SAP Watch


June 27, 2008  10:37 AM

Oracle-SAP lawsuit update: Why Oracle won’t get its $1b

JackDanahy Jack Danahy Profile: JackDanahy

Oracle wants as much as $1 billion from SAP for SAP subsidiary TomorrowNow’s alleged theft of Oracle support documents and other illegally downloaded intellectual property (IP). As the legal clash nears — it’ll be 2010 before you know it — Oracle and SAP’s lawyers are pushing hard to frame the narrative that the courts will hear. Now that Oracle has finally put the question of damages on the table, it will have uphill work claiming $1b. After all, it hasn’t been claimed — yet — that SAP made off with the secret formula to Coca-Cola.

That’s not to say that Oracle has no case, or that its complaints aren’t meritorious, but $1b is a lot of money (although, admittedly, much less than it used to be). Oracle’s lawyers are taking a fascinating approach to make the argument for such large damages. Oracle’s latest joint discovery filing claims that this case is not merely about illegal downloads but about “the rules of fair play” between the two companies. Violating these rules clearly sounds more egregious than making off with some support documents. Furthermore, Oracle wants to draw the tenuous link between a violation of these rules of fair play and the success of SAP’s Fair Passage program, in which customers of PeopleSoft (the enterprise applications company for which Oracle launched a successful hostile takeover bid three years ago) were encouraged to come to SAP instead of waiting to see how they would be treated after Oracle acquired PeopleSoft.

Oracle wants SAP to disclose information on how important TomorrowNow was to the acquisition of (roughly 800) Safe Passage customers. The insinuation is that TomorrowNow was a strong factor in the loss of all of these customers, many of whom were concerned that Oracle would not provide adequate support for, and/or development of, PeopleSoft products after the takeover. Once TomorrowNow drove a wedge between Oracle and its prospective PeopleSoft customers, SAP was more able to convert many of these customers to its own products.

Of course, the trick here will be to demonstrate that TomorrowNow’s illegal downloads, rather than the fear and uncertainty circulating within the PeopleSoft and J.D. Edwards customer bases three years ago, were responsible for the success of Safe Passage. SAP’s lawyers should be able to create reasonable doubt around this connection. Most Safe Passage customers were trying to escape to a stable, supported platform; how many of them were merely choosing between support organizations? TomorrowNow was always a stepping stone; sure, it got SAP into a lot of deals, but there would have been a “safe passage” movement even if SAP hadn’t pushed for one.

Finally, the whole question of fair play is a hypocritical one for Oracle to raise. Was it fair for Oracle to begin a hostile takeover of PeopleSoft hours after PeopleSoft acquired J.D. Edwards? Is it fair for SAP to use its vast size and influence to get into no-bid deals? Balzac famously claimed that behind every great fortune is a crime, and, at its highest levels, the enterprise applications business is just as dirty as any other high-stakes industry. TomorrowNow may indeed have broken the law, and should be punished if this is the case, but $1b is ridiculous and, more importantly, legally unsupportable. Oracle’s fair play argument, and the logical elision by which TomorrowNow is tied to Safe Passage, just won’t cut it.

Demir Barlas, Site Editor

June 26, 2008  10:13 AM

i2 wins $83 million settlement from SAP

JackDanahy Jack Danahy Profile: JackDanahy

SAP is paying fellow enterprise applications company i2 $83.3 million to settle a patent dispute. In 2006, i2 had accused SAP of infringing on seven i2 patents, including patents for “an extensible model network representation system for process planning” as well as a “method for managing available to promised product (ATP).”

Earlier this month, JMP Securities analyst Patrick Walravens had predicted that damages could have been as high as $500 million, so perhaps SAP got the best of the settlement. While the full terms of the settlement were not disclosed, the companies have agreed to dismiss pending legal actions and to cross-license the patents in question.

In an indication of how far the company has fallen since its glory days a decade ago, AP described i2 as an “inventory management software company.” i2 is in fact a supply chain software company, although the business media appears to have forgotten.

With the patent issue out of the way, it is time for someone — meaning, effectively, either Oracle or SAP — to buy i2. Supply chain management long ago ceased to be a popular standalone domain, and is increasingly dominated by the two enterprise applications giants, who can bundle the functionality in an integrated suite. The other option for i2 would be to liquidate its assets.

Someone associated with i2 is no doubt anxious to get the ball rolling, judging by the rapid acceptance of what could be a lowball settlement. Whatever happens, get ready to say goodbye to a company that, not so long ago, was an analyst and investor darling while SAP was accused of being a dinosaur. Sadly, the Dallas-area i2 is doomed to being remembered for being chewed out by Nike CEO Phil Knight (“This is what we get for our $400 million?”), but its wealth of supply chain IP is still a valuable asset.

Demir Barlas, Site Editor


June 19, 2008  10:40 AM

SAP attacked over no-bid contract

JackDanahy Jack Danahy Profile: JackDanahy

SAP was recently awarded a contract worth $108 million by the government of New South Wales, a state within Australia. That’s hardly news in itself, as SAP regularly picks up government deals of this scope all over the scope. What’s interesting, however, is that an outspoken local technology company is fighting back over the lack of a bidding process.

Adrian Di Marco, Executive Chairman of Australia-based enterprise applications software company TechnologyOne, is the face of this resistance. Di Marco made some incendeniary comments in a TechnologyOne press release, finding it “unbelievable…that a decision of this size was made without testing the made” and that “it is very unlikely that NSW taxpayers are getting anywhere near value for money.” This was just the beginning of the broadside. Di Marco went on to accuse the NSW Government, SAP, Oracle, and Mincom of being a back-room “old boys club” that locked out all other tech vendors for major Australian government business.

TechnologyOne has a dog in this fight, as the company is an existing supplier to NSW Government and believed that it had the right to be invited to bid on the project. However, that doesn’t in itself invalidate the company’s claim that a government entity has a responsibility to taxpayers to consider all serious tenders for a project of this sort.

It is important to point out that, in some cases, only SAP and Oracle can do the job (the recent experience of Bank of America comes to mind). Some projects are too big and complex for other, smaller vendors to handle. Perhaps NSW Government is one such case. But, even pro forma, NSW Government doesn’t have the luxury of engaging in no-bid contracts, unless it wants to draw negative attention of the kind now being generated by TechnologyOne. Given the history of project creep, cost over-runs, and other such problems regularly associated with big enterprise applications implementations, NSW Government at least owes an open disclosure of the business case for SAP to the taxpayers who will be paying for it.

Demir Barlas, Site Editor


June 18, 2008  10:40 AM

Most popular SAP skills

JackDanahy Jack Danahy Profile: JackDanahy

The topic of SAP skills has been a hot issue of late. For those interested in this topic, the U.K.’s ITjobswatch provides a list of the most popular SAP skills and other data that will be very pertinent to the average SAP Web developer, software developer, and consultant. Here is a sampling of the most interesting data, with the rest available here:

SAP Application Development

  1. SAP XI
  2. SAP Basis
  3. .NET
  4. J2EE
  5. XML

SAP Business Applications

  1. SAP FI/CO
  2. SAP HR
  3. SAP SD
  4. SAP CRM
  5. SAP MM

Programming Languages

  1. ABAP
  2. SQL
  3. Java
  4. SAPscript
  5. C#

Processes and Methodologies

  1. ERP
  2. BI
  3. CRM
  4. Project Management
  5. SAP Implementation

Although this data pertains to the U.K., both the maturity of that market and the sample space of the survey suggest that it may also reflect conditions in the U.S. market.

Demir Barlas, Site Editor


June 16, 2008  8:09 AM

Alleged SAP partner arrested: Beware of fraud

JackDanahy Jack Danahy Profile: JackDanahy

Nilesh Dasondi — President of Edison, New Jersey’s Cygate Software IT services firm — was recently arrested, along with several of his Indian employees, for defrauding the U.S. government. Dasondi is charged with bringing Indians into the U.S. on H-1B visas and putting them to work in occupations other than technology, in exchange for a cut of their earnings. Dasondi claims, on the 2007 Web site detailing his ambitions to serve on Edison’s Council, to be an SAP Americas partner, and was in the past an SAP programmer himself.

Dasondi managed to post $800,000 bail to free himself back on Thursday, and is now under house arrest pending the next stage of his case. According to reportage from the New Jersey Star-Ledger, Dasondi employed eight Indians between 2003 and 2007, charging them $850,000 in exchange for sponsoring them to come to the U.S. under fake H-1B paperwork. The money was used to set up phantom payrolls and health insurance, with Dasondi keeping the rest. Authorities arrested Dasondi’s “employees” all across the country, including locations in New Jersey, New York, and Arizona.

In the wake of the arrests, it is worth wondering A)how many operations like Dasondi’s haven’t been discovered yet and B)why SAP remains so passive about taking action against people who dilute the value of SAP’s ecosystem. After all, Dasondi’s political Web site has long claimed that he is responsible for a “strategic alliance with SAP America” among other companies. However, Cygate’s name doesn’t appear on SAP’s Web sites. In SAP’s place, I would appoint someone to actively scour the Web for people who attempt to falsely associate their companies and/or services with SAP.

While it is naturally the job of the government to enforce the law, as in this case, it is long past time for SAP, Microsoft, and other tech giants to act more aggressively against people who are using their names and brands in order to perpetuate different kinds of fraud.

Demir Barlas, Site Editor


June 13, 2008  9:38 AM

Léo Apotheker: A dissenting view

JackDanahy Jack Danahy Profile: JackDanahy

By now, SAP’s co-CEO — and soon-to-be sole CEO — Léo Apotheker has been welcomed into his new role by a host of journalists, analysts, and even the French government, which made the former SAP sales head a Knight of the Legion of Honor (whose value is surely diluted by the fact that it has also been awarded to Celine Dion). The conventional wisdom holds that, because SAP has been led by a succession of German engineers who gave the company a decidedly technical face, the time was right for a change of blood. Indeed, that was the thinking that saw Shai Agassi, who was about as foreign to SAP culture and history as anyone could be, almost become CEO.

Sure, Agassi was technologically educated and inclined, but he was also a sales person at heart. Sales, however, isn’t necessarily the best domain from which to choose a software company CEO. Sales people tend to stretch reality in order to close deals, which may be a desirable trait in the CEO of a young company looking to get on a map, but not necessarily a desirable trait for building long-term shareholder value in a mature company.

Waste Management, the company that is suing SAP for $100 million, noted in its complaint that Shai Agassi was present at a meetings on June 17, 2005 at SAP global headquarters, and at least one blogger has already wondered whether Agassi was behind what Waste Management alleges were inflated promises about SAP’s functionality. This year, at Sapphire, Apotheker presided over a carnivalesque atmosphere on the main stage, including a Harley and a Coke truck, that I thought recklessly associated the reliable SAP brand with dot-com era hi-jinks. You had to go to a special session afterwards (attended by about thirty people) to get the serious version of the Apotheker talk about SAP’s ecosystem innovation.

SAP is accused of being boring and predictable, but it’s the horse at the head of the enterprise software market. Changing jockeys in this situation doesn’t make sense, just as the decision to elevate Agassi to co-CEO didn’t make sense. That kind of corporate thinking betrays a slippery understanding of risk management principles. Today, as SAP faces various lawsuits and a deepening perception of being difficult and costly to implement, the voice of sales is just what the market doesn’t want to hear. Rather, it’s the voice of engineering — speaking the language of design, project management, strategic discipline, and process change — that can, and should, guide potential SAP customers through the minefield of problems that stand between a purchase decision and a successful implementation.

I don’t think that Apotheker is that voice.

Comments?

Demir Barlas, Site Editor


June 10, 2008  9:57 AM

SAP’s $150 million banking megadeal

JackDanahy Jack Danahy Profile: JackDanahy

Canada’s ATB Financial is pursuing a $150 million project to rip out its legacy systems, some of which date back to the 1970s, in favor of SAP.

Given that SAP also added Bank of America as a customer earlier this year, the deal points to SAP’s growing strength in the North American segment of the banking sector. Like Bank of America, ATB appears to have conducted thoughtful diligence on its SAP. A thoughtful article in Bank Technology News points out that ATB took nearly a decade evaluating the market and testing the market before signing up with SAP, and is carrying clear-cut, achievable objectives into the deal.

Other firms considering SAP would do well to adopt the banking sector’s risk sensitivity to enterprise software adoption, which includes longer evaluation times, weighted functionality priorities, and unambiguous project objectives. ATB appears to have squeezed every last bit of scalability out of its thirty year-old legacy system before settling on SAP, which is an object lesson to companies who feel obliged to make major system switches every decade or so.

Like ATB, a lot of banks are running up on sunset dates for their old systems. All eyes in the industry must be on ATB to see how the SAP project goes, because it could influence a lot of upcoming purchasing decisions.

Demir Barlas, Site Editor


June 9, 2008  10:26 AM

Spotlight on job skills: Customizing the SAP look

JackDanahy Jack Danahy Profile: JackDanahy

There’s an SAP skills shortage underway, and people want to know how to position themselves to take advantage. One approach is to look through lists of the SAP skills for which employers are paying more, or which are demonstrating faster rates of growth. Another approach is to prioritize your education and training. A third approach, the subject of this entry, is to think of building SAP skills not in terms of product categories but in high-value niches.

One niche that comes to mind is SAP GUI development. As those with any exposure to SAP know, certain product interfaces are difficult to navigate — for example, because of fields scattered across various screens, or screens that don’t capture the exact flow of a business process. These kinds of navigability and usability shortcomings might not doom an SAP project altogether, but they can result in user non-compliance and data inaccuracies.

This opens up an opportunity for SAP developers who can make SAP products more usable and friendly. When you think about it, this is a universal skill, because it can apply to products across the entire SAP portfolio. There are a couple of ways for developers (and consultants) to add SAP GUI enhancement to their skill set: develop SAP GUI scripting skills, or, in an easier gambit, learn to work with third-party tools such as those provided by Synactive.

Synactive is an interesting company, as it products are regularly used to make SAP more usable in dozens of enterprise-class deployments (like Nike and Shell). I’m surprised more people don’t know about this company, especially because it’s easy enough to learn to use its products and use them to package yourself as a SAP interface fixer-upper.

Demir Barlas, Site Editor


June 6, 2008  12:10 PM

SAP fails to settle with Oracle

JackDanahy Jack Danahy Profile: JackDanahy

SAP and Oracle, embroiled in a bitter battle over SAP-owned TomorrowNow’s unit’s illegal downloading of Oracle support materials and other information (like software code), have failed to settle their dispute in a May 29 mediation session. This means that SAP and Oracle will continue on their course towards violent litigation over this matter.

According to SAP co-CEO Henning Kagermann, the case isn’t expected to open until early 2010. That means at least another year and a half of bad publicity for SAP, and the possibility of bigger embarrassments in court. It seems worthwhile to ask why SAP doesn’t try to settle before then, if only in the interest of quashing the publicity. SAP has already prepared 10 million Euros for the legal struggle, and even one lost contract because of this lawsuit could mean another 15-20 million Euros that SAP gets to keep in its pocket.

While we’re on the subject of SAP’s legal issues, investment writer Dennis Byron caught an interesting fact about Waste Management, the company that claims SAP sold it software that didn’t work. In its last 10-Q, Waste Management noted that, “If we decide to abandon the SAP software, the abandonment would result in a charge of between 45 and 55 million dollars.” That vitiates Waste Management’s claim that the SAP software it bought simply didn’t work.

Demir Barlas, Site Editor


June 4, 2008  4:59 AM

SAP’s new certification strategy

JackDanahy Jack Danahy Profile: JackDanahy

In the wake of a particularly contentious entry I recently posted on the value of SAP certification, SAP careers expert Jon Reed has re-opened the debate by arguing that SAP’s new three-tiered certification strategy can be of value to the SAP ecosystem.

The new tiers, according to SAP, are Associate Certification, Professional Certification, and Master Certification. Becoming an Associate is simply a matter of being tested, but becoming a Professional “requires proven project experience, business process knowledge, and a more detailed understanding of SAP solutions.” Becoming a Master “involves demonstrating an expert-level understanding of a specific area of SAP software and the ability to drive innovation and solution optimization through in-depth knowledge and vision. Certification at this level requires broad project experience, comprehensive SAP product knowledge, and the ability to create a future IT vision within complex project environments.”

SAP certification is available for NetWeaver, Enterprise SOA, CRM, ERP, PLM, SCM, Oil & Gas, Retail, SAP Business One, Small and Midsize Enterprises (SMEs), and SAP Solution Manager. Within each of these product areas, certification is available for applications, development, and technology, opening the door to everyone from development techies to business-level consultants.

If you’re going to get certified in SAP, there’s little point in getting the credential from anyone but SAP itself.  However, the mere act of becoming certified does  not immediately confer better career prospects on an aspiring member of the SAP ecosystem. The better way to approach the process, as Jon mentions in his entry, is as education, not only in the sense of learning something from certification tests but also, more enduringly, collaborating with peers at your level in order to improve yourself. Sadly, this message will go right over the heads of the tens of thousands of “freshers,” the term used in India for new technology workers, who see certification as a way to fool employers and insinuate themselves into projects. The idea is that certification allows SAP credential holders to vault past people with greater experience, which is why freshers will often pay more than a year’s wages for certification.

I don’t necessarily support SAP’s claim that becoming as Associate allows certifications holders to “Gain an externally-recognized mark of excellence that clients seek,” because it’s doubtful that potential employers are clamoring to see certifications. Experience, rather, is the name of the game. But on the whole, SAP’s marketing of its own certifications is fairly modest compared to the frankly deceptive practices of third-party certification programs operating in East and South Asia, where the message is that getting certification is tantamount to being employed in the SAP world.

In our credentials-obsessed world, it’s easy to forget that education is about improving yourself and making a long-term investment in your life and career. Sadly, people are more concerned with lying, bluffing, and cheating their way through the process. If SAP certification is approached as  a legitimate part of an educational journey, it could be very worthwhile — and lucrative. But the get-rich-quick crowd will be disappointed, and out of a lot of money, if they mistake the purpose of SAP certification.

Demir Barlas, Site Editor


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