January 19, 2005 11:40 AM PST
SAP buys PeopleSoft support firm
The move, announced Wednesday, is an attempt to lure customers in the wake of Oracle's recent acquisition of PeopleSoft.
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SAP described the buy as part of a plan to give customers a "safe passage away from the uncertainties" associated with Oracle's takeover.
About 4,000 of them use software from SAP, in addition to PeopleSoft programs, which makes the TomorrowNow buy such a clever move on SAP's part, analysts said. It gives the company, which is based in Germany but has a big U.S. following, a way to further insinuate itself into Oracle's newly acquired customer accounts. Oracle plans to pull the plug on PeopleSoft technical support in eight years, but with TomorrowNow, SAP can offer that support indefinitely.
"There's a lot of PeopleSoft customers who don't necessarily want to be Oracle customers," said Josh Greenbaum, an analyst at Enterprise Applications Consulting. "SAP's just extended a pretty interesting offer for those folks."
On Tuesday, Oracle CEO Larry Ellison outlined plans aimed at persuading PeopleSoft customers to switch to Oracle software, or at the very least, to use Oracle for their support. In particular, Ellison is hoping the new plan will help bring in SAP customers.
SAP's offering will include maintenance and support for PeopleSoft and J.D. Edwards products through TomorrowNow and will include the ability to connect the software with SAP's NetWeaver product.
SAP will initially target existing customers that are running both SAP and PeopleSoft or J.D. Edwards applications.
TomorrowNow, a Texas-based start-up that employs about 30 people, has signed up some big clients--including Lockheed Martin, Safeway, Coors Brewing, Circuit City and Petco--since setting up shop five years ago. Founded by two former PeopleSoft executives, the company promises to cut the maintenance and support bill for PeopleSoft's applications in half and give customers a reprieve from tiresome software upgrade cycles. TomorrowNow is able to offer cheap support because it's not investing million of dollars in research and development for future versions of the software; it focuses instead on simply keeping the software up and running for an annual fee.
Financial terms of the buy were not released.
CNET News.com's Alorie Gilbert contributed to this report.
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