Enterprise Software: Warranty Woes - ' What SAP and MS '

Software vendors such as SAP and Microsoft say they currently offer warranties ensuring that their applications operate as promised in the documentation.

For instance, Microsoft's Office XP products "will perform substantially in accordance with the accompanying materials for a period of 90 days from the date of receipt." Software updates aren't covered after that 90-day period. Even Microsoft's security bulletins note the information is provided "as is" without warranties of any kind.

Warranties for SAP are more complicated and subject to negotiation because the software can cost millions of dollars and is often customized. Documents detailing negotiated software warranties weren't available, but lawyers say vendors don't warranty against coding flaws and potential security issues.

In fact, that customization is why SAP says it's impossible to offer a warranty for software as you would, say, a bicycle, notes Dennis Moore, senior vice president at SAP's cross-applications division.

"You can offer a warranty of a GM car because I don't put in 16 different seats and a new transmission when I first buy it," says Moore, who spoke on an industry panel with Scott at the CeBIT electronics show in New York this past May. Moore added that many products come in standard configurations set by the manufacturer and consumers don't change them. Software, however, is configured differently by each customer, thereby rendering warranties moot because whatever is in the documentation isn't reality. Moore and SAP declined further comment.

Nevertheless, the fundamental flaws in software are adding up. The U.S. Department of Commerce's National Institute of Standards and Technology estimates software flaws cost the economy $59.6 billion a year, and there's little recourse for customers other than to install patches and other fixes, even though that may impact more than one system.

Next Page: Who should be on the hook for software flaws?