Waste Management Sues SAP over Software Failure

BOSTON/NEW YORK (Reuters) – Waste Management Inc (WMI.N: Quote, Profile, Research)said it spent more than $100 million on a computer system that wassupposed 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 infourth-quarter net income, has yet to determine whether it will take acharge 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 weresupposed to be designed to manage tasks unique to U.S. companies thathaul waste and handle recycling, with no customization required, thelawsuit said.

Those programs handle tasks including billing, waste logistics,container management and on-board computing, according to a December2005 press release from SAP America Inc.

"Unknown to Waste Management, this ‘United States’ version of theWaste 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 StockExchange 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)