SAP-Oracle feud could hurt business, customers say

Third party arena expected to suffer

Prolonging the battle between SAP and Oracle, following last week's £820 million damages award, could hurt enterprise software users and change the support landscape.

That is the view of both vendors' customers, who said the worst hit by the latest damages award were not SAP shareholders, but instead software buyers.

The award was made by a jury, which decided the penalty reflected the admission by the German software vendor that its TomorrowNow maintenance subsidiary had stolen software and support documents from Oracle.

Ronan Miles, chair at the Oracle User Group, told Computerworld UK the suppliers would likely make moves to ensure the issue did not impact customers too badly. There was "too much money involved in this for either side to upset customers", he said.

However, he warned that the judgement raised alarm bells for businesses using third-party support. Those customers, he said, "should ensure that those third parties will engage fairly with Oracle for support on their behalf. This may mean that customers should pay close attention to the contract with the third party".

If those customers "lapse off Oracle support and then find the third party cannot support them properly later on, then they will have to pay Oracle a lot of back support fees to get support back," he warned.

Other Oracle and SAP experts expressed concern at the news.

The discord between SAP and Oracle was not good news for customers, given that many have a mix of the suppliers' products, said John Glanville, IT director at heating and boiler company Ideal Stelrad. There was an "ever increasing need", he said, for the products to work together so that IT departments can "develop solutions quicker, more robustly and with infinite scale".

While he said "business etiquette has to prevail", he added: "SAP's engagement with Oracle appears to be widening and yes, this has to be a concern."

"We've invested heavily in SAP, Oracle and IBM and it's key that this investment is protected; and of course the strength of the relationship across SAP and all its partners will remain a key selection criteria during any change programme, no matter how small or how large."

Darron Walton, managing director at SAP system integrator De Villiers Walton, said the development was "interesting" and agreed it could have consequences for companies' partners. But he added: "I suspect it will take some time for the impact of the decision to be felt within the system integrator community."

Other IT industry experts acknowledged that SAP had admitted to its actions, but branded the fine "excessive".

IDC research manager David Bradshaw said: "If this judgment is upheld, it will put the future of third party maintenance in doubt and make software lifetime costs higher."

Forrester Research analyst Paul Hamerman said: "The business that [SAP's former TomorrowNow unit] were in was to fix glitches in software and make some compliance updates. ...They weren't trying to resell any of the software that they were downloading." Hamerman warned that any appeal by SAP could prolong the issue for customers.

Martin Mutch, an Oracle veteran who blogs on Computerworld UK, said Oracle had taken A "moral victory against SAP". He added: "The loss puts a major dent in SAP's moral character, especially in Oracle's US homeland where the global ERP market share barometers are calibrated."

Tobias Ortwein, senior VP at Pierre Audoin Consultants, said the news was "another embarrassing episode for SAP at a time when markets had at last begun to forget about the company's failed third-party maintenance strategy".

Ortwein said the judgement would have "little or no impact on the clients", but that SAP integrators would be hard hit.

"SAP's partners will surely suffer under the effects of this award," he said. "The cost-cutting measures SAP can be expected to introduce may also affect some joint projects with partners."

But he said Oracle's reputation could be affected more than SAP's. "At least in Europe, but also in some US companies, I have noticed that Oracle's extremely aggressive behaviour has not gone down well with a rising number of business partners," he said.

"Some clients and partners have begun to wonder whether Oracle had not better concentrate on the technological and organisational integration of the numerous acquired companies, where quite a few questions remain unanswered."

In a poll on the Computerworld UK website, 59 percent of readers agreed that the £820 million damages award against SAP was a "kick in the teeth" for them.

Nearly third of respondents said that European companies "can't expect justice" in US courts. Only one in 10 thought the award was fair.

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Tags applicationsintellectual propertySAPlegalsoftwareTomorrowNowOracle

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Leo King

Computerworld UK
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