How Much Too Long Did Lands’ End Wait For Its Payroll Upgrade? Maybe A Million Dollars Too Long

Written by Frank Hayes
January 23rd, 2013

Lands’ End has landed in a nasty fight over software licensing. On January 17, the Sears mail-order and online subsidiary sued the supplier of its HR and payroll software, Genesys Software Systems, which wants Lands’ End to either pay for a new million-dollar license or pull the plug on the software immediately.

The lawsuit has the tactical advantage of freezing the situation, giving Lands’ End a little more time (very little more time) to find a new home for its payroll system. But it’s also an object lesson in software end-of-life issues—that lesson being, “when a vendor has you over a barrel, it doesn’t have to play nice.”

Lands’ End’s complaint—technically, a request for the court to declare that the license doesn’t expire until October 2013—was filed after months of negotiations broke down this month. Lands’ End has been bargaining since last August for a short-term license extension while the retailer moved to different HR software.

According to the complaint, Genesys Director of Finance Colin Macdonald sent a January 9 E-mail message to Lands’ End IT Director Andree Fredrick that read: “Thanks for your time today. As a point of clarification, I was in error when I mentioned the 20-year license. We no longer offer term licenses, but our perpetual license is currently priced at $999,950.00. I have escalated this to David Fiacco, our COO, and would ask that you reach out directly to him to schedule a call. As you are aware, your license expires on January 19th, 2013. We will be sending a representative to Land’s End on the 19th to certify the de-installation of the software.”

Lands’ End argues that, although it signed the 20-year license in January 1993, the retailer paid for “a non-exclusive and non-transferable right to use the software described in the Agreement for a term of twenty years,” in the words of the license. But the retailer says it wasn’t able to actually use the software until Genesys finished installing and configuring it on a Lands’ End mainframe (originally MVS/ESA using a VSAM database—why would Lands’ End want to move off that?) the following October.

Thus, Lands’ End says, it should get the full 20 years of use it paid for, and the license should terminate in October 2013.

That argument is a stretch, said StorefrontBacktalk Legal Columnist Mark Rasch. “On the facts, I think Lands’ End loses,” Rasch said. “The license term starts on the day you sign the contract. They have the right to use it for 20 years from that date. Just because they can’t use it doesn’t affect their right to use it.”

Ultimately, that will be for a U.S. District Judge in Wisconsin to decide. But it’s already clear that Lands’ End waited too long to start moving off the old HR system—and then put too much trust in a vendor who clearly wasn’t going to keep the retailer as a customer. When a vendor’s executives break off negotiations and say, “Gimme a million dollars,” they’re not being polite—but they must figure they have nothing to lose.


2 Comments | Read How Much Too Long Did Lands’ End Wait For Its Payroll Upgrade? Maybe A Million Dollars Too Long

  1. Steve Sommers Says:

    RE: …but they must figure they have nothing to lose.

    I’m definitely not a fan of strong arm tactics like this. I also can’t believe anyone would sign a term license like this for a mission critical system. That being said, Genesys does have something to lose. If I were Lands’ End, I would make sure we never did business with Genesys again. And if I were an employee of Lands’ End and I moved on to another company, I would strongly advise my new employer to not use Genesys either. Press like this would also be considered a loss in my books so they do have something to lose.

    I guess if Genesys is planning on closing it doors and is just trying to milk any existing customers for what they are worth, then maybe there is not a downside. And for Lands’ End, this would be another reason not to pay the new licensing fees.

  2. John Quincy Says:

    Software vendors are notorious for these types of tactics. What is uncommon is that these tactics are made available in the public forum, such as through a lawsuit.

    Genesys was acquired by PeopleStrategy out of Atlanta a few years ago. (not the same Genesys that produces workforce management software for contact centers) – PeopleStrategy appears to be a going concern, so Land’s End will certainly have to pony up here.

    Also, term licenses were very common (typical) in the software world back then are are still somewhat common – perpetual licenses are certainly the more common practice now. Keep in mind, they signed a 20 year agreement and had plenty of time to make a switch – someone was obviously asleep at the wheel at Land’s End and probably should be fired because of this gaffe. Complete mismanagement.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.