Should Enron execs pay for overstated software claims?


An article from the New York Times describes a case pending against Enron by federal prosecutors.

On the surface, I'm sure everybody enjoys the idea of trying to take down more Enron employees over alleged misstatements, but this one may create some problems for software and technology industries.

At stake is the ability to hide behind the vagaries of technology to occlude the realities of your software or business. I'm not necessarilly condoning this behavior, but if the case goes the "wrong" way, it could have some serious implications for software development (and other technology companies in the US).

The Times article points out that there are a number of points where there is contradictory evidence being cited by the Fed's on this one. In particular, there are discrepencies in the use of terms like "shipping", "beta", "in development", and others.

It is not uncommon for technology companies to fudge their realities in order to gain marketshare or scare competition. Often the actual state of individual technologies that are part of a larger whole are overstated to give customers and partners a false sense of security or value. However, many times, this is done either unintentionally or as a failing of communication rather than as a fraudulent act.

Take the meaning of the world "beta". When I was starting in software development, we still used the word to mean feature-complete and prepared for wider customer or user testing. Now, it more often referrs to what we would have called "alpha": some features are ready for spot testing.

However, the real question out of this case may be how careful technology companies must be about public statements (including marketing, as Enron's marketing statements are being introduced as evidence) about what their systems can and cannot do, how much proof they must have at the time, and what the consequences are of not being able to prove it.