Waste Management Sues SAP over Software FailureBy Reuters - | Posted 2008-03-27 Print
Expecting a fully developed, off-the-shelf software product tailored to the management aspects of the waste business, Waste Management is suing SAP for damages against what Waste Management calls defective software.
BOSTON/NEW YORK (Reuters) - Waste Management Inc (WMI.N: Quote, Profile, Research) said it spent more than $100 million on a computer system that was supposed to help it save money, but instead turned out to be a "complete failure."
Waste Management spokeswoman Lynn Brown said on Wednesday that her company sued SAP AG (SAPG.DE: Quote, Profile, Research) (SAP.N: Quote, Profile, Research), the German-based company that sold it the system, seeking all its expenses plus punitive damages.
The No. 1 U.S. trash hauler, which reported $309 million in fourth-quarter net income, has yet to determine whether it will take a charge for its investment in the failed system.
"It depends on what SAP's response is to the lawsuit," Brown said in an email. "We need to assess their response."
SAP spokesman Andy Kendzie declined comment.
The software maker sold Waste Management computer programs that were supposed to be designed to manage tasks unique to U.S. companies that haul waste and handle recycling, with no customization required, the lawsuit said.
Those programs handle tasks including billing, waste logistics, container management and on-board computing, according to a December 2005 press release from SAP America Inc.
"Unknown to Waste Management, this 'United States' version of the Waste and Recycling Software was undeveloped, untested and defective," the suit says.
SAP shares were off 3.4 percent at $50.18 in extended New York Stock Exchange composite trading. They fell as its chief rival, Oracle Corp (ORCL.O: Quote, Profile, Research), reported quarterly software sales that were below Wall Street expectations.
Waste Management's shares were unchanged from the $34.45 close.
Texas-based Waste Management filed its lawsuit on March 20 in the district court of Harris County, Texas.
(Editing by Andre Grenon, Phil Berlowitz)
© Reuters 2008 All rights reserved
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