SAP Counterpunches Oracle With Trade-In Program

Initially available in the United States, SAP's Safe Passage For 2005 program gives PeopleSoft customers 75 percent trade-in credit based on their original licensing costs and includes maintenance and support services, mySAP ERP and SAP NetWeaver, which already contains connectors between SAP and PeopleSoft and J.D. Edwards applications. SAP will charge 17 percent maintenance fees on the new mySAP ERP license--fees that SAP America CEO and President Bill McDermott described as among the lowest in the industry. During Oracle's customer conference Tuesday, CEO Larry Ellison said Oracle charges 22 percent in maintenance fees.

Also in Wednesday's press announcement, SAP said it acquired TomorrowNow, a 50-person company that provides enterprise maintenance and support to PeopleSoft customers. TomorrowNow will serve as a "vehicle" for delivering the Germany-based software giant's support and maintenance services, according to Shai Agassi, a member of SAP's executive board.

During the teleconference, McDermott and Agassi made it a point to counter Oracle's product road map and figures that placed the Redwood Shores, Calif., company as the U.S. market-share leader.

"We captured 22 points of market share in North America in the last 18 months. The data reported yesterday were from 2003. Our partners are interested in the Safe Passage program, and we will have strategies for their market categories," McDermott said.

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"Our competition has made a promise to build from scratch new tools, a new platform and a new set of applications built in Java, from a team that never built in Java before," added Agassi. "We think a 2008 delivery date is highly optimistic [for Oracle's Project Fusion development effort]. SAP is delivering a platform that's the only one to Java, Abap [SAP's programming language] and [Microsoft] .Net."

Because SAP's program provides an upgrade to mySAP ERP, it bypasses SAP's reseller channel, which sells SAP BusinessOne or mySAP All-in-One. What's more, SAP hopes to capitalize on fears that Oracle executives took great pains to assuage. During Tuesday's event, Oracle promised to deliver the next versions of PeopleSoft and J.D. Edwards applications as well as "support, enhance and improve" those applications until 2013. Ellison also vowed to simultaneously develop a new superset of all three product lines from Oracle, PeopleSoft and J.D. Edwards, which it will begin to deliver in 2007 and complete in 2008. SAP's program is aimed at giving those PeopleSoft customers a financial incentive to migrate to its top-end suite.

"We believe there's more value in our 'safe passage,' with applications that already exist, than in parking and waiting for innovation to come knocking at your door," Agassi said.