The lawsuit As barometer: SAP finally scores big with TomorrowNow

The lawsuit As barometer: SAP finally scores big with TomorrowNow

Summary: Today's announcement that Oracle is suing SAP for allegedly using its TomorrowNow subsidiary to steal software code and other nasties highlights the effectiveness with which TomorrowNow is hitting Oracle where it hurts: right in the old maintenance fee. The lawsuit claims that SAP systematically stole software as part of a concerted effort to beat Oracle, etc.

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TOPICS: Oracle
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Today's announcement that Oracle is suing SAP for allegedly using its TomorrowNow subsidiary to steal software code and other nasties highlights the effectiveness with which TomorrowNow is hitting Oracle where it hurts: right in the old maintenance fee. The lawsuit claims that SAP systematically stole software as part of a concerted effort to beat Oracle, etc. etc. But the real story is that TomorrowNow, which goes around taking over maintenance contracts from PeopleSoft, JDE, and Siebel customers -- at 50 cents to the Oracle dollar -- has finally gotten under Oracle's skin. Not surprising: cutting maintenance in half can save hundreds of thousands, or even millions, of dollars a year for the company that's not buying into Oracle's Applications Unlimited or Fusion Applications strategy. And, with the lawsuit as a barometer of TomorrowNow's effectiveness, they must be doing a helluva job.

Why would Oracle care? Simple: Maintenance revenue significantly outstrips license revenue in the world of high finance a la Oracle. In the most recent quarter applications license revenue was $1.3 billion, maintenance was $2.3 billion. So you can assume that TomorrowNow is starting to make a dent in these numbers, and that's why Oracle finally filed suit. 

Wait, couldn't there be some merit to the suit? After all, Oracle claims it can trace downloads from its servers directly to TomorrowNow computers, and that this theft is an "essential -- and illegal -- part of SAP's competitive strategy." The suit further claims that this activity "enables SAP to offer cut rate support services.... and to attempt to lure [customers] to SAP".

Two problems with this. The first is that TomorrowNow has been in business as an SAP subsidiary since 2004, and had been successfully offering these 'cut rate" services without the benefit of the alleged theft, which occured last November. Indeed, one wonders what in the allegedly stolen software and documentation could actually let SAP offer better services? If Oracle's own IP can prove that there's a better way to support Oracle's products, then Oracle had better hope this suit never goes to trial: Then everyone could find out whatever secret sauce gives SAP its "edge," and then go out and offer "cut rate" support services for Oracle software as well. 

But the real reason I have trouble with "essential" and "part of SAP's competitive strategy" is that SAP has been waiting since 2004 for this lawsuit, and set up a series of virtual and real walls between TomorrowNow and SAP in anticipation of this very kind of suit. If, as the suit alleges, there was some downloading from SAP or TomorrowNow computers, it was a rogue operation that in no way could have been as sanctioned by management. To assume anything else would be more than foolish -- it would be just plain wrong. The bottom line is that TomorrowNow doesn't need to steal anything from Oracle to take over its customers' maintenance contracts: the customer are legally entitled to all the software and documentation up to the moment their contract with Oracle is over. In fact, TomorrowNow encourages these customers to get every piece of code and doc they are owed -- even software they may have absolutely no intention of ever installing -- so that if, by chance, they need to do an install after the Oracle contract is over, TomorrowNow can do it for them. Legally, by the way.

In the end, the lawsuit as barometer shows that the pressure is rising as TomorrowNow's business model continues to take revenues that Oracle desperately needs to realize its business model. It will be interesting to see how this one pans out. At a minimum, it proves that SAP's TomorrowNow strategy is working -- and that Oracle will stop at nothing to stop it. 

Topic: Oracle

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6 comments
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  • You miss the point

    Here's the issue -

    SAP TN used Oracle Client User/passwords to access the Oracle Support and Knowledge Base(s) - to do competetive support on Oracle Products

    SAP TN Directly downloaded Access the Oracle Internal Resources from 'traceable' SAP TN IP Addresses (how stupid is that - at least download from the client you are logged in as!)

    No, ask yourself the question - would you want to work with an organization that is as unethical as SAP TN? Their model is simple - offer support for Oracle's JDE products, with the sole purpose to migrate Oracles customers from Oracle to SAP (Safe Passage)....

    As an independant consultant, squarely in the JDE/Oracle market - I couldn't fathem that SAP TN would be so damn brazen and not expect to be caught.

    I see complete desolution of SAP TN after this blunder!

    (db)
    drbohner@...
    • Wait and See

      You're reading Oracle's complaint as though it were the gospel truth, instead of a legal document filed by a vigorously competitive company that -- you're right here -- has every interest in the complete desolution of TomorrowNow. A more critical read might suggest that this ulterior motive on the part of Oracle may have caused it to "exaggerate" its case -- which is what every lawyer would do for every client in every such filing. So -- innocent until proven guilty -- your rush to judgement is a little premature. It is possible that a rogue employee did this illegally, which is very different than the company-wide policy Oracle alledges. But that would hardly mean the destruction of TomorrowNow.
      josh@...
      • Guilty or innocent, it is bad advertising...

        Maybe the suit is without real merit, and maybe the IP infringment (it there was any) was not TN policy... but the damage to TN is being done anyway. Now you will think twice before signing a contract with TN, because you don't know what will happen with them in 3 or 5 years.

        Regards,

        MV
        MV_z
  • Much To Do About Nothing

    Customer A hires Support Contractor Z to provide support for the products they've purchased/licensed from Publisher X. A requests Z download and store, on A's behalf, all products and supporting information/documentation to which they are entitled or have been given access. X is S.O.L. Z is simply acting as A's agent. No harm. No foul. Add in Customers B-Z9999999, and you've got every product X publishes. Most in multiples.
    Dr. John
  • ... but the customer's didn't own the products

    I hear the point about SAP acting as the customer's agent for download, but Oracle's claim ia that SAP downloaded products that the customer didn't have.
    If the customer doesn't have the rights to the material, they can't transfer it to an agent.
    I'd also wonder whether some of those customer's legal departments would let them appoint SAP as an agent.
    CaptainDave
    • Let's leave this to the lawyers...

      ... you never know where they will end. But the main point of the article is stiil true: Oracle is getting very nervous. And you know what is best: SAP is beating Larry with his own weapons: Offering support at much lower rates, just like he tried with Red Hat. And although lawyers might see this different, to me the SAP offerings for Oracle customers are much more respectable than those from Oracle for Red Hat customers. And the lawsuit to me seems only to be another FUD attempt, trying to threat customers ready to switch rather than convincing them.
      hdn.de