SAP Shuts Down TomorrowNow Support Biz

July 28, 2008 Timothy Prickett Morgan

After a protracted, painful, and ultimately successful bid to acquire rival PeopleSoft by Oracle that resulted in the contentious deal being done in January 2005, Oracle’s key enterprise application software rival, SAP, made a wiseguy move–and what looked like a clever move– only a few weeks later in acquiring TomorrowNow, a company that provided support to the application suites under control of the greatly expanded Oracle. But the grins at SAP all turned to chagrins in March 2007 when TomorrowNow and SAP were slapped with lawsuits for illegally downloading Oracle’s support materials.

Last summer, SAP’s chief executive officer, Henning Kagermann, admitted that TomorrowNow’s employees had improperly downloaded and used Oracle’s support materials, and appointed Mark White, the chief operating officer and the former chief financial officer of its SAP Americas division, as the executive chairman of the TomorrowNow unit to clean up the mess. Last week, in a terse statement, White announced that SAP was shutting down the TomorrowNow business. By November, Andrew Nelson, TomorrowNow’s chief executive officer, and other members of the senior management staff were shown the door by SAP.

Specifically, SAP said that after reviewing the situation, it has decided to wind down the TomorrowNow unit and is working with the 225 customers of the unit to help them move back to Oracle support for their PeopleSoft, Siebel, and JD Edwards software suites or to “smoothly transition to new support options,” as the statement put it when it was released on July 21.

“Our goal is to assist our customers in transitioning to a new support provider, including Oracle, without a disruption to their support during the wind-down process,” explained White. He did not elaborate on what other support options SAP was helping its customers with.

SAP said that it will conclude the winding down of TomorrowNow before October 31, 2008.

At the time of the TomorrowNow acquisition in February 2005, the unit had only 100 customers, so this was a pretty good business for SAP to dive into, in theory. Had it not been for the “inappropriate” use of Oracle materials, as Kagermann so delicately put it last July, TomorrowNow might have 500 customers paying for Oracle support.

The lawsuit launched by Oracle in March 2007 against SAP and TomorrowNow is still underway in the U.S. District Court for the Northern District of California in San Francisco. Oracle and SAP have not come to terms on a settlement, or they would have announced that last week, so the lawsuit is proceeding at its snail’s pace. Even though Oracle and SAP Americas are both Delaware corporations, Oracle chose California as the venue for the lawsuit because of strong state laws against computer fraud.

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