Puerto Rican government agency claims Infor's negligence cost it $9 million

Infor failed to properly maintain a software system used by the Puerto Rican tax authority, a new lawsuit claims

Infor is being sued by a Puerto Rican tax authority on grounds that its failure to maintain software used by the organization racked up US$9 million in costs.

The Municipal Revenue Collection Center first acquired a limited license in 2006 for Infor's Hansen software, according to the lawsuit filed this week in U.S. District Court for the District of Puerto Rico. Hansen, which Infor purchased in 2007, provides asset management and billing capabilities for public sector agencies.

The tax authority initially hired a Hansen partner, Rock Solid Technologies, to install the system, but later decided to switch to Infor, according to the suit. This resulted in three support and services contracts between the authority and Infor, which were signed in early 2010 and had a total value of about $1.1 million.

"The services provided by Infor have been very deficient and negligent since the beginning of Infor's contractual relationship with [the authority]," the suit states. Infor allegedly caused "serious communication, assistance and cooperation problems," it adds.

Ultimately, the authority came to believe that the staffers who originally installed the software no longer worked for Infor, as the technicians assigned to its project had a "clear lack of knowledge" about how it worked, according to the suit.

Infor has been "absolutely incapable of resolving serious problems" in the Hansen system, which involve data integrity, management of overpayments and other issues, according to the suit.

On 33 occasions, Infor "failed to provide satisfactory answers to serious problems," according to the suit.

This has forced the authority's own staffers to create patches and workarounds to keep the system running, a task that "becomes very complicated and sometimes impossible" because the authority can't get access to the source code, it adds.

The authority's suit claims Infor is in breach of contract, and asks that the original agreements be nullified and the money returned. It also demands $9 million in damages to make up for "overtime paid and compensatory time granted to [authority] employees dedicated to technical support tasks and provisional remedies related to the malfunctioning of the Hansen tax system."

In addition, it is asking the court to order Infor to provide access to the source code, so the authority's teams "can develop a solution to the multiple problems it faces in its daily use and management of the system."

An Infor spokeswoman didn't respond to a request for comment on Tuesday. As of Tuesday, Infor had not filed a response to the suit in court.

While it is "certainly plausible" that key personnel left Hansen after Infor acquired it, it is equally possible that the authority's demands to Infor were unreasonable, and it's impossible to judge the situation without Infor's side of the story, said analyst Michael Krigsman, CEO of consulting firm Asuret.

"However, this case bears striking similarity to others in which a services provider or software vendor becomes stretched too thin due to lack of qualified resources," he added. Often during the buying process, customers focus too much on software features, and not enough on the services they'll need to install it, Krigsman said.

Private-equity-backed Infor is one of the software industry's largest ERP (enterprise resource planning) vendors after SAP and Oracle, with close to $3 billion in annual revenue. It achieved that growth in part due to a long string of acquisitions, from smaller ones like Hansen to 2011's roughly $2 billion purchase of Lawson Software.

Infor's growth pattern has earned it a reputation of being more of a holding company than a traditional software vendor with a focused product agenda, but that image has started to wane under the leadership of former Oracle president Charles Phillips, who became CEO in October 2010.

While Infor has continued making acquisitions, it has also hired hundreds of developers and launched a next-generation set of applications and middleware.

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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