As SAP loses customers, some former employees make gains

While Europe's largest software maker battles to regain its customers' trust after an embarrassing admission earlier this year, some of its key current and former employees may be starting a little revolution.

As the calendar turns the corner into December, how likely is it that SAP AG will be able to meet a stated goal of selling off its embattled TomorrowNow (TN) customer support division? Much of the outcome will hinge on how well TN is able to retain its existing customer base, according to industry analysts and some key competitors, including Rimini Street, a company generally regarded as TN's chief suitor.

Now the target of a lawsuit by Oracle Corp., SAP admitted last July that staff members at TomorrowNow -- a division providing customer support to both SAP and Oracle products -- improperly downloaded materials from Oracle's Web site by pretending to be an Oracle customer.


Then, in mid-November, SAP announced that, in light of the debacle, several of TN's top executives had resigned, including CEO and TN founder Andrew Nelson. An SAP spokesperson said at the time that selling off TomorrowNow was SAP's top choice among several options being weighed.

Throughout the TN ordeal, executives of Rimini Street -- a competing company founded by ex-TN executive Seth Ravin -- have been widely quoted in the media as interested in buying the SAP unit. Now, some three weeks later, with TN still on the shopping block, does Rimini's interest continue?

"The answer is 'yes but,'" said Dave Rowe, Rimini Street's vice president of marketing and alliances, in an interview with BetaNews this week. "We're still interested. But we have to be careful about the value of what we'd be obtaining."

Rowe suggested that, in Rimini's assessment, TN's value as an acquired property might become undermined if enough numbers TN customers defect to other means of supporting their software.

Rimini Street, of course, represents one of these alternatives. So, too, do other specialized third-party providers such as netCustomer, Versytec, and Conexus Partners. Like Rimini, these providers are focusing on users who opted to stick with software from vendors like PeopleSoft, JD Edwards, and Siebel, after those vendors were acquired by and folded into Oracle.

"We've received lots of inquiries. Over 50 percent of the potential customers in our pipeline are currently customers of TomorrowNow," Punita Pandey, netCustomer's founder and CEO, told BetaNews.

Rowe also cited strong interest from disaffected TomorrowNow customers. Moreover, some TomorrowNow customers have already signed on with Rimini, according to Rowe. But he wouldn't say just how many.

"TomorrowNow's customers have been happy with the services from TomorrowNow," Rowe acknowledged. "They've just become uncomfortable with the provider, and with the background noise."

But there are other types of alternatives out there, too, including large systems integrators such as Accenture and IBM Global Services, which also operate customer support arms, Pandey noted. And then, there is Oracle itself.

Will any of TN's customers become so disenchanted with the notion of supporting legacy software through third-party providers that they'll make the jump into Oracle's arms? This scenario doesn't seem very probable, as some see it.

"Oracle would love for that happen. But most customers (who are working with third-party providers) either think that Oracle charges too much for support, or are upset with Oracle (for other reasons)," according to Pandey.

"Oracle is kind of a treadmill. Those who have figured out how to get off that treadmill really don't want to get back on it."

Pund-IT's King doesn't perceive any widespread defection of TN customers to other support providers, at this point. Yet for a services company such as TomorrowNow to thrive, staffing is what it's all about, according to the analyst.

"For TomorrowNow, the real value is in (employees') expertise," said King. On the other hand, "unethical behavior" can tend to devalue a company in the eyes of employees and customers as well as other onlookers, he indicated.

"This is kind of like the Republican Party after Watergate," he joked. "(But) the Republicans eventually recovered."

Meanwhile, a number of staffers have been migrating from TomorrowNow to Rimini Street, both before and after TomorrowNow's troubles with Oracle came to light.

Nelson founded TomorrowNow back in 1998 as a one-person consultancy, according to Rowe. Raven subsequently joined TomorrowNow to launch and head up a new services division. When SAP came into the picture to buy TomorrowNow, Ravin left TN, later starting Rimini Street.

Rowe denied any suggestions from the rumor mill that, at the time of the acquisition, SAP might have asked Ravin to leave. "Seth was free to stay (at TomorrowNow) or leave. I'm sure SAP would have preferred for him to stay. But Seth is an entrepreneur, and SAP is very, very much a corporation. SAP (even) came in to (to TomorrowNow) to measure the size of the cubicles," according to Rowe.

Rowe said that, even before Nelson's resignation from TN in November, Rimini Street had hired a number of former TN employees, mainly in the areas of engineering and regulatory software updates. He pointed in particular to Rimini's appointments of George Lester as a technology manager and Beth Lester for PeopleSoft support.

But for the most part, Rimini Street's staffing comes from outside of TN, according to Rowe. "I wouldn't even say that the majority has worked for TomorrowNow," he told BetaNews.

NetCustomer CEO Pandey criticized Rimini Street for being, in her words, "pretty much a 'me too' of TomorrowNow."

But Rowe maintained that Rimini Street provides a variety of services not available through TN, including support for "Oracle customizations," or Oracle applications that have been tweaked by customers.

"It's not like we're the same as TomorrowNow. We offer 'next generation' services they don't have," according to Rowe.

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