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Jason Wood

@Nitin -- Your point vis-a-vis firms internalizing operations is an interesting one. Typically I think of the inverse of that same value proposition: which is to say firms look to externalize operations that they CAN get executed in a more efficient manner. Two sides of the same coin. Thanks for the comment.

@Mukund -- You are absolutely correct; SAP bought TomorrowNow as part of a multi-pronged attempt to lure away PeopleSoft customers during the ORCL/PSFT/JDEC merger soap opera. They had some success actually; but I suspected SAP had two stages in mind. Phase 1: Lure away PSFT customers for cheap maintenance. Phase 2: When it came time to expand or standardize on one ERP platform, convert those customers fully to an SAP solution. It's that second phase which would've made the TomorrowNow acquisition an astute one; but I know of very few examples of this happening. Thanks for your comment.

Mukund Mohan

Jason
I thought the main reason SAP bought TomorrowNow was to get access to PSFT customers and convert them to SAP vs. continue as PSFT or move to Oracle. The point this recent move seems to drive home is that Oracle has done a good job of convincing those customers (or maybe those customers have concluded on their own) that they are better served by Oracle. Given the investments in these large ERP products as you point out, there's little propensity to switch.

Wonder if CA or Quest software would buy out the business or a PSFT partner to get access to those customers and position themselves as a Oracle Fusion upgrade expert.

Nitin

The value that TomorrowNow brings to SAP is that it can hurts (bleed) Oracle margins for support and maintenance. Whether it makes sense to have it under SAP's umbrella or hive it off as an independent is a strategic decision which I am sure is based on multiple factors.

From purely a theoritical standpoint:
Firms generally tend to internalize operations which they cannot get executed from the marketplace in a cheaper and reliable way. TomorrowNow also has high "asset specificity" for SAP.

You raise many interesting questions - I hope the comments provide deeper insights.

Thanks,
Nitin

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