SAP-Oracle stoush exposes third-party support issues

Jaikumar Vijayan asks if there's an ulterior motive behind Oracle's lawsuits

SAP's admission of some liability in a lawsuit brought against it by Oracle over third-party support services is likely to speed resolution of the dispute between the two companies.

However, a second lawsuit that Oracle filed earlier this year against another third-party service provider, Rimini Street, could prove more meaningful for Oracle customers, analysts believe.

SAP recently agreed to assume liability for copyright theft claims made against it by Oracle.

The charges relate to a now defunct SAP subsidiary called TomorrowNow, which provided third-party support services to Oracle customers at about 50 percent of the cost that Oracle charged for it.

In its lawsuit, Oracle accused TomorrowNow of illegally downloading Oracle updates and maintenance tools in providing its third-party support.

In January, Oracle filed a somewhat similar lawsuit against Rimini Street. It is another third-party service provider that has managed to snag a growing number of Oracle and SAP customers, as its prices are about half that of the enterprise vendors.

Oracle has accused Rimini Street of "massive theft" of Oracle software and support materials.

The lawsuits are viewed by some as somewhat cynical attempts by Oracle to protect its lucrative software maintenance revenues against outsiders.

Oracle, like other major vendors of enterprise software, including SAP, derives a major portion of its revenues from application support and maintenance services. Customers who don't sign up for the services are precluded from receiving any further software updates or patches from the company.

SAP's admission of liability will likely resolve its dispute with Oracle more quickly, says Frank Scavo, managing partner of IT consulting firm Strativa.

But the real test of Oracle's ability to prevent other companies from providing maintenance and support services for its software is the Rimini lawsuit, Scavo says.

"SAP had indicated from the very beginning that there was some validity to Oracle's claim," he says. "So this is no great surprise."

The Rimini Street case is more interesting from a customer standpoint, because Oracle could have a harder time supporting its claims of copyright theft, he says.

"They have indicated, by countersuing Oracle, that they plan to fight Oracle vigorously and even are welcoming the opportunity to do so," he says.

The issue is important for customers who are tied to expensive maintenance contracts with their vendors, simply because they have nowhere else to go, says Paul Hamerman, an analyst with Forrester Research in Cambridge, Massachusetts.

Over the past few years, only a handful of companies have even attempted to deliver third-party services and often the ones that do are afraid to openly disclose that fact for fear of legal issues, he claims.

Many of the systems-integration companies that are in a position to deliver such services, often also don't want to do it for fear of losing out on their business partnership status with the software vendors, Hamerman says.

"The third-party software maintenance market is a viable market," he says.

"Customers are feeling a lot of pain over the ongoing costs of ownership of enterprise applications," Hamerman claims. There is a significant uptick in interest in third-party services, especially because many enterprise applications such as human resources and payroll are fairly stable and are rarely in need of frequent vendor updates or support, he says.

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Tags managementSAPTomorrowNowRimini StreetOracle

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