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By Jim Finkle and Helen Chernikoff

BOSTON/NEW YORK (Reuters)—Waste Management Inc 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, 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, 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)

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Comments (7)

	1. 27-03-2008 13:16
	Another clear example of sales hype and the utimate reality. When will software companies see these examples and realize that the customer will demand the product they purchased? It would be a huge mistake for SAP to under estimate the effects of this lawsuit long term. I for one would be very carefull of entering into an agreement with SAP without having heavy penalties for non-performance built into the contract. And you can bet that every marketing/sales claim would be one of the measurements. It will be interesting to understand the cost and impacts of dealing with a foreign company with regard to the law suit. Registered

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	2. 28-03-2008 11:53
	Very often we face that type of problem due to mismatch between the actual requirement by the customer and the solution provided.Sometimes the buyers do not know exactly what type of solution will be suitable for them and, on the other hand, the solution providers are not ready to understand the requiremnets in details.That's why, it is better to go for customised solutions rather than any fit-to-all software product. Guest

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	3. 28-03-2008 16:39
	I think the core issue is that public companies are so concerned/indebted to the stock market/shareholders (re: meeting short term metrics) that they will do anything to meet the numbers. I feel this $100 million balance sheet item was pushed, over-sold, and under-delivered to meet the latest quarters numbers. In my opinion. Registered

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	4. 28-03-2008 18:10
	While one can only understand what was stated in the article, the telling part to me is the basis of the suit and that is and I quote: "Unknown to Waste Management, this 'United States' version of the Waste and Recycling Software was undeveloped, untested and defective," the suit says.  Now I understand that this is the position of Waste Management, however they didn't go into a major contract for a 100M system without some basis for a return on their investiment. I may very well be the case that the version that SAP created for the market in Europe will do much of what is required in the EUROPEAN waste management market, however, it would seem evident that the US market and the largest company in the business here didn't find that it would do what was needed/sold. I suspect that we will get more details about this as it workes it's way through the legal system. I would be shocked if a company the size of Waste Management or any company that can invest 100M in a system, didn't do a very competent due diligence and certainly had a ROI in mind for this system. Registered

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	5. 02-04-2008 19:33
	As an IT executive, I deployed SAP at 5 corporations in different industries over 13 years. It is a surprise to learn that any corporation could get $100 million into an SAP project this decade without knowing that the software could not satisfy their needs. What was the early phases of the project plan, i.e; pilot, process diagraming, etc. The details on this issue should shed light on the folks who made mistakes. Registered

John Stevenson

	6. 02-04-2008 19:54
	While I agree that a PMM does not seem to have been in play here, and is primarily the issue, I still believe that SAP re-packaged a similar solution that was used elsewhere without doing any due diligence for this new and different customer. Probably (and I would hope) SAP's easiest $100M that ever hit the books. The person(s) who bit on this deal from waste management will be the scapegoat(s). As an aside, I would think SAP would try to resolve without it getting this far. Maybe waste management put pressure on a deliverable/go no-go date or similar, seems like there is some important information missing, should be interesting to see how it pans out... Registered

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	7. 17-06-2008 11:47
	I think it's case of project implementation failure. It's wrong to blame SAP ERP products for the failure. It requires a major and concerted effort to cutomize SAP products to effectively implement a system. Registered

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