawsuit can download the entire brief here: Waste Management versus SAP. If you lack the time to peruse this 52-page document, here are the key allegations:

“…SAP fraudulently induced Waste Management to license an ‘United States applicable’ Waste and Recycling Software solution”

“This software was represented to be a ‘waste industry standard solution with no customization required.’”

“SAP further represented that the Software was an ‘integrated end-to-end solution.’”

“Unknown to Waste Management, this ‘United States’ version of the Waste and Recycling Software was undeveloped, untested, and defective.”

“SAP knew that it had competition from other companies in landing Waste Management as a client, and it was keenly aware that Waste Management’s preferred solution was a proven, ‘out-o-f-the-box’ product that could be rapidly installed.”

“…the software modules used by SAP in its ‘United States’ version of the Waste and Recycling software had never been used together before and had never been tested in an actual productive business environment.”

“[SAP's] pre-contract demonstrations were in fact nothing more than fake, mock-up simulations that did not use the software ultimately licensed to Waste Management.”

“SAP repeatedly stated that the capabilities and functionality of the software were exactly as appeared in the demonstration.”

“…the SAP implementation team had never before worked with the software SAP licensed to Waste Management.”

“…the software…was nothing more than beta software–i.e., software still in development and utterly incapable of running the operations of an American waste and recycling company.”

“The installed software failed to contain basic functionality that had been represented to Waste Management and was unable to run Waste Management’s most basic revenue management operation. Instead of making Waste Management aware of these known software problems, SAP attempted to re-program the core software code during the implementation process.”

“SAP purportedly utilized its knowledge of Waste Management’s business, gained in part through its employment of a former Waste Management controller [Dean Elger], to develop the software.”

“Based on SAP’s specific representations concerning the purported capabilities of its Software, the Business Case generated net annual benefits to Waste Management of between $106 million and $220 million per year.”

“[SAP represented] that it would implement the Software at Waste Management on a company-wide basis within 18 months, or by December 31, 2007.”

“Waste Management justifiably relied on SAP’s misrepresentations in agreeing to change orders and paying SAP additional fees to have SAP attempt to provide the very functionality that SAP had represented, during its sales campaign, was contained in its purportedly ‘out-of-the-box’ solution. Through its deceptive change order scheme, SAP improperly recovered its internal costs incurred in software development work that was supposed to have been its responsibility.”

“…the downporting and core code modifications have radically altered the Waste and Recycling Software licensed by Waste Management, to the point where that Software is incompatible for routine future upgrades.”

Details about this lawsuit were sketchy at first, but it’s clear from this document that Waste Management has very specific allegations to make. Furthermore, Waste Management keeps making the tantalizing claim that SAP’s own “internal documents” admit to these allegations. Now the justice system can sort it out.

Demir Barlas, Site Editor

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