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Oracle Businesses The Courts IT Your Rights Online

Oracle Sued For 'Extortion, Lies' By Montclair State University 359

Posted by timothy
from the their-reputation-precedes-them dept.
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."
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Oracle Sued For 'Extortion, Lies' By Montclair State University

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  • It's Oracle. (Score:5, Insightful)

    by Anonymous Coward on Thursday December 15, 2011 @08:56AM (#38382316)

    Seriously... what did they expect?

  • This is why... (Score:5, Insightful)

    by dremspider (562073) on Thursday December 15, 2011 @08:58AM (#38382334)
    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.
  • by Anonymous Coward on Thursday December 15, 2011 @08:58AM (#38382344)

    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.

  • Other side? (Score:5, Insightful)

    by Aladrin (926209) on Thursday December 15, 2011 @08:59AM (#38382354)

    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.

  • Re:It's not lying (Score:5, Insightful)

    by fsckmnky (2505008) on Thursday December 15, 2011 @09:01AM (#38382368)

    It's not lying, it's marketing and/or sales.

    Right. Just like how the universities tell everyone how much better their lives will be, if we all just go $60,000 in debt and sign up for classes.

    I find it ironic that the institutions that aggressively market themselves, seem to be highly susceptible to the marketing of like institutions.

    That said, if Oracle did indeed promise, under contract, to complete project X for Y amount of money, and it's not complete, then good for Montclair. Get the funds back, or make Oracle finish the job. Otherwise, it'll be the students or the taxpayers paying for it, at some point, after the risk transfer process trickles down.

  • Re:It's Oracle. (Score:5, Insightful)

    by erroneus (253617) on Thursday December 15, 2011 @09:07AM (#38382428) Homepage

    People and organizations have to learn the hard way... on an individual basis. Oracle is everywhere and is quite visible. People who don't understand make some presumptions and follow the "nobody ever got fired for buying...[usually Microsoft, but in this case Oracle]" notion and try to make the safest decision possible.

    My first knowledge of Oracle's personality came to me when I learned they price their software based on the performance of the hardware you are running it on. So the more expensive the hardware you run, the more expensive Oracle's software becomes. Something strikes me as terribly wrong with that model. (And yes, I know other vendors do this too... still strikes me as wrong. If you want to upgrade your hardware, suddenly you are in violation of your software license?) Once I learned they were willing to exploit [tax?] people and businesses who are able to spend more or require better, I learned all I needed to know about Oracle and their mindset. 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.

  • by Rennt (582550) on Thursday December 15, 2011 @09:09AM (#38382442)
    You are surprised? Oracle used to make Microsoft look like model corporate citizens - and this was back when MS was still a dangerous monopoly hell bent on choking the industry.
  • Re:It's Oracle. (Score:5, Insightful)

    by john82 (68332) on Thursday December 15, 2011 @09:11AM (#38382474)

    What did Montclair expect? Let's see: Legally binding contract. Contract not met. Customer sues for breach of contract.

    Seems to me that Montclair has the upper hand here. It all falls on the conditions of the contract.

  • Re:Other side? (Score:4, Insightful)

    by sensei moreh (868829) on Thursday December 15, 2011 @09:14AM (#38382508)

    Because microbiology and astronomy totally helped my network admin degree.Because microbiology and astronomy totally helped my network admin degree.

    If you wanted a vocational degree, you should have gone to a vo-tech school

  • Re:Other side? (Score:4, Insightful)

    by Severus Snape (2376318) on Thursday December 15, 2011 @09:15AM (#38382518)

    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.

    Nail on the head. It worth noting that ERP projects are extremely difficult to implement and involve basically ripping up the whole entire infrastructure of an organisation and starting again. As well as being very costly and take years to get up and running. Half the time they aren't even worth the hit you take getting it up and running. When everything goes smooth and actually works, it's fantastic your organisation can make strategic decisions quickly and effectively, data becomes transparent across the organisation and systems become integrated. The problem is, this sort of situation that the university is now, is far to common.

  • by CarsonChittom (2025388) on Thursday December 15, 2011 @09:25AM (#38382636) Homepage

    I'm too cynical about government to say you're never right about public-sector procurement (particularly historically). But I work in the public sector, and while I'm not involved in contracts, I can tell you, based on meetings I've sat in on and conversations I've had with those who are involved in contracts, that in general contracts are scrutinized very heavily at several levels, and requirements specified in almost absurd detail. That is simply the norm. If Montclair State University didn't do this, that's their fault. If they did, and Oracle didn't deliver, then MSU is doing exactly the right thing.

  • Re:Other side? (Score:5, Insightful)

    by sourcerror (1718066) on Thursday December 15, 2011 @09:27AM (#38382666)

    Hate to break the news for you, but university is the new vocational school.

  • by luis_a_espinal (1810296) on Thursday December 15, 2011 @09:33AM (#38382728) Homepage

    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.

    Bingo. My sister went to a private university (local) all the way to grad school for a STEM degree, and she piled no more than $45K (again, in a private school.) I went to grad school in a in-state university, and my total debt was about $25K. My other sisters went also to in-state schools (biomed, fine-arts, PT) and none racked that much of debt either. The only person I know that justifiably had like $60K in debt was this guy who went to grad school in PT with a lot of specialized training. Medical and law students would be the other camp in which I could see a justification for such an amount of student loan debt.

    OTH, people getting into $60K for a degree in History or Social Science is just absolutely retarded. I could understand that debt in those degrees if the student 1) goes to a private Ivy League school, and 2) go all the way for a Ph.D. But for a B.A in those fields?

    I mean seriously, I see these shows and interviews with people being burdened with $60K, $80K even $100K and not having a job or a job that pays well to get rid of that debt, and when they get asked what degree they have, we don't hear STEM or law or medicine, we don't hear post-grad education. We hear 4-year degrees in History or Social Sciences. WTF? WTF? WTF??????

    Yeah, universities keep racking up the cost of education, but let's not delude ourselves into blaming these institutions when people rack up student loans on 4-year degrees with no market value. There is a difference between a freshman entering school and not knowing what to study, and that same person cruising around for the next 4 years without ever thinking "shit, how is my education going to get me a job with which to repay by debt?" Living life in cruise control is a stupid and costly way of doing things.

  • by Anonymous Coward on Thursday December 15, 2011 @09:42AM (#38382844)

    I got may engineering degree at about 500€ tuition and ~100-200€ in books per year for 4 years?
    Happily paid for by my parents of course.
    If schooling gets you that much into debt, your doing something very wrong. Perhaps divert some of that bailout money/warmongering money to your education system?

  • Re:It's Oracle. (Score:5, Insightful)

    by dnaumov (453672) on Thursday December 15, 2011 @09:43AM (#38382868)

    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.

  • Re:It's not lying (Score:4, Insightful)

    by ackthpt (218170) on Thursday December 15, 2011 @09:50AM (#38382938) Homepage Journal

    It's not lying, it's marketing and/or sales.

    It's voiding a contract.

    Happens all the time. Not only one IT projects. This is where you need to write into the contract the clause - "failure to meet agreed upon time and goals will be paid for by the contractor to completion"

    Going over budget on public sector contracts has at least a century of tradition behind it.

  • by Anonymous Coward on Thursday December 15, 2011 @09:51AM (#38382948)

    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.

  • Re:It's not lying (Score:2, Insightful)

    by ibib (464750) on Thursday December 15, 2011 @09:59AM (#38383016) Homepage

    Institutions and companies as well for that matter, REALLY need to learn how to; read contracts and agreements, formulate needs and demands (preferably with help of a third party) and not to trust the seller of a product or service.

    How hard can it really be? REALLY!? (If you really wanted and devoted resources to it, that is)

  • More data? (Score:3, Insightful)

    by cowboy76Spain (815442) on Thursday December 15, 2011 @09:59AM (#38383030)

    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(*):

    • Don't have too much time for meetings/extra work.
    • Don't really know how things really work at lower levels.
    • Think that their asses are covered.
    • Want everything at everytime completely organized, even if it means losing flexibility and increasing workload without ROI.

    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...

  • Re:Other side? (Score:1, Insightful)

    by rgbrenner (317308) on Thursday December 15, 2011 @10:00AM (#38383042)

    From the TFA:

    The school spent a year developing a detailed requirements list that ended up totaling some 3,200 items. This list was given to vendors ... ...
    The revised complaint also includes a partial list of MSU's project requirements and in all runs 60 pages, nearly twice as many

    So they doubled the requirements, and:

    At the same time, Oracle was working out a contract with the Lone Star College System to install a similar set of software, it adds. Oracle repeatedly told MSU that the Lone Star project was comparable to its own plans, according to the complaint.

    In fact, "the number of personnel and resources available to the Lone Star College System to complete its implementation ... was four times greater than the personnel and resources available to the University to implement its ERP system," the complaint states.

    And they dedicated 1/4th number of people needed to implement it.

    Now they want a refund... yeah right. The court should toss MSUs case in the trash.

  • Re:It's not lying (Score:5, Insightful)

    by BLKMGK (34057) <morejunk4me&hotmail,com> on Thursday December 15, 2011 @10:32AM (#38383456) Homepage Journal

    If you had bothered to read the source article it sounds like the University did just that. Their documentation appears solid as to failures, they had a pretty extensive list of requirements, they used real-life use cases tests for bidding companies to demo against, they documented ALL interaction with Oracle, and it looks like this was a FFP contract that Oracle may have simply underestimated. It's interesting that Oracle stated they had a similar project ongoing for another school that was going well - with FOUR times the resources being applied than this university had available but that this fact wasn't revealed to them. Oracle supposedly demonstrated an applicant management process during their demos and apparently represented this as part of their base capability - then at implementation revealed that it was 3rd party code or libraries that would have to be purchased. Gee, no vendor would ever do that right?

    What it will be to a court to decide is if the issues that were run into were as a result of the university or Oracle but the university certainly seems to have documented their case well. Your conclusion that they somehow simply believed and trusted Oracle on this doesn't appear to match up with the source article - perhaps you didn't bother to read it and simply read the sparse /. summary?

  • by Dishevel (1105119) on Thursday December 15, 2011 @10:46AM (#38383690)

    Well. If you do not want to blame your self for making bad decisions. Then you should maybe according to your scenario you should blame your teachers.
    Of course the most important thing I ever learned I did not learn from a teacher.

    I learned that when you look anywhere other than to your self to find the problems in your life you remove all power of being able to change it your self.
    Blaming others may make you feel good for a moment but never leads to a solution.
    Finding your part (How ever small) in bad situation allows you to improve and avoid it next time.

  • Re:It's not lying (Score:2, Insightful)

    by Anonymous Coward on Thursday December 15, 2011 @11:48AM (#38384470)

    Funny, how no matter how much you add for scope creep Oracle ALWAYS goes beyond, and NEVER fully delivers on all their promises.

    Nobody chooses Oracle for anything more than database because of it's quality. It's chosen because it's "Oracle" and spending big bucks on a big player shows clueless upper management that you take it seriously. THAT's the reason why Oracle has been snapping up all sorts of other companies and technologies, so they can position themselves as a top-tier vendor in market segments where, really, they're 3rd string.

    Obvious Dumb ass is obvious.

    Nah, just ignorant, not everyone has had the pleasure of working with them.

  • by Bucky24 (1943328) on Thursday December 15, 2011 @12:40PM (#38385092)
    Currently at the University I went to, tuition is $4,000 per quarter. That's $12,000 per year. In four years a student could rack up $48,000 in loans and that's just to pay for tuition. Then (if they aren't lucky enough to live near a good university) they will probably pay extra for housing. That goes for another $3,000 a quarter if you live on campus, or another $36,000. If you live off campus, average rent is about $600-$900 for a room (its a college town), and often you can only find rooms for $600 if you split with someone else. At ten months for a school year (September-June, I think I counted that right?), that can be as high as $9,000 a year, still $36,000, and at the low end its still $24,000 a year. And, bear in mind, this is assuming a full course-load. If students want to take only 2 classes then their tuition drops... to $3000 a quarter. And they have to go to school for longer because they don't have enough time in 4 years to finish their degrees. Going to school full time, you CAN work part time, but its difficult (I know because I did it, and was lucky enough to get a job in my field of study). That can pay for rent, maybe, and food/utilities/ect.

    School is very difficult to afford for those who's parents are rich enough to disqualify them for grants, but not rich enough to actually be able to push them through college (my parents are this way-I was disqualified for grants because they own a second property, a property that they can't sell because of the market).

    The last year I was in school, an entire major was removed, due to budget constraints. It was social sciences, which, from your post above, I can see you think is useless. However, right after, they created a new major: Judaism. You can currently get a Bachelors degree in Judaism from this University. How is that any more useful then social studies (which actually does have SOME uses)?

    So tell me, who's fault is it that tuition is so high? Even people who are in "useful" majors like myself had to get loans, and I was one of the lucky ones who could get a job (again, college town, even little jobs in coffee shops get snapped up very quickly). I could go on to contrast the cost against the quality of education I received, but that's not really the point.

    While I agree that if you're going to go $60,000 into debt for a history degree, you should stop and rethink what you're doing, but it is very very easy to get that much into debt simply by going to a University, no matter what your major. Maybe it's different where you come from?
  • Re:It's not lying (Score:4, Insightful)

    by steelfood (895457) on Thursday December 15, 2011 @12:49PM (#38385200)

    Which is why it's important to maintain a relationship with a known honest vendor. It's not just to support that vendor per se, but also to minimize the risk involved in consulting a different vendor for future projects.

    It's not surprising that people get away with these things. Management is usually not competent when it comes to discerning the BS from the truth at such a low level. They're typically too removed from the technologies involved, and too concerned with other things such as budgets and service agreements. And many people don't realize that a software demonstration is not necessarily indicative of the cabilities of the core product, but of the potential of the core product. Ensuring that the potential featured becomes a capability is a part of the contract negotiation process.

    That's why it's important to have actual senior developers, or low-level managers, involved in the process. People who work with software will be able to tell what the software can conceivably do, and what it cannot do, especially within a given timeframe.

    Not that I'm saying MSU is in the wrong here. But the lack of general expertise in the area makes them susceptible to such fraudulant practices. It's like walking around with your purse hanging in the back and the zipper open, with the wallet on top.

  • by zooblethorpe (686757) on Thursday December 15, 2011 @01:07PM (#38385492)

    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.

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