State university sues Oracle over PeopleSoft ERP project

Montclair State University is suing Oracle, claiming the company mismanaged a PeopleSoft ERP project and caused deadlines to come and go with no results.

Montclair State University in New Jersey has sued Oracle over what it says was mismanagement of a major multimillion-dollar PeopleSoft ERP project.

In the lawsuit, filed May 18, Montclair claims that Oracle’s mismanagement of the project – called the Bell Tower Initiative (BTI) – has cost the university more than $10 million. It says Oracle didn’t deliver a functional financial management system, threatened to walk off the project, and forced Montclair to seek a replacement vendor.

“Oracle failed to deliver key implementation services, caused critical deadlines to be missed, refused to make available computer resources that it had promised, failed to deliver properly tested software, and, overall, failed to manage properly the project,” the lawsuit states. “As a result of Oracle’s breaches and its refusal to cure its failures after many requests to do so by the University, the University was forced to suspend the BTI Project, terminate Oracle’s contract, and seek to hire a replacement systems integration company to complete the BTI Project.”

Oracle denies the claims and made counterclaims of its own last week, saying Montclair owes Oracle more than $5 million for unpaid products and services. It says the project’s failure was due to poor leadership and knowledge of the technology by Montclair management.

“When issues arose during the course of the project, it became clear that MSU's leadership did not adequately understand the technology and the steps necessary to complete the project,” Oracle states. “Instead of cooperating with Oracle and resolving issues through discussions and collaboration, MSU’s project leadership, motivated by their own agenda and fearful of being blamed for delays, escalated manageable differences into major disputes.”

The project started in October 2007 when the university put out a request-for-proposal (RFP) for a new ERP system to include financial management, human resources and student administration, among other things. Oracle responded the following spring, as did another software company unnamed in the lawsuit. After a brief restart, Montclair chose Oracle for the project in April 2009.  It was scheduled to take two years.

And that’s where the fun began.

Montclair claims that Oracle mismanaged the project by failing to create a project management plan as promised, downgrading critical problems and rotating 129 Oracle employees and contractors on and off the project, making problem resolution difficult. Oracle denies the claims.

The first major application scheduled to go live was PeopleSoft Financial Management System (FMS) on July 1 of last year. The date was key because, Montclair says, it corresponded with the start of the school’s fiscal year. Implementing FMS at a time other than at the end of fiscal quarters would “create significant, complicated and unnecessary accounting work and significant additional conversion work,” according to the lawsuit.

It didn’t happen. Montclair claims that is because Oracle hemmed and hawed over providing a hosted data center environment in which Montclair could convert its financial data earlier in the year. According to Montclair, Oracle wanted Montclair to sign an amendment that could excuse Oracle from legal liability if Oracle wasn’t able to keep Montclair’s financial data confidential. Montclair refused. Eventually the university ended up buying more server hardware inhouse to do the data conversion, but that put the timeline behind schedule. Montclair claims other issues as well, but the bottom line was that the go-live date of July 1 came and went.

Over the next few months, Montclair and Oracle went back-and-forth regarding the terms of the project, without the project getting off the ground. In September, Montclair claims that Oracle said it needed approximately another $8 million – in addition to the almost $16 million for the original agreement – to continue and finish the project.

Montclair refused. By November, Montclair had sent a letter to Oracle saying it was terminating the contract.

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