In March 2008, Waste Management -- the largest garbage collection company in the United States -- sued SAP for $100 million after an ERP implementation went completely into the dumpster. In the suit, Waste Management claimed SAP faked the demo it used to convince its top executives to go with the SAP solution.
Five months later SAP countersued, claiming that Waste Management still owed it millions in maintenance and service fees. Last May the allegedly rigged demo mysteriously vanished, with each side blaming the other for its disappearance. Waste Management says it took a $30 million hit on its first-quarter earnings this year thanks to the ERP failure.
"I don't want to necessarily pick on SAP," says Petouhoff. "The entire software industry needs to clean itself up. When companies are spending millions on your products, promising to deliver something you can't deliver is fiscally irresponsible. If companies would just be straight and say something like, 'Our software isn't doing that yet, but we're working toward that,' at least customers would know what they were buying."
Or as they say in the waste management business: Garbage in, garbage out.
Dirty vendor trick No. 2: Underbid, then overcharge Hand in glove with the fake demo is the deliberate underbid. Enterprise vendors come in and offer an extremely tempting price to a customer, with every intention of making up the difference in added charges after the contract has been signed.
Petouhoff says she witnessed this firsthand when working for a major systems integrator early in her career. As someone who had to implement the solution, Petouhoff would regularly go on sales calls with the software vendor.
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"Whatever the customer wanted, the salesperson said, 'We can do that,'" she says. "One time a vendor bid on building an entire call center for a large entertainment company in Southern California. The salesman said they could do it for $250,000, when he knew the actual cost was $2.5 million. I said to him, '$250,000 won't pay for the computers, desks, and headsets, let alone the software.' My partner said, 'Shut your mouth.'"