SAP plans to close its TomorrowNow software maintenance subsidiary by Oct. 31, having failed to find a buyer for the company. It will help TomorrowNow's 225 customers to find new support providers before the company closes its doors, it announced Monday.
TomorrowNow built a business selling third-party support for PeopleSoft and JD Edwards applications at around half the price charged by the original software vendors, later adding support for Siebel and Baan software to its range.
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SAP bought TomorrowNow in February 2005: the company offered a convenient way for SAP to get closer to customers of its arch-rival Oracle, which had acquired PeopleSoft and JD Edwards in 2004, and later snapped up Siebel too.
However, in March 2007 Oracle filed suit against TomorrowNow and SAP, alleging that they had gotten a little too close. Oracle charged that TomorrowNow employees had illegally downloaded support materials for PeopleSoft and JD Edwards products from an Oracle Web site. SAP has denied gaining access to Oracle's intellectual property in this way.
Last November, SAP announced the resignation of TomorrowNow's management team, and said it was considering selling the company. Both moves were seen as ways for SAP to distance itself from the activities of its subsidiary and clean up its reputation.
In the end, arranging a sale proved too much of a challenge.
"We carefully considered many options for selling TomorrowNow, but it would have been an extremely complex transaction for both the seller and the buyer. We chose to wind down operations instead," said SAP spokesman Saswato Das.
Oracle is asking for damages likely to total US$1 billion or more in its suit, according to documents filed with the court last month. A trial is scheduled for February 2010.
Das would not comment on what effect the closure of TomorrowNow might have on the case. SAP expects the cost of winding down operations at TomorrowNow to be "immaterial," he said.
SAP aims to make the switch in support provider as smooth as possible for TomorrowNow's 225 customers, around 70 of whom are also direct customers of SAP, Das said.
"We are working with each customer individually to help them choose their best option, including choosing Oracle support. Some can go to other third-party support," he said.
Despite abandoning the market, SAP still sees a role for third-party software support.
"We believe the third-party maintenance market has its strongest appeal to customers using software that is considered end-of-life or obsolete, which does not apply to the bulk of SAP software," he added.