SAP's Admission: What Happens Now?

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By now, you've probably seen the news that SAP admits its TomorrowNow unit -- acquired in early 2005 -- wrongfully downloaded Oracle copyrighted materials.


SAP owned up to the downloads, though it denied SAP proper accessed the information, saying it all remained inside TomorrowNow's system. Every thing I've read on it has included the following prepared statement issued by SAP's chief executive Henning Kagerman:

"Even a single inappropriate download is unacceptable from my perspective. We regret very much that this occurred."

The defense is that TomorrowNow was accessing Oracle on behalf of its customers, but Oracle claims TomorrowNow went further, downloading PeopleSoft copyrighted software and other material. Oracle, of course, bought out PeopleSoft in 2005.


Perhaps not coincidentially, TomorrowNow was formed by several former PeopleSoft engineers, according to this AP report published by Wired.


Scientific American published a particularly useful analysis on SAP's admission. The consensus among various IT experts seems to be that while the announcement is significant, it's hardly the smoking gun Oracle will need to win its claims that SAP committed "corporate theft on a grand scale."


But of course, it's not exactly helpful, either. For one thing, the news caused SAP's stocks to fall 2.25 percent on Tuesday, according to Forbes. For another, Kagermann now has vowed to keep "all options open" to settle the case, according to the AP story -- a promise that contrasts with statements he made in April about having no plans to settle.


Though it's not a new piece, you might also want to read Eric Goldman's take on the original news of the lawsuit. Goldman is an assistant professor at the Santa Clara University School of Law and director of the school's High Tech Law Institute.


He explains that while this may not be a "big deal" in terms of each company's competitive position, it could be a big deal if it leads to criminal prosecution of SAP executives.


My question is: Will all this legal haggling matter to the companies using SAP or Oracle?


Of course, companies don't leave huge IT investments such as SAP on a whim. For one thing, it's just not possible, given the staff training considerations and how ingrained these systems are into everyday business.


But that doesn't mean they will inevitably turn a blind eye to ethical violations -- particularly when they're entrusting their own valuable resources to a company.


A March article at InfoWorld revealed that the ethical implications of Oracle's original claims would cause some business and government leaders to rethink their relationship with SAP. I wonder how the sources quoted in the article will feel after reading this week's news.


Apparently, it's enough of concern that SAP and Kagermann are making efforts to ensure users and companies that SAP is an ethical company, according to this piece.