ERP Support Drama: How Far Will Oracle Go to Protect Its Golden Egg?

Oracle has been litigating against third-party support providers, including Rimini Street and TomorrowNow/SAP, for years. But today, one of its own partners continues to sell maintenance and support services. Customers are asking: Will Oracle try to litigate away all lower-cost support options, or just some?

1 2 3 Page 2
Page 2 of 3

Estimates of the overall market for third-party maintenance and support vary widely: from hundreds of millions annually to $20 billion (that's from a 2009 Cowen and Co. research report). Analysts and industry watchers all say that it's a market that's growing. Rimini Street's 2009 revenues, for example, increased 270 percent year over year and the company has expanded its operations outside the United States.

Is There a Problem Here?

Like most other high-tech conglomerates, Oracle maintains close ties to a range of firms in its partner channel. Oracle's is mammoth: A 21,000-company-strong partner system that is stocked with system integrators, resellers, independent software vendors and consultants who help companies install and use the vast array of Oracle software products.

But Oracle does not extend licensing or partnership agreements that allow its partners to sell support and maintenance for its PeopleSoft, JD Edwards or Siebel products.

One partner in particular, however, offers an intriguing case study: CedarCrestone, an Alpharetta, Ga.-based consulting, technology and managed services firm, claims to be the "largest independent provider of managed services for PeopleSoft" products. It is an Oracle Platinum Partner, no less. The Oracle association is, in fact, a key part of CedarCrestone's selling point and painted all over its website.

"As a Platinum Partner of Oracle, CedarCrestone has extensive expertise in Oracle technology and Oracle applications with specific expertise in PeopleSoft Enterprise, Oracle E-Business Suite, and Fusion Middleware," according to CedarCrestone. Its website is virtual billboard of Oracle partner awards.

Though it's not made obvious on CedarCrestone's website, one of the company's offerings is maintenance and support for PeopleSoft applications. CedarCrestone recently christened a maintenance and support deal with the Tucson Unified School District (TUSD) in Arizona. The meeting minutes for TUSD's Dec. 8, 2009, "Governing Board Regular Meeting" note this:

Award of Request for Proposal (RFP) No. 10-63-12—PeopleSoft Maintenance and Support, awarded to CedarCrestone in a multi-term contract beginning December 18, 2009 with renewal options through June 30, 2012, in the estimated amount of $75,000.00

The deal was the result of an RFP process started in the fall. An excerpt from the 71-page CedarCrestone RFP to the TUSD, signed by CedarCrestone Business Development Manager/Public Sector Chris Myers and obtained by CIO.com, states:

Our Managed Services group offers clients alternative deployment solutions for PeopleSoft applications, including Hosting, Application Management, Upgrade Lab, Tax and Regulatory Support, and Remote Development.... With [CedarCrestone] Extended Tax and Regulatory Support, clients are kept in regulatory compliance without using a licensed PeopleSoft application update as a starting point.

Given the previous Oracle litigation with TomorrowNow and Rimini Street, this would appear to be an awkward business-partner situation—at best. At worst, a borderline litigious one. (CIO.com's calls and e-mails to Oracle and the Tucson Unified School District CTO office, requesting interviews for this article, were not returned. Kristin Kullmann, CedarCrestone's VP of marketing and strategic alliances, declined to comment.)

So why hasn't Oracle litigated or attempted to stop its trusted and valued partner, CedarCrestone, from offering a service that Oracle specifically doesn't sanction among its partners and is one that Oracle contends is based upon a business model that can be illegal?

A "Business Model" in Question

In fact, Oracle and CedarCrestone danced a bit of a "legal tango" in 2008, while SAP watched on with great interest. In October, Oracle served a subpoena to CedarCrestone, according to court documents connected to the Oracle v. SAP case. (SAP finally shut down TomorrowNow's operations at roughly the same time.)

A joint discovery document filed in November 2008, by SAP, states: "Apparently, certain former TomorrowNow customers have elected to get support from CedarCrestone rather than return to Oracle," states the document. "Oracle's subpoena includes, among other things, a request for production of documents reflecting CedarCrestone's business model." (At the time, Oracle also subpoenaed Spinnaker Management Group, which offers third-party support for Oracle-owned JD Edwards software.)

Court documents show that CedarCrestone itself confirmed that its employees download "patches" and "fixes" for Oracle software on behalf of Oracle's customers.

1 2 3 Page 2
Page 2 of 3
Get the best of CIO ... delivered. Sign up for our FREE email newsletters!