When the news broke that several execs including CEO Andrew Nelson have been turfed out at TomorrowNow and the company might be up for sale, I can't say I was wholly surprised. Given the specifics of the lawsuit, senior heads had to roll (even though I personally believe they are innocent of wrongdoing) and holiday periods are always a good a time to drip out bad news. After all, who reads tech blogs at holiday times? Apart of course from my Irregular chums.
When we met Nelson and his entourage of note taking lawyers and spinmeisters at SAPPHIRE Atlanta, the company said almost nothing of value. Instead it attempted to put a brave face on what was and remains an embarrassment for SAP. In the background, I was hearing that despite spooking the market, TN was still winning deals but even that wasn't played up.
Without further information anything I say is pure speculation but putting up a for sale sticker in all but name suggests SAP wants to put as much distance between itself and its foray into third party maintenance as possible. That's a shame because this is a market that's ripe for disruption. Jason Wood argues:
Make no mistake, 3rd party maintenance, if handled properly, has tremendous potential value to customers. I'm sure Vinnie (Mirchandani) could speak to this far more eloquently. And now with TomorrowNow's driving force (Nelson) extricated from the process; it's hard to see the value of keeping TN as part of SAP proper.
And sure enough, Vinnie obliges - albeit before the TN announcement was made. In discussing remarks made by Oracle president Charles Phillips, Vinnie offers the following perspective:
"They (TomorrowNow) can’t update the IP–the bug fixes and patches don’t work. It turns out they were stealing" Realize the matter with TomorrowNow is under litigation but is not the word "stealing" a bit provocative? With the thousands of software and services alliances Oracle has can it say unequivocally one of its employees has not used documentation - or other IP - from any of its partners? Also, many of Oracle products are licensed with source code. Which means customers or their proxies could legally maintain it even after they sever relationship with Oracle.
I suspect that SAP doesn't want the distraction of a reputation busting lawsuit at a time when it's in the middle of launching a major addition to its product line in Business ByDesign. It's not the SAP way and Oracle knows that.
While this news will no doubt be heard with glee at Redwood Shores, Oracle needs to be careful it doesn't play the 'Told you so' card. While the company continues to delight its Wall Street masters, customers must be starting to wonder whether Oracle's profits are being earned at their expense. How else can you explain net income running at 29% from a business that derives less than a third of total revenues in new license sales?