TomorrowNow sees life after Oracle

Andrew Nelson, president and chief executive officer of third-party maintenance and support company TomorrowNow, isn’t the kind of guy who appears to be surprised by the maneuvering of business application vendors for greater market share. His own company was acquired by SAP, the world’s largest business software company, in a move to lure customers away from rival Oracle.

On the sidelines of SAP’s Sapphire customer event in Paris last week, IDG News Service interviewed Nelson, who was accompanied by his colleague Nigel Pullan, vice president of TomorrowNow’s operations in Europe, the Middle East and Africa (EMEA) and Asia-Pacific regions. Nelson talked about the company’s support offer for users of J.D. Edwards, PeopleSoft and, more recently, Siebel business applications, which were acquired by Oracle, and about the database manufacturer’s own support and maintenance offer for SAP applications.

IDGNS: What do you think of Oracle’s plans to offer support and maintenance for SAP’s R/3 business software? Surprised?

Nelson: It wasn’t a surprise to us. We’ve been hurting Oracle pretty badly. It appears as if they’re offering more of a consulting type service, compared to a comprehensive program. They’re talking about partying with someone in India. I don’t think they understand that the idea of third-party maintenance is not to find — no offense — cheap labor, but rather to find the most experienced senior labor. Our customers are in mature and stable environments. They don’t call us often but when they do, they need someone very senior to help them with a very serious problem. There is a skill set developing in India but it’s still a bit like the wild, wild west.

IDGNS: Haven’t you also outsourced staff?

Nelson: We outsource our operations to SAP. That’s it. We don’t outsource a single, primary resource engineer. Our service delivery team is in-house, as well as our sales and marketing teams. We’ve outsourced finance, payroll, legal and tax operations to SAP.

IDGNS: Have you had to tweak your structure internally because of Siebel?

Pullman: Many Siebel implementations have a high degree of configuration and customization. We have to deal with issues related to both.

IDGNS: What does that mean — more people?

Pullman: Yes, we’ll need Siebel experts. We have eight at the moment and are still hiring.

Nelson: We brought on John Tanner,director of global support at Siebel. But let me point out that one of the biggest differences in supporting Siebel compared to our other lines is that we will certify and support customizations as a matter of our standard contracts.

IDGNS: Any customers yet?

Nelson: No.

IDGNS: How many Siebel customers are out there?

Nelson: There are around 4,000, of whom half are candidates for third-party support.

IDGNS: Today, your primary target is customers of Oracle acquisitions. Is this your business model?

Nelson: Our strategy is not to go after Oracle, but rather to serve the widest possible enterprise software community wherever third-party maintenance makes sense.

IDGNS: How big is the global software maintenance market?

Nelson: We estimate it to be between $8 and 20 billion annually.

IDGNS: Could open source software products be a new revenue stream?

Nelson: Open code offers some interesting opportunities, as do software services. Today, we don’t have a critical mass of people asking us to look at open code, but we’re watching this market closely.

IDGNS: So you’re already planning a post-Oracle strategy?

Pullan. Of course. If we just stuck with the product lines we have, we wouldn’t have a long-term business but rather a short to medium-term business. We aim to grow our business with additional product lines and, potentially, with additional software service lines.

IDGNS: And will you be converting all these customers to SAP?

Pullan: It’s not our strategy to convert customers to SAP. That’s SAP’s strategy. Our sole objective is to serve customers on the product lines we’ve been discussing. They have the freedom of choice to migrate to SAP at any point in time.

Nelson: We’re vendor neutral, but we’re not independent because we’re owned by SAP. Our customers are happy that we have financial backing. The regulatory research that SAP does in 110 countries for their hundreds of products is something we can tie into at no cost. Coming back to our outsourcing with SAP, let me point out that when we go into a new country and set up a new entity, it costs us nearly nothing. We get this done within weeks instead of months.

IDGNS: How many customers did you have before you were acquired by SAP?

Nelson: We had 75 active customers before the acquisition, and we now have 176.

IDGNS: What impact does SAP’s SafePassage have on your business?

Nelson: Let me explain SafePassage. SAP has created and controls this program. It is first and foremost a license program, giving customers a license credit of up to 75 percent to replace products with a SAP license.

Pullan: Of our 175-plus customers, only 30 have gone to SAP with SafePassage. The rest have either not made a decision, or a decision for another software.

IDGNS: How many support centers to you have?

Nelson: We have ten: London, Amsterdam, Singapore, Sidney and the rest in the U.S.

IDGNS: How many engineers?

Nelson: We have 135 people, of whom 90 are support engineers.

IDGNS: Are you concerned about competition from Indian software maintenance companies?

Nelson: With all due respect to our competitors, there are some real barriers to entry. Software maintenance is hard to do. You need to ensure high quality, consistency, stability and the same mission-critical infrastructure. Outsourcing isn’t appropriate for our type of highly specialized, mission-critical delivery where communications skills, years of experience and stability are more important than having someone who understands how to develop code. We’re not a team of developers but a team of highly experienced consultants.