Who is to blame for the failed ERP project that sparked the SAP lawsuit?

It’s a safe bet that the executives at Waste Management, the company that sued SAP for $100 million over a botched ERP implementation, hadn’t read the MIT Sloan Management Review article by Cynthia Rettig in which she describes ERP systems as ” massive programs, with millions of lines of code, thousands of installation options, and countless interrelated pieces.

In an article I wrote about in August, Rettig notes that a typical ERP implementation “presents so many complex and difficult technical and business issues that simply coming to the finish line with your shirt on (is) considered a victory.”

If they had, would they have accepted SAP’s alleged proposition that the system it sold to Waste Management was “an ‘out of the box’ solution that would meet Waste Management’s needs without any customization or enhancement”, one that could be completely implemented company-wide within 18 months? Highly doubtful.

According to a statement quoted in an ITWorld.com article, Waste Management claims that SAP misled it by creating “fake software environments” for product demonstrations. The project fell through almost immediately after a sales agreement was signed in October 2005. Although SAP promised that a pilot version of the system would be up and running by December 15, 2006, “it’s not even close to complete yet.” .

Increasingly acrimonious relations between the two companies included an SAP “Solution Review” that found the software did not meet the needs of Waste Management and a failed attempt at consensual mediation. Waste Management maintains that it rejected SAP’s suggestion that it would have to “start over” with an updated version of the SAP platform if it ever hoped to roll out the software company-wide. According to his statement, which is quoted on ITWorld.com:


“SAP’s 2007 proposal is precisely the kind of risky, costly, and time-consuming project that Waste Management turned down from other companies two years earlier. In fact, the development project SAP proposed would drastically extend the implementation schedule from the original end date.” December 2007 to a completion date sometime in 2010 with no guarantee of success.

However, as with most failed relationships, it seems that the “wronged” party must also take some responsibility. According to a SearchSAP.com blog, Waste Management may have had unrealistic expectations that the software could fix all of its problems, which included the outright dismissal of its management team and the appointment of new executives following a financial scandal.

Waste Management “had a lot on its plate at one time,” writes blogger Demir Barlas. Certainly, taking on an ERP implementation while in the midst of such a major transition seems unexpected. A little cursory digging should have clued Waste Management into ERP’s reputation for complexity.

Barlas also questions, and rightly so, Waste Management’s vendor evaluation process and ongoing relationship management with SAP. Barlas writes:


“More relevantly, how can these facts about the software be ‘unknown’ to management? ERP implementations can take years and are accompanied by rigorous testing and planning. If SAP software is indeed a ‘bug’ Total,” Waste Management executives might as well have slept at the wheel; no one should pay $100 million and wait two years to find out they’ve bought a defective product.”

The biggest problem here is that traditional ERP systems for many organizations seem to be more trouble than they’re worth. That’s why well-known IT cynic Nicholas Carr suggested, in a post I referenced and linked to in August, that Workday and other ERP systems delivered through a software-as-a-service model may be the “end of ERP as as we know it.” I know.”

Waste Management is far from the only organization that has suffered major problems with ERP. IT Business Edge blogger Susan Hall wrote about the story of the Los Angeles school district’s ERP problem in October. Nine months after implementing a $95 million ERP system from SAP, thousands of employees were receiving incorrect paychecks, some receiving too much and some not enough, and the errors created potential fiscal problems for the district.

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