After TomorrowNow: SAP appears to be retreating from Oracle consulting business
Sidney Hill, Jr., executive editor -- Manufacturing Business Technology, 11/28/2007 7:53:00 PM
The mass defections of senior executives from its TomorrowNow business—and an accompanying announcement that the unit might soon go up for sale—is an indication that SAP’s strategy of making money by offering service contracts to Oracle customers may not have been such a good idea after all.
SAP purchased TomorrowNow—which specializes in third-party maintenance and support of JD Edwards, PeopleSoft, and Siebel applications—in January 2005. Since Oracle had recently acquired those three vendors, SAP’s purchase of TomorrowNow was an obvious attempt to siphon potential revenue away from Oracle.
In addition to offering these new Oracle customer-service agreements, SAP instituted a program to encourage them to migrate to SAP applications.
The plan went sour in March of this year when Oracle sued SAP, alleging that TomorrowNow consultants were appropriating proprietary Oracle information in the course of their work with JD Edwards, PeopleSoft, and Siebel users.
A February trial date has been set in U.S. District Court in San Francisco. It’s possible, however, that SAP could sidestep the legal action by selling TomorrowNow. The stage for such a move was set with the mid-November announcement that TomorrowNow CEO David Nelson and several members of his management team have decided to leave the company.
In a news release announcing this “management transition,” SAP also said it is considering several options for the future of TomorrowNow, including a possible sale.
Currently, Mark White, who was appointed executive chairman of TomrrowNow in July, is running the business.
“Our primary focus is TomorrowNow’s existing customers, who will be supported through this management transition,” White said in the news release. “SAP is prepared to manage through these changes to ensure that TomorrowNow’s obligations to its current customers are met. Over the next days, we will be communicating with TomorrowNow customers about these changes and our plans to support them going forward.”
