The customer accused SAP of fraud and requires to return 100 million dollars

The Waste Management company is engaged in export and processing of household and industrial wastes in the territory of North America and services about 21 million clients (the industrial, commercial and municipal organizations). She owns 413 collectors, 370 stations for transfer of garbage, 283 platforms for waste disposal, 17 plants on burning of garbage, 131 processing plants, 95 enterprises for processing of landfill gas and 6 independent enterprises for power generation.

In 2005 Waste Management started the choice of a corporate information system. According to representatives of the company, in selection process different platforms and solutions in detail were considered, however most of them did not contain all opportunities necessary for the company in standard option, demanded long setup and adaptation that openly was recognized as developers and suppliers of these systems. And only SAP could propose the companies the industry solution which, according to vendor, was created taking into account requirements and business processes of Waste Management and therefore already contained all required functionality.

Meetings with representatives of SAP, including with Bill McDermott, the president and CEO SAP America and also Shai Agassi, entering at that time into Board of Directors of SAP, continued during the summer and fall of 2005. However, according to now representatives of Waste Management, during the carried-out discussions and demonstrations of the software product representatives of developer repeatedly showed to the customer "false" solutions which allegedly could execute those transactions which in a real system were not implemented.

According to explanations of Waste Management, SAP presented it the solution as "boxed", ready and not requiring completion and therefore process of implementation should not have become long, labor-consuming and expensive, and, above all - risky. According to the statement of Waste Management, representatives of SAP promised that in 18 months a system will be brought into operation. These arguments became decisive for the guide of the customer, and the agreement on acquisition and installation of the software product was signed on October 3, 2005.

However, as specified Waste Management in the statement of claim, practically at once after acquisition of software the command created for system implementation found out that many opportunities shown earlier actually in the standard solution are absent. Thus, the company was faced the need of long and expensive implementation with the unpredictable end result, i.e. with those problems because of which earlier the company rejected offers of other vendors.

According to representatives of Waste Management, within many months the company conducted negotiations with the management of SAP, trying to settle this question (it explains the fact that between acquisition by software and the fact of submission of the statement of claim there passed more than two years). At the same time in the internal documents as "injured party" claims, SAP admitted the fact of "forgery" and notorious mismatch of the sold solution to the stated requirements. However instead of it to recognize open, participants of an implementation team from vendor accused of the revealed functional discrepancies of the customer and demanded from it additional financing of the project.

According to earlier approved plan, the "pilot" project had to come to the end by December 15, 2006 with start of a system in operation in one of divisions of the company. However, according to the customer, even the "pilot" project is still far from end. Eventually,  according to Waste Management, summer of 2007 of SAP it was forced  to sign the document ("Solutions Review") in which  recognized that the solution in its standard option not completely conforms to customer requirements.

As told in the claim to Waste Management, for the problem resolution SAP suggested the customer "start everything anew" and agree to creation of the new version of the solution which can be replicated then in scales of the company. Thus, instead of receiving the working solution by December, 2007, as well as it was promised to the customer two years ago, the time of the project was postponed approximately for 2010, and results became more and more indefinite.

As a result payment to it in the amount of 100 million dollars, as compensation for purchased software and already incured costs for its implementation and also for uncollected benefits from use of software could only become the only acceptable exit from the created situation, according to the customer, as Waste Management in the statement of claim submitted on March 20, 2008 was stated. In SAP so far did not comment on the created situation in any way.

Let's remind that in Russia the SAP solution Waste and Recycling is implemented only at one enterprise so far – in Regional payment processing center of the Belgorod region. The project is performed by consulting company "Sayner" [1] (file), and for consultations the Carpe Dies Consulting company which implemented, allegedly, similar projects on implementation of this industry solution in many German enterprises and municipal services is attracted. The "pilot" project in the Belgorod RRKTs was begun in April, 2007.