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In The Dillard’s/JDA Software Settlement, Details Of Sleazy Vendor Practices Come Out

Written by Evan Schuman
November 30th, 2011

Late on Wednesday (Nov. 30), the 11-year-long battle between the 288-store 29-state Dillard’s chain and JDA Software/i2 finally closed, when JDA agreed to write Dillard’s a check for $57 million. The vendor’s check was to compensate Dillard’s for what were allegedly lies the software company used when selling a supply chain system. But the filings in the case provide a rare look into how software companies regard sales tactics and it’s essential reading for all IT execs before their next meeting with any software sales rep.

Quick background: JDA was not involved in this matter when the sale was made in 2000 and is only now involved because JDA bought i2 in January 2010. In June 2010, the case went to trial and a Texas jury awarded Dillard’s $237 million. That’s an impressive amount given that Dillard’s had only paid $2.4 million for the software. JDA/i2 appealed and Wednesday’s settlement happened while the appeal was still processing.

Dillard’s position has been that JDA lied to them during the sales process and that the $6.1 billion chain didn’t receive the value the vendor had promised.

“This is not merely a case in which Dillard’s has a list of complaints with the products and services provided by i2. It is, rather, a case of deliberate and ongoing fraud, in which i2’s officers and employees consistently promised Dillard’s much more than they knew i2 could possibly deliver,” said one Dillard’s legal filing. “In fact, i2’s sale of vaporware—non-existent or embryonic software—to Dillard’s was part of a pervasive culture in which i2’s officers and employees would tell potential and existing customers virtually anything just so they could book a sale of products or services and line their pockets with bonuses and stock options.”

Yes. We’re talking about sales reps pushing enterprise software. Would counsel chastise a basketball team for being tall? Someone should send that attorney a copy of The Scorpion and the Frog. Sorry for that digression. Back to the case.

The most instructive parts of the filings were from JDA/i2. The approach was not to deny that lies were made as much as to argue that companies should not rely on sales promises. That’s sound advice at all times, but it’s still an eye-opener to read on the record.


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