By Stephen Phillips

Customer relationship management software vendor, Siebel Systems Inc revealed this week that it has been served with a lawsuit by SAP America alleging it has unfairly recruited 27 key employees from the ERP software vendor in a bid to injure SAP’s business. In a lawsuit filed in Pennsylvania state court on Monday, SAP contends that Siebel used predatory hiring practices directed at SAP and unfair competition designed to injure SAP’s business and damage SAP’s ability to compete with Siebel.

Ed Bierdeman, senior vice president at Moors and Cabot Technology Research Group in San Francisco, who worked under Siebel chief executive, Tom Siebel, as an executive at Oracle, told ComputerWire that the action indicates that SAP views Siebel as more of a competitor than it has in the past. Bierdeman said the lawsuit is also a tactic to discourage other firms from seeking to lure away SAP staff, although the practice is not illegal.

The two companies’ recent fortunes have been almost inversely proportional as Siebel has experienced surging demand for its front-office CRM software while SAP has reeled from flagging orders for its back-office software modules, spanning companies’ accounting, human resources and manufacturing needs.

To boost sales SAP hatched a business strategy, which included assembling a line of CRM software that it can tout to its installed user base of 20,000 locations worldwide. It plans to launch the long-awaited suite in mid-2000. But the company’s US division, lost many executives at a critical juncture in the development of the new software. SAP’s lawsuit cites a list of executives and managers who left SAP America to join Siebel over the past year, including its former president, chief executive officer, senior vice president of Latin American sales, senior vice president for New Dimension products and vice president for corporate communications, among other sales, management and engineering staff.

Paul Wahl, the former CEO of SAP America joined Siebel in May, joining ex-colleague, Jeremy Coote, who quit as president of SAP America in March to join Siebel. SAP’s lawsuit says Siebel injured its business, disrupted operations and hurt the morale of its employees. The lawsuit states: Siebel has engaged in a systematic effort to injure SAP’s business and impede SAP’s ability to compete with Siebel in the CRM marketplace.

In a terse statement, Siebel said management believes the lawsuit is without merit. It and SAP would offer no further comment to ComputerWire to shed any light on the punishment SAP is seeking or the likely timetable for the legal proceedings. á