Oracle Paints SAP As An Imminent Threat

Oracle lawyers spent Wednesday trying to show the court that Oracle's archrival, SAP, is one lunge away from eating Oracle's lunch.

June 17, 2004

3 Min Read
Network Computing logo

Oracle lawyers spent Wednesday trying to show the court that Oracle's archrival, SAP, is one lunge away from eating Oracle's lunch. The PeopleSoft buyout is nothing less than a desperate attempt to stay ahead of SAP, they said.

In questioning Christy Bass, Accenture's managing partner of global business solutions, Oracle attorney Gregory Lindstrom said SAP threatens Oracle today and eventually will challenge Microsoft's survival. SAP has partnered with Accenture to develop high-end financial software aimed at the top global banks. Bass says SAP intends to win as customers the top 20 banks in the U.S. over the next 24 months.

She testified that the industry will see a market convergence in the ERP-software market where new competitors, including Microsoft, will play. "It's just a matter of time that Microsoft will compete in SAP's space," Bass said. "They intend to be an ERP-like supplier to the mid-market." The implication, of course, is that Oracle must do all it can to stay competitive against new and old competitors, including acquiring PeopleSoft.

She testified that SAP has the best chance for success in this market due to its size, cash on hand, global presence, and tight alliance with Microsoft and IBM.

Another witness said Oracle would leverage its purchase of PeopleSoft to move PeopleSoft customers onto its database software.Curtis Wolfe, CIO for the state of North Dakota, testified that the significant PeopleSoft ERP software investment he made two years ago, which promised the state a 30- to 40-year life cycle, could go down the drain if a merger with Oracle occurs. Another blow to his investment, he testified, would be the cost associated with having to move his ERP software from the Microsoft SQL server database to Oracle's database.

"PeopleSoft and Oracle offer the same product. Logic tells you (Oracle) won't continue to support both, but that they'll emerge to the one that runs on the Oracle database, so those of us running software on a non-Oracle database will suffer," said Wolfe, who oversaw the state's request-for-proposal process, which started with six business-software vendors and ended in a bidding war between Oracle and PeopleSoft.

Wolfe further noted that because Oracle and PeopleSoft knew they were bidding against each other, the proposed price of their financial and higher-education software was significantly reduced. "If you look at the different price offerings from the first proposal and then subsequently, you saw the price decrease from $35 [million] to $40 million to $18 to $21 million. I don't believe you would have seen that price decreasing if they hadn't had competition."

Oracle denies that PeopleSoft customers will be left in the cold. Oracle attorney Daniel Wall told InformationWeek that Oracle's priority after a buyout would be to keep PeopleSoft customers happy. He said Oracle would waive any porting costs associated with moving customers' systems to Oracle platforms. "It's in our economic interest to make these people satisfied Oracle customers so they don't go to SAP," he said. Wall added that the software market is such an "extremely dynamic marketplace," that even though Microsoft owns 95% of the operating system market, it continues to innovate.

PeopleSoft will testify for the government later Wednesday afternoon.The Justice Department is expected to wrap up its case Friday or Monday, according to a spokeswoman. Microsoft execs are expected to testify Wednesday.

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights