Multibillion-dollar software company Oracle seems to have recently been under the media spotlight for both good and not-so-good reasons. On the one hand, it has just reported better than expected revenues and its highest growth rate since 2011. On the other hand, according to a number of reports, it looks to have spent quite some time dealing with legal matters that have the potential to impact on the company’s brand image.
In February, it was reported that a number of its shareholders are suing the company and its board for misleading growth reports about the buoyancy of its cloud business (for more information click here). Later that same month, Oracle was again reportedly being sued – this time by a former employee who believed she had been discriminated against when she was let go, despite bringing in over $11m for the business during her time there.
Oracle Sued Over Alleged Poor Software Delivery
The latest legal issue to hit the news has software giant Oracle being sued for $4.5m after a client reportedly claimed that its enterprise resource planning (ERP) system failed to be delivered, despite four years of work and repeated delivery date rescheduling.
According to The Register, a technology news website, Worth & Company, a US-based mechanical contractor has alleged that “Oracle breached its contractual obligations and fraudulently misrepresented the suitability of its software”.
Worth & Company hired an IT systems integrator at the beginning of 2015 to implement Oracle’s software system. According to The Register, they were assured by Oracle that their solution was “a functioning workable product fully capable of fulfilling Worth’s needs”.
The go live date was to be later that year. However, the go live date was rescheduled to February 2016, then February 2017, then in 2018, after replacing their integration company and spending many months rewriting applications, debugging and attempting to resolve a multitude of issues, Worth & Company decided to drop Oracle in favour of another ERP vendor.
If Worth & Company can prove what they claim, that Oracle over-promised and under delivered, this could be a very uncomfortable legal matter for the software solutions company. More on this lawsuit can be seen in the legal documents here. The $4.5m Worth & Company are suing for is apparently the sum the company paid to purchase and implement the Oracle ERP product.
As Tom Jones Said… “It’s not unusual…”
In our experience of working on over 500 large and complex projects of this nature, we see many variants of either software solution vendors inadvertently over-promising what they can deliver, or clients having high expectations for the budget, resourcing and timescales they have available.
Where the vendor inadvertently over-promises, it is often not that they do it deliberately ‘to get the deal’. It is usually because they haven’t undertaken an appropriate level of pre-contractual due diligence on the client’s expectations of requirements, resourcing, budget and timescale. The vendor can then end up making too many unfounded assumptions and arrive at wrong/misinformed conclusions.
Early Market Engagement can Save a Whole World of Pain
In order to sanity check whether your expectations are reasonable or perhaps could be higher than you realise, undertaking an appropriate early market engagement exercise can be really useful. It will help you to understand ‘the art of the possible’ prior to formally procuring any solution, so you have better information upon which to determine your expectations, given the budget, resourcing and timescales you have available. You can then determine your priorities of compromise against the business outcomes you hope to achieve.
Specialist Solution Providers have a ‘Duty to Warn’
In both situations above, however, ultimately, if you instruct and engage a solutions supplier with deep domain expertise, they are regarded by the law as a ‘specialist’ – an ‘expert’ in their field. These ‘experts’ have a pre-contractual ‘duty to warn’ you of any material expectations you have that are unlikely to be achieved. So, if your expectations as a client are higher than what can be reasonably achieved, your expert vendor should warn you of that – before you sign the contract.
If the vendor doesn’t warn you in a clear manner (ambiguous wording counts against the vendor when they are a specialist in their field) that your expectations are unlikely to be achieved, then case law can often dictate that the specialist vendor has to resolve/remediate – making the system fit your expectations; the vendor also has to bear any additional costs.
Hence it is in the supplier’s own interests to make sure its pre-contractual due diligence on the client’s requirements is at an appropriate level.
Six Steps to get your IT Solution Fit for Purpose
If your IT project or vendor relationship has deviated from its expected path and you have attempted to bring it back in line, there are likely to be a number of steps you will have followed to achieve this goal. The list below has some key elements (not all, due to the restrictions on the length of this article) that can be used to help sanity check your own thinking for realigning the project, quickly. The primary message is that clear communication is key, but we’ve split this into several steps.
1. Outcomes-based agreement
There are occasions when clients have focused more on the ‘how’ and less on the ‘why’. When you decided that you needed a new solution for whatever it is you instructed your vendor to provide, you probably created a business case for it; a detailed assessment of what was needed and why, and how this new technology would transition/enable your organisation from its current position to its future position (along with the quantifiable benefits the new solution would afford the organisation). It is this realignment and re-communicating of these outcomes that will really help govern your discussions with your vendor now as it re-emphasises the outcomes you aspired to when you instructed them. Pages 12–16 in our paper Improving IT Projects cover this in more detail.
2. Have a robust rescoping session
If you are in a position where a rescoping is deemed necessary, then the likelihood is that you have recognised ‘issues’ that you feel have impacted on your project. A rescoping session is your opportunity to air these issues, to supply any documented evidence of them, and to discuss them openly. It is also an opportunity for your vendor to highlight any issues they feel you have created which could have held them back in their task. It’s important to use this session to build bridges, not to be mired in accusations. You want to encourage an environment of trust and collaboration where both sides can redraw the lines and say what they need, in the knowledge that each will take it on board and look to make whatever changes are necessary to ensure the project’s outcomes are achieved. Pages 17–18 in our paper Improving IT Projects cover this in more detail.
3. Document agreed process and objective changes
Assuming the meeting with your vendor was productive and you have been able to identify areas for improvement in order to put your project back on track, and you have kept things convivial between you, then it makes sense to document any agreed changes. As you know, communication is key, but for communication to be effective it’s not good enough to simply ‘say’ something. Whatever is discussed needs to be played back to assure understanding by all parties. Documenting any process or objective changes agreed between you will provide you with a lasting reference to return to should either party deviate again from the agreed path. Pages 17–18 in our paper Improving IT Projects cover this in more detail.
4. Quantify your outcomes
The majority of your outcomes can be quantified. It just takes some ‘walking through treacle’ to be clear so that achieving them is not likely to be misinterpreted. There will be other outcomes that are too early to be fully quantified, but they can usually be ‘shaped’ so that everyone has a sense of the direction to head towards.
For those outcomes that can be quantified, you and your vendor can identify, with greater precision: a) on the way to delivery whether the expected outcomes are achievable and how to adapt to better ensure that they are, and b) once outcomes are achieved, how your vendor has performed – did they achieve the expected outcomes or surpass them, or did they find an innovative solution that allowed you to rethink the difference between your expected and aspirational outcomes?
5. Determine whether a personnel reshuffle is required
There will be occasions when the problems facing your project are not all procedural or operational. Sometimes they’re personal. If you have identified human interaction and governance issues that could be impacting on your project’s chances of success – personality clashes, ineffective management, and so on – now is the time to address them. The right behaviours must be encouraged and the right people, with the right values and influence should be in positions of power, on the governance board and steering groups. There will be times when fresh faces with a fresh approach will breathe new life into a project. Pages 19–29 in our paper on Improving IT Projects cover this in more detail.
6. Is your contract ‘real-world aligned’?
Much may have changed since you started out on this project. After months or even years working with your vendor you now know them far better, appreciating their capacity, abilities, strength and challenges. You also will have a better understanding of the constraints of the project and what is and is not possible. This earned appreciation for the ‘reality’ of the project, coupled with the wisdom you acquired in your full and frank rescoping session should lead to a revision of your contractual agreement to properly reflect the new direction the project is taking. Your contract should be simple to understand, clear on its operating and escalation procedure, and agreed by all parties in order to better direct the right behaviours on the project that will help you achieve the outcomes you aim for. Page 18 in our paper Improving IT Projects covers this in more detail.
Oracle has recently posted revenues for its 2019 fiscal year end, showing they are up by 3% to $39.5bn with the cloud side of the business, including Fusion ERP, growing by 32%. The organisation has, therefore, much to be proud of and with lawsuits being par for the course for most major organisations – as there will always be a disgruntled employee or an unhappy client out there – all of the above could well come to very little. However, it’s how Oracle handles each of these cases and what comes out in the legal proceedings about the way they have treated customers and staff that will determine whether they have any impact on the company’s reputation.