What would SAP have done if the shoe had been on the other foot? Would CEO Henning Kagermann have called Oracle Chief Larry Ellison and simply asked him to stop illegally downloading SAP software?
It is an interesting question to ponder as we watch the maneuvering under way in Oracle's lawsuit against SAP over the service and support document downloads by TomorrowNow, an SAP subsidiary. After an internal investigation, SAP admitted in June that TomorrowNow, which offers service and support for Oracle software, did in fact execute "some" inappropriate downloads.
At the time of SAP's admission, Kagermann expressed frustration that Oracle officials hadn't called him directly when they discovered the problem and instead resorted to what has turned out to be an embarrassing lawsuit against the applications market leader.
Now, Oracle is asking the U.S. District Court in San Francisco for a trial date in 2009 so that the company can determine the extent of the illegal downloading activity and the possible damages done to Oracle. SAP, not surprisingly, wants a fast resolution of the dispute and has called for the appointment of a mediator.
Oracle apparently doesn't have much faith in the results of SAP's internal investigation, which led to the dismissal of a number of employees, the suspension of one manager, and the appointment of a new executive to oversee TomorrowNow. One might also speculate that Oracle believes it will derive a competitive advantage from a long legal process.
Only time will tell the outcome of what may be the veiled start of a negotiation. But what is clear now is that both SAP and Oracle have made some faulty judgments along the way.
First, there has long been a question of just how well — and how seriously — SAP has seen the competitive threat posed by Oracle. Kagermann's frustration that Oracle didn't just call about the downloads may expose an underestimation of that threat.
Second, if Oracle thinks it stands to gain a competitive advantage from a long and bitter lawsuit, it is sorely mistaken. It is highly unlikely that corporate IT buyers will give any substantial weight to the lawsuit in their enterprise software buying decisions. Oracle is also risking the perception that its request for a 2009 trial is nothing more than a fishing expedition designed to disrupt SAP's business.
One of the key reasons that corporate buyers won't pay much attention to a long, drawn-out fight is SAP's transparency over the issue. The company has been up front about the downloads, acted quickly to determine the scope of the problem, and then took steps to punish perpetrators and establish greater oversight.
Where SAP missed an opportunity was in how it set up its investigation. Instead of conducting it internally, the company should have appointed an outside board or group to find out what went wrong and to propose remedies. This would have helped to undercut Oracle's current claim that it needs another 18 months to determine the extent of the damage.
In the final analysis, this Oracle/SAP dispute may reveal more about the rules of conduct in the increasingly competitive enterprise applications market than the actions of any errant individuals. Frankly, it's not a pretty sight. One might hope if not for chivalry in this market, at least for a measure of diplomacy.
What's your take on how SAP and Oracle have handled this dispute? Write to me at Dbrousell@thomaspublishing.com.