Business Litigation - Thursday, June 10, 2010 14:44 - 0 Comments

SAP And Waste Management Settle Lawsuit

A hotly contested lawsuit between SAP and Waste Management has been settled. Under the terms, SAP, the software vendor, will make an undisclosed, one-time cash payment to the trash hauler. Waste Management originally sued SAP in March 2008, claiming fraud over an allegedly failed implementation of its ERP (enterprise resource planning) software. Waste Management claimed that it had suffered significant damages, including more than $100 million it spent on the project and more than $350 million for benefits it would have realized if the software had been successful. The trash disposal conglomerate labeled the project as “a complete and utter failure.”

SAP charged that Waste Management didn’t “timely and accurately define its business requirements,” nor provide “sufficient, knowledgeable, decision-empowered users and managers” to work on the project. Waste Management received “a one-time cash payment” in accordance with the settlement, according to a quarterly earnings filing it made with the U.S. Securities & Exchange Commission. The exact terms of the settlement, including the amounts being paid, are confidential.

Waste Management said it wanted an ERP package that could meet its business requirements without large amounts of custom development. It claimed that SAP used a “fake” product demonstration to trick their officials into believing its software fit the bill. In addition, the trash hauler claimed that SAP’s technical team had “recommended that SAP deliver to Waste Management a later version of the software than the version SAP in fact delivered.” It was alleged that if the newer version had been used instead, “the multi-million dollar sales price for the software could not be immediately recognized as revenue under the accounting rules for revenue recognition,” and salespeople involved in the deal would not receive bonuses. It appears that one employee stood to receive a bonus of more than $1 million out of the deal. Waste Management contended that SAP gave them software that it knew was “unstable and lacking key functionality.” If all of this is true it would appear corporations cheat each other on occasion. I have to wonder why arbitration – rather than the court system – wasn’t used in this case.

Source: Business Week