SAP Undercuts Oracle On Oracle Support

    May 12, 2006
    WebProNews Staff

A unit of German software giant SAP will offer technical assistance for Oracle’s Siebel products at about half the price Oracle charges for support

It’s an interesting strategy put forth by in advance of its Sapphire ’06 Orlando conference. The plan could be enough to give Oracle’s top man Larry Ellison an upset tummy, provided a traditional Japanese of miso soup, sugared eggs, and natto with rice doesn’t accomplish that for him.

SAP plans to slash prices on Siebel application support offered by its TomorrowNow subsidiary, said a report in the Wall Street Journal. Oracle acquired Siebel last year, and earns hundreds of thousands of dollars on high-margin support contracts for its software products.

When Sapphire ’06 kicks off next week, SAP should talk more about the decision to add reduced cost Siebel support to the options it offers for PeopleSoft and JD Edwards products. Oracle owns the latter two firms as well.

Oracle has put a brave face on the threat. An Oracle executive cited in the article dismissed the SAP challenge as one that would cater to an “extreme niche.” Oracle possesses more expertise on its products and better source code access.

The numbers could be hard to ignore for customers, though. Olin Corp saw its $200,000 PeopleSoft support contract drop to $100,000 to $125,000 when it switched to TomorrowNow.

The support initiative looks like another facet of SAP’s aspirations for greater growth. BusinessWeek noted how company co-founder Hasso Plattner wants the company’s market capitalization doubled, to over $110 billion, by the year 2010.

SAP will put about $380 million in incentives out there for managers and certain employees as part of “If you have outrageous goals, then probably you can achieve outrageous things,” he said in that report.

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David Utter is a staff writer for WebProNews covering technology and business.