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SAP acquires PeopleSoft support provider

SAP is acquiring a third-party support provider of PeopleSoft and JD Edwards customers in an attempt to draw them away from Oracle Corp.

SAP is acquiring TomorrowNow Inc., a third-party support provider for customers running PeopleSoft and J.D. Edwards (JDE) software, and is offering an incentive program in an attempt to lure customers away from software rival Oracle Corp.

SAP's strategy is wherever they have any foothold, they want to take over an account and make it an exclusive user of SAP, including the NetWeaver stack.
Michael Dominy,
senior analystYankee Group

Terms of the deal were not disclosed.

The acquisition includes the introduction of what SAP calls a "safe passage program," an initiative that allows organizations to migrate to mySAP ERP business software, and the NetWeaver platform. Under the program, SAP would charge customers a maintenance fee of 17% of the original purchase price of their PeopleSoft and JDE software licenses.

News of the acquisition comes on the heels of an announcement from Oracle Corp., which revealed Tuesday that it would develop a "super set" of applications, combining features from PeopleSoft and JDE software. Oracle said it had thousands of developers building the new application suite, called Project Fusion, aimed at taking market share from No. 1 ranked SAP.

The battle for market dominance between the two software makers puts chief information officers and IT managers in a good position to get some attractive deals, said Michael Dominy, a senior analyst with Boston-based Yankee Group.

"SAP's strategy is wherever they have any foothold, they want to take over an account and make it an exclusive user of SAP, including the NetWeaver stack," Dominy said. "Oracle is moving aggressively to keep a firm grip on their newly acquired accounts, so I think Oracle will at least match or try to beat anything that SAP offers."

SAP said Wednesday it is offering maintenance and software support for PeopleSoft and JDE software users through Bryan, Texas-based TomorrowNow and will initially target companies that are already joint SAP customers. The hope is that SAP will eventually lure companies to plan their maintenance and software migration strategies to a complete SAP platform, said SAP spokesman Bill Wohl.

"We're offering a complete software support and maintenance package, integration and a clear road map to future migration, and we think it's a compelling message," Wohl said.

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Addressing thousands of customers at an event at Oracle's Redwood Shores, Calif.-headquarters, Oracle CEO Larry Ellison and other top Oracle executives assured PeopleSoft and JDE software users that Oracle would support and develop their software  over the next decade. Ellison also said  Project Fusion will combine PeopleSoft and JDE features and the Oracle E-Business Suite.

Clearly, Oracle's acquisition of PeopleSoft has SAP on the defensive, because the combined companies are a more powerful competitor in the marketplace, Dominy said.

"I think that SAP is more concerned than they are communicating outwardly and they should be," Dominy said. "Oracle's integration technologies are a proven product in the marketplace, while SAP's NetWeaver is not in any way as mature."

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