SAP Sued Over Failed Software Installation

Waste Management, of Houston, is seeking to recover more than US$100 million in expenses, plus unspecified punitive damages.

SAP spokesperson Andy Kendzie declined comment Thursday, saying: "As a matter of policy, SAP does not comment on litigation."

The suit was filed last week in the Harris County, Texas, District Court.

Battle of Bigs

SAP is the world's largest business-software company. Its Americas division employs more than 2,000 in Delaware County.

Waste Management, the biggest U.S. trash hauler, has more than 22 million commercial and residential customers.

In 2005, Waste Management was looking for new revenue-management software to handle such tasks as billing, collections, pricing and new-customer setup, the lawsuit said.

SAP said its waste-and-recycling software was a "tested, proven, out-of-the-box solution" that could be rapidly implemented without need for any customization, the suit said.

Like a Beta

These representations were false because a "U.S. version" of the software had never been tested at a U.S. company, according to the court filing. Before 2005, it said, the software had been licensed to "a limited number" of small European firms.

SAP purported the software would save "hundreds of millions of dollars in increased efficiencies and revenue," the suit said.

Instead, it was "nothing more than beta software -- software still in development and utterly incapable of running the operations of an American waste and recycling company," it said.

Waste Management said SAP presented "fake mock-up simulations," although the demonstrations were represented to be the actual software.

Rigged Demos Alleged

Waste Management said senior SAP executives, including SAP America president and chief executive officer Bill McDermott, participated in the "rigged and manipulated" demonstrations. "These fake product demonstrations occurred at numerous locations and on many occasions during an eight-month time period in 2005," court papers said.

Waste Management said in a company statement that it filed suit March 20 "after months of discussions with SAP and a recent consensual, three-day mediation that SAP ended after day two."

Waste Management signed a licensing pact with SAP on Oct. 3, 2005. "Almost immediately the SAP implementation team discovered significant 'gaps' between the software's actual functionality and Waste Management's business requirements," the complaint said.

Still Not Working

In addition, the suit alleged, SAP originally promised that a pilot phase in New Mexico would be running by Dec. 15, 2006, but "it is not even close to being completed today."

Waste Management said it was seeking recovery of more than $100 million in project expenses "as well as the savings and benefits that the SAP software was promised to deliver."

In 2007, Waste Management reported net income of $1.16 billion on full-year sales of $13.3 billion. SAP reported 2007 net income of $1.9 billion on revenue of $10.2 billion.