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