SAP AG has announced plans to close its TomorrowNow subsidiary later this year, after failing to find a buyer for the support operation.
TommorrowNow has been entangled in legal troubles since March 2007, when Oracle Corp. filed a lawsuit contending that the SAP unit had illegally downloaded support data from Oracle's Web site. Four months later, SAP admitted to making "inappropriate downloads" of content from Oracle databases, but the lawsuit was not dropped.
An SAP spokesman declined to say whether the lawsuit had prompted the company to shut down the unit, but he acknowledged that the legal issues were complicating efforts to find a buyer for it. SAP had disclosed last November that it was looking to sell TomorrowNow. The announcement coincided with the resignation of TomorrowNow's top executives.
"It would have been an extremely complex transaction for the seller and buyer because of [the lawsuit]. Therefore, we decided to close down operations," the spokesman said.
Attorneys representing Oracle in the lawsuit against SAP estimated last month that damages in the case could surpass $1 billion. A trial is scheduled to begin in February 2010.
SAP said it plans to help TomorrowNow's 225 customers find new support vendors before it formally closes the subsidiary on Oct. 31. The spokesman said SAP will recommend multiple options, "including choosing Oracle support."
TomorrowNow provides maintenance and support for Oracle's applications, including PeopleSoft, Siebel and J.D. Edwards products. SAP acquired the firm in 2005.
Ray Wang , an analyst at Forrester Research Inc. , said that while the Oracle lawsuit was likely a key reason for closing TomorrowNow, SAP also may have underestimated the "uncharted territory" of running a third-party support operation. "I think they thought the environment around TomorrowNow would be different," he said. "[It was] a lesson learned in terms of acquisition and business model."
Despite the problems, SAP could have made a success of TommorrowNow, given the demand for third-party support, Wang added.