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Oracle sued by university for alleged ERP failure

By Chris Kanaracus
May 23, 2011 12:49 PM ET

Montclair subsequently sent Oracle a letter on Oct. 11, saying the vendor was in breach of contract and demanding the problems be fixed with 30 days, it adds.

A number of Oracle personnel came to the school on Nov. 1 "to continue previously scheduled data mapping and work on HCM (i.e., business as usual), all of which was inappropriate given the project failures and breaches previously identified," the complaint states.

After conferring with an Oracle attorney, the workers handed their access keys to Montclair's CIO, "said 'here you go' and 'we're out of here," left campus and never returned, the complaint states.

The contract was terminated on Nov. 11, but tensions between the school and Oracle did not subside, according to the complaint.

Oracle allegedly refused to turn over a number of "deliverables" related to the project, which could have made it easier for another systems integrator to complete the job, unless the school agreed to pay for them.

Montclair ultimately paid Oracle about $370,000 for several deliverables, which turned out to be substandard and not reusable, the complaint states.

The school has paid Oracle more than $6 million in connection with the project, and much of that work will not be usable either, according to the complaint.

"Based on the initial bid responses from the replacement vendors, the direct, out-of-pocket cost to complete the BTI project will ... exceed Oracle's bid by at least $10,000,00 and as much as $20,000,000," it states.

Oracle also intends to sue the school for another $5.3 million, it adds.

Montclair is seeking a judgment against Oracle for breach of contract, gross professional negligence and other claims, along with compensatory damages.

ERP projects have been compared to a three-legged chair or stool, with the software vendor, implementation partner and customer all needing to play key roles in a project's success.

For example, vendors should provide software that either fits or can be adapted easily to the customers' needs, while systems integrators should ensure that realistic project timelines are set and met.

In turn, customers must provide adequate leadership as well as budget enough time and money for "change management" activities -- the training and other tasks needed to move users over to a new system.

The Montclair situation is far from the only time an ERP project ended up in court, with SAP, Ross Systems and other vendors also facing litigation in recent times.

It was not immediately clear how Oracle will characterize Montclair's role in the project. As of Monday, the company had not filed a response to the suit.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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