Oracle-SAP Suit Won't Clear Third-Party Support Fog

No matter the outcome of Oracle and SAP's sprawling intellectual-property dispute that goes to trial Monday, it will likely fail to clear up questions that have major financial implications for software vendors and customers around the globe.

By Chris Kanaracus
Fri, October 29, 2010

IDG News Service — No matter the outcome of Oracle (ORCL) and SAP's sprawling intellectual-property dispute that goes to trial Monday, it will likely fail to clear up questions that have major financial implications for software vendors and customers around the globe.

The lawsuit revolves around SAP's now-shuttered subsidiary, TomorrowNow, which provided discounted support for Oracle applications. Oracle alleged that TomorrowNow overstepped its bounds, illegally downloading support materials and software in excess of customers' rights.

SAP has accepted liability for wrongdoing by TomorrowNow, and on Thursday also said it would not contest charges SAP itself contributed to copyright infringement. Now it wants the trial to center on damages due to Oracle, which it has estimated to be in the tens of millions. But Oracle wants SAP to cough up billions.

The trial could be a veritable clash of tech titans marked by weeks of colorful testimony, accusations and recriminations, if the recent series of public broadsides from Oracle CEO Larry Ellison is any indication.

But the case's central theme has become like so many others in Silicon Valley: one vendor accusing another of stealing its intellectual property. The issue of third-party support, which has a potential effect on every enterprise software customer, has been largely shunted aside.

That will not be the case with a related but much lower-profile suit Oracle filed early this year against a small company called Rimini Street.

Rimini Street was founded by Seth Ravin, a co-founder of TomorrowNow. Oracle has charged that Rimini Street simply repeats TomorrowNow's "corrupt business model."

But in contrast to SAP, Rimini Street has denied any misdeeds, and says it makes "extraordinary efforts" to protect Oracle's intellectual property rights.

In a previous interview, Ravin said Rimini Street anticipated Oracle's action and budgeted for legal costs accordingly. Ravin hopes the case will finally put to rest legal questions around third-party support, he said.

The stakes don't get much higher for software companies like Oracle and SAP, whose revenues heavily depend on annual support fees.

Charged as a percentage of the cost of licenses in use, usually 22 percent, over time they deliver far more revenue than the initial software sale. Indeed, vendors commonly sell software licenses at steep discounts, simply to get the customer signed up and the maintenance dollars rolling in.

Support revenue is not only plentiful -- it is highly profitable. Oracle, for one, has notched profit margins north of 90 percent on the line item.

Meanwhile, companies like Rimini Street cater to customers with stable systems and little desire for upgrades, which are only available with a vendor support contract.

Continue Reading

What is Tech Briefcase?
TechBriefcase is a new, free service where IT Professionals can Search, Store and Share IT white papers and content like this. Learn more
Bookmark content
Speed up your research efforts with content across the web.
Search and Store
Find the white papers you need. Create folders for any topic.
View Anywhere
Open your briefcase on your iPhone, tablet or desktop. Share with colleagues.
Don't have an account yet?
Learn why a mobile development platform is critical to be able to support today's complex enterprise mobility strategies. Learn what to look for in a mobile development platform and how apply these tools whether you're developing a dedicated app for one device or multiple apps running across multiple devices.
Learn how developers are using HTML5 and native development methods to build mobile apps. Get practical insights on how these tools are being used, what's driving their usage, and how to choose the best development approach for your business.
Driven by explosive growth in smartphone and tablet sales, enterprise mobility has become an essential part of business. Organizations across industries are developing internal- and external-facing mobile applications that drive revenue, build brand loyalty, strengthen communication with partners, and enhance employee productivity. Learn how keeping pace in this market requires an agile, flexible, and iterative approach to application development.
When AlertBoot switched to the cloud it needed a load balancing solution that would support its migration and prevent as much downtime as possible. The company chose Riverbed® Stingray™ Traffic Manager to use while transitioning its infrastructure to an entirely virtualized environment. The move was a complete success, at one-third the cost of comparable hardware solutions.
With over 5,000 requests per second during peak periods, online retailer Gilt Groupe could lose a large percentage of its daily profits in just 10 minutes of downtime. After choosing the Riverbed® Stingray™ Traffic Manager as its load balancing solution, visits to the site have increased thanks to improved customer satisfaction. Real-time traffic views and tracking also make it easy to strategize and plan for the future.
With 85 percent of its ticket sales made online, See Tickets needed a robust, secure, highly accessible website. The company chose the Riverbed® Stingray™ Traffic Manager to ensure that its site was always online and fast, even during extreme peaks in traffic. Now the company's valued customers receive optimal online service.
Date: Tuesday, June 5, 2012, 2:00 PM EDT

Whether your B2B complexity is caused by multiple technologies due to M&A, business or application specific needs or traditional under investment, the net effect is usually the same: high cost and lower productivity. Enabling business-to-business (B2B) integration using point-to-point EDI translators is usually time intensive and cost prohibitive.

Join IDC's Maureen Fleming and SAP for an insightful Webcast on the different approaches companies are taking to B2B integration and how you can ask the right questions to reassess you B2B approach.
Date: Wednesday, June 20, 2012, 1:00 PM EDT

Siloed organizations continue doing the wrong things and doing things wrong, leading to increased costs, project delays, lower quality, and time-to-market delays. Providing a collaborative platform where the whole organization can prioritize, share and manage deliveries with more transparency can help the organizations make more informed decisions at all levels, and greatly improve communications and traceability between teams. Hear from application lifecycle management experts how to increase delivery efficiency and effectiveness with a new approach to Delivery Management.
Date/Time: June 5, 2012, 11:00 a.m., EDT, 4:00 p.m. BST / 3:00 p.m. UTC

Please join us for this webcast, as Dr. Barry Devlin, Founder and Principal, 9sight Consulting, describes what operational analytics can do for your business and reviews an architectural approach that will enable you to make it a reality.
With BMC Control-M, you schedule and manage everything - down to the very last platform and application - from one simple interface. It's the foundation of workload automation, really - the ability to run application and business processes as one. Siloed job schedulers can't do it. BMC Control-M can.
Sun Chemical, the world's largest producer of printing inks and pigments, quadrupled its complex batch environment with zero extra headcount using BMC Control-M's Automated File Transfer features.
Learn how IT teams can protect against spear phishing tactics. Harry Sverdlove, chief technology officer of Bit9 offers a frank discussion about spear phishing - the most common technique used in today's advanced attacks. Learn how spear phishing works and three recommendations for IT to protect against modern threats.
Newsletter Sign-Up »

Receive the latest news test, reviews and trends on your favorite technology topics

Choose a newsletter
  1. View all Newsletters | Privacy Policy
Sponsored Links

High performance. Delivered. Click to see Accenture's client successes

Master the cloud with the power of convergence from HP

Connect with IT leaders redefining mobility at the Enterprise Mobile Hub

Choose New and manage one device instead of 170

Choose New for 8x the firewall and NAT performance

Check out a smart way of mobilizing your business with enterprise-ready Samsung Mobile.

Redefine your data center with HP servers.

Enhance your business with Windstream IT Solutions. Speak to someone local.

BlackBerry® Mobile Fusion. Different mobile devices. One platform.

CYBERMARYLAND | Learn Why Maryland is the Epicenter for Cybersecurity

Get Ethernet speeds from 1 Mbps to 10 Gbps - Comcast Business Class

Cognizant. Leading in Business, Application & Technology Services

Collaboration: driving better business outcomes

Gain cutting-edge insights at MIT in 2-5 day executive programs.

Click to see how Accenture has delivered high performance to clients

Complimentary Gartner Report on BYOD: Media Tablets & Beyond. View Now

Elevate storage agility and efficiency with HP 3PAR storage.

Choose New and slash the number of devices you manage

Customized information views & Twitter events at New Fulcrum Point

Splunk translates machine data into "aha" moments for IT and the business.

ManageEngine Desktop Central - Automate and Audit Your Desktop Management! Learn More...

Cloud Readiness Starts with Intel® Technology

Visit the Virtually There Learning Page to learn how to use virtualization to your competitive advantage.

Free: Hunter Muller's "The Transformational CIO."

Join us for an upcoming Microsoft 365 live online demo event.

Discover your easiest path to unified communications

Virtualizing Your Infrastructure Just Got Easier

Connect with global CIOs now at Enterprise CIO Forum

Resource Center