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SAP sues Siebel, alleges unfair hiring

Siebel Systems says SAP America filed a lawsuit against the software maker, alleging it unfairly hired 27 SAP employees in an attempt to "injure SAP's business."

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
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Kim Girard
2 min read
Siebel Systems said today that SAP America has filed a lawsuit against the software maker, alleging it unfairly hired 27 key SAP employees in an attempt to "injure SAP's business."

In its lawsuit filed in Pennsylvania state court, SAP alleges that Siebel Systems engaged in "predatory hiring practices directed at SAP…and unfair competition…designed to injure SAP's business and damage SAP's ability to compete with Siebel."

The suit comes at a time when competition has been escalating among No. 1 customer relationship management (CRM) software maker Siebel and its top two market threats: SAP and Oracle.

Ed Bierdeman, an analyst at Moors & Cabot Technology Research Group in San Francisco, said such lawsuits are filed frequently within the software industry, where companies are constantly stealing each other's talent.

"It's no big deal," said Bierdeman, who worked under Siebel chief Tom Siebel when he was an executive at Oracle. "I think it's more harassment than anything else."

Flying high
While Siebel's business is flying as the market for its software explodes, demand for SAP's software, which automates back-office financials, human resources, and manufacturing needs, has been sagging in recent quarters. Despite that fact, SAP remains the leading enterprise resource planning (ERP) software maker with $5 billion in 1998 revenues, more than twice that of its nearest ERP rival, Oracle.

To boost sales, SAP's new business strategy has included pulling together a line of CRM software that it can sell to its installed user base at 20,000 locations worldwide, as well as new customers.

However, many executives left SAP America, the U.S. division of Walldorf, Germany-based software behemoth SAP, for Siebel at a critical time, when the company was developing the new CRM software that automates business sales, customer service, and marketing needs. SAP plans to deliver the long-awaited product suite in the middle of next year.

The lawsuit includes a list of executives and managers who were hired away from SAP over the past year, including the president of SAP, SAP's former chief executive officer, the company's senior vice president of Latin American sales, the senior vice president for New Dimension products, the vice president for corporate communications, and a host of others from the sales, product, and technology units.

Paul Wahl, the former head of SAP America, joined Siebel in May. Wahl joined former colleague Jeremy Coote, who left his job as president of SAP America in March to work for Seibel.

The lawsuit, detailed in a press release issued by Siebel today, blames Siebel for injuring SAP's business, disrupting its operations, and hurting morale among employees.

"Siebel has engaged in a systematic effort to injure SAP's business and impede SAP's ability to compete with Siebel in the CRM marketspace," it states.

In a statement, Siebel Systems said "management believes that this lawsuit is without merit." The company had no further comment.

An SAP spokeswoman said the company had no further comment on the matter.