Customer accuses Infor of betrayal in software lawsuit

Paragon Medical claims that it was sold 'virtually useless' software

An Infor customer is alleging the ERP (enterprise resource planning) vendor betrayed a long-standing trust between the companies in order to sell it software that utterly failed to perform as promised.

Medical device maker Paragon Medical is a longtime user of Visual ERP software, which Infor acquired some years ago, according to a lawsuit Paragon filed last week in U.S. District Court for the Northern District of Indiana.

In late 2009 and 2010, Paragon began looking for a document management system, the suit states. The company told each potential provider that the system would have to comply with the U.S. Food and Drug Administration guidelines Paragon was subject to, according to the suit.

The software had to be able to work with Microsoft Visio files and make it possible for a Paragon watermark to be placed on documents "as part of Paragon's FDA-compliant control procedures," the suit adds.

At the same time, Paragon happened to be discussing an upgrade of its Visual system with Infor, but hadn't considered the company to be a potential vendor for its document management needs.

Infor caught wind that Paragon was in the market for such a system, and presented its PLM8 software as an option, according to the suit.

Paragon relayed its requirements to Infor and was assured by the vendor's salespeople that they could be met, it adds. Infor and Paragon subsequently inked a deal for PLM8.

"Due to the parties' long-standing relationship, Paragon trusted Infor," the suit states. "Paragon would not have agreed to license PLM8 from Infor without these representations."

But as it turned out, "PLM8 is not document management software," and after the deal was signed an Infor representative said as much, Paragon attorneys wrote.

PLM8, which is also listed as Infor10 PLM Discrete on Infor's website, is described as product lifecycle management software aimed at companies that manufacture complex goods. Among other capabilities, it includes a central data repository for "capturing, sharing, managing, tracking, and storing documents, tasks, and product information," the site states.

However, after a number of requests from Paragon, Infor could not provide any customer references or cite any instances where PLM8 was being used solely for document management, according to the suit.

Paragon "could not even view its documents" in the system, it adds. Infor created a patch that converted Word, PowerPoint and Excel documents into PDF format, which made them readable.

However, this fix "added multiple steps for viewing documents, which makes its use within Paragon's business structure -- that requires multiple individuals to review, potentially modify, approve and execute most documents -- totally impracticable."

Paragon has also had consistent difficulties printing documents through PLM8, despite "attempted cures" by Infor, it adds. One of those involved embedding Oracle software into the PLM8 code, according to the suit.

"Instead of fixing PLM8 to make it print reliably, Infor's recommended solution is for Paragon to change its business practices," it adds. "According to Infor, Paragon needs to use few colors and few charts in its documents, create shorter documents generally and print documents less frequently."

Finally, PLM8 "cannot, in any regard, work with Visio files," the suit claims.

Paragon never would have licensed the "virtually useless" software if it had known of its limitations, it adds.

The company is suing Infor for breach of contract, unjust enrichment, fraud and negligence. It is demanding Infor return fees it paid for related software licenses and services, as well as punitive damages.

"Infor believes there is no merit to Paragon Medical's claims and thus, intends to vigorously defend this matter," company spokesman Dan Barnhardt said in a statement. "Beyond this, Infor does not comment on active litigation matters."

Situations like the one alleged by Paragon may be an unfortunate fact of life in the IT industry.

"A lot of the time, customers may not have enough technical knowledge to answer questions or solve problems themselves, so they trust the vendors," said analyst Ray Wang, CEO of Constellation Research.

One way customers can avoid the type of problems Paragon alleges is by making sure they have "the right kind of executive sponsorship on the vendor side," such as the vice president of products or someone on the development team, Wang said. "You need direct access to someone in management. The salesperson is not the first person I would come up with in that list of executive sponsors."

This sort of relationship can have multiple benefits, such as helping solve problems on a project more quickly and getting preferred features added to future releases, Wang said.

Naturally, the size of the deal in question will make getting such access easier or more difficult, depending on the situation, he said.

In the case of Paragon, "it sounds like here there's a communication gap somewhere between what was expected, what was required and what was delivered," he said.

Copyright © 2011 IDG Communications, Inc.

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