SAP Stock Price Spikes On Report Google Will Use Its Financial Apps, Ditch Oracle

The news comes the same day the U.S. Supreme Court ruled in favor of Google in a long-running lawsuit brought by Oracle seeking $9 billion for Google’s alleged Java copyright violations.

SAP shares surged nearly 5 percent Monday on a report that Google and its parent company Alphabet will stop using financial applications from Oracle and instead begin using ERP applications from SAP, a long-time Oracle rival.

The news comes the same day the U.S. Supreme Court ruled in favor of Google over Oracle in a long-running software copyright dispute over Google’s use of Java.

There was no indication the news of Google’s plans regarding its use of Oracle financial applications was in any way related to the SCOTUS decision. Both developments, however, show how much Google and Oracle are becoming heated rivals in the cloud computing services space.

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The report regarding Alphabet’s adoption of SAP applications, if accurate, would also mark a victory for SAP, also a long-time bitter rival with Oracle in the market for enterprise applications.

Monday CNBC reported that Google plans to migrate its internal financial manage systems from Oracle software to SAP applications in the next few weeks. The CNBC report, which cited an email sent to Google employees the network said it had seen, said Alphabet will stop using the Oracle financial applications “in the coming weeks” and move its core financial systems to SAP applications in May.

SAP shares gained $6.05 (4.81 percent) Monday on news of Google’s reported plans to switch financial application providers, closing out the day’s trading at $131.80 per share.

The report said the move only applies to the Oracle software Alphabet uses to track finances and that there is no indication the company is moving off of other Oracle software. Given that such ERP applications are used to run core financial operations within large companies, migrations from one vendor’s ERP system to another usually take months – if not years – of planning and implementation work prior to a switchover.

An SAP spokesperson confirmed that “Alphabet is running SAP S/4HANA on Google Cloud to support its finance teams, and we’re excited to continue expanding our work with them.” Oracle has not responded to a request for comment.

The reported application switch could be viewed as Google thumbing its nose at Oracle. Google and Oracle compete in offering cloud computing services and resources that businesses and organizations use to host and run their cloud applications and systems. The CNBC report also noted that Oracle has refused to certify its widely used Oracle Database for use in Google’s cloud.

The Oracle-Google rivalry reached a new level Monday when the U.S. Supreme Court ruled in favor of Google in a long running Java code copyright lawsuit brought by Oracle.

Oracle had sought up to $9 billion in the suit claiming that Google’s use of Java APIs to build the popular Android mobile operating system violated Oracle copyrights. But in a six-to-two decision the court ruled that Google’s use of the code was protected under fair use.

While Oracle’s rivalry with Google and AWS in cloud services is more recent, its heated competition with SAP in enterprise ERP applications goes back years. During past earnings calls Ellison has been known to trash-talk its rival, including pronouncing “SAP” as a single word instead of by individual letters.

In March, during Oracle’s fiscal 2021 third quarter earnings call, Ellison said SAP “had entirely missed the boat” in the ERP application market and he spent more than 10 minutes reading a list of ERP software customers he said Oracle had won over from SAP.

Google’s decision to discontinue its use of Oracle financial applications is reminiscent of moves by Amazon Web Services – which also competes with Oracle in cloud computing – to shut down its internal use of Oracle’s database software. In late 2018 AWS CEO Andy Jassy even taunted Oracle founder, CTO and chairman Larry Ellison in a tweet when AWS shut off its Oracle-based data warehouse system.