Court ruling in SciQuest action means that necessary questions regarding company can still be asked

Posted on July 19, 2016

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In my May 31st post Why Is SciQuest Afraid To Go To Court, I shared with you the news that the company had filed a motion to have my defence stricken because I was unable to pay $22,000 in legal fees.

The legal fees came about as a result of my failed motion for a change of venue from Ontario. An important reason behind my filing that motion, was to do everything that I could to protect the identities of my many sources. The sources, which number more than half a dozen, provided everything from documentation and audio/video recordings, to access to senior company executive insights. In short, they are the true heroes behind my coverage of SciQuest, because without their willingness to come forward, I would have never been able to ask the important questions that need to be asked, regarding the company’s operations.

The other day, I received word that the courts had denied SciQuest’s motion to strike my defence, and have provided me with an opportunity to pay the legal fees in more manageable monthly increments over the next 3 years. Don’t get me wrong, The $22K does not include my legal costs for my own lawyers, but no one said that the pursuit of truth would be easy or free. In this regard, and if so moved, you can contribute to the cause through my Go Fund Me campaign. My hope is to raise $2K per month – which means that even the smallest donation will make a difference.

So now that my voice has not been silenced, there are new developments that need to be addressed including what happened in Delaware.

court Ruling Delaware Online

According to a July 13th delawareonline article by Scott Goss, the State is asking the court to “force” SciQuest to complete a $2.3 million software contract. If the State fails in its action reports Goss, then Delaware taxpayers could be on the hook for nearly $2.3 million for a “procurement website that may never function as originally envisioned by state officials.”

According to the article, SciQuest has filed counterclaims arguing it met every contract requirement and more.

Now in and of itself, and without further information, one could reasonably conclude that this is an isolated incident. Or as SciQuest CMO Karen Sage commented in my June 22nd, 2015 post, lawsuits are not “prevalent” but that “it does happen in all companies.”

You may be wondering what prompted my exchange with Ms. Sage?

The reason is quite simple . . . I was asking for a comment regarding a breach of contract suit filed by  John Muir Health, which has it turns out made somewhat similar claims to those of Delaware.  I also asked about the company’s action against the West Virginia Network for Educational Telecomputing (WVNET).

As with my previous requests for comment regarding other matters, the company was unable to shed any additional light on the above referenced actions beyond Ms. Sage’s brief Tweets.

By the way, the John Muir Health Claim was settled on April 27th, 2016, a little more than 1 month before the AKKR acquisition of SciQuest was announced. You can access all of the court documents through the Pace Monitor website at https://www.pacermonitor.com/. Simply enter SciQuest in the search box.

However, are two or even three actions enough to demonstrate a possible pattern?

In my August 26th, 2015 post I wrote about how UConn spent $902,000 on software licensing fees it didn’t use, as well as how Ohio would be dropping SciQuest due to among other issues, the position that the company’s method for catalog creation and maintenance is both complicated and costly. Ohio did in fact stop using SciQuest as reported on April 26th, 2016.

In the same August 26th article, I had also written about SciQuest losing both Dartmouth and Stanford has customers.

The above are all facts based on research, media coverage and the insights provided by my various sources.

However, let’s dig even deeper, by revisiting my September 6th, 2015 post A Material Change at SciQuest?

In that article I had made reference to the concerns raised by one analyst covering the company, about the possible implementation challenges that led both Oregon and Colorado to cancel their contracts with SciQuest.

Based on the information that was received from sources within SciQuest – including an audio/video recording of the company’s Q2 Scoop session at the end of July 2015, the problems with implementations and growing client dissatisfaction appear to be wider spread than initially thought.

An audio excerpt in which SciQuest’s CFO Jennifer Kaelin made the statement that “we’ve constantly heard from customers that integrations are too timely and costly to them” is compelling.

CEO Stephen Wiehe’s recorded comment that “we’re still playing a little catch-up with the development and products that we’ve got we’re going to shift to high gear into more of an offensive mode” is also noteworthy, as is his statement that we’ve made some great progress in reducing implementation times . . . working on how to install this in weeks and days, rather than months and quarters.”

There is more.

According to the documentation provided by one inside source, a considerable number of clients had stopped using SciQuest, including Purdue. The client losses in its indigenous higher education and government markets can’t be ignored.

Even though these client losses did not lead to a lawsuit, it should still raise a red flag for prospective clients going forward. In this context, I wonder where the post AKKR acquisition announcement regarding SciQuest’s introduction of the PartnerSelect Program comes into play? I will delve into this point in greater detail in an upcoming post, including the SciQuest – Huron Consulting Group partnership back in 2006.

Coming back to Delaware . . . is it an isolated incident, an exception to the rule? Is Delaware an unreasonable client placing undue demands on the company or, are Delaware’s issues indicative of a long-standing, systemic problem?

As with everything that I have written, I would invite you to do your own research regarding the above, and draw your own conclusions.

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