SAP: Oracle Software Support from TomorrowNow to End
SAP will close TomorrowNow, its money-losing third-party maintenance provider of Oracle applications that is the subject of a nasty court battle, on Oct. 31, 2008. What are the implications for third-party maintenance?
CIO — After everything—the promise of prying ERP customers away from Oracle, the awkward software-maintenance business-model implications, and the embarrassing court battle with Oracle—it appears the sun won't come out for SAP's TomorrowNow.
On July 21, SAP announced what had long been expected in enterprise software circles: That its troubled subsidiary, TomorrowNow, which SAP had attempted to sell, would cease operations on Oct. 31, 2008, and the turbulent chapter in SAP's history will officially end. "SAP is working directly with TomorrowNow's more than 225 current customers to help them return to support from Oracle for those customers on PeopleSoft, JD Edwards or Siebel applications or to smoothly transition to new support options," noted the SAP announcement.
Or at least SAP executives hope it will end. Much damage has already been done. "This has been a major embarrassment to the SAP executive team," notes Bruce Richardson, chief research officer at AMR Research who has closely followed the SAP and TomorrowNow relationship.
However, enterprise software analysts say that even with the trouble that TomorrowNow created, the third-party maintenance market will remain strong because customer demand is growing.
SAP purchased TomorrowNow, a rising star in third-party maintenance and support for Oracle enterprise applications such as Siebel, PeopleSoft and JD Edwards, in February 2005. TomorrowNow, under the SAP umbrella, was eager to offer "safe passage" to Oracle's customers—maintenance and support for Oracle's stable of applications for half of what Oracle charged. And if those same customers decided to move to SAP's product sets at some point and time, all the better for SAP.
The acquisition was aggressive and somewhat peculiar, noted industry watchers at the time. It seemed out of character for SAP, which normally grew its products organically. (See "SAP's Purchase and Attempt to Sell Off TomorrowNow" for a detailed look at the SAP and TomorrowNow saga.)
But there was also something implicitly troubling about TomorrowNow's business model for SAP: "If TomorrowNow is good for Oracle customers, why is it not good for SAP customers? Why don't you offer SAP customers something similar?" says Vinnie Mirchandani, a former Gartner analyst and founder of vendor consultancy Deal Architect.
In other words, where was the "half off" maintenance support for SAP's products?
TomorrowNow's Downfall
For more than two years, TomorrowNow slowly grew its customer list under SAP's logo. But its fate was most likely sealed when, in March 2007, Oracle filed a federal lawsuit in San Francisco alleging that TomorrowNow employees had illegally accessed Oracle's proprietary software products and materials, and had downloaded those materials onto TomorrowNow's computers.
