Cooperative sues Oracle over integration debacle

Tri Valley Growers, an $800 million farming cooperative in San Ramon, Calif., yesterday said it had filed a $20 million lawsuit against Oracle Corp. over an abandoned installation of the software vendor's application bundle for consumer packaged goods companies.

The suit, which charges Oracle with fraud and breach of contract, was actually filed several months ago in California Superior Court in San Francisco. But Jeffrey Shaw, Tri Valley's president and CEO, said the cooperative had kept the matter quiet while trying to settle the dispute with Oracle.

Shaw added, though, that the settlement talks between the companies weren't successful. "At this point, our intent is to litigate," he said. "They came in here and sold hard and made lots of promises. It was a good sales job, but the bottom line is that they didn't stand behind (the software)."

Oracle officials declined to comment on the lawsuit, which alleges that its Oracle CPG applications never worked properly at Tri Valley and had to be scrapped. The cooperative has since switched to SAP AG's R/3 software and plans to complete an installation of those applications in May, Shaw said.

Oracle CPG combined Oracle's own financial and process manufacturing software with order processing, supply chain planning and asset management applications developed by other vendors. Big users such as Kellogg Co. in Battle Creek, Mich., and The J.M. Smucker Co. in Orrville, Ohio, bought the bundle, which was released in early 1997.

But Oracle had trouble integrating the different applications and eventually had to set up a development SWAT team (see story) to help early users get the software working. Then last spring, Oracle CEO Larry Ellison described the whole endeavor as "a huge mistake" and said the vendor was developing its own order-management software for users.

At Tri Valley Growers, Shaw said, Oracle first promised that the CPG bundle would work on the cooperative's minicomputers from the former Digital Equipment Corp. But then it reneged, forcing Tri Valley to buy new Unix systems. Even then, the software still wouldn't work properly, he said.

"In our opinion, when they announced the product, it was vaporware," Shaw said. "They had some development going on, but the reality is that they sold something at a time when it didn't really exist."

Tri Valley canceled the Oracle project early last year after spending about $12 million on the software, $2 million on the new hardware and $4 million on internal labor costs, Shaw said. He added that the cooperative was then forced to do year 2000 fixes on some legacy systems because it couldn't install SAP R/3 in time, adding another $4 million to its tab.

The lawsuit asks the court to order Oracle to repay all of that money to the cooperative.

David Dobrin, an analyst at Benchmarking Partners Inc. in Cambridge, Mass., said the Oracle CPG saga has been "one of those ugly chapters in the history of software."

Users such as Tri Valley Growers "were sold a bill of goods," Dobrin said. "Nobody had a good time trying to install that package. It was never going to work, and it didn't work."

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