SAP's 'Ramp-Up' program fingered in ERP lawsuit
- 27 May, 2011 03:33
Officials in Marin County, California, are claiming SAP enticed them into joining a "Ramp-Up" early adopter program for a new ERP (enterprise resource planning) software suite, a move that helped send the project on a road to ruin.
Marin County initially sued the troubled project's systems integrator, Deloitte Consulting, last year, and later lodged a complaint against SAP as well, saying it conspired with Deloitte in a manner that violated the U.S. RICO (Racketeer Influenced and Corrupt Organizations) act.
The county, which has since decided to rip and replace the SAP software, added the Ramp-Up allegations as part of an amended complaint filed in April.
The Ramp-Up claims "have been concocted solely in an effort to keep SAP in this case," SAP said in a motion to dismiss filed last week in U.S. District Court for the Northern District of California.
Statements by SAP officials in connection with the Ramp-Up program do not amount to fraud, according to SAP. "As a threshold matter, the so-called 'Ramp-Up' scheme is nothing more than 'puffing' in the context of a sales pitch to the County," the motion states.
"Statements such as the Ramp-Up Program was a 'special' offering, available only to selected number of customers,' or that the new software had 'new' and 'enhanced' functionality that would make the County a 'first mover in your industry' are classic examples of salesmanship by SAP," it added. "It is implausible that such statements misled the County and, as a matter of law, they cannot constitute a scheme to defraud."
The Ramp-Up process provides SAP with reference customers and successful case studies that can be used to promote the new software to the broader user base. SAP has also attacked Marin County's claims on this basis, saying it strains credulity that it would want to collude with Deloitte on a project that was doomed to fail.
Marin County officials tell a different story in their amended complaint.
SAP persuaded them to implement ERP 2005, a new product, instead of ERP 2004, which the county had initially licensed, according to the complaint.
"Because Ramp-Up customers implement new versions of SAP software that have not been previously used, SAP assures its Ramp-Up customers that it will 'provide the guidance to go live with the new solution or release during the SAP Ramp-Up phase,'" the complaint said.
SAP makes Ramp-Up customers pay for a "special on-site SAP Ramp-Up 'coach' supplied by SAP," the complaint said. "It also requires that the project integrator complete specialized training and be deemed by SAP to be "adequately prepared for the latest solution release."
But in reality, Ramp-Up participation "presents extraordinary implementation risks" due to the software's newness as well as the possibility consultants won't have the requisite knowledge to implement the product, according to the county.
SAP sent the county's project manager a PowerPoint that extolled the virtues of ERP 2005 but failed to include "a single risk" associated with installing it, or becoming a Ramp-Up customer, according to the county.
Moreover, the Deloitte consultants on the job had no experience with ERP 2005 and very little with ERP 2004, it added. Marin County was to be Deloitte's "implementation guinea pig" for ERP 2005, according to the complaint.
"At precisely the same time that SAP was encouraging the County to license the new ERP 2005 software, it was acutely aware that the incompetent Deloitte consultants were struggling even to properly implement the old ERP 2004 software," it said.
The "Ramp-Up coach" provided by SAP also lacked the requisite skills and experience with ERP 2004 SAP for Public Sector software, much less the new ERP 2005 version, according to the county.
An SAP spokesman declined to comment beyond the court filings.
Deloitte did not immediately respond to a request for comment. The company has called the county's allegations baseless, and previously filed a complaint seeking unpaid fees.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com