Data and analytics technology provider Teradata has filed a lawsuit against enterprise software and ERP applications provider SAP alleging trade secret misappropriation, copyright infringement and antitrust violations.

This development should garner the watchful eye of both Teradata and SAP installed base customers including those that are operating supply chain management support applications leveraging predictive and prescriptive analytics.

The lawsuit alleges that: “SAP has used its powerful position in Enterprise Resource Planning (“ERP”) Applications to gain entrance to and quickly grab market share in the Enterprise Data Analytics and Warehousing (“EDAW”) market, in which it previously had essentially no presence.” The subsequent Teradata News Release alleges that:

SAP has engaged in a decade-long campaign of anti-competitive behavior, to the detriment of the parties’ customers and Teradata” and that SAP lured Teradata into a joint-venture in order to gain access to Teradata’s intellectual property.  The noted purpose of the joint venture was to combine SAP’s ERP Applications suite and Business Warehouse (BW) reporting tool with Teradata’s massive parallel processing (MPP) architecture for EDAW. Teradata also contends in its complaint that: “SAP’s ERP customers are effectively locked-in to using SAP ERP Applications, and SAP is now attempting to lock them into using only HANA in the EDAW market as well.

According to various published reports, this week’s filing draws on allegations from a former SAP auditor that was first reported by the German magazine Spiegel in September 2015 At the time, SAP co-founder and Supervisory Board chairperson, Hasso Plattner, characterized the claim as “monstrous and laughable.”

This lawsuit further alleges that, ..HANA developers,  under the direction of Dr. Vishal Sikka ( former SAP Chief Technology Officer) utilized the same technology developed by Teradata engineers and developers during the Bridge Project- using Teradata’s trade-secret techniques for optimizing the execution of analytical queries and the speed of data storage and retrieval of largescale databases.

Dr. Sikka indicated in a statement to The Economic Times of India that the allegations were “baseless and outrageous.”

As with all my endeavors, my work with SAP HANA was carried out with the highest integrity, professionalism and respect for all obligations towards trade secrets and intellectual property. Although this lawsuit is not directed at me, I categorically deny the baseless and outrageous allegations made by TeraData that attempt to diminish the hard work, passion, and the irrefutable and fully legitimate achievements by the Hana team, including myself.”

SAP has indicated that it will need time to review the lawsuit prior to providing a comment.

 

Implications and Advisory

As many in IT know all too well, lawsuits involving an enterprise software provider can be nasty and can extend through a number of iterations before the parties eventually settle.  Tech industry media is quick to point out that initially, it is unclear as what success this lawsuit will have. Lawyers representing both firms will obviously maneuver to inflict the most business pain to elicit a monetary or business practice related settlement.

Our readers might recall that in 2006, then supply chain planning technology provider i2 Technologies sued SAP alleging that the enterprise software provider infringed on 7 patents concerning supply chain management demand and manufacturing planning algorithms. That lawsuit reached a settlement in 2008, two years later, with SAP paying $83 million to i2.

In the meantime, SAP customers that are migrating former BW data warehouse data and information retrieval needs to the SAP HANA platform need to monitor ongoing events related to this lawsuit. Similar advice applies for Teradata customers that have elected to augment their SAP focused EDAW needs, if this process turns nastier and SAP elects a counter-suit.

Vinnie Mirchandani, noted enterprise software analyst and occasional expert witness in technology related lawsuits, in a recent commentary on his Deal Architect blog regarding the Teradata law suite, opines that both companies will present detailed technical arguments related to industry development practices, and that in the end, a jury trial appeals to lay person more than technical arguments. “But the discovery process will involve looking at lots of data going back at least a decade or more. They cannot do instant analysis, they have to watch “lots and lots of tape””

This development could therefore extend for many additional months extending a cloud of uncertainty as to the final outcome and its depth of implications for customers, if any.

The full PDF copy of the compliant can be viewed on this specific Teradata web page.

 

Bob Ferrari

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