Technology

N.J. College Accuses Oracle of Extortion and Lying

Montclair State University's lawsuit elaborates its case over an ERP project gone wrong.

By Chris Kanaracus

New details have emerged in Montclair State University's lawsuit against Oracle in connection with a troubled ERP (enterprise resource planning) project. In a court filing that includes more information about Oracle's alleged failings, the New Jersey school accuses the vendor of extortion, and improperly "inducing" the institution to take on the implementation.

Montclair's amended complaint, filed Tuesday in U.S. District Court for the District of New Jersey, states that Oracle made an array of "intentionally false statements" regarding the functionality of its base ERP system, the amount of customization that would be required, and the amount of "time, resources, and personnel that the University would have to devote."

"Ultimately, after missing a critical go-live deadline for the University's finance system, Oracle sought to extort millions of dollars from the University by advising the University that it would not complete the implementation of the ... project unless the University agreed to pay millions of dollars more than the fixed fee the University and Oracle had previously agreed to," it adds.

Oracle spokeswoman Deborah Hellinger declined comment.

In a response earlier this year to Montclair's original complaint, Oracle said the university was to blame for the project's woes.

"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," it stated. "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."

But much like its original filing, MSU's revised complaint tells a much different tale.

MSU wanted to replace its legacy systems with a new one requiring minimal customization, according to its revised complaint. The school spent a year developing a detailed requirements list that ended up totaling some 3,200 items.

This list was given to vendors, including Oracle, who responded to the school's original request for project bids several years ago, it adds.

In January 2008, Oracle told the school that its base PeopleSoft system for higher education institutions would satisfy 95 percent of MSU's business requirements, the complaint states. "This representation was false."

Before it won the bid, Oracle also conducted live demonstrations of its software that used test scripts prepared by the university. One demonstration involved "a robust on-line application process for Undergraduate and Graduate Admissions ... that it falsely represented was an existing part of the base system and satisfied the University's requirements," the complaint states.

But in fact, "Oracle's ultimate implementation plan was to sell the University a third-party product called 'Embark' to satisfy those requirements, suggesting the initial 'live' demonstration was rigged," it adds. A "substantial" amount of customization was needed in the end, according to the complaint.

Oracle also misled Montclair State about how long the project would take, saying it could be done quickly through a methodology it had developed, the complaint states. At the same time, Oracle was working out a contract with the Lone Star College System to install a similar set of software, it adds. Oracle repeatedly told MSU that the Lone Star project was comparable to its own plans, according to the complaint.