SAP Buy Targets PeopleSoft Migration

With its acquisition of TomorrowNow, a third-party maintenance provider for PeopleSoft applications, SAP rolls out a plan that lets users maintain their current PeopleSoft and JDE application support while migrating to mySAP ERP.

Playing the next move in whats become an intense chess game for the software industry, SAP on Wednesday announced the acquisition of TomorrowNow and a new migration program for PeopleSoft application users.

The announcements serve as SAP AGs response to Oracle Corp., which launched a combined company Tuesday that includes the assets of PeopleSoft Inc. and J.D. Edwards & Co., another software company that PeopleSoft acquired in 2003.

After an intense, 18-month-long battle to acquire PeopleSoft, Oracle succeeded in its plan earlier this month, finally gaining control of PeopleSoft to become the worlds second largest applications provider, behind SAP.

With the acquisition of TomorrowNow Inc., a third-party maintenance provider for PeopleSoft applications, SAP now has a viable alternative to offer PeopleSoft and JDE customers besides eventually migrating to an Oracle-based application suite and infrastructure platform.

To help PeopleSoft and JDE customers decide, SAP on Wednesday announced its Safe Harbor migration program.

Aimed primarily at customers who already have an SAP implementation—for the most part either at corporate headquarters with a JDE manufacturing implementation, or using SAP financials with PeopleSoft human resources implementation—the program provides a discounted migration plan, allowing users to maintain their current PeopleSoft and JDE application support while migrating to mySAP ERP.

As part of the program, SAP is offering a 75 percent credit toward mySAP ERP (based on the cost of a users initial PeopleSoft or JDE implementation), the NetWeaver integration platform that provides adaptors for PeopleSoft and JDE, and ongoing maintenance and software support priced at 17 percent of the initial PeopleSoft or JDE implementation, annually.

To clear up any confusion over pricing, SAP executive Shai Agassi gave an example Wednesday during a media and analyst call of a company that initially spent $1 million on a PeopleSoft implementation.

Under the Safe Harbor program, the company would be given a $750,000 credit toward mySAP ERP, pay $250,000 additional for the application suite, and pay 17 percent of the total $1 million fee for annual maintenance.

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The support package, which would be administered by TomorrowNow as long as a PeopleSoft or JDE application is involved, includes bug fixes and patches, as well as regulatory and compliance updates for PeopleSofts current software. It does not include the next iterations of PeopleSofts suites, which Oracle committed to developing and delivering in 2005.

Oracle, of Redwood Shores, Calif., also committed to supporting PeopleSoft applications until 2013. SAP did not provide a hard-stop support date for those same applications under the Safe Harbor program, but said it would provide an equivalent level of support that is currently offered to its R/3 users who have enjoyed 25 years of ongoing maintenance.

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TomorrowNow, based in Pleasanton, Calif.—PeopleSofts former home base—boasts about 100 customers who have offloaded their PeopleSoft maintenance at a significant discount, including the likes of Lockheed Martin, Circuit City and Coors. While PeopleSoft charged about 20 percent for standard annual maintenance, TomorrowNow charged 10 percent for a similar service.

Under SAP and the Safe Harbor program, TomorrowNow will continue to offer maintenance and support at a 10 percent annual fee for users who want to park their systems—and put off the decision to stick with Oracle, swap sides to the SAP camp, or make alternative plans.

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