SAP admission of liability highlights Oracle third-party support issues

Oracle/Rimini Street lawsuit will be a real test of legality of third-party services

SAP AG's admission of some liability in a lawsuit brought against it by Oracle Corp. over third-party support services will likely speed resolution of the dispute between the two companies.

However, it really is a second similar lawsuit that Oracle filed earlier this year against another third-party service provider, which could prove more meaningful for Oracle customers, analysts said.

SAP agreed on Wednesday to assume liability for copyright theft claims made against it by Oracle .

The charges relate to a now defunct SAP subsidiary called TomorrowNow, which provided third-party support services to Oracle customers at about 50% of the cost that the vendor charged for it.

In its lawsuit, Oracle accused TomorrowNow of illegally downloading Oracle updates and maintenance tools in providing its third-party support.

In January, Oracle filed a somewhat similar lawsuit against Rimini Street , another third-party service provider that has managed to snag a growing number of Oracle and SAP customers largely by virtue of the fact that its prices are about half that of the enterprise vendors.

Oracle has accused Rimini Street of "massive theft" of Oracle software and support materials.

The lawsuits are viewed by many as somewhat cynical attempts by Oracle to protect its lucrative software maintenance revenues against outsiders.

Oracle, like other major vendors of enterprise software, including SAP, derives a major portion of its revenues from application support and maintenance services. Customers who don't sign up for the services are precluded from receiving any further software updates or patches from the company.

SAP's admission of liability will likely resolve its dispute with Oracle quicker, said Frank Scavo, managing partner of the IT consulting firm Strativa.

But the real test of Oracle's ability to prevent other companies from providing maintenance and support services for its software is the Rimini lawsuit, Scavo said.

"SAP had indicated from the very beginning that there was some validity to Oracle's claim," Scavo said. "So this is no great surprise."

The Rimini Street case is more interesting from a customer standpoint because Oracle could have a harder time supporting its claims of copyright theft, he said. "My understanding, having spoken to Rimini Street, is that they have taken extraordinary measures to protect both Oracle and SAP intellectual property."

"They have indicated, by countersuing Oracle , that they plan to fight Oracle vigorously and even are welcoming the opportunity to do so," he said.

The issue is an important one for customers who are tied to expensive maintenance contracts with their vendors simply because they have no place else to go, added Paul Hamerman, an analyst with Forrester Research in Cambridge, Mass.

Over the past few years, only a handful of companies have even attempted to deliver third-party services and often the ones that do are afraid to openly disclose that fact for fear of legal issues, he said.

Many of the systems-integration companies that are in a position to deliver such services, often also don't want to do it for fear of losing out on their business partnership status with the software vendors, Hamerman said.

"The third-party software maintenance market is a viable market," and one that is going to remain largely unaffected by the outcome of the SAP/Oracle dispute, he said.

"Customers are feeling a lot of pain over the ongoing costs of ownership of enterprise applications," Hamerman said. There is a significant uptick in interest in third-party services especially because many enterprise applications such as human resources and payroll are fairly stable and are rarely in need of frequent vendor updates or support, he said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags Gov't Legislation/RegulationIT industrydatabasesapplicationsregulationSAPsoftwaregovernmentTomorrowNowOracle

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jaikumar Vijayan

Computerworld (US)
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?