SAP: Oracle-PeopleSoft tangle causing price suicide

Brawling between Oracle and PeopleSoft over Oracle's takeover attempt is placing suicidal pricing pressure on enterprise applications vendors, SAP executives have claimed at an earnings report conference - but local customers don't seem to be buying their line.

SAP's president of global field operations Leo Apotheker claims the vendor is facing "Some extraordinary things that people are willing to do on the other side" requiring "a certain amount of flexibility…not…normally [offered]".

Apotheker warns: "The campaign cannot deliver any short-term results because the cycles are still going to be the same. A customer who has to make an important decision…will take his time."

Unwilling to speculate on how long the alleged price war will last, Apotheker said, "If it's going to drag on for another year or so, and that's possible, then I do believe the pricing pressure will cease. There's an element of suicide here."

Locally, IT managers like retailer Best & Less' Roger Spraggon, said he's not yet noticed software vendors in Australia trying to leverage market uncertainty - but would look dimly on attempts to dissuade him from buying Oracle or PeopleSoft.

"Depending on how [suppliers will be] squeezed in a very tight market now, there's a real possibility of them trying to win more market share by looking to [Oracle and PeopleSoft's] customers," Spraggon said.

Spraggon says that despite this, customers would be reluctant to change to a competitor if they had longstanding relationships with Oracle, PeopleSoft or JD Edwards and do not want to be forced into the software strategy of a new vendor.

Buyers will also question the value of software investments if alternative vendors to Oracle or PeopleSoft cannot support mission-critical server systems - like IBM's iSeries, used by many mid-sized companies, Spraggon adds.

The Australian Oracle User Group refused to comment immediately on SAP's assertion that business software players would engage in aggressive pricing to grab market share now Oracle is in contention for honours as the enterprise apps bridesmaid - behind SAP."At this time we do not have a position on the Oracle and PeopleSoft subject, " vice president Martin Power said.

Meanwhile, rivals to Oracle, PeopleSoft and SAP are eyeing off the fracas in the ERP market, as an opportunity to snatch new customers. Intentia International has opened a JDE Conversion Lab to ease the defection of JDE customers to its Movex solution, while SAP launched an ad campaign aimed at Oracle, PeopleSoft and JDE customers in late June.

"Manufacturers and distributors need to work with software vendors that understand their business and share their same beliefs," said Intentia Asia-Pacific managing director David Hope.

"With the change of strategies of these vendors, the eye is off the mid-tier enterprise. We're keeping our focus and dedication to this market's success," Hope said.

SAP also views the ongoing turmoil as an opportunity for the company to reinforce its market position. Oracle's bid has helped SAP, SAP's CEO Henning Kagermann said.

With Lee Ser Wei.

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