Customer alleges broken pledges, lies in ERP software suit

Ross Systems misrepresented the capabilities of its system, according to farming company Woolf Enterprises

Fruit, nut and vegetable grower Woolf Enterprises is suing Ross Systems over allegedly broken promises and misrepresentations made by the ERP (enterprise resource planning) software vendor, in just the latest instance of such a dispute to hit the courts this year.

Woolf Enterprises began searching for an ERP system in 2007 and asked several prospective vendors, including Ross Systems, a subsidiary of CDC Software, to see whether their systems could be matched up to its business processes, according to a complaint the Fresno, California, company filed last week in U.S. District Court for the Eastern District of California. CDC is also named in the complaint.

Ross gave Woolf officials several demonstrations of its software during 2007, gathered information about Woolf's operations, looked over the capabilities of its existing system and were told what the new system would need to do, the complaint adds.

Woolf was told that Ross "would meet Woolf’s needs and that Woolf’s implementation goals would be achieved on time and within budget," according to the complaint. However, the complaint alleges that these claims were "false and misleading," and that Ross "grossly understated and misrepresented" the implementation costs.

In addition, Ross first claimed its software could provide all the necessary functionality for budget planning, but later conceded it couldn't and recommended the use of a third-party package, according to the complaint.

Before the contract was signed, Ross officials also pledged that Woolf would be able to “easily access precise, detailed inventory information; and to optimize inventory controls and yields while maintaining full operational visibility,” the complaint states, adding “This representation was false.”

In addition, Ross promised before the sale that its software “would accommodate Woolf's farm cost and general ledger requirements,” but that didn't turn out to be the case, the complaint alleges. Woolf ended up having to license another module and pay for some additional customization, it states.

This didn't jibe with pre-sale promises by Ross that its software would fit Woolf's needs without major tweaks, save for a “grower accounting module,” according to the complaint. It was only after the deal was signed that Ross revealed that many changes would be required, it claims.

Moreover, while Ross promised it would develop the grower accounting module at no charge to Woolf, it never had any intention of doing so, according to the complaint.

Overall, the project was marred by leadership failures on the part of Ross, according to Woolf. The original project manager repeatedly assured Woolf he was in control and that it should “trust” Ross, but he was ultimately removed due to “major inadequacies” and some work had to be redone, running up significant additional costs, the complaint states.

Finally, Ross placed Woolf's business “at substantial risk” by advising and permitting its project to go live without a written risk assessment “and in the total absence of any CDC/Ross personnel on-site,” according to the complaint.

While Woolf has so far paid Ross about US$1.2 million for the software and maintenance fees, it “remains unstable, defective and deficient,” it adds.

Woolf is asking for assorted damages and that its license agreement with Ross be rescinded.

Ross has yet to file a response to Woolf's complaint, but the vendor provided an e-mailed statement from president Sherri Rodriguez on Monday.

"Ross denies any allegations of fraud and will vigorously defend itself against this suit," she said. "This suit is unfortunately another example of many ERP lawsuits today, and demonstrates the advancement of opportunistic legal strategies by plaintiffs and their attorneys whose sole purpose is to advance novel legal theories in an effort to generate alleged damages which do not approximate any actual harm caused to these claimants."

"We believe this suit is a result of mismatched expectations by the customer and the vendor and not fraud," she added. "We have thousands of world class customers that continue to use our software successfully as their mission critical applications for their business.”

Overall, ERP projects are complex affairs that require customers as well as vendors and technical staff to perform individual roles well to ensure the implementation is a success.

To that end, Woolf's complaint presents a one-sided view of what may be a much more nuanced situation, according to one expert, who partly echoed Rodriguez's statement.

Like many similar cases, the dispute between Woolf and Ross appears to be “all about expectations,” said Michael Krigsman, CEO of consulting firm Asuret, which helps customers run successful IT projects.

In this instance, either Woolf's technical requirements weren't spelled out properly, they were changed midstream, or there was serious miscommunication between the company and Ross, he said.

“There's always a question of trying to avoid or minimize customizations versus making the software perform to the way a customer does business,” he added. “The fact they had to do customizations is not a problem in and of itself. It's simply a matter of the expectations up front. The question is, what did Ross actually say and what did the customer understand, and how were those different?”

Modifications are often made to ERP projects after work begins, and that can complicate matters further, he said. “It's just like building or renovating a house. You get into it and you tell your electrician or plumber, 'you might as well do this while you're in the walls'.”

However, if Ross indeed allowed the project to go live without a risk assessment or staff on site, “that's bad," Krigsman said. Still, this in itself may not have caused a problem, he said. “What [Woolf is] saying is that Ross was irresponsible.”

This is just the latest legal action brought against Ross over its software. Last year, a jury in Alabama awarded pet food maker Sunshine Mills more than $61 million. Ross is appealing.

Oracle, SAP and Epicor, as well as systems integrators such as Deloitte, have also come under legal fire from ERP customers in recent months.

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Tags enterprise resource planninglegalsoftwareapplicationsCivil lawsuitsRoss SystemsWoolf Enterprises

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Chris Kanaracus

IDG News Service
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