Waste Management Inc. (WM) is suing SAP after spending more than $100 million on a failed ERP implementation. In 2005, SAP agreed to implement a mySAP solution for container management and waste logistics. SAP’s Safe Passage Program was also designed to help transition customers off of old end-of-life applications (like Siebel and JD Edwards). What’s more interesting is that SAP Managed Services was supposed to host the entire solution for WM.

This will be a huge blow to SAP as WM is perhaps the largest disposal company in North America with revenues of $13 billion last year. This article from IT World gives a good run down of the situation.

Here are some surprising excerpts.

Waste Management said product demonstrations by SAP prior to the deal employed “‘fake software environments, even though these demonstrations were represented to be the actual software.”

According to the complaint, “… SAP AG executives and engineers represented that the software was a mature solution and conducted a demonstration consisting of what they represented was the actual SAP Waste and Recycling software,” The company later discovered that the software was a “mock-up version of that software intended to deceive Waste Management,” and that SAP has admitted to this in “internal documents,”.

Waste Management has discovered that these gaps were already known to SAP’s product development team in Germany even before the SLA was signed…

Eventually, SAP conducted a “Solutions Review” and by summer 2007 determined the software was not an “enterprise solution” for Waste Management’s needs, according to the complaint.

SAP said that if Waste Management wished to have the software implemented on a companywide basis, it would have to “start over” and agree to let SAP build a new version of the product with an updated version of its enterprise application platform, according to the complaint.

This is a classic example of the disconnect between Sales Reps, Engagement Managers and Implementation Consultants. Most of the time a solution is pitched by the Sales Reps and/or Engagement Manager. Once the deal is inked, they turn it over to the consultants to implement. At this point, when the project goes sour the initial heat is on the consultants. They’re the ones dealing with the customer and explaining to them that the software does not produce lollipops even though their sales rep promised it. While this is all happening, the sales rep are laughing all the way to the bank while they cash in their commission. It’s very common for the sales rep to over promise to close a deal, which leaves consultants with a very difficult problem to solve.

My philosophy is that customers are satisfied when you deliver on what you’ve sold. If you sell them a Dodge and you give them a Dodge, they’re happy. But if you sell them a Ferrari and you give them a Dodge, they’ll sue you for $100 million dollars. Customers understand that there is never a perfect fitting solution, but they better get what they paid for.

And now for the icing on the cake, check out the Press Release when SAP announced the WM deal in 2005:

“We are committed to building a strong relationship to help Waste Management realize its strategic objectives and execute on its mission of providing superior services to its more than 22 million customers in North America,” said Bill McDermott, president and CEO, SAP America, Inc.