SAP Cuts Ties with Execs at Subsidiary

[Sunite]

SAP Cuts Ties with Execs at Subsidiary
By Michael Liedtke
November 20, 2007 9:48AM

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SAP Chief Executive Henning Kagermann has acknowledged that TomorrowNow made "inappropriate downloads" of Oracle's code, but has maintained that its rival "wasn't significantly harmed" by the breach. Oracle's allegations attracted the attention of the Justice Department, which launched an inquiry into the matter.

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   SAP
   Oracle
   Espionage
   Scandal

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   Battling allegations of corporate espionage, business software maker SAP AG cut its ties with the leaders of a subsidiary that infiltrated rival Oracle Corp.'s computers to fetch information about Oracle's products.

The shake-up disclosed Monday, including the resignation of TomorrowNow's chief executive and founder, Andrew Nelson, represents the latest fallout from a federal lawsuit that Redwood Shores-based Oracle filed eight months ago against TomorrowNow and Germany-based SAP.

SAP bought TomorrowNow for an undisclosed amount in early 2005 as a counterattack on Oracle, but the strategy appears to be unraveling.

The changes included the resignation of several managers in addition to Nelson. SAP gave no reason for the departures.

Besides overhauling TomorrowNow's management, SAP said it is exploring selling the Bryan, Texas-based subsidiary, which will now be run by one of SAP's top U.S. executives, Mark White, who was appointed TomorrowNow's executive chairman in July.

Oracle alleges TomorrowNow hacked into its computers to steal secret information about its software so SAP would have a better chance of luring customers from one of its biggest rivals.

SAP Chief Executive Henning Kagermann has acknowledged that TomorrowNow made "inappropriate downloads" of Oracle's computer coding, but has maintained that its rival "wasn't significantly harmed" by the breach.

The lawsuit is scheduled for a February 2009 trial in San Francisco. An Oracle spokeswoman declined to comment on how TomorrowNow's management upheaval or possible sale might affect the case.

Oracle's allegations attracted the attention of the U.S. Justice Department, which launched an inquiry into the matter. SAP has said it is cooperating with the Justice Department.

SAP snapped up TomorrowNow shortly before Oracle completed an $11.1 billion (EU7.57 billion) acquisition of PeopleSoft Inc. to expand its line of business applications software products that automate a wide range of administrative tasks.

Oracle has since completed dozens of smaller deals to narrow SAP's longtime lead in the business applications software market.

TomorrowNow specialized in supporting PeopleSoft products, giving SAP a potential weapon to undermine Oracle's expansion.


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