Are CDC Software’s hands as clean as it claims?

It's difficult to get too excited about lawsuits filed against ERP vendors, simply because they're so commonplace. ERP implementations are notoriously difficult, and more often than not, the customer is at least as much at fault as the vendor when projects fail. Still, I'm curious about allegations that have surfaced against Ross Enterprise, the ERP unit of CDC Software.

Ross Enterprise was born in 2003 when ERP vendor Ross Systems was acquired by CDC Software, the Atlanta-based enterprise software arm of CDC Corp., which is based in Hong Kong (that's "CDC" as in "chinadotcom"). I'm aware of four lawsuits that were filed against Ross/CDC Software during the period May 2005 to April 2008, and all four basically allege what customer lawsuits against ERP vendors typically allege: that the software functionality promised by the vendor wasn't delivered.

I spoke earlier today with Timothy Coen, CDC Software's general counsel, who said the fact that I could cite only this handful of lawsuits, "given the breadth of our customer base and the scope and sophistication of the systems we provide," speaks to "the quality of our products and of the excellent customer support we provide." He said only two of the lawsuits are still active, and CDC Software considers them to be "without merit." He also said he's unaware of any other suits of this type that have been filed against the company, so my small list was apparently exhaustive.

A case that I found far more interesting is one that was filed against CDC Software in November 2007 by William McKenna, a former sales executive with Ross Enterprise. That lawsuit contained some far more serious allegations of widespread fraud, price inflation and cover-up.

McKenna alleged that he "traveled to numerous customer locations and discovered a pattern of lies, overcharging and exaggeration of software functionality." The suit claimed that McKenna had been directed by superiors to "cover up" two fraudulent ERP sales that had been made by his predecessor, and that the customers in these cases were threatening lawsuits. It also claimed that a Ross service director in charge of handling numerous Ross accounts had said that millions of dollars in licensing and services were being given to customers in an effort to compensate them for misrepresentations pertaining to features and functionality.

According to the suit, moreover, CDC Software executives engaged in price-inflation practices in the run up to a planned CDC Software IPO in the fourth quarter of 2007. McKenna claimed that he informed his superiors of his unwillingness to participate in these activities, and that he was fired in August of 2007 because of his refusal.

According to Coen, McKenna's case has been settled, with CDC Software disputing all of the allegations in the suit and admitting to no wrongdoing. Coen said the terms of the settlement are confidential, so he couldn't comment on the details other than to say, "What payments were made would not be considered ... material to the business or operations of the company." Incidentally, the IPO never happened, he said, because CDC Software withdrew its IPO filing in 2007 due to "market conditions."

So I know that CDC Software paid McKenna some money to settle the suit, but I don't know whether there was any truth at all to his allegations. I'd therefore be very interested in hearing from any CDC Software/Ross customers or associates (current or former) who might have information to share that could shed some light on the matter. Are CDC Software's hands as clean as it claims?