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Oracle swipes at SAP with rebate program

Oracle is launching its own rebate program aimed at SAP R/3 customers considering an upgrade to mySAP ERP.

Oracle Corp. launched a program Tuesday offering a full rebate to SAP software customers, countering a similar...

initiative by SAP.

None of these programs have been all that successful. The main issue here for all customers is that the switching costs are very high.
Paul Hamerman,
vice president of enterprise applicationsForrester Research Inc.

Called Off SAP, the program was launched to lure SAP R/3 customers who are currently deciding whether to upgrade to R/3 Enterprise or mySAP ERP software, the latest version of SAP.

Under the new program, which is also dubbed, "Oracle Fusion for SAP," Oracle will offer SAP R/3 customers up to a 100% license credit, to switch from SAP to Oracle applications. Project Fusion, which combines technologies from the PeopleSoft Inc., Retek Inc. and J.D. Edwards & Co. acquisitions, will not be formally rolled out until at least 2009, according to Oracle.

Oracle Financing will also offer a two-year payment plan for the application license and support fees, with no interest and no payments for six months, followed by six installments for qualified enterprises.

In a statement released Tuesday, Oracle president Charles Phillips said SAP appears to be relicensing its own customers as they choose to upgrade to mySAP ERP. Phillips pointed out that so far only about 6% of SAP customers are upgrading to the latest suite.

"Oracle has evolved [our] customers for nearly three decades across multiple generations of technology," Phillips said.

The Oracle announcement came on the same day that SAP highlighted luggage maker Samsonite Corp. as an enterprise that chose to migrate to its business suite through its rebate program.

Under SAP's rebate program, called Safe Passage, SAP would give PeopleSoft, J.D. Edwards and Retek customers a credit of up to 75% of their original software license fees against the licensing of software within the SAP software. SAP is also offering an on-site assessment to build a business case to migrate to SAP and an implementation road map to begin a migration project. It is also adding free project team training under the program.

Analysts don't expect a big impact from either rebate program.

Oracle's announcement was expected given that SAP has been touting its own program, said Paul Hamerman, vice president of enterprise applications at Cambridge, Mass.-based Forrester Research Inc. Customers are listening carefully, but many will chose the easier upgrade path with their respective vendor, Hamerman said.

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"None of these programs have been all that successful," Hamerman said. "The main issue here for all customers is that the switching costs are very high."

Hamerman said added costs associated with a reimplementation of an entire ERP system include the change in business processes, training users, data conversion and possible consulting fees. But customers may be able to use the programs as bargaining chips when negotiating a license with SAP or Oracle, Hamerman said.

SAP spokesman Bill Wohl said the software maker is educating its sales and staff to explain to customers the facts associated with the Oracle program. Wohl called the program "incredibly hollow," and "replete with mistruths and misinformation."

"Oracle wants to get SAP customers to switch to Project Fusion, but the resulting product doesn't even exist," Wohl said. "This is continued proof of Oracle asking its customers to take a substantial leap of faith."

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