Topping Hollywood: Software's Frenzied Year: Page 2

Posted December 17, 2007
By

Larry Barrett


(Page 2 of 4)

Looking Back

The SAP-Oracle war rages on

The Hatfields and McCoys have nothing on these two. Put simply, both of these companies and their CEOs want to annihilate each other.

And things actually got worse in 2007.

Oracle's Ellison has made it abundantly clear he wants to overtake SAP as the world's largest business application vendor. The company has made almost four-dozen acquisitions during the past four years to build the end-to-end software platform of choice for enterprise customers.

Meanwhile, SAP keeps plugging away with its formidable installed base of more than 43,000 companies -- and the recurring service and maintenance contracts that come with them. It's also set an internal goal of achieving 100,000 customers by 2010.

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Yet with Oracle's mounting challenge, the company also proved this year it's open to more radical thinking. Even after having long mocked Oracle for its growth-at-any-cost strategy in favor of its own plan of organic growth, SAP took a page out of Ellison's book when it ponied up $6.7 billion in early October to acquire Business Objects.

It didn't take Oracle long to respond.

Less than a week after SAP broke from tradition with its Business Objects purchase, Ellison and company launched an unsolicited and (so far) unsuccessful $6.8 billion takeover bid for middleware provider BEA Systems.

For Ellison, the fact that BEA rejected Oracle's bid and remains independent isn't the point.

Industry watchers widely regarded the timing of the takeover bid -- rumored for more than two years -- as yet another dig at SAP. Not only did Oracle try to upstage SAP's big purchase, but it swooped in on BEA knowing it was highly unlikely, if not impossible, for the German firm to mount a counteroffer less than a week after committing $6.7 billion for Business Objects.

Along with the M&A activity and both companies' penchant for bragging about customer wins against each other, the animosity spilled over into the courtroom in March. Oracle filed a lawsuit alleging SAP, though its TomorrowNow subsidiary, had engaged in "corporate theft on a grand scale" by engaging "systematic, illegal access to -- and taking from -- Oracle's computerized customer support systems."

SAP's Kagermann conceded some TomorrowNow employees engaged in "inappropriate" downloads of Oracle support materials but said SAP did not access any of Oracle's intellectual property. Oracle, however, contends TomorrowNow employees downloaded thousands of mission-critical items from Oracle's database to service its customers.

In September, a U.S. District judge set a trial date of Feb. 9, 2009 for the two antagonists to resolve the matter in court, unless they reach a settlement in the interim.

After showing most of TomorrowNow's management team the door, SAP in November appeared to be ready to put the scandal behind it and announced it was considering a number of options, including the possible sale of the third-party services provider.

Continued on Page 3: What's the deal with SOA?


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