SAP resellers and integrators should beware Oracle suit

By Yuval Shavit, News Writer 28 Mar 2007 | SearchSystemsChannel.com

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With the surprise over the revelation that Oracle is suing SAP starting to fade, SAP resellers and systems integrators should be prudent without panicking, IT and legal experts said.

Oracle sued SAP over "corporate theft on a grand scale" last week, alleging that SAP – through subsidiary low-price Oracle-support provider TomorrowNow -- accessed Oracle's support pages using customers' login information.

From those sites, Oracle's complaint charges, TomorrowNow staffers downloaded masses of copyrighted materials, including maintenance software and documentation it used to offer "cut rate" support for Oracle products.,

It is still unclear how many other channel companies will be dragged into the suit. Oracle named 50 "Doe" defendants in the complaint, essentially creating a placeholder for other companies whose individual names it can fill as it learns who else may have been involved.

Those eventual defendants may include system integrators (SIs) and other SAP partners, if they used Oracle materials supplied by SAP, according to Tucker Griffith, partner at the Hartford, Conn.-based law firm McCormick, Paulding & Huber LLP.

Oracle sues SAP Read the Oracle's complaint against SAP Oracle and SAP struggle among enterprise resource management (ERP) products for SMBs Oracle support vs. third-party support

"If you're one of these systems integrators who's presented with stolen goods, it depends on what you're doing with it," he said. "If you had reason to suspect it was stolen, or suspect it came from illegal means and illegal sources, then you might have some culpability."

But even if Oracle can go after channel partners, it may choose not to attack the industry it relies on to get its products to users, according to Daniel Sholler, a vice president of research with Gartner Inc., a research firm in Stanford, Conn.

The suit is not likely to affect partners who work with smaller companies, such as those who implement SAP's small and midsized business (SMB) application Business One, said Nolan Breazeale, president of Exerve Inc., a Norcross, Ga.-based SI. Most of his clients come from Microsoft or Quickbooks platforms, so there is no potential threat from Oracle, he said.

"I think, ultimately, the issue that we're talking about is in a bigger pond than we play at," he said. Indeed, one of the companies that the Oracle complaint specifically mentions is Honeywell International Inc., a Fortune-100 company based in Morristown, N.J.

"The one thing that [Oracle has] said is that TomorrowNow employees downloaded support information from the Oracle Web site. Now, this is hardly rocket science. It's hardly an unusual event that a service provider that you hire would download some information" on a client's behalf, he said.

Oracle's complaint referred to the volume of downloads, along with a statement that the materials were downloaded faster than they could possibly be applied. The complaint also noted that some of the companies whose logins were used had support contracts with Oracle that were about to expire, suggesting the downloads would be used after the contract's end. But even this, Sholler said, is not unusual.

"If Honeywell was considering canceling maintenance and not hiring TomorrowNow, that's obviously what they would do" anyway, he said.

What the suit does mean is that SIs and consultants should be more careful in how they get that information, Sholler said.

Instead of downloading materials wholesale, third-party companies should use a client's account to download only the patches and documentation for that client, and be sure to make sure all billable hours correspond exactly to the companies they are linked to on paper.

Oracle and SAP declined to comment on the lawsuit, although SAP did issue a press release saying the company intends to "aggressively defend against the claims made by Oracle."

Griffith said partners whose contracts with SAP do not include an indemnification clause should negotiate to get one in case Oracle does end up suing them.

In a conversation with SearchITChannel.com before the lawsuit was filed, TomorrowNow's channel director Kirk Chan said the company has about a dozen regional-SI-level partners, a number it hopes to grow to more than 100 by the end of the year.

Many of those deals are brokered "under the radar" -- established without either the SI or the client notifying Oracle -- because some customers and SIs fear retribution from Oracle for undercutting its support revenue, said Bob Geib, TomorrowNow's vice president of sales.

Chan said some of those partners have called TomorrowNow concerning the suit, but he would not comment further.

But Steve Beard CEO of Summit Technology Inc., a consulting firm that refers some of its clients to TomorrowNow, said he is not worried. Summit Technology does not have any formal relationship with TomorrowNow, so there would be "no reason" for Oracle to sue it, he said.

Let us know what you think about the story; email: Yuval Shavit, News Writer.

Tags: Systems Channel Conflict,  Systems Service Provider News,  Platform Integration Services and Management,  VIEW ALL TAGS

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