After Oracle laid out its long-term road map for integrating PeopleSoft technology last week, SAP responded with what it calls the "safe passage program." It's a pitch to provide technology and support services to PeopleSoft customers that lets them maintain their PeopleSoft and J.D. Edwards applications as legacy software or migrate to SAP's own apps. SAP also is touting its NetWeaver development, deployment, and integration platform, which has connectors for PeopleSoft and J.D. Edwards applications, as a way companies can extend those applications as part of a migration strategy.
Key to that effort will be SAP's acquisition of TomorrowNow Inc., a third-party services company former PeopleSoft executives founded, for an undisclosed sum. TomorrowNow provides bug fixes, software updates to comply with changes in laws and regulations, and tech support. EDS, Lockheed Martin, NBC Universal, and Safeway are among its customers.
SAP also will offer PeopleSoft and J.D. Edwards customers a 75% credit of their original software purchase price toward SAP applications. The vendor promises to support PeopleSoft apps for an annual fee of 17% of the original purchase price. Oracle charges a 22% fee and PeopleSoft 20%, a rate Oracle promises to maintain for PeopleSoft customers.
A software company supporting a rival's product to this extent is unprecedented, showing the maturity of the market and SAP's eagerness to head off Oracle, Wachovia Securities analyst Kash Rangan wrote in a report last week. Yet he noted that SAP would need to add PeopleSoft talent to succeed, since TomorrowNow has a staff of about 35 employees supporting about 100 companies, most of them small and midsize.
SAP says its efforts initially will be directed at the roughly 4,000 companies and organizations that already run its software in conjunction with PeopleSoft and J.D. Edwards applications. "Those customers don't want to be bought," said Bill McDermott, SAP's president and CEO for North America, announcing the "safe passage" effort. "They're going to look at all their options."