Oracle vs. SAP: Stand By Your Vendor

Analysis: When the news surrounding the lawsuit filed by Oracle against SAP hit the wires I thought back on PeopleSoft, and the old Tammy Wynette song, “Stand By Your Man,” started playing over and over again in my head.

I’ve since gone on medication and the song has stopped, but I now recall a survey that was done years ago on Oracle, and the one stand out comment from a CIO, which was “I don’t know who [Oracle CEO] Larry Ellison’s enemy is, but I’m afraid it’s us.” There is no medication I can think of that will make that go away, but folks, there comes a time when you really may want to step back and take a look at what is going on here.

Oracle Wears the Black Hat

Even though it is Oracle complaining about the theft, it is my read that, from the perspective of the IT buyer, Oracle wears the black hat here.

The sequence of events, as I understand it, are that Oracle, which was facing increasing competitive pressure from PeopeSoft, used their superior resources to do a hostile takeover and shut down the company. This denied you, the buyer, choice. And by removing a competitor, it allowed Oracle to improve their own financial position. In effect it putting them at cross purposes to your best interests.

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A large number of you objected and to address that market opportunity SAP hired some of the ex-PeopleSoft folks to provide alternative support for their PeopleSoft stuff. At least one did this by going on to the (now Oracle owned) PeopleSoft support sites to get the information needed to keep the folks running who didn’t want to work with Oracle.

Now what these SAP employees did was clearly wrong but it was also just as clearly in the best interest of the IT organizations they were trying to support. And the entire thing never would have happened if Oracle had not done the hostile takeover in the first place.

This will be one of those things where a jury is likely to go south and side with the defendant if they understand what caused the behavior.

But, at some point, if you want choices in the market, you the buyer need to stand up and help protect your chosen vendor – or choose vendors who can better protect themselves.

Why You Should Stand Up For Your Vendor

One of the interesting aspects of this market, and one that I doubt is unique to it, is how seldom companies come to each other’s defense.

If you have a vendor who is in trouble, even if you like them a great deal, that trouble is more likely to result in your changing vendors rather than finding a way to help them. Given how costly it is to change vendors and how grateful they are when you do this (it can turn a marginal business relationship into a lifetime, “whatever you want,” friendship) I wonder why this is the case. I’ve concluded that it is all about risk.

But what is the risk of getting down to two or three choices in the market? The way it is going for a broad selection of enterprise products there will shortly be only three: Oracle, IBM, and Microsoft. While these folks can likely pound on each other for some time, Oracle is on a last-man-standing kind of strategy. And that suggests that even this number could still be reduced.

We complain about Microsoft a great deal, but stop and think what it would be like if Oracle reached monopoly status and they could literally charge whatever they wanted and do whatever they felt needed to be done to increase their bottom line?

If IBM was bad in that position, and Microsoft is a problem, Oracle would likely be much worse.

And remember how much fun Computer Associates was at its peak? I can recall the days when CIOs wouldn’t buy from companies they thought “might” get acquired by CA. Compared to the PeopleSoft thing CA wasn’t that bad.