The Irish Times this week ran an article about the lawsuit brought by Allied Irish Banks (AIB) against Oracle Financial Services Software BV (OFSSBV) and Oracle Financial Services Software Ltd (OFSS Ltd) for allegedly botching a retail banking system implementation. The former is based in the Netherlands, while the latter is based in Germany.
According to the Times article, “AIB is suing OFSS BV as alleged provider of the software and OFSS Ltd in its capacity as alleged guarantor of the obligations of its related company.”
AIB claims that it “wasted” €84 million on a new retail banking system using a platform called Flexcube, developed by Oracle Financial Services Software (there is a bit of tangled history about the development of Flexcube and its eventual relationship to Oracle, which interested Risk Factor readers can read about here).
This 2007 story that appears to be a press release says that Flexcube would enable AIB “to implement a common IT operating model for retail banking [across the UK and Ireland]... AIB says the technology will provide a new streamlined and efficient method of handling customer data.”
In addition, the 2007 story quotes a Maura McEvilly, who was the head of enterprise core retail banking at AIB, as saying:
“This [Flexcube] will deliver enhanced services to our customers and help us grow and develop our business.”
Well, apparently it did not.
The Irish Times story says that AIB claims that the Flexcube platform was “beset with technical problems” as well as project management issues which resulted in only 3,000 out of an expected and agreed 5,000,000 customer retail accounts being switched over to the platform between March 2007 to March 2010. AIB stopped working on further customer switch overs at the end of March 2010.
AIB wants not only €84 million, the Irish Times article reports, but also unspecified “damages for loss of profits and damage to goodwill.”
An article in India Info Line (IIFL) states that the shares in Oracle Financial Services Software fell on the news of the AIB lawsuit. It also reports that the company will be filing counter-claims “... against AIB for breach of contract and outstanding fees.”
Speaking of sour, that’s definitely the taste in SAP’s and consulting company Deloitte Consulting LLP’s mouths. As I noted last June, Marin County, California decided to sue Deloitte for $30 million over what it said was a botched SAP implementation. The suit was originally filed in Marin County Superior Court but was recently moved to the U.S. District Court for the Northern District of California, i..e, a federal district court.
A story Wednesday at ComputerWorld says that Marin County is not only suing Deloitte, but now also SAP America, Inc. and SAP Public Services, Inc. and a former Marin County employee, then County Assistant Auditor-Controller Ernest Culver.
The County alleges (see this press release in PDF here) that:
“Deloitte Consulting LLP, a U.S. subsidiary of global consulting firm Deloitte Touche Tohmatsu, and two U.S. subsidiaries of the German enterprise resource software developer SAP AG (SAP America, Inc. and SAP Public Services, Inc.), engaged in a pattern of racketeering activity designed to defraud the County of more than $20 million.”
Federal racketeering charges? That’s kicking it up a notch. Even the New York City CityTime fiasco with its $80 million in alleged fraud didn’t bring racketeering charges.
The outcome of this case could get very, very interesting, especially to other US state and local government organizations who may believe their consultants and/or product vendors are ripping them off.
The County says that:
“The complaint alleges that as part of the scheme, Deloitte falsely represented that it had the necessary skills to implement SAP for Public Sector software, and that the SAP entities falsely vouched for Deloitte’s skills. In fact, the complaint alleges, Deloitte’s consultants lacked the requisite skills, and, when problems with Deloitte’s work began to surface, Deloitte and the SAP entities engaged in a cover-up that included bribing Culver to falsely ‘approve’ Deloitte’s defective work, and silencing an SAP employee who attempted to intervene on the County’s behalf.”
Marin County now wants $35 million, which would be tripled under the Federal Racketeering Influenced and Corrupt Organizations Act (RICO) statute, as well as punitive damages.
Deloitte, the ComputerWorld story says, calls the lawsuit “a frivolous litigation tactic.” SAP is refusing to comment.
The post says that the lawsuit, also filed in U.S. District Court for the Northern District of California, claims that AT&T’s billing software is over-stating data downloads by 7% to 14% as well as showing data downloads even when iPhones are turned off.
AT&T says that its billing system is accurate, and will vigorously defend itself in court.
Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.