2 blunders in SAP response to Oracle lawsuit

Here’s the timeline of events: 

• March 22, 2007: Oracle filed a lawsuit on SAP in the U.S. District Court in San Francisco, alleging that SAP, through it’s third-party application provider TomorrowNow, illegally accessed and downloaded thousands of customer support documents, software and other confidential information from Oracle’s online customer support system.
• July 2, after over 3 months of no-response, SAP declared they will present their defence on July 3.
• July 3, SAP CEO Henning Kagermann, in a dramtic U-turn, accepted that employees of TomorrowNow had indeed downloaded more info than they were entitled to!

Regardless of right or wrong doing (which could only be known after some investigation), SAP made two blunders in it’s response to the Oracle suit:

(1) When you are accused by your topmost competitior in the market of wrong-doing, it’s already a dangerous situation, because there is a strong chance it’s true, because your top competitor would not want to lose face for baseless charge. SAP needed to respond within a a week or two (it’s more than enough time for any kind of investigation when it involves IT systems). Plus SAP owed it to it’s business partners/investors/sales teams to prepare a fast response…not wait for 3 months like it did – 3 months of open wound on reputation is not good for any industry leader. It just creates a perception that you have actually something wrong, and are finding ways to juggle out of it – and in this case the perception turned out to be true. Such a law suit…anything over 2 weeks of time would have provided good ammo to Oracle’s teams…and it surely happened.

(2) Multiple messages and U-turns: this is the kind of error acceptable from a small business when the business plan is still evolving, and not at all expected from an experienced player like SAP. It just looks like the folks in head quarters at Walldorf, Germany have less control/transparency on what their units in the US are doing. In a way, this lawsuit may just be a symptom of a more serious operational issue in SAP’s US vs Europe vs Worldwide operations. As an executive, any U-turn in messaging is damaging for the ground level teams, who would have used your previous message to get some progress in their work. But SAP chose to do it, probably because they say a bigger danger in trying to defend the case, with facts going against them. So Blunder 1 led to blunder 2.

You could be facing a similar situation at your own business. While most execs won’t have a clue, our members are equipped with some tools and answers. You can get started too – with a free copy of our Difficult Decisions Guide.

Here are the background articles:

http://www.eweek.com/article2/0,1895,2154584,00.asp

http://www.eweek.com/article2/0,1895,2154139,00.asp

http://www.eweek.com/article2/0,1895,2107280,00.asp