There is an old maxim that you should never get into a contract without the ability to get out of that contract. This is even more true with ERP-related contracts.

  • How do you walk away from an ERP contract with SAP or Oracle when that contract no longer works for you?
  • You may be unable to do it easily – especially if you failed to negotiate an expansive or flexible termination right.

ERP vendors like SAP, Oracle, and Infor offer discounts off the list price, expecting customers to purchase software for the duration of the contract.

  • They often include language in their contracts obligating customers to pay a termination fee to get out of a contract early or an acceleration clause obligating a customer to pay all fees due and owing for the remainder of the contract term.
  • Is this reasonable? Should you pay a termination fee? Do you have options?

Terminating an ERP software contract for breach is substantively different than terminating an ERP software contract for convenience.

  • Terminating a contract for breach with an ERP vendor, especially Oracle, SAP, and Infor, is not as simple as sending a notice of termination.
  • You need to document the basis for the termination, make sure your allegations of breach read on the vendor’s contractual obligations, and follow any termination and resolution obligations in the contract.
  • You also need to ensure you document the vendor’s breach of contract and the vendor’s efforts to cure the breach.
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Oracle is known for being aggressive during the sales cycle and dismissive of any issues or concerns arising during implementation. Oracle’s in-house legal department is often unreasonable and unwilling to compromise.

  • I’ve litigated against Oracle, negotiated with Oracle, and mediated disputes with Oracle throughout my career.
  • Make no mistake: Oracle is difficult to deal with. Their salespeople are aggressive, their lawyers are difficult to deal with, and they rarely make meaningful concessions.
  • It’s a culture that starts at the top.

If you are considering suing Oracle for a failed digital transformation or ERP failure, make sure you know what you are getting into and have counsel who has been there before.

You must have a good case before you sue any ERP software vendor, especially Oracle. What does that mean?

  • The reason you are suing – cannot be based on a subjective determination that the software does not work.
  • Litigating because the software does not work how you expected it to or is not as efficient as your legacy system is insufficient.
  • An objective, measurable, and substantive deviation from the software’s documentation or the vendor’s warranty obligations must exist.
  • If the vendor misrepresented the software functionality, your reliance on those misrepresentations must have been reasonable, and the misrepresentation must have been based on a present material fact—not future intent.

While I think you should do everything you can to salvage a failing project, Oracle may be unwilling to meet you halfway. If that is the case, you may have no choice but to litigate.

#erp #erplawyer #erpcommunity #erpfailure #saps4hana #oraclecontracts #softwarelawyer #sapservices #saphanacloudplatform #saas #erpcloud #teamtaft #oraclecontracts #oraclelawsuit #oraclefailure

Is it better to arbitrate or litigate digital transformation disputes? Like most things, it depends.

  • Arbitration is usually less expensive and quicker than litigation.
  • You can select an arbitrator with ERP software and technology experience, and the dispute is confidential.
  • In some scenarios, you may have a panel of arbitrators.

Choosing the right arbitrator(s) is everything. Pick incorrectly, and the results can be disastrous.

  • Some arbitrators are more concerned about resolution than the merits of the case.
  • This can result in questionable rulings that are virtually impossible to reverse.

With litigation, disputes are governed by rules of civil procedure.

  • Rulings can be appealed.
  • A perceived advantage of arbitration is that it is less expensive than litigation.
  • However, that is not always true. The upfront fees and the cost of the arbitrator (or arbitrators) can be costly.
  • I’ve seen arbitrations that rivaled the cost of federal court litigation.

Arbitration is not always preferable to litigation and is not always less expensive.


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As we often say, the Cloud is not a one-size-fits-all all proposition and it is not a silver bullet. It is a fundamental shift in how companies purchase software. It carries data security risks. If you need to customize the software to meet unique business requirements, the Cloud may not be ideal for your needs.

On-premise software traditionally consisted of a large up-front investment with a smaller ongoing maintenance obligation. With Cloud software, you are perpetually leasing software with the price increasing on an annual basis. It never goes down, and you can never stop the fee increases. Many Cloud products are not fully baked. Know what you are getting yourself into.

#erp #erplawyer #erpcommunity #erpfailure #saps4hana #oraclecontracts #softwarelawyer #sapservices #saphanacloudplatform #saas #erpcloud #teamtaft #erplawyer #erplitigation #erplawsuit

Over the past 20 years, we have been involved in hundreds of disputes involving failed ERP software implementations and Digital Transformation. While the specific facts are always different, the claims and allegations involving a failed ERP implementation or Digital Transformation are remarkably similar. If you are, or have been, involved in a problematic ERP software implementation, the claims, allegations, and counter-allegations outlined below will sound familiar.

Misrepresented Experience And/Or Skill Set:

  • Customer Allegations: (i) the ERP Software Vendor misrepresented its experience or skills in the customer’s industry or its experience or skills in implementing the particular software; (ii) the ERP vendor assigned inexperienced consultants who were using the customer’s implementation project as a training ground; (iii) the vendor’s consultants showed up late to work or failed to attend project meetings.
  • ERP Software Vendor Response: (i) the customer’s project manager and decision makers were unavailable when needed; (ii) the customer experienced employee turnover; (iii) the customer’s resources assigned to the implementation project had a limited understanding of how the business was actually run; (iv) the customer’s resources lacked the power to make decisions; (v) the customer’s steering committee members were not fully invested in the conversion to a new software system.

Misrepresented Software Functionality, Capabilities, or Features:

  • Customer Allegations: (i) the software does not work as represented; (ii) the software does not meet the customer’s business needs disclosed by the customer to the ERP Software Vendor during the sales cycle; (iii) significant functionality basic to the customer’s industry is missing; (iv) the software lacks basic functionality common to all software and included in the customer’s legacy system.
  • ERP Software Vendor Response: (i) the software met the agreed upon acceptance testing criteria; (ii) the software performs as warranted because it substantially conforms to the documentation; (iii) the sales process was open and transparent; (iv) the customer was able to conduct reference checks and site visits; (v) the software and its functionality were demonstrated; (vi) the customer’s expectations are unreasonable.

The Software Is Unusable Post Go-Live:

  • Customer Allegations: The customer claims that after the software has gone live, it cannot use the software because it is experiencing: (i) excessive overtime; (ii) the inability to ship product; (iii) ongoing loss of revenue; (iv) the inability to invoice customers; (v) loss of reputation and brand equity; (vi) loss of customers; or (vii) the inability to comply with federal or state regulations.
  • ERP Software Vendor Response: (i) the customer failed to re-engineer its business processes, or (ii) the customer failed to implement organizational change so it could properly use the system.

Training in the ERP Software Was Inadequate:

  • Customer Allegations: (i) the ERP Software Vendor’s consultants responsible for training were not knowledgeable; (ii) the application training environment was not suited to the customer’s industry or was broken; or (iii) the training did not utilize real data.
  • ERP Software Vendor Response: (i) “super users,” “champions,” managers or employees failed to attend training; (ii) the training was conducted in addition to full user work schedules, so the customer’s employees were not adequately focused on learning the new system; (iii) the customer failed to allocate adequate time and resources to the training.

The ERP Software Vendor Underbid the Implementation and Failed to Follow Best Practices:

How often do ERP vendors misrepresent functionality? More often than you think. With the rush to the cloud, many ERP solutions are half-baked with functionality that is not the same as the on-prem version. ERP salespeople are motivated by commissions. They often minimize limitations and complexity and sell the “sizzle,” not the steak. Almost every case we litigate includes allegations of negligent misrepresentation or fraudulent inducement.

One allegation we typically see is that the vendor intentionally underestimated the cost and length of the project. Vendors will typically respond by arguing that the customer changed its requirements, didn’t understand its business processes, or wasn’t available to make timely decisions.

The Customer Believes That the System Will Never Work:

  • Customer Allegations: (i) the system cannot be saved; (ii) the system has too many errors and functionality gaps; or (iii) the system is now highly customized and too expensive to maintain.
  • ERP Software Vendor Response: The ERP Software Vendor counters by asking for more time, more patience, and most importantly, more money.
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Contact: Marcus Harris

Technology Transactions

In today’s ever-evolving digital landscape and increasing reliance on technology, it is vital for organizations to have an expert legal team to assist with managing technology transactions. Taft’s Technology Transactions group is fully equipped to assess and manage legal matters related to technology with extensive knowledge, regulatory understanding, and practical experience to mitigate risk and enable companies to thrive.

Our services include advising on and safeguarding intellectual property rights, including patents, trademarks, copyrights, and trade secrets; technology-related contract drafting and negotiation; assisting in due diligence, contract negotiation, and regulatory compliance during technology-related mergers, acquisitions, and investments; technology licensing and commercialization; and providing litigation support in the event of intellectual property disputes, breach of contract cases, or regulatory enforcement actions.

Taft’s unique breadth of services also ensures that our clients benefit from cross-disciplinary collaboration across the firm, such as corporate law, antitrust, tax, or international trade, for comprehensive legal solutions that encompass all technology transaction-related needs.

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Taft’s artificial intelligence (AI) practice area, including generative AI, sits at the intersection of artificial intelligence and the law. We are a cross-functional group consisting of world-class litigators, IP-focused lawyers, and business attorneys fluent in the latest AI technologies and their applications. We help clients and c-suites mitigate potential legal and business risks in their use and development of AI-powered and API technologies, while safely taking advantage of the business opportunities presented by artificial intelligence. We also stay up to date on the rapidly evolving laws and regulations for AI-related technologies. Many of Taft’s AI attorneys have technical backgrounds and technology industry experience that enables them to understand the methodological workings of AI tools and the component technologies that comprise AI.

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Technology is constantly evolving, bringing changes that impact the financial services industry. Fintech businesses must navigate the industry’s regulatory environment and rethink their approach to legal issues.

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Intellectual property (IP) relates to intangible assets, including inventions, brands, new technologies, source code, and artistic works. More specifically, IP pertains to patents, trademarks, copyright, and industrial design. IP protects and encourages innovation and creativity and is among a company’s most
important assets.

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Many employers are turning to the use of artificial intelligence (AI) in the workplace to streamline processes, increase efficiency and lower costs. Yet many companies have not examined their use of AI in the workplace as federal, state and local laws and regulations begin to address this technology. Taft’s labor and employment attorneys are experienced with navigating AI integration and compliance to mitigate risks, whether your company is considering or currently using AI in the workplace.

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Artificial Intelligence or “AI” presents a conundrum for companies. On one hand, AI provides unprecedented power to process, sort and make sense of the mountain of data these companies have collected over the years. AI can help companies better understand this data and put it to use in the company’s effort to provide additional value to its customers, identify new opportunities and customers, and further distinguish themselves in a competitive marketplace. On the other hand, much is still unknown about this power technology.

Strategic Advisory

Artificial Intelligence (AI) and emerging technologies will continue to have a transformative impact on businesses and everyday life. This expanding and evolving landscape presents both opportunities and challenges. While the possibilities seem endless, considerations on the legal, business, and ethical fronts must be at the forefront of decision-making. With the exponential growth of technological advancements, it is important to have a team of trusted advisors who are well-versed and adaptable.

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With a keen understanding of the complex nuances of emerging technologies, our team diligently monitors governmental agency activity, anticipating the impact on our clients’ rights and helping clients prepare for regulatory requirements and prohibitions. We offer tailored solutions by providing proactive counsel to mitigate risks and seize opportunities in this rapidly evolving arena.

The move to the cloud has been transformative, but negotiating cloud and SaaS contracts presents its own set of challenges.

The legal and business terms presented in cloud contracts are different from those in traditional on-premise software licenses. You have no greater leverage with your vendor to negotiate meaningful concessions than before you commit to a multi-year term.

I have negotiated thousands of SAP contracts. Understanding what concessions to request, what is reasonable, and what SAP is likely to concede is critical to getting the most out of the negotiation process.

In this video, I discuss the top concessions you should request when negotiating with SAP.


#erp #erplawyer #erpcommunity #erpfailure #saps4hana #oraclecontracts #softwarelawyer #sapservices #saphanacloudplatform #saas #erpcloud #teamtaft

Contact Marcus:

  • Email: mharris@taftlaw.com
  • Work Phone: 312.840.4320

About Marcus

Marcus has established one of the country’s leading practices devoted to drafting and negotiating Enterprise Software related licenses, implementation and SaaS agreements, as well as litigating failed software implementations in courts and before arbitration panels across the country.

Read Marcus’s Full Bio on Taftlaw.com or download the PDF here.

Some of Marcus’s Recent Videos

AI Vendors will draft contracts that limit their exposure in the event of a lawsuit. What are the most likely issues litigated in a commercial contract for artificial intelligence?

#erp #erplawyer #erpcommunity #erpfailure #saps4hana #oraclecontracts

AI vendors will typically use traditional software licensing or SaaS models to sell their functionality. While that generally makes sense, nuances associated with acquiring AI functionality need to be accounted for and negotiated. Warranties, remedies, and indemnity provisions all need to account for the risks that AI presents.
#businesssoftware #erp #saas #digitaltransformation #erpcommunity

Visit Marcus’s YouTube Channel.

AI Vendors will draft contracts that limit their exposure in the event of a lawsuit. What are the most likely issues litigated in a commercial contract for artificial intelligence?

Data is the currency of AI. You need to ensure that you are protecting your data and making sure you have recourse in the event your data is compromised. Negotiating the right contractual language is key to mitigating risk.

Data Security, Data Poisoning, and Confidentiality are all issues that arise when an AI contract goes wrong.

By simply entering data, confidential information, or intellectual property into an AI functionality, you could be giving up your rights in that material. When negotiating with ERP vendors like SAP, Oracle, and Infor, you need to understand what rights that AI vendor has in any inputs, and more importantly, what rights you might be giving up in those inputs.


#erp #erplawyer #erpcommunity #erpfailure #saps4hana #oraclecontracts

AI vendors will typically use traditional software licensing or SaaS models to sell their functionality.

While that generally makes sense, nuances associated with acquiring AI functionality need to be accounted for and negotiated.

  • Warranties, remedies, and indemnity provisions all need to account for the risks that AI presents.
  • When acquiring AI, you need to understand the type of data you are entering into the AI software and what the AI vendor will do with that data.
  • You need to negotiate adequate warranties and representations to protect your and your customers’ data.

AI is transformative but presents a variety of risks.

  • Who owns the data generated by AI functionality?
  • What rights do you have to utilize that information?
  • Can you be sued for commercially exploiting the data generated by the AI you are using?

I discuss these issues in this clip from my upcoming YouTube video.

#businesssoftware #erp #saas #digitaltransformation #erpcommunity