Oracle Sued For 'Extortion, Lies' By Montclair State University
angry tapir writes "Montclair State University is suing Oracle in connection with a troubled ERP (enterprise resource planning) project. Montclair's complaint, filed Tuesday in U.S. District Court for the District of New Jersey, states that Oracle made an array of 'intentionally false statements' regarding the functionality of its base ERP system, the amount of customization that would be required, and the amount of 'time, resources, and personnel that the University would have to devote.' 'Ultimately, after missing a critical go-live deadline for the University's finance system, Oracle sought to extort millions of dollars from the University by advising the University that it would not complete the implementation of the ... project unless the University agreed to pay millions of dollars more than the fixed fee the University and Oracle had previously agreed to,' it adds."
It's not lying, it's marketing and/or sales.
Seriously... what did they expect?
When you purchase something like professional services of a new system, you need to make sure that throughout the process you are receiving and own all the code and documentation and have at least a high level overview of what is going on. Too many people just say "Make this XYZ system for me, heres money to do it" and then expect to be barely involved with the process from there on until the product is done.
Pray you do not anger Him further.
I'm sure "SlashdotMedia" will improve on all the wonders that Dice Holdings blessed us all with
Ellison will rock up to court, invite the judge and jury to party hard on one of his many yachts and justice will be served.
He is just that awesome.
Any company/university who believes the sales guys, without doing their own evaluation of the software, deserves to waste millions and millions to implement the software. In my 15 years I've seen this happen more often then not. Ya, it sucks, but let the technical people choose products and negotiate with the vendor instead of the management and lawyers talking to sales guys. You end up with parties that don't really understand the software (sales guys) talking to the upper management and lawyers who have no concept of the work it's going to take to implement. Doomed to fail. Every time.
Why there are so many cases about bad business practices about Oracle? 1) Oracle not honouring an agreement with HP to continue to support Itanium 2) Oracle failing to file profit returns correctly 3) Oracle sued for 'extortion and lies' I thought legal and management departments where more important than engineering departments in a tech company
Contractors, I will say that this is common place here, and probably at many universities. I think part of it is that many companies think that the government is an infinite source of funds and a deserving target to be ripped off. Another part of it is the bidding mechanisms which are supposed to ensure an unbiased picking of vendors, but has the added "bonus" of tending to favor groups that under-represent their cost, and no real mechanism to enforce them to stick to their estimates.
Of course, we're only hearing 1 side of this. I can easily imagine how this could come to be:
Oracle gives a quote that requires the University do things Oracle's way, on Oracle's timeline. University doesn't. Oracle then quotes a price to fix all the University's mistakes.
I can't for a minute imagine that Oracle wrote a contract for a fixed price that didn't outline exactly what the duties of each side were, and exactly what was covered.
However, I also can't imagine a University engaging in frivolous lawsuits.
It should be interesting to see what the facts are, and how this plays out.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
"Instead of cooperating with Oracle and resolving issues through discussions and collaboration, MSU's project leadership, motivated by their own agenda and fearful of being blamed for delays, escalated manageable differences into major disputes."
This certainly reads like code for "We promised more than we could deliver. Instead of giving us more money as we demanded, the university decided to try to force us to deliver on our promises."
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Isn't this standard for their Peoplesoft product? We went through hell with it where I work years ago. Cost around 20 million more than it should have. Some folks lost their jobs, sadly, not the people responsible for that debacle. Ten years and that project is still bringing us "joy."
I implement MRP / ERP systems, it's the same story everywhere. Out of box, they are proud the product can save and recall data. BIG DEAL. To get anything useful out of the system is big $$. Look up lawsuits on Epicor, same thing.
As one of the guys responsible for delivering on salesweasels' promises, I fully support customers being given a realistic appraisal of the time, effort and cost required to get them up and running.
If you were blocking sigs, you wouldn't have to read this.
Predictable response from Slashdot:
"Stupid sales/marketing drones. It's Oracle, of course. They should've asked technical support, then they'd get the real answer. These things always take five times as much money as the salesman says."
In January 2012 there will be a story on some major project with high visibility that is suffering cost overruns. Slashdot will respond.
"How can it take so long? That's what you get for hiring Lockheed (or whomever). Here's the solution, it'd take three weeks and cost a tenth the price. Salesmen overselling, get the technical guys in, we'll do it quickly and much cheaper."
I know of very few large implementations (ERP, WMS, eComm site) where the project goes on time, on budget, and feature complete. Usually, along the way, one of those is lost. I'd be willing to bet there was a fair amount of scope creep on the University side. I'd really like to hear Oracle's position.
A four-year degree at an in-state school should not cost more than $15-20,000 including fees. If you went $60k into debt for school, consider that a $40-45k math lesson. Teach your kids that one at home so they don't have to pay for it again.
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The solicitors. I'm sure they are rubbing their hands together for this one and can't wait for a long drawn out battle. I guess this points out the need to employe an intermediate - technical professional that has a proven track record for IT project management?
I know the article is ligth in facts but it does suggest that the university has a record of detailed information on why they feel they were mis sold the software. So In this case it does seem like Oracle mislead the university and this should result in some form of compensation, or a full refund?
What is a good choice of ERP software for a small company that will grow into a medium sized company ($5million to $20million)?
I would like to avoid the experience Montclair State University had, and work with a good software package that doesn't need a lot of expensive consulting to customize it for my company.
THE COMPANY shall not be held liable for any lies, extortion, waste of time, resources and personnel, injury, plague or death that may result from use of THE SOFTWARE.
I've seen this problem so many bloody times (and I've had to clean it up a handful of times), it's because marketing goes out and promises big when they don't really have a clue about what their product even is.
Fire the sales guy(s) that sold them the product, and have people who actually understand which end is up fix the problem.
What do I know, I'm just an idiot, right?
If you want to be treated like an adult, act like an adult.
If some big company advises you to go into $60K of debt for their marvelous services, and you didn't even check that they can meet the goals that you've laid out for yourself....
Stop whining and take some accountability. Go to a cheaper school. If you're 12 years old surely you can understand that.
I worked at an Oracle consultancy in the late 90's and they were notorious at the time for doing this. The ERP solution is so convoluted, it was painful to look at the code back then. I am convinced they know internally that this system is unwieldy and market it like plug-and-play. They would *have* to.
When I would see negative press over the years about how bad Microsoft is, I would always think "Where is the negative press about Oracle?"
They were also known for the practice of "Eating Their Young". In this case a small private consultancy goes into a client, scores a job. Then for whatever reason, they need more resources so they go to Oracle for extra consultants. Well, Oracle would try like hell to squeeze out the people that got them the contract, making all sorts of promises, and then play that game where they simply cycle people in and out of the client to increase the billable hours. So incredibly short sighted, because obviously that small consultancy would do *anything* not to bring them in again. They tried it with my company back then and somehow we were able to kick them out.
I can't understand how they've managed to stay so successful. You'd think their reputation would bite them in the ass - more than this Montclair lawsuit.
I love milestone billing.. The project is $10. I'll give you $2 when you accomplish this, $2 when you finish that... Don't care if it takes 20 minutes or 5 years...
I would like to know a little more about how the project developed before forming an opinion.
My experience with public organizations is that higher-ups in the administration are all for it ready to take merit, until they realize how much work it does take. They organize a functional group including only the bosses, who happen to(*):
Most probably, whatever system based in the specifications that such guys give won't survive the first time it is tested "on the field". These same guys will later claim that the failure was of the contractor, and will show their anger in an attempt to hide their responsability.
In most of the projects I have been, it happens that the bosses discover how the organization really works through it, and what it really needs. The earlier they discover it, the better the project results.
The issue about being told that another project at another university is moot, that is not part of the contract (unless the other university wanted the same functionality and had been given other estimates, that could show a double standard).
My take? So far we only have a one sided story, I would like to know more about the project management to assign blame. Anyway, the fact that the University is going bold and suing for "Extortion" (instead of the standard "Breach of contract") makes me think that they are, at the very minimum, not totally innocent.
(*)Of course, I do not mean that every boss is like that but I see that a little too much...
Why can't
Dr. Cole (President of Montclair State University): That was never a condition of our agreement, nor was devoting more personnel to this project!
Larry Ellison: Perhaps you think you're being treated unfairly?
Dr. Cole: [pauses] No.
Larry Ellison Good. It would be unfortunate if this project happened to have any further costly delays.
Dr. Cole: [under her breath] This deal is getting worse all the time.
You just built a small compute cluster using popular hypervisor, with three hosts, each with 2x8-core physical CPUs.
You plan to run a few Oracle VMs on this cluster.
You are advised by Oracle to license all of the physical cores in your compute cluster, because those VMs can (in theory) move around and run on any of the physical CPUs in the cluster.
You tell Oracle to go and f*ck themselves and opt for a DBMS with a less retarded licensing model.
-- ab1
Welcome new Oracle customer! As you explore your personalized Oracle portal, you will find new and exciting functionality awaits so don't miss out!
1) New functionality $4500/core (dual socket 2-core license)
2) Exciting functionality $3500/core (single socket 4-core license)
3) New + Exciting functinality $5200/core (Itanium dual-socket)
4) New + Exciting functionality $5000/core (Opteron dual socket)
The above offers apply only to new Oracle customers and may not be combined with any other coupons/specials currently active. By making a selection from the available licensing packages, you hereby forfeit any legal rights to hold Oracle Ltd. or it's partners liable or responsible for any consequence resulting from sales offers whether verbal or written. You also hereby acknowledge you will decline from bringing charges against Oracle Ltd. or it's partners in any form of class action, personal or civil lawsuit.
Bo Hica
VP/CLO/BFG/BMF Sales/Marketing
Oracle Ltd.
Join the Slashcott! Feb 10 thru Feb 17!
...to not demand and include a Liquidated Damages section and a security bond in the contract they negotiated with Oracle.
The government organization I work for requires it in every contract we negotiate with outside contractors, IT or otherwise. Most IT vendors balk at first, but eventually cave in and agree to the terms. The threat of having to fork out Liquidated Damages or forfeit their security bond helps to a great degree keeping a fire lit under the contractor's asses to make sure they meet deadlines with the deliverables. And yes, we've done that with Oracle resellers/integrators too. Twice in fact, on big projects each one over a million dollars total project cost.
I work for an enterprise software company who had a salesperson promise a major national retailer that we supported their chosen database platform, which of course, we didn't. National retailer didn't find out until the implementation was complete, and were mightily pissed. We did the right thing though and added support for the DB. It only required pulling a significant number of developers off our next release and inconvenienced the client for the 3 or 4 months they had to wait.
So, this is not atypical.
You know what Oracle stands for right ? One Raging Asshole Called Larry Ellison
Kinda makes me miss SCO
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Nail those lying bastards to the wall.
The Kruger Dunning explains most post on
Anyone that uses OC as their primary implementation partner is an idiot. None of the dozen or more Oracle sales reps I know recommend OC to their customers because they know the deal will go bad.
Working in Professional Services for another major enterprise application, I could really see this being the fault of either party. I think many in Professional Services (myself included) take a pragmatic approach to implementation. The focus is on getting something going that meets 90 or 95% of the requirements with a healthy dose of skepticism that anything beyond that is worth the cost. At some point, the customer has to pull the trigger, adopt and adapt. In the course of doing so, they will discover shortcomings and advantages that weren't envisioned initially, and the effort and cost of pursuing perfection initially can be saved for follow-up effort once all that real-world feedback is collected. I have found some University customers tend much more towards wanting the "ideal" solution on Day 1 and as a Professional Services provider, going that last 5 or 10% of the way to perfection can be an extremely frustrating, money-losing endeavor. At the same time, none of the above can be encoded in a contract that would ever get signed, so all you can do as a Professional Services provider is choose your customers wisely and know when to require time & materials contracts.
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I thought the way this was managed these days was with contractual incentives.
The seller wants $100 dollars for a project. The buyer wants to pay $50 dollars for the project.
Normally, the buyer and the seller would negotiate some price, say $75, with generally no timing.
Now what seems common is that the buyer negotiates to pay $75 with completion guaranteed on some date. The buyer also negotiates incentives and penalties -- if the project is done earlier, there's some extra money for early completion, and for every N units of time the project is late, the buy deducts money.
The early completion bonus is capped to mitigate sloppy work as well as to keep the agreed completion date realistic, and the project actually has to function right, with the bonus sacrificed for problems that crop up.
They do this with highway projects -- I lived blocks from a billion dollar freeway project and it was amazing to see it done about a month early -- the vendor got a bonus.
would you?
For every benefit you receive a tax is levied. - Ralph Waldo Emerson
".. a boring joyless life."
That's all you, and nothing to do with your career. It a reflection of YOUR personality.
Well, it's fair to point out that he didn't say that was a bad thing -- for all we know, he's an accountant, and a boring joyless life is actually just what he wants.
Cheers,
"What in the name of Fats Waller is that?"
"A four-foot prune."
your general catch all clause falls to the standard tactic of claiming the buyer changed the requirements so that the original time line is void. Any absence on the buyer's part that holds back any part of the project; and believe me they will keep every note about delays from your side they can; give them an out.
The big problem with most of these projects is the people in charge of implementing their chosen solution rarely will stop a project and willingly commit a companies money until its done. Egos don't like being bruised.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Here is the first complaint from the University and Oracle's response:
You'd have to pull anything newer from PACER, nobody seems to have put it online yet.
Original Complaint:
http://searchoracle.techtarget.com/news/2240036374/Montclair-State-University-vs-Oracle-lawsuit
Oracle Response:
http://searchoracle.techtarget.com/news/2240036378/Oracle-response-to-Montclair-State-University-lawsuit
There is an amended complaint that someone should pull from PACER. This case is a "textbook example of how to sue a vendor" for fucking up.
They don't price and value their product on their own merits, but on the merits of who, how and where it is to be used. If McDonald's operated this way, the results would be interesting wouldn't they.
No, you are confused. Noboby in their right mind prices their products based on their own merits. You price your products based on what the market will bear and pocket the profit. Economics 101.
A little history for you first.
The Quakers in the 1800s developed a reputation for fair dealing. They did a couple things in their business transactions that were unusual, and widely regarded as equitable -- 1) they set a price and that was the price, no haggling or shystering; and 2) that price was based on a reasoned estimate of the value of the time and materials that went into the product or service being sold. They made a living in their fair dealings, and did well by themselves. This is a large part of the reason that "Quaker" became a favorable brand image in the US, such as Quaker State Oil, or Quaker Oats, complete with a smiling picture of a man in Quaker clothing as part of the label.
There's a difference between making a living, and making a killing. US-style business anymore seems much more about killing, and as we're discovering with the state of the economy these days, it's awful hard to make a living this way. Many others have described how mass greed ultimately destroys value, and consistent overpricing to ensure profit -- not just to cover costs and a bit extra for room to grow, but instead deliberate excess as part of the dream of getting something for nothing -- is sucking the value out of everything around us. It's wholly unsustainable.
But it seems that's taught in the higher-level classes, not at the 101 level. I'm guessing many of the movers and shakers in the US economy never got that far in their studies.
"What in the name of Fats Waller is that?"
"A four-foot prune."
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Then sell them the bacon later...
IBM does the same thing. The project I'm on now exists because IBM failed to deliver so the client is now doing it themselves. Why they chose an IBM framework that costs millions in licensing I don't know...
Budget Detail Budget Component Amount
Tuition $30,900.00
Fees $2,130.00
Room and Board $13,125.00
Books $1,950.00
Travel $850.00
Miscellaneous $3,000.00
Total: $51,955.00
thank god i got a full time job as a co-op and was able to pay for it on my own...
Anyone who has worked either side in this type of project can tell you this (what Oracle is accused of) is standard operating procedure, not just for Oracle. The steps are usually:
a) Agree to virtually anything. The intent is to get the contract. A practical schedule is actually a disadvantage, as we will see later. Don't worry too much about non-delivery clauses, they will never apply.
b) Continue development until time runs out. Developers will be oddly calm as deadline approaches for reasons that will become clear later.
(The objective here is to show competency, but with no serious intention of fulfilling the contract.)
c) Miss the deadline.
d) Allow hysteria to accumulate. Blame missed deadline on unrealistic scope and/or feature creep. Encourage panic.
e) Present new proposal at higher price and tough out the fireworks. ("Go ahead and sue. We have more lawyers than you have employees.")
f) $$ Profit!
This works (usually) because the end product is often a critical replacement or enhancement to an integral part of the customer's business (eg, Billing, Customer Service) and the customer will look for the shortest path to being able to do business.
It's common for the abused customer to threaten lawsuits, exceedingly rare for them to follow through. Kudos to Montclair for having the guts to go against a major corporation. It'll be interesting to see how this plays out.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
A similar large vendor tried this near me. they said for X we will deliver A, B &C. simple We pony up X..... quick implementation ensues 1. The techie they sent us has never worked with an environment like ours 2 The internal geeks stated "this crap stinks, doesn't work and will break things" 3.The salesman precedes to distract management with concert and sports tickets 4. Project is getting near deadline, A, B & C not working 5. We report that A B & C aren't working and that "this crap stinks, doesn't work and will break things" 6. The salesman precedes to distract management with concert and sports tickets 7. Project finally stalls 8.A B & C aren't working and "this crap stinks, doesn't work and will break things" 9 Salesman says "throw 5x at problem and that will fix it 10. Management balks because A B & C aren't working and "this crap stinks, doesn't work and will break things" 11. Suddenly Salesman isn't taking calls This is the pattern of business, it doesn't matter if something actually works, it matters that it makes a sale.
~corporate tool, but employed~
Fuck Oracle.
-- What do you need?
-- Gnus. Lots of Gnus.
Bait. And Switch.
It's well known in the retail world, where you can get successfully sued for it. Remains to be seen if a judge or jury can discern it in this case.
Thursday
I develop very complex, web based systems for a living, moved to using (mainly) Ruby and RoR a long time ago.
To see multimillion projects like this only tells how bad and uninformed the management layer is. (even if they completed it on budget and on time).
A university should have:
1./ Team up their computer science grads
2./ Write the stuff themselves
3./ Open Source it,
The indirect profit comes from:
a) saving the obnoxious, extortive amount of money to pay to a vulture vendor
b) giving an interesting job they can brag about to their own students (unless they don't believe in the people they form)
c) the popularity of having written a soft any other uni can use for their needs
But of course, what can you expect? It is pointy hair people that takes the decisions.
Hello,
I'm the author of the original article, wanted to share a link to the full court filing by Montclair, see below. Been enjoying all the comments, very interesting discussions and thanks for reading!
Chris Kanaracus
IDG News Service
http://www.scribd.com/doc/75810731/OracleMontclairAmended
And this is a surprise to anyone? *OTHER* similar companies do the same thing and just some times a lid is lifted so people can see this sort of black mail goes on quite often. Usually the account team (you name the company) is more subtle and make the threats where they know it won't be reported.
One company spoke in front of me saying that certain individuals (names spoken) are NOT to be part of the team effort as they (the company) doesn't like them for whatever reason.
Once they (the company) has their feet in the door its impossible to get them out without major payoffs. I have only heard it being done once (kicking the company out the door) and getting away with it. Yes threats and lawsuits are done and everyone ends up looking like a long dead horse.