How SAP and Oracle Cheat the Commercial Software Model

Executive Summary

  • SAP and Oracle do not follow the established rules of enterprise software.
  • Both of these vendors use monopoly power to block out other vendors.

Introduction

Many people like to pretend that SAP and Oracle operate under the generally accepted rules of the “free market” enterprise software segment, but this is far from the case. SAP and Oracle practice most extreme form of commercial software tactics and behaviors, pushing up against the legal rules, and far beyond what is generally considered ethical. With open source software anyone can use the software, and in most cases, it is free to use. Commercial software charges a license fee to use the software. However, SAP and Oracle aren’t regular commercial software vendors. This is because a typical commercial software vendor would sell its software for a license fee, but allow its software to be used with any other software. This is the logical basis for allowing commercial software in the first place.

Why is Commerical Software Allowed?

Commercial software is allowed as it is intended to compensate the software development entity for their investment. The intent of commercial software licenses was never to allow larger and vendors with more resources to “block out” other vendors from environments where they predominate. However, SAP and Oracle develop exclusionary products that reduce interoperability and use a variety of legal and account control tactics all designed to push the purchases of the company to SAP and Oracle.

Why Does SAP Make Integration so Difficult?

SAP has routinely made integrating other applications to SAP far more difficult than it needed to be, and encouraged the large consulting companies to talk down non-SAP software in favor of SAP software. (An easy task as SAP consulting partners make so much money on SAP consulting.)

Oracle’s Monopolistic Acquisitions

Oracle has used aggressive acquisitions to control the purchases of their customers. SAP has used the centrality of its ERP system to limit choice on the part of customers, while Oracle has done the same thing, but using its control over databases. SAP introduced S/4HANA, which was the successor to their most popular ERP application, and which had for decades worked with a variety of databases, and made the new version exclusive to SAP’s HANA database. SAP has created a number of technical arguments as to why this was better for customers and why it was necessary (a subject we cover in depth in the article How HANA is Used to Block out Other DB Vendors).

We have analyzed these in detail and concluded none of them are true.

Conclusion

SAP and Oracle use the commercial software model, but they do not follow the rules of commercial software. They follow a model where the commercial software is used to extract monopoly rents from customers.

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