Will SAP Acquire Teradata to Extinguish the Lawsuit?

Executive Summary

  • Teradata filed a lawsuit against SAP, however, an acquisition by SAP would negate this lawsuit.
  • We cover how SAP may employ this strategy, and what it would mean for HANA.

Introduction

SAP is currently being used by Teradata for anticompetitive behavior and for IP theft. SAP also has a major problem on its hands with HANA being unable to meet the promises that SAP made for it, as we covered in last week article SAP’s Layoffs and a Brightwork Warning on HANA.

In this article, we will review the reason by SAP would make this acquisition.

The Motivation from SAP’s Side

The Teradata lawsuit is both highly embarrassing for SAP, but also signifies a significant threat to SAP. This threat is pronounced from the anticompetitive side of the lawsuit. Teradata claims in the area of anticompetitive behavior were quite convincing. And SAP’s response in the motion to dismiss really made no sense. We cover the topic in detail in the article How True is SAP’s Motion to Dismiss the Teradata Suit.

However, we have taken part of that article and place it in this article.

Teradata Cannot Compete with S/4HANA?

SAP goes on to make an assertion that is so absurd, that SAP must believe the judge will make zero effort to fact check the statement.

“Teradata has not been able to compete effectively with S/4HANA because it only focuses on its flagship analytical database and has failed to offer innovative and relevant compelling products,” the filing stated.

Teradata does not compete with S/4HANA. They compete with HANA. The reason Teradata has not been able to compete in SAP customers with S/4HANA is that SAP made it a requirement that HANA only copy data to a second instance of HANA. This made Teradata uncompetitive as it would massively increase the cost (HANA is an exorbitant database in its TCO, which we estimated in the Brightwork Study into SAP HANA’s TCO) This is not merely a Teradata issue, SAP is using these rules against all the database competitors and using them against SAP customers. Reports of these abuses come in from different places around the world to us. Therefore, SAP’s statement about failing to offer innovative and “relevant competing products” rings hollow. This is particularly true since HANA is not an innovative product, but as we covered, in Did SAP Simply Reinvent the Wheel with HANA.SAP backward engineered other databases combined with its acquisitions of other database components. To hide this backward engineering, and to seem innovative, SAP has renamed items that already had generally accepted names. For instance, what SAP calls “code pushdown” is simply the same old stored procedure as we covered in How Accurate are SAP’s Arguments on Code Pushdown and CDSs.

Teradata Must Develop an ERP System to Compete?

The sentence related to Teradata only focusing on its “flagship analytical database” by SAP contains an important assumption that should be fleshed out by the judge during the case. The assumption made clear by this statement is that Teradata should not offer only analytical/database products to compete with SAP, but needs to develop its own ERP system. This fits within the construct that SAP finds appealing, which is that the ERP vendor should control the entire account. And it is an inherently anti-competitive assumption. What is most curious, is that SAP does not even appear to realize how this exposes them as monopolistic in their thought processes. That is not supposed to be the assumption of ERP systems. ERP vendors are entitled to offer the customer more products, but selling the ERP system to a customer does not entitle that vendor to all of the IT spend of that company.

SAP Lacks Power in Its Own Customers?

One has to really stand in awe of SAP’s next proposal to the judge. SAP would like the judge to think that SAP lacks influence in……SAP accounts.

“SAP said Teradata’s allegations that it was monopolising the enterprise data analytics and warehousing market also fell flat, arguing it had failed to even identify SAP’s power in that market.

The SAP Position on the Teradata Lawsuit

SAP hires the most expensive lawyers that money can buy, but the argument put forward by SAP’s attorneys make no sense. And there is something very odd about the Teradata lawsuit. First, anticompetitive actions are supposed to be followed up by the FTC, not brought through the court system. But the FTC has stopped performing its function, with industry after industry entirely monopolized with the FTC doing nothing about it.

Our view is that it is quite likely that Teradata would win its anticompetitive complaint against SAP. We are less convinced around the IP theft claims in the lawsuit. Not because SAP is not as a normal course constantly reverse engineering the products of other companies, and particularly those they are partners with, as we covered in Did SAP Just Invent the Wheel with HANA? But SAP has a partnership agreement with Teradata which will have IP sharing clauses, and SAP can point to two acquisitions (Trex and P*Time) which SAP purchased around a year before HANA was introduced and are the basis for most of HANA, which we covered in the article Did Hasso Plattner and His Ph.D. Students Invent HANA? The overall ins and outs of IP theft is murkier than the anti-competitive portion of the lawsuit. And if SAP were to lose, it would be opened up to more lawsuits, because SAP has been using the same tactics described in the Teradata complain against other vendors. Actually, it is difficult to see who the Teradata lawsuit can be satisfied without a court order which requires SAP to change how it does business. And this would probably make it impossible for the FTC to then not investigate SAP. And if SAP investigated SAP, they would find a great deal of evidence of anticompetitive behavior. SAP’s business model is based upon anticompetitive behavior. If SAP were blocked from this, it would go into a steep decline. Therefore, SAP really cannot afford to lose the lawsuit against Teradata.

Now, normally this lawsuit could be settled by SAP writing a big check to Teradata. The terms would be sealed, and all we would have left to guide us as to what happened is the initial complaint filing and the motion to dismiss. But this is where the situation with HANA comes into play.

The Problem with HANA

This lawsuit exists because SAP decided to create a database, and then reverse engineer that database in part from other databases (along with P*Time and Trex). SAP planned to push the other database vendors from their accounts — and a primary way they did this was by making false claims about HANA, and denigrating all of their database partners. SAP released information through shills like John Appleby at Bluefin Solutions who wrote that SAP was “finished on Oracle,” as we covered in How John Appleby Was So Wrong About His HANA Predictions. It is our view that these false statements were made in exchange for some type of consideration from SAP. There are all kinds of consideration that SAP can provide to consulting firms that push its message, consideration that is also very difficult to track — something as simple as SAP referring business to the consulting company. SAP not only made outrageously false claims around HANA as we covered in Articles that Exaggerated HANA’s Benefits. But they got partners to repeat these messages. Lenovo rigged a benchmark for SAP to make HANA look good, that has clearly been redacted and manipulated to make HANA look as good as possible as we covered in The Problems with the Strange Lenovo HANA Benchmark.

Other companies like Huawei bet big on HANA, thinking that HANA was an up and coming new database that they could build a business around.

HANA was one of the most prominent and deceptive marketing and sales campaigns in the history of enterprise software, and it began in 2011-12 and increased in promotion all the way up until probably late 2017 or early 2018, when we finally called out the end of the reign of HANA as the primary marketing tentpole of SAP in the article HANA’s Time in the Sun Has Finally Come to an End.

In our article SAP’s Layoffs and a Brightwork Warning on HANA.
we predicted that SAP had to do something with HANA. And that HANA is impossible to make meet SAP’s promises for it. And that HANA is just not making much progress in improving as a database. One solution that would both make the Teradata lawsuit disappear and cover up for what would be a jettisoning of HANA is through SAP acquiring Teradata.

By doing this SAP would buy Teradata’s silence, end the lawsuit, and allow SAP to access Teradata’s products and talent. SAP could simply rename Teradata products as HANA and then port existing customers over to Teradata (HANA). Teradata’s products are far superior to what SAP has created in HANA.

Teradata’s Motivation

The lawsuit claims that Teradata’s business has suffered from SAP’s anticompetitive activities. However, Teradata is also being squeezed by what is widely considered poor management and a change in the database market which has opened up more options to customers, one of these being cloud-based data warehouses. Teradata does have a good chance of winning at least part of its lawsuit, but as SAP would appeal, it would be years until Teradata would win a final judgment. And Teradata may not be in the position or have the interest to wait. While Teradata’s victory would be a victory of the overall enterprise software market, no other software firms are pitching into “help” Teradata with the lawsuit. This is exactly why the regulation of markets is so important because single companies should not have to sue other companies because anti-trust law is being broken. However, antitrust laws were barely enforced under the Obama Administration, and they certainly will not be enforced under the Trump Administration which actively supports the predation of larger companies on smaller companies.

As for more motivation, Teradata is getting leaner and engaging in layoffs, potentially to make itself more appealing to an acquirer.

See the following quotations.

“Q3 in London, LT signed NDAs and were given a preview of the RIFs. In late Q3 and Q4 Field Hiring was executed in order to fill in with younger and less experienced people and new hires were given elevated grades. This way when the rifs happened, they can show the data to try to quell age discrimination and every one got the same severance – all based on grade.” – TheLayoff

“Seems pretty clear they are cutting payroll expenses to make the company more attractive for an acquisition. Highest paid, most successful folks go first – biggest impact on payroll. Then sell the services business to Cognizant. Then sell the technology business to SAP. Executives get their sweet golden parachutes with stock deals.” – TheLayoff

“You are saying what we are all thinking… Teradata has “jettisoned” a lot of their “first wave” of experienced Teradata folks who started in the late-80’s, 90’s. Many of these folks are some of the world’s best data analysts….so why don’t we use that against them? There have been wave after wave of layoffs. Each time Teradata has to provide a “peer group” analysis of like-jobs, locations and ages. I think they purposely manipulate these lists so that they pass “Age Discrimination” tests for each layoff.” – TheLayoff

“What’s up with hiring more and more H-1Bs from India after the layoffs. Sadly, it feels like company is infested with H-1Bs after kicking out many Americans. I hate to see many of my friends lost the job and instead of hiring them back we hire more and more H-1Bs. Does anyone else feel the same? Can we report this to immigration authority?” – TheLayoff

The Cost of the Deal

At a stock price of around $48, Teradata has a market capitalization of around $5.6 billion. If we estimate a 30% premium, we end up at an acquisition cost of $7.2 billion for a company with revenues of Revenue: $2.3 billion and 12,026 employees. Considering that SAP paid over $8 billion for the tiny Qualtrics we covered in Does SAP’s Acquisition of Qualtrics Make Any Sense?, this should be doable by SAP.

What SAP Would Get

As explained by Ahmed Azmi

Teradata’s account base in data warehousing, the world’s top banks, telcos, insurance.

Teradata’s prebuilt industry models for their major markets, which are mature and primary differentiators.

SAP could replace HANA with Teradata for BW for new customers.

The problem with this is that Teradata could not be well leveraged for creating an application database.

However, SAP needs an application database to replace HANA. SAP needs to shed HANA, the word is that SAP internally is tired of the HANA overhead and lack of progress. But what will replace it?

What Happens if the Acquisition Were to Occur

But if SAP does acquire Teradata it will say two possible things.

  1. SAP knows that it has at least a fairly good chance of losing part of the Teradata lawsuit.
  2. Everything that SAP said about HANA is false because SAP told customers that they shared with Teradata that Teradata could no longer be recommended because everything Teradata had was so inferior to HANA. This was “so innovative” that no other vendor could match it. HANA outperformed every competing technology by a factor of 100,000 times as we covered in How Accurate Was SAP About HANA Being 100,000x Faster Than Any Other Technology in the World. HANA was so performant that genetic algorithms run in HANA would be essential to finding a cure for cancer as we covered in How Accurate Was Vishal Sikka on the Future of HANA? If any of this were true….why would they need to purchase Teradata?
  3. Or both 1 and 2 are true.

Conclusion

Teradata’s lawsuit is one of the best hopes we have to reign in the anticompetitive behaviour of SAP, and an acquisition would put a stop to this.

It is worse for the market than a settlement because the lawsuit becomes inactive instead of being settled. If the acquisition does occur, we see SAP jettisoning much of HANA and replacing the analytics usage of HANA with Teradata (which SAP will cover up and say the two technologies were “merged”). The rebranding of Teradata will make it appear as if the products are actually HANA. But it still does not give SAP an answer for replacing HANA for applications like S/4HANA.

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References

https://en.wikipedia.org/wiki/Teradata

https://www.thelayoff.com/t/Xtyw3WG

https://www.thelayoff.com/t/X3apRIo

https://www.thelayoff.com/t/Xh9Kb2o

https://www.thelayoff.com/t/UME5iRH

https://www.thelayoff.com/t/T86CMK0

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How True is SAP’s Motion to Dismiss Teradata’s Complaint?

Executive Summary

  • SAP filed a motion to dismiss Teradata’s complaint.
  • How accurate are the statements proposed in the motion to dismiss?

Introduction to the SAP vs Teradata Lawsuit

Teradata filed a complaint against SAP in June of 2018 asserting many things that Brightwork Research & Analysis has been saying for several years. (although our research does not agree with all of Teradata’s allegations.)

Naturally, SAP said they did nothing wrong, and filed a motion to have the complaint dismissed. The reporting of the contents of the motion is from The Register. We looked for but were not able to find the actual motion to dismiss. We evaluate SAP’s statements against our own research.

Our Disclosure

We have any financial or non-financial relationship with either SAP or Teradata.

Now let us get to the quotes from the motion.

SAP Changing the Topic on the Teradata’s Complaint

“It (the complaint) also made antitrust allegations claiming SAP had attempted to edge Teradata out of the market by locking customers into its tech, noting the German giant’s ERP suite S/4HANA can only run on HANA.

However, SAP slammed these claims in a motion to have the case dismissed for once and for all, which was filed with the District Court of Northern California at the end of last month.

It argued the joint venture, known as the Bridge Project, started because Teradata “had a limited customer base” and wanted to appeal to SAP’s users – but SAP painted Teradata’s push as wildly unsuccessful, saying that just one customer signed up.”

This is not related to at least the heart of Teradata’s complaint. When SAP partners with a vendor it is never (from SAP’s perspective) to improve that vendor’s ability to sell into SAP’s customers. SAP uses partnerships to neuter competitors and to copy intellectual property, but normally work against the competing vendor’s interests. As we covered in the article How SAP’s Partnership Agreement Blocks Vendors from Fighting Indirect Access, partnerships with SAP have helped to keep competing vendors from publicly complaining about indirect access.

This is of course not to deny that Teradata wanted to appeal to SAP’s users/customers. They certainly did. That is always the motivation for vendors to engage in partnerships with SAP. However, Teradata had been doing this for decades…..that is before SAP introduced HANA and began deliberately blocking out other database vendors. Teradata’s complaint is that SAP effectively blocked them out of accounts that they shared by using HANA and the restrictions around HANA to do so. We covered this topic in the article The HANA Police.

Therefore, in this argument, SAP is attempting misdirection.

HANA is Innovative?

“SAP had been working on its own database product for years before that deal, it said, and branded “the assertion that HANA is the result of anything but SAP’s technological innovation, investment, and development is factually groundless”.

Teradata was only bringing the lawsuit because it has “fallen behind” the competition, SAP claimed.”

SAP did not “work on its own database product for years before the deal.” SAP had several databases for years, and they also acquired Sybase, but those are not related to this topic. What ended up becoming HANA were two small acquisitions purchased roughly a year before HANA was released. We covered in the article Did Hasso Plattner and His Ph.D. Students Invent HANA? That while SAP falsified a story around Hasso Plattner and his students creating HANA from scratch, the supporting technologies for HANA was purchased with the intent of making them into HANA. SAP’s big addition to the design was to remove aggregates and indexes. Hasso Plattner nor Vishal Sikka, nor Hasso Plattner’s Ph.D. students ever contributed anything that could be called intellectual property to the exercise.

How do we know?

We analyzed what was claimed by Hasso Plattner in his books and in the SAP marketing/sales material where these contentions were made.

Hasso Plattner’s books aren’t so much books as marketing pitches. Riddled with exaggerations and inaccuracies, part of what Hasso Plattner’s books do is create a narrative where Hasso and SAP created some superlative innovation in column-oriented databases. None of Hasso’s claims regarding innovation hold up to scrutiny. All of Hasso’s books (4 in total) have one purpose….not to inform, but to sell HANA. 

There is little doubt that Teradata had superior database knowledge and that SAP did seek to learn from Teradata and to use the partnership to do so. Furthermore, SAP has a history of doing exactly that with other software vendors. SAP’s xApp program was really an extensive competitive intelligence gathering operation designed to extract IP from vendors so that it could be placed into SAP’s products. We covered the xApp program in 2010 in the article Its Time for the xApp Program to End.

HANA’s design is highly problematic and cannot meet SAP’s statements about it — except in analytics, where it is only better than older versions of competitive databases and only when using far larger hardware footprints as covered in How Much of HANA’s Performance is Hardware? SAP’s statements about HANA’s superiority are false.

The Mystery of HANA’s Lack of Use Outside of SAP Accounts

HANA is not purchased outside of SAP accounts; it is only purchased by accounts controlled by SAP where the IT customers failed to perform their research into SAP’s claims. If the outlandish claims around HANA are true, why aren’t non-SAP customers using it? No other database fits this profile.

  • Oracle sells databases to everyone not just to customers that buy Oracle’s applications and where they have account control.
  • SQL Server is found everywhere, not only on accounts where Microsoft sells their ERP system.

Bill McDermott stated that HANA works “100,000 times faster than any competing technology.” If that is true, why do only SAP customers buy it?

Teradata’s IP Puffery

Through the original complaint, Teradata overstates its intellectual property implying that they have some secret sauce no one else has. The designs that are similar to HANA are all over the place. AWS has Redshift which is similar in design to HANA. And both Google Cloud and AWS have Redis, which is also similar to HANA (although in a different dimension). Reading Teradata’s complaint is symptomatic of commercial software companies perpetually overstating how unique their software is. However, the claim is axiomatic, declarations of uniqueness and innovation are known to correlate with commercial software sales positively. Teradata’s complaint also exclaims how employees are made to sign NDAs so that Teradata’s technology secrets are not distributed outside of Teradata, but neglects to mention how much Teradata benefits from those same employees add to Teradata’s IP. Apparently, by inference, all of the Teradata IP was created by executives, and not employees. And where did Teradata originally develop its database from? That is right, from using database concepts that were in the public domain.

As with pharmaceutical companies which commercialize research that performed by universities and is funded by taxpayers through the National Institutes of Health, as soon as a software vendor wants to sell software, the public domain very conveniently recedes into the background, and the narrative of “their IP” is wheeled out front and center.

Big Money Equals More IP Protection?

As readers can tell, we find the IP theft argument made by Teradata to be the least persuasive part of their complaint. Other vendors have far greater claims regarding SAP stealing their IP than does Teradata. But Teradata is a rich software vendor and has the money to bring a case like this. Therefore, their IP concerns are considered relevant, whereas a smaller software vendor’s IP concerns are considered less relevant (perhaps irrelevant?).

Teradata Has Fallen Behind…….SAP’s Marketing Department?

SAP states that Teradata has “fallen behind” SAP. However, in technical circles, SAP is still not a respected database vendor. Teradata, although they are known to charge far too much for what they offer and to overpromise, are technically respected. The only place that Teradata has fallen behind SAP in databases is in marketing.

Teradata Cannot Compete with S/4HANA?

SAP goes on to make an assertion that is so absurd, that SAP must believe the judge will make zero effort to fact check the statement.

“Teradata has not been able to compete effectively with S/4HANA because it only focuses on its flagship analytical database and has failed to offer innovative and relevant compelling products,” the filing stated.

Teradata does not compete with S/4HANA. They compete with HANA.

The reason Teradata has not been able to compete in SAP customers with S/4HANA is that SAP made it a requirement that HANA only copy data to a second instance of HANA. This made Teradata uncompetitive as it would massively increase the cost (HANA is an exorbitant database in its TCO, which we estimated in the Brightwork Study into SAP HANA’s TCO) This is not merely a Teradata issue, SAP is using these rules against all the database competitors and using them against SAP customers. Reports of these abuses come in from different places around the world to us.

Therefore, SAP’s statement about failing to offer innovative and “relevant competing products” rings hollow. This is particularly true since HANA is not an innovative product, but as we covered, in Did SAP Simply Reinvent the Wheel with HANA.

SAP backward engineered other databases combined with its acquisitions of other database components. To hide this backward engineering, and to seem innovative, SAP has renamed items that already had generally accepted names. For instance, what SAP calls “code pushdown” is simply the same old stored procedure as we covered in How Accurate are SAP’s Arguments on Code Pushdown and CDSs.

Teradata Must Develop an ERP System to Compete?

The sentence related to Teradata only focusing on its “flagship analytical database” by SAP contains an important assumption that should be fleshed out by the judge during the case. The assumption made clear by this statement is that Teradata should not offer only analytical/database products to compete with SAP, but needs to develop its own ERP system.

This fits within the construct that SAP finds appealing, which is that the ERP vendor should control the entire account. And it is an inherently anti-competitive assumption. What is most curious, is that SAP does not even appear to realize how this exposes them as monopolistic in their thought processes. That is not supposed to be the assumption of ERP systems. ERP vendors are entitled to offer the customer more products, but selling the ERP system to a customer does not entitle that vendor to all of the IT spend of that company.

SAP Lacks Power in Its Own Customers?

One has to really stand in awe of SAP’s next proposal to the judge. SAP would like the judge to think that SAP lacks influence in……SAP accounts.

“SAP said Teradata’s allegations that it was monopolising the enterprise data analytics and warehousing market also fell flat, arguing it had failed to even identify SAP’s power in that market.

“The [complaint] alleges nothing more than that Teradata now has to compete in its favored marketplace,” SAP said.”

Here SAP’s attorneys try another sleight of hand. Rather than addressing anything true, SAP’s (what must be very highly paid) attorneys prefer to change the subject to see if the judge will notice.

Can judges be hypnotized? If so, SAP has a chance with this argument. 

Teradata’s allegation is that SAP is blocking them out of SAP accounts. And that this is anti-competitive. SAP has created false technical proposals including the incredible bizarre restrictions that HANA must be copied only to HANA and not to Teradata. I have discussed these limitations with people with decades of database experience, and none of us can make any sense of the restrictions. They are unprecedented and designed merely to capture market share. Those are real impediments to Teradata, and they are meant to be.

Furthermore, these restrictions are costing SAP customers in a major way. SAP wants customers to upgrade to S/4HANA, which comes with HANA, and as soon as they do, they will find themselves subject to all manner of restrictions that did not exist with the previous database they were using (Oracle, DB2, SQL Server). SAP plans to use these restrictions to push out from ERP making HANA mandatory and “making the customer’s choice for them.”

Teradata need not identify SAP’s “power in the analytics market,” as SAP has enormous and undisputed power in their clients. Anyone who has worked in SAP consulting knows this. Now those clients previously were happy to use Teradata and SAP side by side and did for many years. But SAP, through these restrictions made it difficult for Teradata to continue to do business in SAP accounts. In fact, according to the Teradata complaint, many of their customers they shared with SAP gave them ultimatums that they would have the previous levels of interoperability with SAP, or their customers would leave them. This is quite believable, as SAP greatly reduced the value of Teradata in SAP accounts by making the integration to Teradata so much more expensive.

The entirety of SAP’s restrictive policies is to injure competitors and to absorb more income from customers. SAP is in a particularly weak position here now that all of their claims regarding HANA’s superiority have been pierced as we covered in Articles that Exaggerate HANA’s Benefits and How to Deflect That Your Were Wrong About HANA.

S/4HANA and HANA are the Same Product?

“Regarding antitrust claims, SAP said Teradata “does not plausibly allege that SAP coerces its customers into purchasing HANA”. It added assertions that S/4HANA unlawfully ties HANA to ERP software are misguided, as they aren’t separate products.

Rather, it is one integrated product sold to customers as so, compared to separate ERP and database wares.”

SAP’s attorneys should have checked this with the technical resources at SAP because these two paragraphs are unsupportable and make it plain that the attorneys mean to trick the judge.

First S/4HANA is unlawfully tied to HANA because…

  • a) There is no technical reason to restrict S/4HANA to HANA. The evidence is that HANA underperforms the competing database alternatives as we covered in What is the Actual Performance of HANA. and..
  • b) Products that are tied together in order block out competitors are illegal under the tying arrangement clause of the US antitrust law. This is the exact clause of our antitrust law used by the DOJ to win a judgment against Microsoft back in the 1990s.

Something else which will be difficult for SAP to explain — how is an application like S/4HANA and a database like HANA a single integrated product? Can SAP name another ERP system that is “integrated as a product with its database?” Here is another question, if S/4HANA and HANA are the same product, why are they priced separately and listed as different products in the SAP price list? A third question. Is HANA now integrated to the BW also? As BW can be deployed on HANA, they must also be a single fused product!

Teradata’s Real Complaint is SAP Would Not Integrate with Teradata’s DB?

“Teradata’s real complaint is that SAP chose to offer this integrated system with HANA, rather than integrating with Teradata’s database; the antitrust laws, however, are designed to prevent injury to competition, rather than injury to competitors,” SAP said.”

This is a very strange wording by SAP. However, the issue that SAP is hoping the judge is confused by is that the restrictions are not technical. Teradata has been integrating to (often Oracle) databases on customers with SAP applications for decades. The issue is not technical; it is how SAP setup the charges and used indirect access to cut off their database from being accessed by Teradata. Indirect access is a violation of the tying arrangement discussed previously and covered in the article SAP’s Indirect Access Violates US Anti Trust Law. Notice Teradata’s use of the specific term tying arrangement in this quote from the complaint.

“On information and belief, SAP has also begun significantly restricting Teradata’s ability to access customers’ SAP ERP data stored in HANA (which is necessary for the functional use of Teradata’s EDAW products), thereby ensuring the success of its tying arrangement in coercing customers to adopt HANA.”

The second part of the paragraph from the SAP quotation regarding “designed to prevent injury to competition, rather than injury to competitors seems to be some type of wordplay. This would be like saying laws against murder are designed to protect society in general but are not designed to protect the murder of any one particular person.

Teradata is being blocked because of SAP’s unwarranted tying arrangement between S/4HANA and HANA. Teradata is a competitor, and SAP is not competing with them by offering customers to choose between HANA and Teradata. They are using the SAP ERP system, previous versions which did not have these restrictions, to be restricted.

This is stated in the Teradata complaint.

“Moreover, and on information and belief, SAP has begun significantly restricting Teradata’s ability to access customers’ SAP-derived data. Through this conduct, SAP has deliberately sought to exploit its large, existing ERP customer base to the detriment of Teradata and its customers. Given the extremely high costs of switching ERP providers, SAP’s ERP customers are effectively locked-in to using SAP’s ERP Applications, and SAP is now attempting to lock them into using only HANA in the EDAW market as well.”

This is the exact reason we have argued against ERP systems; they are continually used to take control of the customer’s IT spend through account control, as covered in the article How ERP Systems Were a Trojan Horse. 

The strategy by SAP’s attorneys here is called “muddying the water.”

SAP Requires More Explanation as to Inefficiencies?

“For instance, SAP said the US-based Teradata was vague about the “inefficiencies” it claims to have identified in SAP’s systems it offered; failed to precisely identify what trade secrets were stolen; and failed to allege that SAP breached the contracts drawn up for the Bridge Project.

“To the contrary, much of what the [complaint] alleges as purported misconduct (which SAP denies) is expressly permitted by the relevant provisions of the Bridge Project Agreements,” the ERP giant said.”

Here we agree with SAP on the trade secret allegation.

Conclusion

What can be taken from this motion to dismiss? The arguments related to trade secrets seem correct. SAP most likely did benefit from Teradata’s advice and expertise related to how to improve HANA. SAP would have naturally tried to learn things from Teradata. SAP was very unsophisticated regarding databases, particularly back when they were cobbling together HANA from acquisitions and with ideas gleaned from other databases vendors. But this backward engineering was not restricted to Teradata. And we have yet to see evidence that Teradata offered a substantial portion of IP that eventually became HANA.

Furthermore, HANA is not a competitive product. Therefore, whatever SAP may have taken from Teradata was either not particularly good, or SAP screwed up the implementation of the concept. HANA’s power comes from its association with SAP, not from HANA’s capabilities as a product.

SAP’s arguments against Teradata’s claims regarding anti-competitive behavior go beyond anything reasonable, dance in the area of insulating and make one wonder about the attorneys used by SAP. Any person who would make these arguments to me would so ruin their credibility; I would never listen to them again.

The impression given is that SAP hopes to find a weak judge who would believe such arguments. A motion to dismiss is automatic, but if this is what SAP came up with (assuming there was no miscommunication with the attorneys and SAP) this case appears to be a substantial risk for SAP. Teradata is asking for SAP to change the way they do business essentially. Teradata’s request is entirely consistent with demanding the SAP follow the normal rules of competition. SAP is asking that the US courts allow them to use tricks and deception to push vendors out of “their” customers. SAP claims to own them because they have sold them an ERP system. Teradata is asking for the courts to bar some of SAP’s behaviors as covered in the following quotation in the Teradata complaint.

“Teradata therefore is entitled to an injunction barring SAP’s illegal conduct, monetary damages, and all other legal and equitable relief available under law and which the court may deem proper.”

US courts are not the best place for anticompetitive enforcement. One question might be, why is the FTC not investigating SAP? The exact issues listed by Teradata in their complaint have been reported to us for years. But as the FTC no longer is interested in enforcing antitrust law, this is Teradata’s only option. The US economy is increasingly dominated by larger and larger entities, something which reduces competition and depresses wages.

Other vendors should show an interest in this case because SAP is claiming the vendor selling the ERP system has the right to push the other vendors from the account. If the US courts allow them to do it to Teradata, which is a vendor with large amounts of resources, they can do it to anyone.

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Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Question Box

  • Have Questions About S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is close to impossible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

References

https://www.theregister.co.uk/2018/09/03/sap_response_teradata_lawsuit/

https://www.businesstoday.in/current/corporate/day-after-teradata-filed-ip-theft-suit-against-sap-vishal-sikka-terms-charges-baseless-outrageous/story/279442.html

https://assets.teradata.com/News/2018/2018-06-19-Complaint.pdf

The Risk Estimation Book

 

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model

How SAP HANA vs TeraData and Tableau Market Backend Technology

Executive Summary

  • SAP markets HANA far differently from Teradata or Tableau.
  • We evaluate these approaches.

Introduction

In a previous article, Has SAP’s Relentless SAP Push Paid Off? I cover whether SAP’s HANA major marketing push has provided the intended benefits? However, in this article, I provide several examples of how top competitors market their analytics.

How SAP HANA’s Competitors Market

A competitive analysis is important in this regard because my argument is that if a marketing concept is successful and it is eventually adopted by competitors.

However, focusing on in-memory computing has not been approved by competitors, at least nowhere near to the degree that SAP emphasizes the topic. That should tell SAP something. Let us take a look at two examples of leaders in the analytics space, which is the most relevant comparison to SAP HANA; the software vendors Teradata and Tableau.

Teradata

Teradata is the leader in data warehousing and is the record holder in substantial high-performance databases, however, while they use in-memory computing when it is beneficial, their marketing strategy is not so single-mindedly focused.

Tableau

Tableau’s success is very well known at this point, and it is the leader in its space. Tableau grew rapidly from a small base to become a dominant self-service BI vendor by taking business from larger BI software vendors. SAP purchased Lumia to compete with vendors like Tableau that are seeing most the growth in the BI market.

Look at these samples of how Tableau emphasizes their backend technology.

Here is one of Tableau’s main pages. I deliberately picked a page with the most emphasis on background technology. Most of Tableau’s web pages don’t bring up the backend technology at all.

However, even here, the background technology is a link — that is it is not the original pitch. If you want to select the link you can find out about the background technology. 

Upon clicking, this page comes up, and you can learn about their Visual Query Language for Data, etc…

It is available, but it is in the background. Tableau — as you can see if you visit their site, the user experience, flexibility and many other aspects are emphasized. Their underlying technology is there for those who want to know. However, they don’t lead with it.

Even the technical page discusses more about data than what database is used.

To go back to the first article, Has SAP’s Relentless SAP Push Paid Off?

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Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Question Box

  • Have Questions About S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is close to impossible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

References

I cover the topic of software selection and how to interpret information from different sources in the following book.

Software Selection Book

 

SELECTION

Enterprise Software Selection: How to Pinpoint the Perfect Software Solution Using Multiple Information Sources

Mastering Software Selection

Software selection is a form of forecasting, just as any another purchase decision is a forecast of how successfully the purchased item will meet expectations. Forecasting is necessary because it is not feasible to implement each application under consideration before it is purchased to see how it works in the business.

The Importance of Software Selection

Software selection is the most important part of any software implementation because it is the best opportunity to match the software with the business requirements, which is the most important factor in determining the success of the project. This book explains how to get the right information from the right sources to perform software selection correctly.

What You Can Expect from the Book

Essential reading for success in your next software selection and implementation. Software selection is the most important tasks in a software implementation project, as it is your best (if not only) opportunity to make sure that the right software the software that matches the business requirements is being implemented. Choosing the software that is the best fit clears the way for a successful implementation, yet software selection is often fraught with issues, and many companies do not end up with the best software for their needs. However, the process can be greatly simplified by addressing the information sources that influence software selection.

This book is a how-to guide for improving the software selection process and is formulated around the idea that much like purchasing decisions for consumer products the end user and those with the domain expertise must be included. In addition to providing hints for refining the software selection process, this book delves into the often-overlooked topic of how consulting and IT analyst firms influence the purchasing decision and gives the reader an insider’s understanding of the enterprise software market. By reading this book you will:

  • Learn how to apply a scientific approach to the software selection process.
  • Interpret vendor-supplied information to your best advantage.
  • Understand what motivates a software vendor.
  • Learn how the institutional structure and biases of consulting firms affect the advice they give you, and understand how to interpret information from consulting companies correctly.
  • Make vendor demos work to your benefit.
  • Know the right questions to ask on topics such as integration with existing software, cloud versus on-premise vendors, and client references.
  • Differentiate what is important to know about software for improved “implement-ability” versus what the vendor thinks is important for improved “sell-ability.”
  • Better manage your software selection projects to ensure smoother implementations.

Chapters

  • Chapter 1: Introduction to Software Selection
  • Chapter 2: Understanding the Enterprise Software Market
  • Chapter 3: Software Sell-ability versus Implement-ability
  • Chapter 4: How to Use Consulting Advice on Software Selection
  • Chapter 5: How to Use the Reports of Analyst Firms Like Gartner
  • Chapter 6: How to Use Information Provided by Vendors
  • Chapter 7: How to Manage the Software Selection Process
  • Chapter 8: Conclusion
  • Appendix a: How to Use Independent Consultants for Software Selection

Risk Estimation and Calculation

Risk Estimation and Calculation

See our free project risk estimators that are available per application. The provide a method of risk analysis that is not available from other sources.

project_software_risk