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Business Objects Settles Lawsuits With Dissident Solution Provider

Stacy Cowley

"It's a great product and it's doing great things for people," said Michael Ward, founder and principal of Creative TechnologyTraining Solutions in Shelby Township, Mich. "But they're hurting partners, and that hurts their customers."

Ward filed a lawsuit against Business Objects early last year in Michigan's Oakland County Circuit Court, seeking payment for $330,000 in product sales commissions that CTTS says it was owed but never paid. Business Objects responded with a countersuit charging CTTS with licensing breaches and trademark infringements.

Both lawsuits have been dropped as part of a settlement finalized last week, which gave Ward financial compensation he deemed reasonable, along with other concessions.

"I didn't get everything, in terms of financials, that I should have been entitled to, but no one does in a settlement," Ward said. He declined to disclose the amount Business Objects agreed to pay.

Business Objects did not respond in time for publication to a request for comment on the litigation with CTTS.

In addition to financial compensation, Ward extracted a concession he deemed equally important: An agreement that Business Objects won't take action against him for his training business. Like a number of other independent training consultants, CTTS offers Business Objects training but is not one of the company's authorized education partners. That arrangement may put it in violation of Business Objects' license terms, which appear to block licensees from using Business Objects' software in commercial training classes without authorization.

Multiple independent trainers have reported receiving letters from Business Objects warning them to pay up for a "classroom license agreement" or discontinue their training offerings. One irate trainer, Ken Hamady, posted a copy of the letter on his Web site.

Ward's settlement with Business Objects allows him to continue offering his training services without paying for Business Objects' classroom license or using its official training materials, he said.

But the run-up to the settlement involved a fair bit of hardball, according to Ward. Business Objects abruptly discontinued his tech support late last year, claiming Ward was behind on paying invoices Ward says he never received. Getting service reinstated has been a drawn-out affair; with the settlement signed, Ward hopes to be back on support soon.

Business Objects' showdown with CTTS comes amid grumbling from some partners about the company's encroachment on their turf. While Business Objects' net license fees rose from $516 million to $560 million between 2005 and 2006, the percentage of those fees that came from direct sales increased from 51 percent in 2005 to 54 percent last year. Meanwhile, Business Objects' professional services revenue grew to 196 million, a 31 percent increase over the prior year.

Under new leadership since late 2005, when John Schwarz replaced company co-founder Bernard Liautaud as CEO, Business Objects is fighting for a vanguard position in a rapidly shifting -- and consolidating -- market.

Enterprise application giants like Microsoft and Oracle (which recently snapped up Hyperion, a Business Objects rival) are gunning for a bigger share of the business intelligence market, while the industry's surviving pure-play vendors struggle to adapt to the software-as-a-service rise and to changing economics that require stronger midmarket sales. To better target the midmarket, Business Objects recently launched a new Crystal Decisions-branded line of lower-cost offerings, a move popular with VARs.

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