Meanwhile, Citigroup SAP analyst Marc Geall wrote in a separate report that by his calculations, factoring out acquisitions, Oracle's applications sales growth trails SAP's. While acknowledging that calculating organic growth is "a challenging and subjective process," he found little evidence for Oracle's claim to be winning market share away from its chief rival. Bernstein Research analyst Charles Di Bona downgraded Oracle after its earnings report, also citing concerns that "much of [Oracle's] growth is due to the optics of Oracle's recent acquisitions."
The case studies Oracle plugs are similarly slippery. In Oracle's earnings call, co-president Charles Phillips touted 88 head-to-head victories over SAP during the quarter, including wins at Electrolux, Lockheed Martin, Walt Disney World and U.S. Steel. One customer, jewelry retailer Zale Corp., was singled out as a prime example of Oracle's "winbacks" against SAP.
"We lost to SAP a year ago at Zales," Phillips said. "[SAP] made some promises we knew they couldn't deliver on. The projects failed. They now have a new CIO and they replaced the SAP product with Oracle retail products."
But Zales was already a heavy Oracle customer one that made plans to switch to SAP, then canceled them after a management shakeup. Zales has an extensive deployment of Oracle's financials applications and has for years relied on retail software from Retek, which Oracle acquired in April. Early last year, Zales signed with SAP to replace some of its Retek functionality. But before the project got beyond the planning stages, a management sweep that cleaned out all of Zales' top executives ushered in a new CIO, Mark Stone, who took the job in May. Zales immediately canceled all IT projects begun by the previous regime, according to SAP.
Zales' press representative declined to comment on its IT projects or to make IT executives available for this article. Beset by turmoil in its executive ranks and slumping sales, Zales is working on a turnaround and is reportedly considering going private. The company and is unlikely to embark on any major IT overhauls until its fate is less uncertain.
Oracle's characterization of Zales as a "failed" project, along with its growth claims and other jabs, have SAP frothing.
"Zales may have been a customer on paper, but they never got started from a software perspective," said SAP spokesman Bill Wohl. "[We're] up against a company that does not think that getting the truth out into the market is an important component of the story.
SAP doesn't dispute that it loses scores of potential new-business deals to Oracle each quarter, but it wins an equal number, Wohl argued. More significantly, SAP says it's not seeing the rip-and-replace conversions Oracle insinuates it's generating. In the fifteen months since Oracle launched its "Off SAP" campaign to convert SAP R/3 customers, Oracle hasn't rolled a single one, SAP claims.
"We have not seen a single SAP customer that has changed from being a fully implemented and live SAP customer and switched to Oracle solutions," Wohl said.
Oracle blankets discussions about conversations with a fog of announcements about new business wins over SAP, but its press office was unable to name any recent customer conversions. Asked for an example, Oracle cited McData, a storage networking vendor profiled in a conversion case study Oracle published in March. However, McData switched from SAP applications to Oracle's more than four years ago.
While hard data on the relative successes Oracle and SAP are having in their sales tug-of-war is elusive, it's clear that the heated rhetoric between the two vendors is approaching the boiling point. When SAP reports its quarterly results next month, expect to see some sharp elbows thrown Oracle's way.
