Oracle Seeks to Woo SAP Users with License Exchange Deal

The OFF SAP (Oracle Fusion for SAP) program offers users up to 100 percent license credit if they switch from SAP to Oracle applications.

After a relatively quiet stretch from its applications division, Oracle Corp. is again baring its teeth. The company announced Tuesday evening a new program to lure SAP AG users over to its E-Business Suite.

Dubbed OFF SAP (Oracle Fusion for SAP) the program offers SAP R/3 users up to 100 percent license credit to switch from SAP to Oracle applications.

At the same time, Oracle Consulting announced a free workshop and migration plan for R/3 users, and Oracle Financing said it would offer the equivalent of a six-months-same-as-cash offer: a two-year payment plan for application license and support fees, with no interest and no payments for six months.

"Ninety-four percent of Oracle E-Business Suite customers are running on the latest applications—Release 11i," said Oracle co-president Charles Phillips in a statement.

"SAP, however, seems to be requiring customers to re-license their applications to upgrade to SAPs latest technology. Now they have a low-cost alternative to stop paying for upgrades and get OFF SAP."

At the same time SAP announced the (up to) 75 percent license credit to PeopleSoft and JDE users migrating from Oracle, it offered the same deal to its R/3 users looking to migrate to mySAP ERP.

SAP spokesman Bill Wohl disagrees with Oracles perception.

"If Oracle wants to be the market leader in this space, they really have to learn to be truthful with customers, because customers are smarter than that," said Wohl, in Newtown Square, Penn.

"Weve clearly laid out support, maintenance and upgrade strategies. [Oracle is] trying to point out that this process is somehow burdensome to SAP users, so much so that they will switch to Fusion, which doesnt exist."

This isnt the first time the two companies have exchanged words.

Oracle, the No. 2 applications provider in the world, is in a protracted battle with SAP to wangle its top spot in the applications market.

With its acquisition of PeopleSoft earlier this year, Oracle bumped up a notch closer.

/zimages/6/28571.gifClick here to read more about Oracle reshuffling its North American sales organization.

Oracle, however, is late to the game with a migration program.

Last January, SAP announced its Safe Passage customer migration program that provides PeopleSoft and J.D. Edwards users—then newly acquired by Oracle—a 75 percent credit toward a mySAP ERP implementation.

The offer, geared primarily toward those users who already have an SAP implementation somewhere in their environs, also provides an ongoing maintenance and support fee priced at 17 percent of the initial PeopleSoft or JDE implementation, annually.

To bolster its migration plan, SAP also acquired in January TomorrowNow Inc., a third-party maintenance provider for PeopleSoft applications.

What SAP did at the same time was it offered up to 75 percent license credit to PeopleSoft and JDE users was extend that same deal to its current R/3 user base looking to upgrade to mySAP ERP.

Both SAP and Oracle, of Redwood Shores, Calif., are facing similar battles when it comes to customer upgrades, at least in the coming years.

SAP, which has a large percentage of its user base still on R/3, is in the process of re-architecting its newer suite of applications to a service-oriented architecture.

Oracle, too, is in the midst of revamping its three suites—Oracle E-Business, PeopleSoft Enterprise and Enterprise One—into a single sort-of super suite.

Both new platforms—SAPs, based on its NetWeaver integration platform, and Oracles, on its Fusion technology stack—are due in the 2008 time frame, give or take a few months.

The question for both companies is how many users will actually migrate to the latest and greatest, and how many will take the opportunity to look around at what else is available.

For the short term, a study released this week by IT research firm AMR Research Inc. suggests ERP is heading for a slow down, with SAP clearly leading the pack.

The study showed that despite Oracle nearly doubling the size of its applications business with the acquisition of PeopleSoft, AMR expects SAP to finish 2005 with more than twice the revenue and market share of the combined Oracle and PeopleSoft.

While the ERP market grew 14 percent in 2004, AMR predicts that number will flatten to 3 percent growth in 2005.

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