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The scariest US software project horror stories of 2012

Billions of dollars were wasted and tempers ran hot as multiple projects hit the skids this year

Sure, plenty of enterprise software projects go just fine and end up giving customers all the things vendors promise: lower operating costs, streamlined operations and happier users.

Unfortunately, some still end up in ruins, leaving customers out huge sums of money, churning up lawsuits, damaging careers and destroying relationships.

On the bright side, when examined these failures can reflect some important lessons for both vendors and customers to take to heart. Here's a look at some of 2012's scariest software project disasters.

U.S. Air Force pulls plug on ERP project after blowing through $1 billion

In November, reports emerged that the U.S. Air Force had decided to scrap a major ERP (enterprise resource planning) software project called the Expeditionary Combat Support System after it racked up US$1 billion in expenses but failed to create "any significant military capability."

ECSS was supposed to replace more than 200 legacy systems. The project dated to 2005 and used Oracle software, but its ballooning costs clearly suggest that Air Force officials and systems contractor CSC conducted an overwhelming amount of additional custom coding and integration work.

An Air Force spokesman said the project would require another $1.1 billion just to complete one-fourth of the original scope, and that wouldn't be complete until 2020.

Watchdog agency's report suggests ongoing U.S. military ERP projects are failures in motion

The U.S. Government Accountability Office released a report in March that found many ongoing ERP projects by the nation's military are drastically behind schedule and over budget.

One such project, the Marine Corps' Global Combat Support System, is projected to cost nearly 10 times its original budget and was supposed to be fully deployed in November 2009, according to the GAO. Its expected cost has reached $1.1 billion, up from an initial $126 million, the GAO said at the time.

Another ERP project at the Navy was begun in 2003 and planned for completion in fiscal 2011, but that schedule has slipped to August 2013, with costs expected to be $2.7 billion instead of $1.9 billion.

"It's so bad that maybe the government should give up the ghost on trying to do anything and simply accept that multibillion failures are a permanent part of the landscape," said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on IT project failures, in a recent interview.

"The big question is how does it happen?" Krigsman added. "Where are the controls? Why does it keep happening and when is it going to stop. Is government IT totally out of control?"

California courts throw huge software project on scrap heap

A project that was intended to modernize case management for California's court system was scrapped in March, despite the fact that officials deemed the software developed so far was viable. The problem? Not enough money to continue rolling out.

California spent more than $300 million to develop a number of versions of the case management system. However, it would require another $343 million to implement and support the system in 11 courts through fiscal year 2020-2021, according to an independent audit.

Some earlier versions of the system are in place at certain courts, but they aren't able to handle all case types.

In part, the decision to pull the project's plug can be attributed to the severe financial pressures California has faced in recent years. But even if it had been completed, the system may have become outdated quickly, according to a 2011 report by the state's auditor.

"We have a perfect storm of the right hand not talking to the left," Krigsman said. "A classic example of needless waste."

Manufacturer sues IBM over SAP project 'disaster'

Also in November, chemical products maker Avantor Performance Materials lodged a suit against IBM, alleging that Big Blue officials lied about the suitability of an SAP-based software package it sells in order to land Avantor as a client.

As it turned out, the Express Life Sciences Solution was "woefully unsuited" for Avantor and the ensuing software project took the company to a "near standstill," according to its lawsuit.

In fact, IBM workers told Avantor that the project was the worst they'd ever seen, Avantor alleges.

Other allegations have a familiar ring to them, having been cited by other plantiffs in various ERP lawsuits. One is that IBM allegedly staffed the project with "incompetent and reckless" workers who made scads of errors. IBM also cut corners in order to reach a go-live date sooner rather than later, a move that resulted in "disaster," according to Avantor.

In a statement, IBM called Avantor's complaints "exaggerated and misguided," and said it plans a vigorous defense.

Woodward's finances get dinged due to ERP problems

ERP projects are supposed to save companies money in the long run. But in some instances, they can hurt the bottom line.

In July, aerospace and energy system components manufacturer Woodward said its third-quarter profit and revenue had taken a significant hit partly due to "ERP system-related issues that have been addressed."

While analysts on average had predicted $0.60 per share and roughly $491 million in revenue, profit instead was $0.40 per share in the quarter and revenue totated $460 million, according to Woodward's announcement at the time.

The exact nature of the ERP system difficulties, as well as the brand of software being used, wasn't made clear.

"A lot of times it has to do with some type of change management issue, either that or poor testing," Krigsman said.

Companies may also have other underlying financial problems but instead decide to "point the finger at the ERP implementation because they figure it's not as bad," he added.

Other companies, including Lumber Liquidators and Ingram Micro, have blamed lower profits on ERP woes.

Beverage distributor's lawsuit claims two-year effort resulted in 'absolutely useless' ERP software

Epicor found itself in court in January after its customer, beverage distributor Major Brands, sued the vendor on grounds it had delivered "absolutely useless" software after years of effort.

Major Brands started looking in 2008 for a replacement of some 20-year-old applications. The software still worked acceptably but Major Brands was self-supporting it and desired to move to a vendor-supported package, according to its suit.

It signed a deal with Epicor in September 2009 after giving the vendor a full rundown of its business processes, according to the lawsuit. Epicor assured Major Brands that its software was a good fit and would be up and running in mid-2011, it added.

Major Brands paid Epicor an initial $500,000 for software licenses and support and another $670,000 for the implementation, according to the lawsuit. The software was installed in November 2009 on Major Brands' servers but severe performance problems cropped up, it added. Major Brands spent another $100,000 on a hardware upgrade.

Major Brands paid Epicor an initial fee of about $500,000 for software license and support, and roughly $670,000 for implementation services.

The software was installed on Major Brands' hardware in November 2009, but "problems with operations, implementations and training" began almost at once, the complaint stated. Epicor's application was "running so slowly that it was not going to be suitable for use," it added.

Epicor told Major Brands that a hardware upgrade would help the performance, so the company spent about $100,000 on new machines, according to the complaint.

The Epicor software continued to suffer from severe latency problems and Epicor eventually told Major Brands that it would need to make "numerous changes and upgrades," with the project's go-live date pushed out significantly, according to the suit.

Major Brands and Epicor settled the suit in April, according to a court filing; terms were not disclosed.

'Antiquated' software leaves city out of millions in uncollected parking fines

Some parking violators in Long Beach, California, haven't had to cough up their fines due to an 'antiquated' software system used by the city's government, according to a report released in March by Long Beach Auditor Laura Doud.

Some $17.6 million in fines have gone uncollected due to the AutoProcess system's age, Doud's report said. "Staff time is consumed with manual processes, research and reconciliations surrounding parking citations billing and collecting because the existing system is antiquated," Doud's report said. "This results in limited collection efforts."

In addition, a lack of ongoing maintenance on the system has worsened the situation, according to Doud.

Since 2000, its database "was not cleansed to eliminate old, incorrect or uncollectible citations," slowing it down "considerably" and making outputs less reliable, the audit stated.

Epicor project failure suggests customers take risks when they go it alone

Epicor found itself hit with another ERP project lawsuit in April, this time by contract manufacturer Group Manufacturing Services.

The vendor allegedly told Group Manufacturing that its software would be a great fit, with Group's own employees able to manage any minor tweaks that might be needed, according to the lawsuit.

Instead, the project "consumed countless hours of [Group Manufacturing's] staff time, was sporadic, and problems endlessly erupted throughout," it stated.

Group Manufacturing ultimately told Epicor that it wished to end their agreement, according to the suit.

In a letter filed with the court, Epicor's general counsel John Ireland said Group Manufacturing's claims were "baseless." Ireland also wrote that Group Manufacturing "essentially fired the project manager and adopted a go it alone mentality which in no way relied upon or utilized Epicor's expertise."

Group Manufacturing's staff wasn't prepared to handle the job on their own, Ireland added.

Ultimately, the dispute reached a quick and quiet end, with the parties agreeing to have the case dismissed in May, according to a court filing.

Construction company can't file annual report on time due to ERP woes

In May, Pennsylvania construction firm New Enterprise Stone and Lime said it would have to hold off filing its fiscal 2012 annual report because of problems with an Oracle JD Edwards system rollout.

"Unexpected delays and other issues" with system interfaces as well as operational and financial reports have made it impossible to collect all the data New Enterprise need for the report, the company said.

New Enterprise dodged a bullet, however, saying that its "current projects, material and product shipments, and customer experience" weren't "materially impacted" by the system's woes.

Oracle software glitch leads to financial aid frenzy

Issues with an Oracle PeopleSoft system at Washington State University resulted in a wild startto the semester in August, causing widespread delays in financial aid disbursements.

The problems were due to communication issues between the software's student financials and financial aid modules, a school official said in an interview at the time. Other factors included a lack of staffers to help students and parents use the system, the official said.

IT personnel managed to fix the issues fairly quickly, according to a published report.

The system, which cost roughly $15 million, is replacing a series of older student-information software applications at WSU.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

Tags business issuesGovernment use of ITapplicationsenterprise resource planningIBMCivil lawsuitsepicorYEAR ENDsoftwaregovernmentOraclelegalSAP

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