Ohio's attorney general has filed a lawsuit against
PeopleSoft, seeking $510m in damages stemming from an allegedly
faulty installation of the company's ERP and student administration
applications at Cleveland State University.
The lawsuit claims that the student administration applications
were "vapourware" when the project began in 1997 and that the
module for managing financial aid remains unusable even now.
Through the attorney general, Cleveland State is charging
PeopleSoft with fraud, breach of contract, negligent
misrepresentation and four other counts.
The school is also seeking unspecified damages from Kaludis
Consulting Group, a Washington-based firm that advised Cleveland
State during the technology selection process and then temporarily
managed the project.
A spokesman for Cleveland State declined to comment about the
suit, citing a school policy against discussing pending
litigation.
PeopleSoft officials did not respond to repeated requests for
comment.
Cleveland State was the first user to install a full set of
PeopleSoft's student administration applications. but after it
began using the software in 1998, university officials blamed the
technology for problems in processing financial aid, enrolling
transfer students and recording grades.
In the lawsuit, Cleveland State says PeopleSoft falsely assured
it that the applications would run on the school's IBM mainframe.
In addition, the initial version of the software that PeopleSoft
shipped to Cleveland State was "woefully deficient", the suit
claimed.
Subsequent releases also did not work as promised. The
school claimed it had to install "hundreds of fixes" to try to get
the software to function properly. Work on the project continued
unsuccessfully into 2001.
The fallout at Cleveland State allegedly included more than $5m
in lost revenue because of an inability to track and collect
receivables, plus unexpected purchases of a second mainframe and a
Sun Solaris server with an Oracle database.
James Lang, an attorney at Cleveland-based Calfee, Halter &
Griswold, is handling the case on behalf of the school. He said
Cleveland State eventually gave up on some of the PeopleSoft
applications and decided "to go down another path". He did not have
detailed information about the technology now used for student
administration.
The court has not yet set a schedule for hearing the
lawsuit.
Joshua Greenbaum, an analyst at Enterprise Applications
Consulting, said failed ERP installations often result from
implementation problems rather than shortcomings in the software
itself.
"But what's important when you see a lawsuit of this magnitude
erupt into the public arena is that the customer relationship
process between vendor and customer has broken down completely,"
Greenbaum said.
Marc L Songini writes for
Computerworld