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April 4, 2005

SAP: luring Oracle customers onto its side

SAP has opened up a new front in its war with Oracle with the announcement that it is extending its Safe Passage program to all PeopleSoft and JD Edwards users. SAP is thereby attempting to lure customers away from Oracle and onto its new flagship platform mySAP ERP.

By CBR Staff Writer

SAP is to extend its Safe Passage program.

In January 2005 SAP acquired third party service provider TomorrowNow, which provided maintenance and support for PeopleSoft and JD Edwards applications, and launched the Safe Passage program. This offered the 2,000 or so SAP customers who also ran PeopleSoft and JD Edwards software, maintenance and software support for their existing implementations while they moved over to SAP’s architecture and applications. Instead of ostensibly restricting the offer to joint customers, SAP has come clean and made the offer to all PeopleSoft and JD Edwards users.

Organizations taking up the option will receive a 75% credit towards mySAP ERP and pay the standard SAP maintenance fee of 17% on the purchase price of their PeopleSoft or JD Edwards applications.

Just how much SAP thinks it will gain from the program is uncertain as it has always declined to quantify how many customers or how much value it expects to gets from the program. In reality a wholesale shift from their existing base to SAP architecture is unlikely for most organizations. However, with Oracle’s declaration of Project Fusion, customers know there are major changes coming in the mid to long term so a SAP option could be a handy back-up. It will also serve to annoy Oracle of course.

Another potential consequence is that customers could use the SAP offer as leverage during future license and maintenance negotiations with Oracle, so even if SAP does not gain customers, the program could end up costing Oracle financially. Making Oracle pay may well be emerging as an under-the-wire strategy from SAP, as this offer follows the Retek battle in which Oracle had to bid up to gain the assets and customer base of the retail specialist. Indeed some analysts have suggested it paid too much in the end.

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