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8/8/2005
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SAP Countering Oracle In ERP Services Arena

TomorrowNow subsidiary hires senior support engineer from Oracle as it expands its PeopleSoft application-maintenance services.

Recruiting employees with the right skills remains a burning issue for many small businesses trying to expand and grow. In the software services business, service companies sometimes hire away talent from the company whose applications they support.

Such was the case last week when Vicky D'Amelio, senior human-capital management support engineer, left Oracle's United Kingdom office to join TomorrowNow Inc., a third-party software-maintenance and support-services company for PeopleSoft and J.D. Edwards applications that SAP acquired in January. "Yes, we could hire inexperienced people, but we're more likely to go after those with eight to 20 years experience in a specific application," says Andrew Nelson, TomorrowNow's president and CEO. "This is what's needed to aggressively expand in Europe and Asia."

D'Amelio joins several former co-workers from Oracle's U.K.-based global payroll-development team, part of Oracle's human-capital-management staff, in moving to TomorrowNow's greener pastures. D'Amelio, who has been responsible for PeopleSoft customer support since 1997, says that while she's grateful to Oracle for what she learned there, the new job was an opportunity to "really help customers" stay on product releases they choose for half the price without being forced to upgrade to every new software release in order to retain software support.

Employee defections to competitors have become more frequent, despite the inclusion of noncompete clauses commonly added to employee contracts. Microsoft, for example, has suffered an exodus of top talent to Google in recent months. Last month, Microsoft sued Google over the defection of a highly prized research engineer to the online search company.

As an SAP wholly owned business, TomorrowNow has grown from 37 employees to 100 since January and this month is expanding into Singapore, Amsterdam, and the United Kingdom. The company has doubled the number of offices it operates to 12 in seven months and has added about 40 new customers. Jim Mackey, SAP's head of corporate finance, says some of those customers took advantage of what SAP calls its "safe passage program," which offers a 75% credit on their PeopleSoft software toward the purchase of SAP apps. The program allows customers to maintain their PeopleSoft and J.D. Edwards applications as legacy software while they migrate to SAP.

"The TomorrowNow acquisition really was brought on by Oracle's acquisition of PeopleSoft," Mackey says. "A percentage of PeopleSoft and J.D. Edwards customers told us they were worried about a forced software migration down the road. They just weren't ready."

Mackey began to look for and found a "nice little company that could legally provide maintenance support for much less than Oracle." Analysts say TomorrowNow is part of SAP's strategy to grow its share of the enterprise resource planning application market and blunt Oracle's efforts to expand there. "SAP sees TomorrowNow as a way to get people to sign on and make a commitment to a long-term migration strategy," says AMR Research analyst Bill Swanton.

TomorrowNow says it charges fees about half that of Oracle's to maintain PeopleSoft and J.D. Edwards apps. Its goal is to grab a bigger slice of the ERP application-maintenance business that AMR Research estimates at $8.3 billion, growing to $8.6 billion next year.

"We don't see any reason to limit ourselves to PeopleSoft and J.D. Edwards software lines," Nelson says. "Our piece of this market is really a drop in the bucket, and our goal is to expand and capture as much of the available share as we can." TomorrowNow could add support services for products by other ERP vendors, such as Microsoft Business Solutions and SSA Global, as well as for SAP's own apps, although Nelson says no plans are in the works.

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