FT.com / Companies / IT - SAP shakes up leadership at US unit

FT.com / Companies / IT - SAP shakes up leadership at US unit

SAP shakes up leadership at US unit
By Richard Waters in San Francisco

Published: November 20 2007 02:06 | Last updated: November 20 2007 02:06

The chief executive of TomorrowNow, a US unit of SAP at the centre of a corporate spying scandal that has ensnared the German software group in a high profile lawsuit, quit on Monday, the company said.

SAP also revealed it is looking at various options for the troubled unit, including selling it. The news late on Monday night marks the latest step in an unfolding saga that has represented an unwelcome setback for SAP in its most important market.

The scandal broke when arch-rival Oracle filed a lawsuit earlier this year accusing SAP of corporate espionage. It levelled the claims against TomorrowNow, a Texas-based company that had been acquired by SAP to sell software maintenance and support to former Oracle customers. That gave it a key role in SAP’s strategy of trying to win over Oracle customers, since the need for continuing support for older software is one of the main reasons companies are hesitant to switch between suppliers.

According to Oracle, TomorrowNow had used the sign-on details of several Oracle customers to access that company’s computers and allegedly remove information about its products.

The German company admitted in July that TomorrowNow had made “inappropriate downloads” from Oracle’s machines, though it also said that the information had been kept inside the subsidiary and that none of it had been viewed by executives in other parts of SAP.

SAP said on Monday that Andrew Nelson, chief executive of TomorrowNow, and “several members of his senior management team” had “chosen to resign”. It did not give details about the extent of the departures, or whether SAP had asked for the resignations.

When the scandal first broke, SAP sent one of its own executives, Mark White, to oversee the subsidiary as executive chairman. On Monday, it said that Mr White was working to “assure retention of key managers and support personnel” and make sure customer support was not interrupted.

The signs of upheaval at TomorrowNow appear to represent a victory for Oracle in what has turned into one of the most heated confrontations in the corporate technology market. The US and German software companies have been on a collision course over the past four years, since Oracle embarked on a series of acquisitions to challenge SAP in its core application software market. While confined to an arcane part of the corporate IT market, the bitterness of the rivalry has guaranteed it a prominent place in business press headlines, culminating in the barbs thrown over the corporate espionage suit.

“Our primary focus is TomorrowNow’s existing customers, who will be supported through this management transition,” Mr White was quoted as saying. “SAP is prepared to manage through these changes to ensure that TomorrowNow’s obligations to its current customers are met.”

Copyright The Financial Times Limited 2007