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SAP's chief looks to new day after TomorrowNow

SAP's Henning Kagermann discusses his company's disclosure that its third-party support and maintenance subsidiary made illicit downloads of Oracle software.

For Henning Kagermann, the first six months of the year have been a challenge.

Kagermann, chief executive of enterprise software applications giant SAP, saw his company distracted earlier this year with speculation over whether he would seek another term as CEO, followed by the surprise announcement that Shai Agassi, once considered a future heir apparent for the CEO post, would resign.

And although Kagermann and SAP have since put together a new management structure and Kagermann's term has been extended, another distraction has emerged.

Oracle in March filed a lawsuit against SAP and its third-party support and maintenance subsidiary TomorrowNow, alleging the companies profited from making illicit downloads of its proprietary software.

SAP late Monday acknowledged TomorrowNow engaged in several instances of "inappropriate" downloads of Oracle's software.

Kagermann spoke with CNET News.com this week about the TomorrowNow-Oracle debacle and whether tomorrow holds any promise for a brighter day.

Q: If you take a 10,000-foot view, how significant is this issue of "inappropriate" downloads to SAP's reputation?
Kagermann: If I look at the size of TomorrowNow and our entire operation...I feel that this is not an unusual thing. We have high standards, so we will immediately react and behave accordingly.

I don't think in the history of SAP, that this is too exceptional of an incident. I don't like it, that is clear, and I am disappointed that it happened, but we will manage it.

After SAP finishes addressing Oracle's allegations, do you plan to go beyond these "inappropriate downloads" to see if other similar incidents exist beyond what was cited in Oracle's lawsuit? For example, downloads TomorrowNow did of PeopleSoft in 2003 or 2004, before it was acquired by Oracle in early January 2005?
Kagermann: Our intent is to look at the downloads that TomorrowNow did once they became an SAP subsidiary (in mid-January 2005). That is what we are responsible for, no.

If you find that the download problem with TomorrowNow is far more extensive than you had initially envisioned, would you shut down TomorrowNow and start fresh?
Kagermann: Now, we are really speculating and we have no evidence to assume this. I don't really want to speculate about this. What we will do is we will go through these examinations as long as it takes, and do whatever it takes, that TomorrowNow, let's say, is doing their support appropriately. We will continue to support our clients, that is what we will do.

Will you continue to supply your customers with your PeopleSoft Daylight Savings Time materials, even though SAP admits it's "substantially similar and in some instances identical" to Oracle's DST offering?
Kagermann: The Daylight Savings Time solution you refer to is not software code. It's generally available (text) information on how to adjust IT systems to daylight savings time. That's very important in my view. Therefore, in our response, we denied that TomorrowNow profited from that.

Because you deny that. Will you continue to use the materials?
Kagermann: TomorrowNow has to keep them, because of the litigation. We will not use it, but we have to keep them because we cannot destroy the material.

With the publicity surrounding this lawsuit, do you find it's more difficult to attract new customers, versus the effort to retain existing ones?
Kagermann: I would agree attracting new customers is more difficult than it was before we were in this discussion. Retaining existing customers, I would guess, is not a matter of concern. We will fulfill our obligations. If some of these customers look to another third-party provider, that is fine. I am talking about TomorrowNow customers, not SAP customers.

If you ask me about the impact on SAP, I don't see an impact. If there is a certain impact to TomorrowNow, please have in mind that the TomorrowNow business is a very, very small fraction of our entire business.

Are TomorrowNow's existing customers asking about this situation? How many inquires have come in?
A few customers have asked TomorrowNow, but I would not say that I am aware about it in detail.