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SAP targets Oracle customers with program

SAP is extending an incentive program aimed at drawing PeopleSoft and JD Edwards customers away from Oracle.

SAP is extending a migration incentive program to PeopleSoft and JD Edwards customers in an attempt to draw them away from Oracle Corp. and onto the mySAP ERP software suite.

The switching costs are very high and for many Oracle shops it's too resource intensive to make the switch to SAP.
Paul Hamerman,
vice president of enterprise applicationsForrester Research Inc.

The program was the result of SAP's acquisition in January of TomorrowNow Inc., a third-party support provider for customers running PeopleSoft and J.D. Edwards (JDE) software.

The consulting services and discounts were first introduced as the "Safe Passage Program" by SAP and offered to joint customers running SAP and PeopleSoft or JDE software. The extension now opens the program to Oracle customers running PeopleSoft or JDE software.

Under the program, SAP is offering a 75% credit toward mySAP ERP software that is built on the NetWeaver integration platform. SAP would also charge customers a maintenance fee of 17% of the original purchase price of their PeopleSoft and JDE software licenses.

SAP said its new subsidiary, TomorrowNow Inc., is also launching an intensive customer recruitment campaign and reducing the cost of maintenance services. A marketing campaign has been launched with over 70,000 direct mail solicitations to executive and IT management personnel, according to SAP.

SAP has been deflecting an attack from Redwood Shores, Calif.-based Oracle that began with Oracle's successful acquisition of PeopleSoft in January.

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Oracle Corp. is developing a "super set" of applications, combining features from the PeopleSoft and JDE software and its CEO, Larry Ellison has been vocal about his intentions to take market share away from SAP. Oracle said it has thousands of developers building the new application suite, called Project Fusion, aimed at taking market share from No. 1 ranked SAP.

Dartmouth-Hitchcock Medical Center in Lebannon, N.H., a PeopleSoft customer preparing to make the move to PeopleSoft 8.8, isn't ready to move to SAP but executives there are delighted by the fact that SAP and Oracle are fighting it out for their business. Lower maintenance fees are attractive but being in the middle of an upgrade makes it too difficult, said William Grimes, manager of MMIS.

"Any time there's that level of competition the potential for the end customer is great," Grimes said. "We just have too much invested in PeopleSoft at this point to make a switch."

The price of migrating to SAP will be too high for most Oracle customers running PeopleSoft or JDE software, said Paul Hamerman, vice president of enterprise applications at Cambridge, Mass.-based Forrester Research Inc. But SAP's program could increases the bargaining power for companies negotiating new licenses with Oracle, Hamerman said.

"For many Oracle shops it's too resource intensive to make the switch to SAP," Hamerman said. "Oracle has been quite clear that they will continue to support and enhance these products for a long period of time, so a vast majority will stay with Oracle."

Oracle and SAP recently clashed in a bidding war for retail software vendor Retek Inc., resulting in Oracle winning that round with a $631.4 million acquisition of the xxx based company. However, analysts said SAP was successful in driving up the cost of Retek forcing Oracle to pay a premium to add retail functionality to its E-Business Suite.

Barney Beal, News Editor at, contributed to this report.

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