by Thomas Wailgum

Leo’s Letter to Larry: SAP ‘Olive Branch’ to Oracle Turns into a PR Nightmare

Nov 12, 2009
Enterprise Applications

An ill-conceived letter is causing a storm of unwanted attention for Leo Apotheker and SAP.

File this under high-tech PR nightmares: Oracle is facing protracted European antitrust review proceedings over its Sun Microsystems purchase. At issue: The future of the Java programming language and competition in the database market.

The European Commission, in the position of approving or blocking the deal, and Oracle continue to clash and exchange verbal jousts. Other vendors take sides, interested and invested parties opine passionately, and database gurus spread their doom-and-gloom or “no big deal” scenarios.

The difference between heroes and villains in the saga is sometimes unclear. For sure, though, Oracle and its intentions have been demonized more often than evangelized.

Enter SAP. Wait, what? Yes. Enter SAP into the fray. Uh oh.

In SAP’s own words: In light of the proposed Oracle Sun merger, we, like many others, have concerns about customer choice in the database market and the future open licensing of Java. We communicated our concerns to both Oracle and Sun at the working level as far back as the end of July 2009, recalled SAP officials, in a just released statement.

OK. That’s fine, SAP. You’ve got a right to express your opinion in letters to both vendors and regulatory agencies.

But wait. There’s more.

Since there was no response, our CEO Leo Apotheker took the initiative and wrote to both Oracle and Sun CEOs in the middle of September to voice our concerns again, offer a dialogue, and attempt to clarify the issues. We have not heard back from Oracle, but instead found Leo Apotheker’s letter leaked to the press last week.

That second, now-mysterious letter was at the center of a recent Wall Street Journal editorial piece, which questioned some apparent improprieties of the letter’s motives, noting the “multibillion-dollar industrial espionage lawsuit pending against SAP in the U.S.” by Oracle. (That’s the TomorrowNow legal saga that just won’t go away fast enough for SAP.)

According to the Journal editorial: “Mr. Apotheker does not exactly say that he can solve Oracle’s Commission problem. But if resolving SAP’s concerns would have no effect on the Commission’s inquiry, it’s hard to understand what the point would be of the two executives meeting about them.” SAP subsequently termed the Journal‘s editorial “misleading speculation.”

The relationship between Oracle and SAP can best be summed up like this: “It’s complicated.” Perhaps a diplomatic Apotheker was using the occasion to heal the discord between the two companies: SAP is a customer of Oracle’s, a more-than-just-a-little-curious observer of Oracle’s database dealings, as well as a nemesis and archrival in the Big ERP software market.

All of which makes SAP and Oracle: Frenemies? Maybe. But Pen Pals who regularly exchange M&A business strategies, industry gossip and other pleasantries? Not in a million years. (Can you imagine: “Soooooo, Larry, how’s the weather in Redwood Shores? Been sailing lately? Have fun at OpenWorld?”)

The first letter SAP sent to voice its concerns over the Oracle-Sun deal was to be expected. So noted, SAP. Gotcha. Thanks, and buh-bye.

But a second, more personalized letter, which, while it could have been created with the purest of intentions, could also leave the company fully exposed to unseemly ethical questions? That seems desperate, foolish and out of character for the German software giant.

In effect, Leo’s extension of an olive branch to Larry has turned into a situation that’s sinking in olive oil—a messy, sticky PR debacle for SAP that’s going to be difficult to wipe away.

I’ve been trying to come up with an analogous situation in the business world for SAP’s letter. The best I could do: “Hey Mr. Coke CEO, it’s Mr. Pepsi CEO….how’s it going? Heard you’ve got troubles with your new bottling-plant operations in the Purchase, N.Y., area. Maybe we can help. Care to chat about it?” (Purchase is where PepsiCo’s headquarters are located.) How does that sound to you?

Naturally SAP is sticking to its “concern for customers and competition” rationale for sending the letter. But do I actually have to remind SAP that it is not the European Commission for investigating antitrust and other regulatory issues? Noted the SAP statement, on how Leo’s Letter made it into the public realm: This is both telling and disappointing as it demonstrates that there is no real interest by Oracle to listen and explain how it wants to ensure the required level of customer choice in the database market as well as open access to Java.

Last time I checked, Oracle doesn’t have to explain themselves to you or get your approval to do anything. In typical fashion, Oracle has kept quiet on the entire le affaire de Leo’s letter. As with the TomorrowNow lawsuit, Oracle has staked out the high ground over SAP once again. And it prefers that view.

Who knows what SAP’s true intentions were? Well, SAP does, of course. But I’m pretty sure we’ll never know the real reason. Unless somebody, somewhere leaks another confidential letter.

Do you Tweet? Follow me on Twitter @twailgum. Follow everything from on Twitter @CIOonline.