Oracle

As Oracle’s day in the Sun inches closer, SAP continues to sunblock

This week, Oracle took a step closer to offering the McDonald’s value meal of the tech world - the U.S. Justice Department giving the green light to a deal with Sun that will have Oracle selling “hamburger, fries and a soda” software/hardware packages to companies.

There’s still the matter of the European Union’s OK - which is being held up by concerns over Java, middleware and databases, according to the Wall Street Journal. But the WSJ also reports that the Justice Department’s OK is an encouraging sign that the EU’s approval isn’t far behind.  

Meanwhile, SAP CEO Leo Apotheker has been making it very clear over the past few weeks, in interviews with the Wall Street Journal and the New York Times, that SAP has no intention of following the Sun.

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CNET: SAP “second fiddle to Oracle”

An article published recently by editor Michael Kanellos on CNET described SAP as playing “second fiddle to Oracle.” The phrase is buried in a post about why green technology can provide a boost to European IT, and isn’t backed up by any kind of market share numbers. It’ll be interesting to see how SAP responds to this, as the company typically gets its hackles up when portrayed as anything but the leading (by revenue) company in enterprise applications.

Kanellos isn’t necessarily interested in market share, as the first part of his article is more about the weakness of European brands. In this regard, he’s the second media figure today to opine that the SAP brand is weak. Earlier, in an interview with SAP executive Bill McDermott, the Philadelphia Inquirer noted that, “Many people see SAP’s signs in train stations and airports, but don’t know what you do.”

The counterargument is that people who make technology buying decisions do know what SAP does, even if the person on the street doesn’t. If you’re interested in the strength of the SAP and Oracle brands, try canvassing the executive suite rather than the airport.

Kanellos’ article might be more of an attempt to wrangle up some free controversy and page views, reminiscent of when he claimed that the iPhone (currently doing $2 billion of business per quarter) would “largely fail.” That comment generated a lot of heat in the blogosphere and in the Apple community, and this one might in the SAP world, but in both cases it may be best to take the commentary as entertainment rather than news.

Demir Barlas, Site Editor

More to come with TomorrowNow suit?

While SAP is looking to unload its TomorrowNow division in the wake of Oracle’s lawsuit against the company, there may be more to the story. Most think the two companies will settle, but as reported by MarketWatch yesterday, Oracle hints at a more serious charges in the latest filing from the trial.

Here’s what Oracle says in the document, filed with the court on January 29th:

Virtually all discovery sought and received thus far has centered on Oracle’s current allegations. However, in the process of conducting this discovery, Oracle has uncovered a broader program of copyright infringement that is entirely different from the scheme alleged in the current complaint.

Based on this evidence, Oracle is gathering additional facts and analyzing the need to file an amended complaint that will encompass these new claims. It expects soon to share a draft amended complaint with Defendants, and to seek their agreement to allow the filing. If Defendants do not agree, Oracle will seek leave from the Court to file the amended complaint.

Not surprisingly, SAP disputes Oracle’s new claim:

Oracle claims to need more time to present a further amended complaint, yet it has not provided even the barest description of its supposed new claims, either to the Court or to Defendants. While there may be some discovery disputes (which Judge Legge will handle), and Oracle may want to take some follow-up depositions, no developments have occurred which justify changing the case schedule or discovery limits.

As a result of these new accusations, Oracle is requesting another Case Management hearing in about 60 days, at which time it would, “be able to make specific proposals for extending the time and limits on discovery.”

When this case was first brought to court, SearchSAP.com interviewed Hillard Sterling, an IT litigator with Freeborn & Peters LLP, a Chicago-based law firm. When asked about what we should expect from the case he said that Oracle would try to keep the case in the news:

This is a great weapon for Oracle — it’s rare and beneficial when a company has a lawsuit that is only a sword and not a shield. Usually, counterclaims come flying back at a plaintiff. Here, however, Oracle has a unilateral set of claims that it can press ahead with, with little fear of boomerang counterclaims.

We’re going to see some aggressive discovery from both sides, especially from Oracle. It will get messy before it gets clean.

We should know more in 60 days, but it would appear, at this point, that Sterling is right on.

BEA bidding war? Not for SAP

Oracle’s recent hostile takeover bid for enterprise infrastructure software company BEA triggered speculation that SAP and other big players may enter the fray and engage in a Retek-style bidding war. Well, that doesn’t seem to be happening. The clock ran out on Oracle’s offer and nobody else has stepped up to the plate.

In fact, SAP CEO Henning Kagermann went on the record to restate that SAP has little interest in BEA just earlier today. What now? Since BEA insists it is worth at least $21 per share (compared to the $17 offered by Oracle), it better show some seriously improved numbers in the next few quarters. It’s a risky gambit, and the market response has been rather brutal. It seems neither technical analysts nor Wall Street are taking a kind view to BEA’s bold stance.

Carl Icahn, who owns some 13% of BEA, is already suing the board for not taking Oracle up on the offer. SOA blogger Miko Matsumura predicts BEA will also face a new “wait and see” attitude in its potential customers, making it even harder to salvage the sinking ship. Investment researcher Georges Yared went so far as to call BEA “…an arrogant company led by an arrogant management team.”

Ouch. The consensus seems to be that Oracle is BEA’s only hope, where Oracle is in a position to patiently wait for BEA to come crawling back on its knees… Or, if BEA is stubborn, the company can slowly crumble away into oblivion. Either way, SAP obviously intends to steer clear of whatever ripples may be caused by the BEA drama. In this situation, that’s probably a wise move.

Matt Danielsson
Editor

BEA to Oracle: Do better or get lost

The recent news of Oracle’s bid to acquire troubled enterprise infrastructure software company BEA took an interesting turn today. Despite Oracle offering $17 per share, some 25% over market price before the deal was announced, BEA has now responded to the Redwood Shores giant saying that’s nowhere near fair valuation. From BEA’s official response:

“…It is apparent to our Board [...] that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter [...] We believe that the absence of current financial information in the public markets limits investor visibility into our performance. We expect that this will be corrected in the near future.”

Furthermore, BEA is not about to get lured into any kind of shenanigans that might endanger its competitiveness.

“…As we have made clear to you in previous discussions, we are very sensitive to the fact that Oracle is a direct competitor of BEA. Therefore, the Board cannot consider any process which is long in duration, open-ended in nature, or would divulge competitively sensitive information which could materially harm our business and our shareholders’ interests.”

An interesting turn of events, indeed. It seems the BEA folks are quite confident, and the market is responding; as of this writing, BEA’s stock price is approaching $19 a share, a neat one-day bump of about 40%. Still, Goldman Sachs analysts Sarah Friar and Derek Bingham believe Oracle will be game for a price tag of $20 or more per share.

It’s an all-cash deal, so the question is: Will Oracle dig that deep into the coffers just to get BEA in the bag? And if they do, how will this impact SAP and other competitors? Better yet, will SAP, IBM, HP and other key players engage in a bidding war now that there’s blood in the water? Stay tuned as news editor Jon Franke digs deeper into this over the weekend for an in-depth analysis early next week.

Matt Danielsson
Editor

The latest Oracle-SAP lawsuit news

Late yesterday, more information came out about Oracle’s lawsuit against SAP. Nothing too exciting, mostly timeline and scope issues.

The trial date has been set for February 9, 2009. Oracle was looking for a September 2009 start. According to this Bloomberg.com article, SAP seemed pleased:

“The judge has found a reasonable means for a speedy trial,” SAP’s Walldorf, Germany-based spokesman Frank Hartmann said in a phone interview today. “He also found it reasonable to limit the discovery phase and that is overall sensible.”

Seems funny that February 2009 is considered “speedy,” but what do we know? So, we checked in with Hillard Sterling, an IT litigator with Chicago’s Freeborn & Peters LLP, who has weighed in on the lawsuit before to get his $.02. Here’s what he had to say:

The judge’s schedule is aggressive yet manageable given the circumstances. This case will require both parties to produce and examine millions of pages of documents, then depose witnesses with the key documents, the interesting needles in the massive haystack. It will take tremendous effort to get all those documents by July 2008, and then absorb the information and take the many depositions. That being said, the schedule is realistic, and the parties should be able to accomplish their tasks and prepare for the trial set for February 2009.

Does this trial date or the limiting of witness interviews (20 for each side) and forensic experts (3 each) have an impact on the assumption by many that the case will be settled before ever getting a verdict?

“Of course, it is likely that the case would settle sometime before trial, or maybe even during it,” Sterling said. “We probably won’t see any settlement, though, until the parties make significant inroads through discovery and gather the evidence that they believe will exact the most settlement leverage.”

Jon Franke
News Editor

NetSuite CEO on SAP’s A1S

Truth is, we don’t know all that much about A1S yet. But that will all change on Sept. 19, when SAP has a big A1S bash planned. Another event approaching fast is the much-ballyhooed IPO of NetSuite, Oracle chief Larry Ellison’s baby. Some may debate the wisdom of an IPO in this market, but NetSuite CEO Zach Nelson isn’t one of them; he’s in a quiet period and can’t comment about it all. He can, however, take jabs at SAP A1S. Here’s what he had to say during a recent interview with Mary Hayes Weier:

SAP is saying A1S [...] will be less customizable than SAP’s traditional software. That strategy amazes me. Midsize businesses need customization, just as every other company needs customization. Vendors like SAP will say SaaS is less customizable, but that’s just not true from a technology standpoint.

Interestingly, Nelson doesn’t see much competition with Oracle itself, adding that the Redwood City giant is busy “hammering SAP in the enterprise market.”

I’ll leave that without comment, but Nelson’s words on SAP’s lack of customization do raise some concerns. Indeed, as others have noted, SAP is a bit late to the party, and it better have some substantial bells and whistles to jazz things up. Stay tuned as news editor Jon Franke treks to New York City for the Sept. 19 event.

Matt Danielsson
Editor

SAP CRM second to Oracle?

Research firm Datamonitor’s recent report on the CRM market pegs Oracle as number one, followed by SAP. Microsoft? Not so much. From Stuart Lauchlan’s analysis:

Datamonitor concludes that Oracle is a clear market leader with an impressively versatile and highly competitive CRM portfolio while SAP is also recommended as an automatic shortlist choice due to the excellence of its CRM modules and dominant impact on the market [...] There are possible alternatives in the form of Chordiant, Infor and  Salesforce.com, but these have to remain competitive if they are to continue to be considered as market leadership challengers. Other possible contenders include Consona, Microsoft and RightNow Technologies if they enhance their profile among end-users or deliver on the considerable promise of their forthcoming releases.

It is true that Oracle has made substantial acquisitions over the past couple years. Indeed, the time for decrying the Siebel- and PeopleSoft-mess as more bluster than actual business benefits has come and gone. But does that translate to automatic CRM dominance, especially in light of SAP’s admittedly excellent offerings? What about the pesky little deal that SAP is actually leading in market share? We asked Lauren Hoyt, site editor of our sister site SearchCRM.com, for her take on the issue:

It’s hard to deny that Oracle has a clear lead in CRM deployments, thanks in large part to their acquisition of Siebel Systems. Siebel has 4.6 million users, and Oracle and Siebel combined can claim 5.6 million. Meanwhile, SAP leads in market share. Still, don’t count out Salesforce.com or Microsoft. Analysts predict significant spending on CRM in the next few years, which should be telling from a market share perspective. My sense is that the vendors that can do a few things — design a friendly user interface (UI), help customers design a real strategy for managing customer relationships, capitalize on the now ever-prevalent on-demand market and finally, blend its product with social media opportunities — will be the winner in the long run.

Will that winner be Oracle, SAP, Microsoft or any of the other CRM players? Submit your comments for a chance to win a free copy of “mySAP CRM Interaction Center” by Thorsten Wewers & Tim Bolte, courtesy of SAP Press.

Matt Danielsson
Editor

SAP admits to ‘inappropriate downloads’

SAP has officially responded to Oracle’s lawsuit. While a good chunk of the case remains bluster and hot air, according to SAP, chief Kagermann did raise some eyebrows by admitting certain “inappropriate downloads”. It’s worth noting, however, that SAP is taking great pains to isolate itself from its TomorrowNow branch. From the Brisbane Times:

[SAP] said its US subsidiary TomorrowNow had legally downloaded support documents from the website of Oracle but had also made “some inappropriate downloads of fixes and support documents.”

SAP stressed however that the rest of the group did not have access to the intellectual property downloaded by the US unit.

“What was downloaded at TomorrowNow stayed in that subsidiary’s separate systems. SAP did not have access to Oracle intellectual property via TomorrowNow.”

This is an interesting yet not entirely unexpected move, since it in effect seals the hatch between the main SAP ship and TomorrowNow’s leaking compartment. I’m no legal expert, but what I do know is that it’s too early to read too much into it. Yes, SAP could be preparing to jettison the whole thing (very unlikely). Or they could be working on a legal strategy that will end up with a sensible settlement (yes, that door has been nudged open again, despite initial assurances to the contrary). Or, it could be something as simple as PR damage control. If nothing else it seems like putting a neat little box around the problem might help preserve some integrity in the minds of the customers.

Either way, SAP probably has good reasons for keeping TomorrowNow at arm’s length until the dust settles.

Forbes reported that the SAP executive team were disappointed with Oracle’s aggressive litigation, arguing that it would have made more sense to come to them directly rather than get courts involved. Disappointed but hardly surprised, I bet, kind of like I’ll be disappointed but not surprised next time I fail to get a non-canned response from my Internet provider’s support site.

No, this is just too nice of a show for Ellison to pass up. I still believe he has little incentive to see this all the way through, but he’ll wring every ounce of fun out of it up until that point. Stay tuned for more as the story develops…

Matt Danielsson
Editor

SAP vs. Oracle food for thought

Did SAP steal Oracle’s customers? As in, nefariously done on the sly as opposed to, oh I don’t know, offering better products? That’s what you’d conclude if you believe the over-the-top aggressive amended complaint filed by Oracle the other day. But the reality of the case is anything but clear-cut. Dennis Byron, who has provided insightful guest columns on SearchSAP.com in the past, took a closer look at the issue in a recent blog post.

Byron raised a couple issues that deserve consideration:

• If SAP used old Oracle customers’ passwords to gain access to Oracle’s systems, why didn’t Oracle disable those accounts when the contract expired? Is it standard practice to leave the barn doors wide open for years, and then be shocked — shocked, I tells ya! — when someone comes by and takes a peek inside?
• After raising hell with the initial complaint, why, exactly, did the really nasty talk about “aiding and abetting” and “conspiracy” suddenly evaporate in the second filing?

Furthermore, Byron points out, the customers covered here (former JDE, PeopleSoft etc.) stems from a frenzied series of acquisitions that happened years ago. Back then, there was a lot of uncertainty for the new Oracle users, and SAP was more than happy to bring concerned companies into the safe SAP fold. But the lawsuit focuses on the past couple months, when the dust had been settled for quite some time. Why are former PeopleSoft and JDE customers bailing out now, 2 years after the acquisition by Oracle?

Interesting stuff for sure. Stay tuned as the case goes to court and, we would imagine, a solid return-salvo from SAP in the weeks ahead.

Matt Danielsson
Editor