On Monday, SAP informed the IT world that it will “wind down” the operations of TomorrowNow, its subsidiary that provides third-party support for Oracle applications. The announcement ends a bold experiment on SAP’s part that blew up in its face. Unfortunately, the fallout from the explosion will put over 200 TomorrowNow customers — including many JD Edwards users — through the pain of having to find new support providers.
According to SAP sources, the software vendor plans to shutter TomorrowNow before October 31 of this year. Undoubtedly, the actual shutdown date will be partly determined by how long it takes the subsidiary’s 225 customers to return to Oracle support or choose another maintenance vendor. SAP spokespeople say that they are already assisting customers in transitioning to new providers. While Oracle will undoubtedly get the bulk of the accounts, it is likely that third-party support providers such as Rimini Street will also win significant numbers. Indeed, Rimini Street has posted a “Welcome TomorrowNow Customers” page on its web site that advertises its 50 percent savings off Oracle support prices.
Nice Try…No Cigar
Ever since Oracle filed suit against TomorrowNow in March 2007, the maintenance provider has been a growing embarrassment to SAP. When the German software giant bought the firm back in February 2005, it turned it into the tip of a marketing spear that it hurled at Oracle. That spear was “SAP Safe Passage”, a program that offered to assist JD Edwards and PeopleSoft customers in migrating to SAP applications. As part of Safe Passage, TomorrowNow’s job was to support migrating customers on their existing applications at 50 percent off Oracle prices until they moved to SAP.
For a brief period, Safe Passage seemed to be a smart bet on SAP’s part. The program catered to the fears of many customers that Oracle would railroad them into migrating to Fusion Applications. However, those fears have been steadily evaporating since Oracle announced its Applications Unlimited strategy in 2006. When Oracle sued TomorrowNow for massive thefts of its intellectual property, it gave customers another reason to avoid Safe Passage. By the end of 2007, word began circulating on the street that SAP was shopping TomorrowNow around to other firms. As last Monday’s announcement makes clear, the software vendor never found a buyer…or at least one whose terms SAP would consider.
Whither Third-Party Maintenance?
While SAP may be burying one third-party maintenance provider for Oracle applications, that does not spell the end of such services. In recent months, Rimini Street and other providers have been gaining growing numbers of Oracle and SAP customers. Moreover, given SAP’s recent decision to eventually get all of its customers paying 22 percent of their license costs for annual support (versus the current 17 percent), it is likely that more of the German vendor’s customers will take the third-party route.
Though SAP may be bearing the brunt of the bad press right now when it comes to maintenance, I believe that a general backlash against high support costs could materialize over the next year. Given the tough economic climate and the steep percentages of license cost that many vendors are charging, the time is ripe for such a movement. However, what do all of you think? Let us know by stating your case in the comment box below.
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