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?

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In addition, Mirchandani adds that vendor maintenance fees are still "grossly overpriced," and that software maintenance's 95 percent gross margins are some of the biggest "empty calories" in IT spend. "One price does not fit all in any market category," he adds, "and software vendors keep ignoring that truism for maintenance." (For more on dealing with enterprise software vendors, see "How to Negotiate Better Maintenance Terms.")

AMR's Richardson notes that he still sees an ulterior benefit for Oracle in continuing the legal proceedings. "It may have scared some customers into continuing to pay Oracle the 22 percent annual maintenance," he notes. (See "SAP Raises Software Maintenance Fees for New Customers" for more on SAP's pricing strategies.)

As to whether Oracle will "call off the dogs" now that SAP is shutting down TomorrowNow, Richardson believes there's more to legal rancor to come. "While the judge has urged the two parties to go to arbitration, I think Oracle is relishing playing the Christie Brinkley role of the victim," he says. "SAP would like this to go away as soon as possible. Oracle wants it to last forever."

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Copyright © 2008 IDG Communications, Inc.

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