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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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  • by Anonymous Coward on Thursday December 15, 2011 @09:00AM (#38382360)

    "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."

  • by captbob2002 (411323) on Thursday December 15, 2011 @09:09AM (#38382444)
    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."
  • Good, bring 'em on (Score:5, Interesting)

    by Rogerborg (306625) on Thursday December 15, 2011 @09:09AM (#38382452) Homepage

    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.

  • Tuition math lesson (Score:5, Interesting)

    by Anonymous Coward on Thursday December 15, 2011 @09:16AM (#38382538)

    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.

  • Re:It's Oracle. (Score:4, Interesting)

    by HerculesMO (693085) on Thursday December 15, 2011 @09:17AM (#38382540)

    We are running a SAM project here (software asset management) and Oracle is one of our biggest offenders. They have the most weird, complex, and obnoxious licensing terms in their contracts, but the problem is we USE IT A LOT. I'd happily suggest people to swap off, but since I'm far from a DBA my word carries no weight, and even if it did, there's a lot of politics in play that keep it planted firmly.

    I am hoping that after the discovery of this project and seeing how much money we piss away on Oracle (needlessly), that people's eyes will open. This behavior really is just much of the same from this company.

  • by swb (14022) on Thursday December 15, 2011 @11:37AM (#38384340)

    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.

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

    by gstoddart (321705) on Thursday December 15, 2011 @01:02PM (#38385428) Homepage

    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

    I will be curious to see how this plays out ... documenting everything to be able to say that Oracle lied to them about the capabilities of the software and then demanded more money ... well, that might make them less susceptible to these fraudulent practices.

    If Oracle really did lie to them and try to play a shell game whereby they expected the university to pay extra for functionality they were promised was already there ... well, I'd like to see Oracle held to account for that one.

    As I've said elsewhere in this thread, I once worked with one a project with some Oracle software which didn't do half of what they claimed it did. I certainly believe the university was sold a bill of goods, only to have Oracle turn around and say "well, it doesn't really do that, this part is an add on you have to buy, and we really have no idea how to do this part, but if you wait for the next revision we're sure we can figure it out".

    Sadly, I've seen software sold with half truths and bald-faced lies before. Why it hasn't led more of them into court, I will never understand.

  • This is S.O.P. (Score:5, Interesting)

    by roc97007 (608802) on Thursday December 15, 2011 @03:21PM (#38387766) Journal

    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.

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