Eye on Oracle

Nov 25 2008   10:35PM GMT

Oracle takes aim at other third party support shops

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

Oracle customers haven’t seemed too phased by the $1 billion lawsuit filed by Oracle against SAP’s now defunct third-party support subsidiary TomorrowNow.

Last year, analysts predicted that the attention from the lawsuit could actually be a boon to the third-party support market. And just a few months ago, even after SAP closed down TomorrowNow in the midst of “corporate theft” accusations by Oracle, third-party support continues to remain in demand.

So while Oracle customers may not be suspicious of third-party vendors, is a different story emerging for the software giants themselves?

It seems that way. Oracle has now taken legal action against another company — this time it’s the Denver-based Spinnaker Management Group, a company that recently hired dozens of former TomorrowNow employees to form its software services business.

According to this MarketWatch article about Oracle’s court order, Oracle is “demanding a look at [Spinnaker’s] customer contracts, business plans, internal assessments of the ’legality’ of TomorrowNow’s business model, and documents showing any ‘planned support by you of any Oracle customer,’” according to court filings. Spinnaker has contested the request as overly broad.

Oracle has also issued a subpoena on the software services firm CedarCrestone Inc. and demanded to see documentation of the PeopleSoft service provider’s business model.

Has Oracle gone too far?

Other software companies probably won’t think so, according to analyst Jim Shepherd of AMR Research. Third-party support has long been a “gray area” in the industry, Shepherd said in the MarketWatch story, and “all the software vendors are uncomfortable with this.”

The economy may also be making Oracle and other software giants uneasy. As the MarketWatch article points out, support services can be a significant source of revenue in a down economy, when new software sales tend to be down.

Nevertheless, this is one of the “stalls in the market while the dust [around the TomorrowNow] lawsuit settles,” that consultant Josh Greenbaum predicted last year. And, while not all third-party support customers are wary, it’s important to take precautions. For example, customers should make sure that “any contract they sign states that they are not responsible for misuse of intellectual property by the third-party vendor,” according to a research note from Stamford, Conn.-based Gartner Inc.

How (if at all) has the TomorrowNow lawsuit changed your views of the third-party support market?

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