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March 27, 2008

SAP Sued for Typical Ghetto Behavior

So... when me and my friends talk about the "bar being set so low" in this industry, we're not talking simply about programmers. Stupid, crass ("ghetto", if you will) behavior is endemic at all levels, and even at the biggest players. Case in point, SAP getting sued to the tune of $100 million by Waste Management over a failed enterprise project. (full article via cote)

The trash-disposal giant Waste Management is suing SAP, saying top SAP executives participated in a fraudulent sales scheme that resulted in a failed ERP (enterprise resource planning) implementation.

What makes this case interesting, in my opinion, is that the "fraudulent sales scheme" that SAP is accused of doing is a well-known marketing tactic used by practically every software vendor I've ever known, and is probably familiar to you as well. Read on...

In 2005, Waste Management was looking for a new revenue management system, according to a company statement. "SAP proposed its Waste and Recycling product and claimed it was a tested, working solution that had been developed with the needs of Waste Management in mind,"

Emphasis mine. They claimed it was a tested, working solution! Further, they promised to implement it throughout Waste Management in 18 months. There must be huge logistical challenges and biz-process re-engineering (BPR) factors to account for in such a deal, but 18 months is probably a reasonable time-frame to get a working, tested solution implemented. However, writing plus implementing in 18 months, for such a huge company is of course a whole 'nother story!

"From the beginning, SAP assured Waste Management that its software was an 'out-of-the-box' solution that would meet Waste Management's needs without any customization or enhancements"

Wow! No customization or enhancements! How do you convince skeptical purchasing managers that such a bold claim is true? (Here's where I start chuckling, knowing how common this practice is)

Waste Management said product demonstrations by SAP prior to the deal employed "'fake software environments, even though these demonstrations were represented to be the actual software."

If you're in the business of selling enterprise software, you kind of have to go read the article, because it is a priceless account of how to really fuck up a major deal like this.

Waste Management ultimately signed a sales pact with SAP on Oct. 3, 2005, according to the court filing.

The charade about fully-functional and tested software collapsed immediately.

"Almost immediately following execution of the agreements, the SAP implementation team discovered significant 'gaps' between the software's functionality and Waste Management's business requirements," it states.

I guess deep-down inside, it's this sort of stuff that drove me away from the "enterprisey" side of the industry. For all the talk of pragmatism and being lean, and Agile, this sort of thing is just still too common.

"Waste Management has discovered that these gaps were already known to the product development team in Germany even before the SLA was signed. Instead of admitting what it knew at the time -- that the software lacked basic functionality to run Waste Management's business -- SAP undertook an elaborate fraud to perpetuate the original fraud and to recover additional money from Waste Management."

How do you cover up fraud on this scale? Blame the client of course!

Members of SAP's implementation team blamed Waste Management for the functional gaps and submitted change orders requiring that Waste Management pay for fixing them, according to the complaint.

We all play our part in the grand drama of IT, behaving in ways that improve the industry or lead to fiascos like the one described above. The client is not always right, and I'm sure Waste Management played into the fraud to a large degree, with clueless managers and unreasonable expectations. The onus is on us, the technology providers, both at the executive level and below, to stand up and be honest about what can and cannot be accomplished, and risk our jobs if necessary. That's courage, although you have to admit, that given the red-hot demand for IT talent currently in place, it might not actually take that much courage to stick to your guns.

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