Oracle Corporation et al v. SAP AG et al

Filing 1200

Declaration of Kevin M. Papay in Support of 1199 Brief Offer Of Proof Regarding Oracle's Hypothetical License Damages filed byOracle International Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X, # 25 Exhibit Y, # 26 Exhibit Z, # 27 Exhibit AA, # 28 Exhibit BB, # 29 Exhibit CC, # 30 Exhibit DD, # 31 Exhibit EE, # 32 Exhibit FF, # 33 Exhibit GG, # 34 Exhibit HH, # 35 Exhibit II, # 36 Exhibit JJ, # 37 Exhibit KK, # 38 Exhibit LL, # 39 Exhibit MM, # 40 Exhibit NN, # 41 Exhibit OO, # 42 Exhibit PP, # 43 Exhibit QQ, # 44 Exhibit RR, # 45 Exhibit SS, # 46 Exhibit TT, # 47 Exhibit UU, # 48 Exhibit VV, # 49 Exhibit WW, # 50 Exhibit XX, # 51 Exhibit YY, # 52 Exhibit ZZ, # 53 Exhibit AAA, # 54 Exhibit BBB, # 55 Exhibit CCC, # 56 Exhibit DDD, # 57 Exhibit EEE, # 58 Exhibit FFF, # 59 Exhibit GGG, # 60 Exhibit HHH, # 61 Exhibit III, # 62 Exhibit JJJ, # 63 Exhibit KKK, # 64 Exhibit LLL)(Related document(s) 1199 ) (Howard, Geoffrey) (Filed on 8/2/2012)

EXHIBIT AA

HIGHLY CONFIDENTIAL INFORMATION ATTORNEYS' EYES ONLY

SAP-OR 00126416-17 (COLOR 000002)

Clear Sailing:

Sustaining Our Momentum in Competitive Waters
SAP Project Management Approach
February 3, 2004

CONFIDENTIAL

1

Sustaining Our Momentum
Phase I: Our “Safe Harbor” positioning served us well as the hostile takeover played
out and PeopleSoft’s customers were bombarded by Oracle with messages that had
nothing to do with their success
We took the high road on messaging
We executed our strategy
We gained share
Phase II: “Safe Passage” is a strong competitive offering and strong customer story,
and a jumping-off point for SAP’s mobilization effort
Positive press and analyst reaction
Strong initial customer response
Immediate and enthusiastic engagement across SAP
Phase III: Oracle has one competitive target and a war plan based on mistruth and
arrogance; but SAP has the winning strategy, the leader’s momentum, and a course
charted for sustained Clear Sailing
Oracle’s story now is about unrealistic promises, lies and money
SAP’s story is about customers, integrity and value
We need to harness SAP’s desire to respond, keep the pressure on,
stay on strategy, and stay on message

© SAP AG 2004, NetWeaver & ESA Phase 2 / 2

2

Objectives for Clear Sailing at SAP
Leadership strategy that leverages and extends our position
Aggressive sustained competitive pressure and drumbeat
Mobilization of resources across SAP and with our Partners
Consistency and quality of our message

© SAP AG 2004, NetWeaver & ESA Phase 2 / 3

3

SAP Rules of Engagement
Single, integrated competitive strategy that leverages existing resources
Clear roles, established and guided by a single Governance Model
Lead project manager to coordinate and align activities
US as lead market, with global syndication

© SAP AG 2004, NetWeaver & ESA Phase 2 / 4

4

Clear Sailing Strategy
Stay focused on our winning customer-centered strategy of industry process best
practices and innovation, with accelerated execution in key battleground markets, to
maintain market share growth at the expense of Oracle

Interrupt Oracle’s acquired maintenance income stream, making it difficult for them to
invest in development of their Fusion platform

Win the “Technology War” versus Oracle in the opinions and recommendations of lead
industry analysts, consultants and influencers

© SAP AG 2004, NetWeaver & ESA Phase 2 / 5

5

Clear Sailing Strategy
Stay focused on our winning customer-centered strategy of industry process best
practices and innovation, with accelerated execution in key battleground markets, to
maintain market share growth at the expense of Oracle
Global Manufacturers with JDE plant-level systems
Global High Tech manufacturers Oracle e-business suite
Other focus industries (TBD by US team)
Net new mid-market customers, especially in emerging markets
Convert targeted PSFT-JDE partners to shift practice focus

Interrupt Oracle’s acquired maintenance income stream, making it difficult for them to
invest in development of their Fusion platform

Win the “Technology War” versus Oracle in the opinions and recommendations of lead
industry analysts, consultants and influencers

© SAP AG 2004, NetWeaver & ESA Phase 2 / 6

6

Clear Sailing Strategy
Stay focused on our winning customer-centered strategy of industry process best
practices and innovation, with accelerated execution in key battleground markets, to
maintain market share growth at the expense of Oracle

Interrupt Oracle’s acquired maintenance income stream, making it difficult for them to
invest in development of their Fusion platform
“Safe Passage” offering to maintain PSFT/JDE systems and upgrade licenses
Direct sales focus on top-500 joint SAP-PSFT customers
Co-marketing to JDE mid-market customers in manufacturing/wholesale/retail
With IBM to reach AS/400 and iSeries installed base
Others TBD

Aggressive and targeted direct marketing
Highest level of Field Enablement and inbound response management

Win the “Technology War” versus Oracle in the opinions and recommendations of lead
industry analysts, consultants and influencers

© SAP AG 2004, NetWeaver & ESA Phase 2 / 7

7

Clear Sailing Strategy
Stay focused on our winning customer-centered strategy of industry process best
practices and innovation, with accelerated execution in key battleground markets, to
maintain market share growth at the expense of Oracle

Interrupt Oracle’s acquired maintenance income stream, making it difficult for them to
invest in development of their Fusion platform

Win the “Technology War” versus Oracle in the opinions and recommendations of lead
industry analysts, consultants and influencers
Cultivate thought leading analysts and media, sustained by a continuing stream of
technology leadership announcements (e.g., Mercury Interactive)
Establish clear superiority for SAP’s ESA strategy and Business Process
Platform/productized services framework
Establish consulting practice alliances around leading process and business design
innovation strategies
Promote ESA Roadmap “reinvestment scenarios” for key industry sub-segments

© SAP AG 2004, NetWeaver & ESA Phase 2 / 8

8

Safe Passage Scorecard 2005 - DRAFT
KEY MESSAGES:

WO
RK
Market Metrics

IN P

Target Target
Actua
FY YTD (Q1) YTD (Q1)

ROC
F

Total Customers
% of Global 500
customers

ESS
FIE – TO Market Perception
B
LD
AND E VET lyst Coverage
FMT TED
Y
WIT Safe
Pas
HU
S

Actual
2005

Target
FY

Actual
Status
YTD (Q1)
G

R

% Negative to a
of PSFT-JDE customer

Y

R

# of Articles that mention or
quote SAP customers

G

# of Positive Analyst briefs

Y

% of Mfg Leaders
% of Mid Mfg’s
(JDE)

R

Maintenance Offerings

Target
FY
##

TN Maintenance (10%)

25

Products

Oracle Status
Equiv.
Revenue

Customer Adoption
Active ERP upgrade implementations

Target
FY

Total # Status
Y

25

Safe Passage Assessments

XX

R

G

Active JDE conversions

XX

mySAP ERP upgrade licenses

$

Y

Active PSFT HCM conversions
Safe Passage Maintenance (17%)

Active NetWeaver implementations

$

Y

Conversion/Integration References

Y
G

$

© SAP AG 2004, NetWeaver & ESA Phase 2 / 9

9

Business Owners and Project Management Overview
CORE TEAM

Program Team

Business Owner

Global Lead

US Lead

Executive Sponsorship

Leo Apotheker

Leo Apotheker

Bill McDermott

Overall program management

Marty Homlish

David Bradley
(Gita Gupta)

Jane Vaughn
(Heather Loisel)

Industry and segment focus battlegrounds

Nils Herzberg

David Bradley
(Sol Mktg VPs)

Greg McStravick
(ISPs)

mySAP ERP upgrade and maintenance offering
management

Martin Breuer

Thomas Baur

Mike Wendell

Maintenance services management

Gerd Oswald

Thomas Ziemen

Steven Tseng

Technology evangelism

Shai Agassi

Peter Graf

Peter Graf

John Robertson

Stephan Rossius

Carlos Chou

Ed Brice

Ed Sander

Chris Clarke and Heather
Loisel

Bill Wohl

Steve Bauer

Mike Prosceno

M ke Prosceno

Investor relations

Marty Cohen

M ke Prosceno

Internal communications

Torsten Busse

Tara Degler

Susan Popper

Costanza Tedesco
and John Steinert

Chris Clarke

Steve Mann

Karen Peterson

Barbara Pleibel

Tim Crean

Tim Crean

Brad Brubaker

Partner management
Field enablement
Public Relations
Analyst Relations

Anne McCarthy

Integrated marketing communications
Market intelligence
Legal
©

Sales KPI Reporting

Martin Breuer

,

10

Mike Wendell

Project Management System
Management System Element

Process Owner

Frequency

Participants

Core Team Kick-off – Roles and
Responsibilities

Gupta for Apotheker

Once at beginning

Global Leads

Steering Committee Review

Gupta for Homlish

Monthly
Bd Mtg Week

Steering Committee
Team Leads

Global Project Lead Meeting

Gupta

North America Project Core Team Meeting
Legal Review
Reporting
Offering Management and Global Sales
Syndication

…

Weekly
Weekly

Wendell
Gupta and Mackey

WO Gupta
RK
IN P
ROC
ES

© SAP AG 2004, NetWeaver & ESA Phase 2 / 11

11

Global Leads
NA Core Team
Global Leads

Ongoing process

Offering, Comms
and IMC Leads

Bi-Weekly

Project Leads

Weekly

Global Leads

S

Clear Sailing: Positioning SAP
for the Market Leadership Battle
Communications
Recommendations
Sylt Discussion Slides

Clear Sailing Core Team

1

Context
PURPOSE OF THE DECK: This deck is focused on recommendations for communications that
address the broad market. It recommends communications strategy and tactics required to
position SAP for Market Leadership vis-à-vis Oracle, and discusses the following:

Situation analysis
Risks that could impact SAP’s brand position, and risk mitigation
High level communications goals
Messaging Guidelines
Communications Tactics and Event Calendar

NOTE: In a separate deck, “Questions that get Oracle into trouble”, you will find content that
clearly identifies Oracle’s weak spots. This content is intended as input into communications
strategy and tactics.

© SAP AG 2005, Confidential, Clear Sailing

2

Situation Analysis

Market consolidation has changed the competitive
landscape. Oracle is positioning itself to aggressively
challenge SAP for leadership in business software
solutions.
Oracle is highly motivated to drag SAP into a PR
battle, and we can expect a relentless campaign over
the next 24 – 36 months to de-position SAP. In the
wake of the 18 month PS takeover news cycle, Wall
Street is watching journalists are on the sidelines waiting
to write the next and chapter.
Media interest is high – provocative statements
from Oracle, and simple statements from executives will
drive the news cycle in most key markets.

Internal pressure at SAP is high to
“take on Oracle” in response to
public provocation from Oracle.
We are emboldened by strong
financial performance, especially
after nine good quarters in the US
market, which is the key
battleground.

Recent SAP share price drop caused mainly by
disappointment on SAP operating margin guidance
coupled with Oracle projections of strong top line and
margin targets. Some possibe selling by hedge funds
and long-term holders taking profits due to “lack of a
catalyst” to drive near term SAP share price and SAP
trading at highest valuation in peer group.
© SAP AG 2005, Confidential, Clear Sailing

3

We Have an Opportunity to Extend SAP’s Market
Leadership
Oracle is distracted – attempting to integrate three
companies, maintain margins, reduce people assets,
and deliver a 3-7 year roadmap for a new platform,
apps and new tools, while maintaining its customer
base.
SAP needs to maintain the high ground - SAP can
avoid a costly and dangerous PR battle with Oracle
by learning from its successful Safe Harbor plan.
SAP can position itself as the market leader, and
discipline itself to avoid a fight with Oracle, by
staying focused on the customer.

SAP has the opportunity to extend
market leadership.
However, communications risks
exist.

SAP’s focus on the customer de-positions
Oracle’s competitive threat - Customer focus
drives positive perception of SAP for key audiences
– investors, customers, prospects, media.
There is opportunity in this situation for SAP to
extend its market leadership. The long-term prize
is not beating Oracle – SAP is already the market
leader. The goal is successfully positioning SAP
against IBM and Microsoft.

© SAP AG 2005, Confidential, Clear Sailing

4

Communications risks exist, but can be mitigated
Risk: SAP gets into a PR battle, weakening the brand
SAP succumbs to temptation and gets dragged into the
mud by Larry Ellison and his PR team.
A PR battle between Oracle and SAP ensues, widely
covered by media.
Distracted by the PR battle, the press begin to deposition SAP’s market leadership perception, and view
everything through the “filter” of the battle with Oracle for
first place.
Risk: SAP perception by other key audiences weakens
Customers - SAP market-leading perception erodes, as
customers see SAP going toe-to-toe with Oracle,
devaluing the brand position built over last 18 months;
customers raise questions about success of NetWeaver;
SAP faces risks in the Public Sector as Oracle waves the
“Buy US” banner
Investors/Financial Analysts – Oracle continues to gain
in market cap battle as investors focus purely on Oracle’s
short term financial targets instead of SAP’s platform
vision and SAP’s resulting potential market victory

How we can mitigate the risks
Take the High Road: Leverage the
success of 18 months of Safe Harbor
and stay above the fray in market
messaging
Focus on Key Battleground
Channels: Investors & Media
Follow Consistent Communication
Principles: Everyone at SAP, from the
Board level onwards, adopts a
common set of communications
principles
Channel all efforts through a
central team: We execute on the
strategy through a clear project
management structure with clear KPIs,
monitoring and accountability

© SAP AG 2005, Confidential, Clear Sailing

5

Communications Strategy,
Messaging Guidlines and
Tactics

6

Clear Sailing - High Level Goals for Communications

It's All About the Customer
Differentiate the customer relationship by sharing valuable knowledge and delivering extraordinary
service
Full transparency on the Oracle vs. SAP Strategy
Expose the Competition’s Achilles' heel
Disrupt Oracle's planned maintenance income stream from PSFT customers, making it more
difficult for them to deliver their promises to the Street and the customer base
Win the "technology war" in the minds and writings of the most respected analysts and influencers
Own the News Cycle by taking it away from the competition
Leverage the calendar to drive SAP messages into competitive news flows
Develop a steady stream of news hooks for Wall Street and Main Street
Drive Investor Confidence (market cap/market share)
Consistently meet or beat expectations, highlight and be more specific on medium term targets,
reinforce the traditional base of investors while seeking new investors, increase the interest among
the sell-side with new ideas for research
Protect and offset SAP’s potential "vulnerabilities"
Pre-empt Oracle’s spin campaign by executing aggressive M&A plan (industries/regions/products)
Wrap SAP in the red, white and blue, especially in Washington, DC

© SAP AG 2005, Confidential, Clear Sailing

7

Clear Sailing – Messaging Guidelines
Maintain the high ground by keeping the focus solely on the customer
Primary channel for Clear Sailing is through the press.
Global program, but key battleground will be the US market.
Critical channel for success: investors & financial analysts
Drive Clear Sailing messaging in SAP events and activities going forward (investor tours, press
meetings, customer engagements, Business Forums, SAPPHIREs, executive thought leadership
programs, etc.) – establish an on-going drumbeat that will resonate for 24 months
Ratchet up “guerrilla marketing activities” to leverage news for SAP that disrupts competitive
news cycles – keep the media focus on SAP

© SAP AG 2005, Confidential, Clear Sailing

8

Clear Sailing – Messaging Guidelines
Exploit geographies and vertical markets where Oracle has “given up,” and demonstrate SAP’s
broad solution map and global reach. Position these areas with financial analysts and
media/analysts.
Demonstrate SAP wins/success in key markets where Oracle has declared their emphasis –
this will undermine their credibility (like Banking, High Tech, Healthcare, etc.). Position these wins
aggressively with financial analysts and press/analysts.
Find ways to set the record straight, and balance the Oracle PR machine without waging a PR
war directly. Consider static methods – like web sites or blogs, rather than direct PR statements.
Commission surveys. Leverage credible 3rd parties.
Keep the field informed – drive a consistent flow of information to the regions and to the Global
sales organization. Keep sales educated on SAP initiatives and SAP’s response to competitive
thrusts.
Key success factor: Clear Sailing succeeds only with consistent flow of customer
conversions/success stories from Safe Passage, US market and globally. Introduce new “welcome”
program for new customers to drive participation in Clear Sailing public relations efforts.

© SAP AG 2005, Confidential, Clear Sailing

9

Risk Mitigation – “High Road” Principles for
Communications
Leverage the success of 18 months of Safe Harbor, when SAP was widely acclaimed for consistent,
leadership behavior – staying above the fray, not engaging in a public battle and staying focused on the
customer.
A key success factor for Clear Sailing is getting everyone at SAP, from the Board level to the sales
person on the street, to adopt a common set of principles:
Be the Customer Advocate -- Leverage the customer relationship as the differentiator
Be true to the Brand – Operate in an open, straightforward manner, with all stakeholders
Behave as a Leader -- Consistency, credibility, confidence reinforce market leadership: Passion ≠ Emotion
Insist on the Truth -- Zero tolerance for inaccuracies, set the record straight
Prove it with Actions, Not Words -- Leverage third party endorsements (customers, analysts, partners,
research reports, etc)
Don’t Personalize -- Stay the course (this is not a battle with Larry Ellison), focus on helping customers
succeed
Stay the Course -- Disregard the distractions and stay focused on the long-term goal

© SAP AG 2005, Confidential, Clear Sailing

10

Stakeholders at a Glance
Audience

Objectives

Tactics

Investors

Build on track record with buy-side,
increase dual sell-side coverage (many key
brokerage firms only cover SAP out of
Europe)

Increase face to face briefings; leverage
road shows and brokerage events, leverage
partners and customers, use sell-side for
special research, perception studies to
measure sentiment

Media

Increase visibility by leveraging existing
opportunities and anticipating the next
phase

Seek placements in major biz pubs and
broadcast. Train spokespersons. Drive
awareness in vertical/trade.

Analysts

Internal: help define markets and industry
trends, Support sales execution

Briefings, Consulting, Inquiry, Syndication of
opinions, ETL Speaking opportunities,
Sales cycle assistance, Leverage analysts
with the press and the financial analyst
community.

External: establish credibility and improve
our competitive position
Gov’t
Officials

Position SAP as a multinational w/deep US
roots to influential legislators on the hill and
in key states (PA, CA, etc).

Targeted one on one meetings, select one
to many forums; leverage BRT membership

Employees

Provide continuous information flow

Embed in existing channels (board report,
SMI, town halls, etc)

Customers

Simplify the decision by showcasing
companies that have switched

Educational forums, Sapphire

© SAP AG 2005 C fi

i l Cl

S ili

11

Clear Sailing – Message Talking Points/Spokespersons
On responding to Oracle statements: “Rather than spending our time responding to competitive
statements, SAP will continue to do what we’ve always done…remain devoted to helping customers -large and small – run their businesses better.”
On the question of will Oracle be number one: “The best indication of the future is to examine the
current state. For the past two years, customers have been voting with their wallets – and the result is
steady market share gains for SAP at the expense of competitors. Customers want a trusted advisor, and
a long term partner – that choice is SAP. Nothing suggests a change in this customer behavior.”
On Project Fusion’s challenge to SAP: “SAP has best in class applications with mySAP solutions, and
we are shipping to customers. SAP has the only truly open applistructure platform in NetWeaver – with
1,500+ reference customers. The competition has laid out an ambitious agenda, but they promise a
completely new application set, platform and tools – sometime after 2008. All while integrating three
different companies with very different cultures. Meanwhile, SAP is delivering solutions to customers
today.”
Spokespersons
Global Major Media:

Customer/Market Topics: Bill McDermott
Technology Positioning: Shai Agassi

Other Media:

Technology Positioning: Peter Graf
Customer/Competitive Topics: PR Team (Heitmann, Wohl, etc.)

© SAP AG 2005, Confidential, Clear Sailing

12

Potential SAP Events to drive Clear Sailing Messages
[Currently being compiled – Oracle events.]
Jan

Feb

March

April

May

June

July

Aug

Sept

Oct

Nov

Dec

ASUG
CeBIT
Hanover

Business
SAPPHIRE
Forums Detroit,
Boston
SAPPHIRE
Atlanta, San
Copenhagen
Jose, New York,
Houston

Customer
Comms

Investor
Relations

Business
Forum CeBIT Asia
Philadelphia

Q4

Global
road
show

Q1

AGM

SAPPHIRE
Tokyo

Broker
conferences

TechEd Vienna/
Boston

Q2

Broker
conferences
SAPPHIRE
Broker
SAPPHIRE Boston
conferences
Copenhagen

Employee
Comms

Public
Comms

CeBIT
Eurasia
Business Forums
Los Angeles,
Miami, Chicago,
Wash. DC TechEd

Broker
Broker conferences
conferences

Tokyo/ Bangalore

Q3

Broker
conferences

Global
road
show

FKOM APA
FKOM NA/
EMEA/ Japan
ICT World Forum8. UN ICT Task
Force Meeting
SAP Interoperability
Hanover
Dublin
Conference Brussels
WEF World
Economic Forum

SAP
RFID Panel US

AGM

WSIS Tunis

ACCS Vallendar

© SAP AG 2005, Confidential, Clear Sailing

13

Clear Sailing: Positioning SAP
for the Market Leadership Battle
Communications
Recommendations
Sylt Discussion Slides

Clear Sailing Core Team

14

Clear Sailing: Questions that

Oracle Cannot Credibly Answer
Sylt Discussion Slides

Clear Sailing Core Team

1

Context
PURPOSE OF THE DECK
This deck provides a set of sharp, focused questions that will trip Oracle up, since Oracle cannot answer these
questions credibly.
This content is intended to be used in crafting communications strategy and tactics, creating spokesperson
content, in competitive sales situations with Oracle, and in building out sales tools like competitive Oracle Sales
Guides.
It is intended to be leveraged in a manner that is effective and hard-hitting, yet consistent with the values of
SAP

NOTE
Please note that general Communcations recommendations on strategy and tactics for addressing the broad
market – media, investors, analysts etc. – are discussed in a separate deck, “Clear Sailing Communications
Recommendations for positioning SAP for Market Leadership”..

© SAP AG 2005, Confidential, Clear Sailing

2

Asking the Questions that
get Oracle into Trouble –
“Quo Vadis, Oracle?”

Shai Agassi and Peter Graf

3

Quo Vadis, ORACLE?

O
R
A
C
L
E
© SAP AG 2005, Confidential, Clear Sailing

4

Quo Vadis, ORACLE?

O
R
A
C
L
E

SUPPORT FOR MICROSOFT?

penness?

Will the Oracle platform support .Net like
SAP NetWeaver?
Does “Support for DHTML” mean Oracle will
not support the MSFT native desktop model
by 2008?

SUPPORT FOR NON-ORACLE DBs?
Will Oracle only support DBs that have
Oracles future identity model, i.e. only
Oracle DBs? If not, where is that generic
identity model that all will use? If it is there,
why is it such an advantage for them over
SAP?

SUPPORT FOR OPEN TOOLS?
Why is Oracle not using open tools like
Eclipse (like IBM and SAP) but is building
their own tools?
If Oracle creates all new tools, what
happens to customers‘ investment in
PeopleTools, and PL/SQL? Was that a
wrong direction to follow?

© SAP AG 2005, Confidential, Clear Sai ing

What happens to their contract with BEA on Tuxedo? Did BEA extend it, are they now generating revenue for
BEA? If not, what happens to the customer?

5

Quo Vadis, ORACLE?

O
R esources?
A
C
L
E

WHO WILL MAKE THE NUMBERS?
Oracle laid off 5,000, that’s 50% of the size
of PSFT
If 90% of development and support are still
on board, who is gone? Field!
How can the ORCL apps sales force
generate 2x revenue? Is ORCL plan based
on any reality?
What happens to all the customer
relationships?
Don't they fear the departure of customers
as result of this kind of Field change?

WHO WILL DEVELOP CON-FUSION?
ORCL reduced development headcount by
10%. Where are the additional developers
needed to develop the new platform, tools,
architecture and applications while at the
same time they keep delivering on all of the
current development plans for all products?

© SAP AG 2005, Confidential, Clear Sailing

6

Quo Vadis, ORACLE?

O
R
A pplistructure?
C
L
E

IS THIS ABOUT TECHNOLOGY?
ORCL said SAP wants a technology fight.
Do they understand that SAP is going after
Applistructure and not pure Technical
Infrastructure? When will they have their
applistructure ready?
Does ORCL understand that new trends like
Web Services and Applistructure
commoditize databases?

WHO LEADS THIS MARKET?
Since NetWeaver is already delivered and
working at customers with 1,500 references,
does that give SAP a head start of 4 years?

WHO CAN INNOVATE THIS MARKET?
Since SAP has only one code base, aren't
they able to innovate better and faster?
Where are ORCL’s composites/xApps?

© SAP AG 2005, Confidential, Clear Sai ing

WHAT HAPPENS UNTIL 2008?
What happens until Project Confusion is ready, did they just leave the whole market wide
open for SAP until that point,

7

Quo Vadis, ORACLE?

O
R
A
C ustomers?
L
E

PSFT/JDE CUSTOMERS DEAD END?
As they don't pitch PSFT/JDE applications
to new customers, what kind of innovations
will they put into the app? Is version 9
merely a dot release for all the bug fixes that
were in the pipeline anyway?

INNOVATION FOR ALL?
If there are major additions and innovation,
will they show up in all four product lines?
Same innovation? How can they code it four
times, and still have enough people who can
code it for the new platform?

WHY PAY HIGH MAINTENANCE $?
If customers don’t get any major innovation
on the existing product line, why shouldn't
customers just get a cheap support model
(like TomorrowNow) and wait to see what
product comes out of project confusion? It
is definitely a cheaper holding pattern.

© SAP AG 2005, Confidential, Clear Sailing

8

Quo Vadis, ORACLE?

O
R
A
C
L eadership?
E

PROFITABILITY?
If PSFT was working at 10% margin, how can
ORCL deliver the revenues to get to 50%?

MARKETSHARE?
SAP just captured 12% of relative market share
during the last 6 months. How do they explain
this loss of share to the financial community?
Will they ever be able to catch up?
ORCL predicted flat app revenue. SAP
delivered 20% growth (in $) in 04 and predicts
similar results in 05 (10-12%). Does ORCL admit
a loss in market share in 2005-06 to SAP.

VOLUME?
ORCL says the avg. deal price gets smaller, so
more volume is needed. Which sales people are
supposed to sell that volume?

REVENUES?
Why did ORCL use 2003 numbers to state their
North America position, 2004 numbers are
available and show that SAP is in the lead?!

© SAP AG 2005, Confidential, Clear Sai ing

Since they are not reducing R&D in order to produce the new project confusion, and they are not
reducing support in order to provide better customer service, what are they reducing in order to gain
an additional 10% in margin?
Given they had just paid well over $10B for PSFT, at a rate of 5% cost o money, where do they
model the cost of acquisition as a loss of $500M a year, and how does that reflect on EPS? Do they
intend to sell shares to pay for the debt, if so how does that reflect on EPS?

9

Quo Vadis, ORACLE?

O
R
A
C
L
E xecution?

MISSION IMPOSSIBLE?
No application vendor in the past has been
able to fuse two applications into one, how
are they going to do it with 3 or 4? Is this
project Fusion or Con-fusion?

WILL THEY (EVER) BE DONE?
Do they really think they can start building
all of the applications from scratch and do
better than with Oracle 11i which took 3+
years to stabilize? Should we plan for 2011?

AUTOMATIC MIGRATION?
How does ORCL want to automatically
migrate all customers from all solutions to
project con-fusion? Doesn’t each solution
have a different data model, and there’s
custom code, too. Even PSFT didn't provide
automatic migration for 8.0 to 8.1, etc. within
the same code base! Isn’t automatic
migration too good to be true?

© SAP AG 2005, Confidential, Clear Sailing

10

Quo Vadis, ORACLE?

O penness?
R esources?
A pplistructure?
C ustomers?
L eadership?
E xecution?
© SAP AG 2005, Confidential, Clear Sailing

11

Clear Sailing: Questions that

Oracle Cannot Credibly Answer
Sylt Discussion Slides

Clear Sailing Core Team

12

THE TRUTH ABOUT ORACLE II

Summary
On 26 January, 2005 Oracle’s Executive Leadership Team held a Financial Analyst Day to
discuss its future plans and made a number of pointed claims regarding SAP, among them:
Ellison: Oracle is the #1 business solution provider in North America." (not true SAP
is number one)
Rozwat: “With the amount of publicity given [to NetWeaver]” he "wanted to set the
record straight.” Going on to say he was “flattered that SAP’s NetWeaver chart [on
their website] looks like Oracle’s,”
Ellison: "SAP (NetWeaver) is ABAP dominated. That's a dead language.” and
“internally focused.”
Ellison: "Responding to several further questions on Project Fusion and its
implementation, Ellison stated, “It’s time to deliver the next generation of
applications. We expect SAP to come out with a story close to ours.”
Rozwat listed out reasons why NetWeaver was “not there yet, but looks good,”
So what is the truth of all this?

Oracle’s Claims Examined:
Claim: Oracle is Number 1 in the North American Application Software market for total
revenues (Source: Gartner 2004).

Rebuttal: For Gartner’s 2003 revenue numbers this is true but based on 2004 revenue
numbers, SAP will again lead this market. We expect Gartner, the largest and most
respected analyst firm, to substantiate this information when it publishes its 2004 market
numbers. CMI projects that Gartner will publish the following market share figures: SAP:
$798mm +/- 10mm; Oracle/PSFT $682mm +/- 3. Therefore, Gartner will reinforce the fact
that SAP is leading in North America.

Claim: Oracle is Number 1 in Worldwide HCM Market (Source: AMR: 2004)
Rebuttal: According to Gartner, SAP leads the worldwide HCM market with a 21%
(281.3MM) share of the market and Oracle with 19% (250.8) Source: Gartner Dataquest,
2004

Claim: Oracle is Number 1 in the worldwide SCM market (Source: AMR 2004)
Rebuttal: Again, SAP holds the leadership position in the SCM market. AMR had
provided Oracle with numbers on the SC Planning segment which put them in the lead, but
again, according to Gartner, SAP is the clear leader in the Supply Chain Management space
(SCE, SCP, Sourcing/Procurement) with $ 315mm (15.8%) to $250mm (12.6%) Source:
Gartner, 2004

Worldwide Relative Market Share
SAP's share of the worldwide software market leadership remains unaffected by Oracle's
acquisition of PeopleSoft. In fact, over the last two years, SAP's worldwide relative market
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share (SAP compared against its top 4 -now three - competitors: Oracle, PeopleSoft Siebel
and Microsoft) has grown from 49% to 57%, an increase of 8 points. During the same
period, Oracle's share of the worldwide market declined from 13% to 12%, while
PeopleSoft's share decreased from 16% to 11%. Today, the combined entity has a relative
market share of 23%, less than half of SAP's total worldwide market (based on total software
revenues). Source: CMI, IDC

US Relative Market Share
The story in the US Market is remarkably similar, illustrating SAP's continued strength in this
geography. Over the last two years, SAP came from behind to establish a leadership
position in the US. SAP's relative market share grew from 25% to 38%, an increase of 13
points. PeopleSoft, which had the leadership position 2 years ago, with a 28% share,
declined to just 17% in the quarter ending December 2004. Oracle's share of the US market
decreased from 17% to 16%. Today, the combined entity has a relative market share of
33%, five percentage points less than SAP's share in the US market. Source: CMI, IDC

Claim: Ellison announced that “its new range of products, Project Fusion, would
incorporate the best functionality from all four legacy products”. It is to be delivered by 2008.
Rebuttal:
CMI believes that Oracle will use its discretion and hand pick functionality with no
guarantee of meeting customer requirements. It will not use PeopleSoft or JD
Edwards code; instead it will incorporate some features.
We also believe that the whole concept of easily being able to combine features and
functions from multiple solution sets is largely impossible to do in the near-term. This
is especially true given the expected high turnover in the Oracle, PeopleSoft and JD
Edwards development and product management staff. Creating a new platform and
building deep industry and solution expertise will take years.
Its our opinion that the inherent weaknesses of Oracle's database-centric approach
could hamper its ability to incorporate the true strengths of each solution.
Most agree it will be virtually impossible for Oracle to provide substantive
enhancements to three product lines while simultaneously developing a fourth,
within a two year timeframe.
SAP, today, leads in providing rich and deep industry specific functionality. In the
future, SAP will even further exceed competitors in providing value to customers in
most industries. This will occur because of SAP’s
Industry specific business process based approach to application development
Commitment and R&D spending to enhance industry specific functionality.
xApps and ability to bring in pre-built industry partner applications.

Claim: Oracle stated that one of their main objectives in Project Fusion is to help
customer lower their total cost of ownership.
Rebuttal: Analysts don’t believe this will happen. AMR clearly states, “While we believe
the launch was very positive for customers, we didn’t hear any discussions of the role that
Project Fusion will play in driving down the costs of managing next generation
architectures.” (AMR, The Fusion of Oracle and PeopleSoft Apps, January 18, 2005).
Furthermore, given Oracle’s (and PeopleSoft’s) reputation for leaving customers in a lurch
when it comes to product migration, it is impossible to think that Oracle will create a new
(immature) platform that allows its customers to migrate quickly, at a low cost.
JP Morgan quotes, “CEO Kagermann talked of industrializing software production and how
SAP is strongly positioned to become the enterprise transaction processing platform of
choice through delivering solutions that offer the lowest total cost of ownership in the
industry. This message is consistent with our view of one of the major themes in the
technology industry today - the costs to maintain the corporate computing environment are
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high and need to come down before CIO’s can make the case for further investment that
sees corporates structurally deepen their technology capital base once again.” (JP Morgan,
SAP, January 27, 2005)

Claim: Ellison says “we're going to continue to develop all 3 application product lines for
some years to come.” He followed this up by stating, “we have a team of over 8,000
engineers developing the existing application suites and the next-generation application
suite.”

Rebuttal:
It is our opinion that it is unrealistic to expect any substantive enhancements to
product lines that will be dead-ended in three years by Project Fusion. Oracle is
unlikely to invest much in the PeopleSoft and JDE products because the investment
will not pay off as there are no plans to sell them to new customers, giving it little
impetus to continue to innovate.. In addition, they are products that Oracle has
indicated that it does not want.
8000 developers focusing on 4 product lines will not be able to match the
enhancements that could be delivered to customers if those developers were all
focused on one product line.
More importantly, we also believe that Oracle will not be able to keep up with the
innovation delivered by SAP. SAP has close to 10,000 developers all focused on
ONE product line. SAP is poised to be the first to deliver on SOA, based on a
converged Applistructure environment which makes it easy to combine, integrate
and manage software from SAP, other ISVs or from in-house development.

Claim: Ellison states, “despite SAP not liking us very much, SAP has certified us, not
MSFT or IBM, to run SAP Applications.”

Rebuttal: Unlike Oracle, SAP is certified and runs on all major DB platforms, MSFT,
Oracle, IBM, Sybase and even the open source MySQL (and has a long history of doing so).

Claim: Oracle will be the first to deliver on ESA with its Fusion architecture. Oracle will
develop its new architecture based solely on standards, making it more flexible and open.
Responding to several further questions on Project Fusion and its implementation,
Ellison stated, “It’s time to deliver the next generation of applications. We expect
SAP to come out with a story close to ours.”
Ellison stated that NetWeaver wasn’t real and had no customers.
Rozwat (EVP Server Technologies) said: “with the amount of publicity given [to
NetWeaver]” he "wanted to set the record straight.” Going on to say he was
“flattered that SAP’s NetWeaver chart [on their website] looks like Oracle’s,”
Rebuttal: We firmly believe that Oracle is trying to re-write history by implying its vision
on Fusion preceded that of SAP NetWeaver.
SAP first announced its vision in 2001. According to Giga, 2001, “while SAP was
addressing a vision of providing technology and services and components from different
vendors internal and external to the organization, Oracle was still claiming that linking
components from different vendors was unworkable and instead wanted customers to buy
components from one vendor.”
SAP followed through on this vision by launching SAP NetWeaver in January 2003 – two
years before Oracle revealed its plans and future vision. At the same time, SAP deployed its
NetWeaver map, which Oracle seems to have made use of in 2004.
Gartner ranks SAP much higher than Oracle in the categories of “Smart Enterprise Suite”
and “Web Services Enabled Software”. Additionally, in October of 2003, Gartner stated that
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SAP has the leading vision for business process fusion (which is Gartner’s term for enabling
companies to flexibly develop and deploy processes).

Claim: Ellison stated that "SAP NetWeaver is ABAP dominated. That's a dead
language”…“internally focused.”

Rebuttal: While ABAP is a proprietary language, SAP has continued to enhance it so
that it currently supports security and scalability requirements more robustly than languages
such as Java – and PL/SQL. Furthermore, SAP NetWeaver is the only platform to
support Java, ABAP, and .NET at the same time. ABAP is the world's most successful
business application language. In addition SAP is committed to protecting customers’
investments, while offering the CHOICE to use Java and/or .NET.
According to our intelligence, Oracle solutions are dependant on PL/SQL, which is a
proprietary language. Further, we believe that Oracle relies on pre-defined business flows,
which are hard-coded in PL/SQL stored procedures. Oracle has no .NET strategy. Oracle’s
apps are based on stored procedures in the database.

Claim: Oracle has the leadership vision regarding ESA.
Rebuttal: "As applications and infrastructure blur into what we are terming
“Applistructure”, we expect a handful of vendors to emerge as business software platform
providers. We expect SAP to have a predominant position among them." (JPMorgan - 24
September 2004).

Claim: Oracle will service enable its applications as part of Project Fusion
Rebuttal: Consistent with its database heritage, we believe that the only products Oracle
announced to support its service enablement vision were data and transaction hubs. In our
opinion, this data hub approach can’t match SAP’s ESA vision or the marketplace’s SOA
expectations. Data hubs can’t provide basic SOA requirements including process
automation, service composition, service registration and reuse, support for other SOA
platforms (Microsoft.net or IBM WebSphere as examples) or presentation capabilities.

Claim: Business process automation combined with information management is better
than SAP’s business process focus.
Rebuttal: In our opinion, Oracle’s financial performance in the enterprise application
market has been less than stellar. The company’s inability to grow enterprise application
market share highlights its inability to deliver solutions that automate business process and
manage information. Unlike Oracle, SAP has proven its ability to automate business
processes and SAP allows its customers to choose the database platform that best suits
their needs.

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