Saturday, May 10, 2008

Ice cream and garbage collectors

Imagine that your ice cream sales business had recently survived a tough time when the store manager decided to convert everything into the metric system to confuse you and customers so you could look like you made more money. You fired the manager four years ago knowing that your reputation was slacking.

So, a few years ago you bought a new expensive untested ice cream store accounting system from the Dairy Foods Association of Germany that was going to take another few years to get used to. It didn’t do what you wanted to, you don’t have a clue how much money you are making, and now you really look bad.

What do you do?

a) Stop and determine what the software is able to do and what you want from it before moving on.

b) Start over again, this time making a good evaluation of the software by thorough testing.

c) Sue the idiots for making bad software and sully their name everywhere you go.

Around 1998, Waste Management Inc. was in bad shape with no management and hardly any IT at all. The management had been dismissed by the board after the SEC had found Waste Management Corporation using aggressive accounting practices to enhance its earnings. Shortly afterwards Waste Management’s board fired the company’s management. In 2002, Waste Management purchased and installed PeopleSoft software. Then a few years ago, they were attracted to SAP while Oracle was making a bid for PeopleSoft for SAP’s “Safe Passage” program in which they included free support of the PeopleSoft systems.

Now, after two years and $100 million, Waste Management is characterizing the SAP project as a “complete failure” in a lawsuit filed March 20, 2008. Waste Management wants to extract their pound of flesh for the US version of the SAP Waste and Recycling Software that they say was undeveloped, untested and defective.

I’m guessing there are a few problems here. During the PeopleSoft integration, Griff Macy, VP for enterprise systems, decided against bringing in consultants to help manage the project. "Their folks aren't necessarily better than ours," he said. Most likely, the SAP integration went the same way without outside expertise.

Waste Management was taking on a second major ERP integration after starting from scratch with their IT operations in 1998. Maybe there was overconfidence, maybe there was just a distrust of outsiders and more mature IT processes. Macy also said "Consultants would have wanted to work in silos" which sounds to me like he didn’t understand the planning process.

The dark side to this lawsuit is that the liability of the vendor for achieving requirements extends far past the initial contract to the deployment and customer satisfaction where the results can be in murky dispute. The ability to extract out the responsibility of supposed failure is going to be tough but several fallouts result. In this case, one is the dirtied name of SAP and the other is the higher fear factor of systems integrators working with any large client who has a legal department.