TomorrowNow is the cause of Oracle’s corporate theft lawsuit against SAP. Its activities, alleged and admitted, have turned what looked like a sound business idea into a legal mess. There are potentially massive financial implications if any proof emerges that information TomorrowNow downloaded from the Oracle customer support site found its way into the mainstream SAP business.
SAP’s acquisition of TomorrowNow, and the resulting Safe Passage support program, have always been as much about the PR value of enticing customers away from Microsoft, as gaining new customers and supporting them during the migration from Oracle to SAP software. In terms of numbers, SAP said on its web site that 390 customers have signed up to Safe Passage. That is a signigicant amount of new custom but still small when compared with the total SAP customer base of about 39,000. Of course, the real value is in the future revenue potential.
Now it looks like the risk/reward balance has tipped the wrong way, leading to SAP’s announcement that it is considering several options for the future of the TomorrowNow business, including possible sale.
If it opts for a sale, who are the likely buyers? SAP’s experience highlights some of the dangers of a vendor providing support for a rival vendor’s applications. It shows how difficult it is to manage the close customer relationships and handle the IP of a direct competitor. It is also questionable whether there are any business applications vendors with the scale to take on and operate a third-party maintenance business. It would not fit with the finances or the selective vertical market strategies of players like Lawson, IFS, or QAD. Consolidators like CDC and Infor could make use a maintenance arm, but not a dedicated PeopleSoft/JD Edwards/Siebel operator.
The most likely candidates would be service providers such as IBM on one side, or players like Tata Consultancy Services on the other. A merger with an independent third-party maintenance provider would also make sense. Rimini Street is probably the largest third-party maintenance provider in the market, although it only has an estimated 50 customers, and operates in a similar area to TomorrowNow. Rimini Street founder and CEO Seth Ravin was one of the original founders of TomorrowNow, alongside outgoing TomorrowNow CEO Andrew Nelson.
As to the effect on the third-party maintenance market, the SAP experience indicates that it has to be just that: an independent third-party operation, not a subsidiary of a software provider. The market needs third-party providers for two reasons: to offer lower priced maintenance and to act as a check and balance on the prices and quality of service of vendors’ own maintenance operations.
