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Oracle and partners sued over claims they over-elevated NetSuite's capabilities
Maker of industrial lift gear claims fraud as software project sinks
Advance Lifts, an Illinois-based maker of industrial lift machinery, has sued Oracle, its IT implementation partner Folio3, and its finance partner Banc of America Leasing & Capital, claiming that the trio breached their contract and committed fraud by delivering a NetSuite system that lacked promised features.
The complaint [PDF], filed in a US federal district court in northern California, describes how in 2019, Advance Lifts decided to upgrade its Customer Relationship Management (CRM) software and its Materials Requirement Planning (MRP) software.
For two decades, the lift biz had used an MRP system called Forth Shift to access market information about raw materials, in order to provide product price quotes to customers. But the company wanted to integrate the CRM and MRP systems it used to manage its pricing, business, and manufacturing processes.
In an October 4, 2019 meeting, the complaint alleges, sales reps from Oracle and Folio3 convinced executives from Advance Lifts that Oracle's NetSuite would meet their needs.
The court filing recounts how Advance Lifts president Henry Renken asked Oracle's sales rep, "This NetSuite will be an upgrade from my current MRP system, faster and better and more complete?"
The answer was "Yes," but Advance Lifts contends company personnel were misled.
"Unbeknownst to Advance Lifts, in October 2019, Oracle did not offer an MRP component to the NetSuite software," the court filing says. "In fact, Oracle would not include an MRP component in the NetSuite software until approximately one year thereafter."
With a Statement of Work (SoW) and a Subscription Services Agreement (SSA) signed, Oracle, the lawsuit claims, assigned Banc of America to collect payment. And in December 2019, Folio3 began trying to customize Oracle's NetSuite application to match the capabilities outlined in the SoW.
Folio3's work went on through November 2020, but according to Advance Lifts, the consultancy never managed to implement the key functions of software.
"The NetSuite customizations took longer than anticipated because as problems with the software would arise, Folio3 would attempt to fix the problems only to have the problems reappear," the complaint explains.
Cited problems include: extremely slow response times that got slower still as more data was entered; materials cost updates that took two days instead of one hour, while lacking a means to separate costs into different categories; and a quotation system that "was unstable and generated numerous, random errors."
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By December 2020, Advance Lifts gave up on the project when company personnel came to believe the software would never work as promised. On January 25, 2021, Renken presented a Notice of Breach of Contract and Notice of Deficiencies to Oracle's NetSuite sales VP that offered 30 days to fix the NetSuite system's deficiencies.
Oracle, it's claimed, rejected the notice and demanded Advance Lifts withdraw it, while nonetheless trying to remediate the issues. But the problems persisted. So Advance Lifts filed a second breach notice on March 1, 2021, again allowing 30 days to repair the software.
Come April 8, 2021, Advance Lifts presented Oracle with a Notice of Termination, concluding the contract. Nonetheless, the complaint alleges, neither Oracle nor Banc of America have acknowledged the cancellation of the deal and continue to seek payment.
On May 19, 2021, Banc of America served Advance Lifts with notice that it was in default for failing to pay. The financing firm, acting on Oracle's behalf, has asked for $351,816 and 15 cents.
So Advance Lifts decided to sue, alleging breach of contract and fraud. The company is seeking relief from claimed payment obligations and damages of $278,000 to cover the $87,000 paid to Oracle, $74,000 paid to Folio3 and $117,000 paid in salaries to its own employees who spent more than half their time during the project dealing with the software's shortcomings.
Oracle and Folio3 did not respond to requests for comment. ®