Oracle wins partial victory in school's software project lawsuit

But Oracle still faces breach of contract claims by Montclair State University

A judge has tossed out some of the claims brought against Oracle by Montclair State University in New Jersey over an allegedly failed ERP (enterprise resource planning) software project.

Montclair's claims of fraudulent inducement and negligent misrepresentation have been dismissed by Judge Freda Wolfson, according to a recent filing in U.S. District Court for the District of New Jersey.

The judge dismissed Montclair's allegations on grounds they failed to "state a claim," or provide sufficient facts upon which the court could grant relief under existing law. But Wolfson's opinion preserved Montclair's breach of contract claims against Oracle.

Montclair State first sued Oracle in May 2011, saying that a PeopleSoft project that was supposed to cost about US$20 million and take roughly two years to complete ended up in disarray.

Oracle also initially claimed that the overwhelming majority of Montclair State's business processes could be handled by the base Oracle PeopleSoft system, versus additional customizations, but that turned out to be far from the case once work started, according to the school.

But in a counterclaim, Oracle argued that Montclair State officials didn't understand what steps were required for a successful project and were difficult to work with. "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," Oracle said in a court filing at the time. Montclair's actions have amounted to a "scorched earth" campaign meant to deflect blame from Montclair to Oracle, the vendor alleged.

A spokeswoman for Montclair State didn't immediately respond to a request for comment on Wolfson's ruling. Oracle spokeswoman Deborah Hellinger declined to comment.

This is far from the first ERP software project to suffer problems serious enough to spark litigation. Other high-profile cases include Waste Management's lawsuit against SAP, as well as Marin County, California's action against Deloitte and SAP.

ERP projects are complex affairs that require customers, systems integrators and software vendors to each play important roles. But a number of persistent dynamics can cause matters to go awry, according to one expert.

"Most CFOs and CIOs are painfully aware of the risks associated with ERP implementations and most are even more aware that a botched deployment will likely cost them their jobs." said Eric Kimberling, president of Panorama Consulting Solutions, in a Wednesday blog post, which didn't specifically mention the Oracle-Montclair dispute.

However, "when forced to choose, speed and cost will almost always trump business results," Kimberling added.

"Unrealistic expectations" on the part of customers, driven by vendor boasting, can prove problematic, according to Kimberling.

"They too often hear (and believe) the sales hype from ERP vendors that their software can be implemented in relatively little time, cost, and risk," he wrote. "While our experience and research shows that the average implementation takes 14 months and significantly longer for larger and multi-national companies, it is not uncommon for software sales reps to suggest that their software can be implemented in just several months."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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