Strategic CIO // IT Strategy
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11/3/2010
08:29 PM
Fritz Nelson
Fritz Nelson
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Oracle V. SAP: Courtroom Diary

The big dogs haven't howled, but there's been plenty of yapping and leg-lifting. Here are a few highlights and lowlights from the Oracle-SAP trial after two days.

Just a quick refresh. SAP acquired TomorrowNow, a third-party PeopleSoft support provider, in 2005, shortly after Oracle acquired PeopleSoft. SAP had planned to use TomorrowNow as a gateway to PeopleSoft customers. Unfortunately for SAP, TomorrowNow had engaged in a methodical practice of downloading massive amounts of PeopleSoft software and support documentation, violating copyrights. This practice continued under SAP, and extended to other Oracle products. SAP has admitted liability and the trial is now about damages -- anywhere between $40m and $2b, as best anyone can tell.

But while the trial will ultimately determine the monetary damages, for a few weeks it will be about exposing some of the underbelly of these two fierce competitors.

The big flip flop. When SAP set out on its mission to make TomorrowNow a linchpin in its Safe Passage strategy, bent on turning Oracle customers into SAP buyers, it was so bullish about the prospects of its $10m acquisition, it thought it could grow revenue by hundreds of millions within three years, and knock 10 percent off Oracle's share price, according to documents provided as evidence in the trial. Other documents depict Oracle executives as being so dismissive of SAP's new appendage, Oracle was practically willing to concede what it called "laggard" customers (another Oracle exec called them "bastards").

In an e-mail, Oracle executive Juan Jones sarcastically compared Safe Passage to No Child Left Behind, Clear Skies and the Patriot Act. Oracle executive Jeff Henley said in an e-mail to co-President Safra Katz and Larry Ellison: "I don't believe we lost any large customers because of this. If we lost, we lost to SAP for other reasons." Oracle exec Chris Hummel said: "If we present a strong case... customers should continue to choose Oracle software and upgrade to newer versions, TomorrowNow is irrelevant."

Now, SAP would have us believe that of the 86 companies that became TomorrowNow customers and then switched to SAP software, only two of them could have switched because of TomorrowNow, and probably not even them. SAP is quick to admit that TomorrowNow and Safe Passage utterly failed. Meanwhile, Oracle would have you believe that this No Child Left Behind scheme was so insidious that... well, Larry Ellison might be even higher than sixth richest in the world if SAP had negotiated for these licenses up front.

Bastards.

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