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SAP Shutting Controversial TomorrowNow Unit

July 22, 2008
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SAP is shutting down TomorrowNow, its software support business that is at the heart of a lawsuit with rival Oracle.

The Germany-based software giant said in an announcement Monday, July 21, that it was working with TomorrowNow’s 225-plus customers to help them find alternative software support options, including the possibility of returning to support from Oracle for customers on PeopleSoft, JD Edwards or Siebel applications.

It is unclear what effect SAP’s decision to close TomorrowNow may have on the litigation, in which Oracle accused TomorrowNow of stealing support materials.

“It’s impossible to predict” whether the move will lead to a settlement of the suit, SAP spokeswoman Lisa Poulson said. “SAP is very interested in a settlement and is working toward that.”

Oracle declined to comment on the decision to close TomorrowNow or its effect on a possible settlement.

SAP bought TomorrowNow in 2005. TomorrowNow’s business model was to offer low-cost, third-party application support, meaning it handles such issues as bug fixes for customers. There are a number of firms offering such independent software maintenance services, including Rimini Street.

Vinnie Mirchandani, founder of technology advisory firm Deal Architect, argues that the death of TomorrowNow does not spell the end of third-party software support arrangements.

“One price does not fit all in any market category, but software vendors keep ignoring that truism for maintenance,” Mirchandani wrote in a blog posting Monday. “Third party service like that offered by Rimini is attractive to mature customers who have little interest in future releases and want to pay less for current ones.”

Months ago, SAP said it was exploring the possibility of selling TomorrowNow.

Poulson said there was some potential buyer interest in TomorrowNow, but winding down operations was in the interest of the unit’s customers.

SAP said it intends to “conclude the wind-down process” before the end of October.

In March 2007, Oracle sued SAP, alleging “corporate theft on a grand scale.” SAP responded that TomorrowNow was authorized to download materials from Oracle’s Web site on behalf of TomorrowNow customers, but acknowledged “some inappropriate downloads.”

In November, SAP said several senior managers of TomorrowNow, including the unit’s CEO, had resigned.

The lawsuit between the firms intensified earlier this year, with Oracle accusing its archrival of stealing copies of Oracle’s actual software applications.

—Ed Frauenheim

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