Hiring away key employees from another firm is a longstanding and legitimate business practice. Mass hirings or defections such as the ones described here are much more rare and are often teh signal that rivalry between firms is about to or already has kicked into high gear or that the hiring firm intends enter the other's marketspace. A recent notable and notorious instance of the use of mass hirings as a means to facilitate entry was Amazon.com's poaching of a huge swath of Wal-Mart's IT staff back in 2000. Wal-Mart struck back by suing Amazon for violation of trade secrets. The case was settled out of court. I don't anticipate that anything like this will occur here. Rather, I expect the business equivalent of the bare-knuckles, smash-mouth, "Just Win, Baby" football that made the Oakland Raiders an NFL legend. Among the other tactics and strategies I'd expect to see is for the two firms to go aggressively after each other's customers, something the article suggests is already happening:

Recently, the two biggest players, SAP and Oracle, have also been trying to woo each other’s customers by offering incentives for switching sides. But it’s unclear how effective these measures will be. Customers are often wary of changing enterprise systems as cost and risk can be high and deployment can be lengthy.

An interesting aspect of this story relates to who it is that is leading these lightning raids into the hostile camps. According to the article:

Several other key development and marketing executives from rival companies have joined SAP. They will be working under the key Product and Technology Group in Palo Alto, California, which is managed by Israeli whiz kid Shai Agassi, president of the group and a member of SAP’s executive board.

“This wave of incoming talent proves that SAP is attractive not only to outside companies seeking a strong partner, but also to leaders outside our organization who are looking to influence the industry through their work at SAP,” Mr. Agassi said in a statement.

Since his appointment to SAP, Mr. Agassi has made several changes, including drawing new talent into the Palo Alto offices. “He is not a staid German engineer,” Mr. Shepherd said. “He’s much more vocal and fits much better in Silicon Valley than he would in Germany.”

Several things about this information are noteworthy. First, is the international angle. If I am not mistaken, Agassi is an Iranian and/or Persian name, e.g. tennis star Andre Agassi is half-Iranian. Thus, we have a rather young, possibly Persian Jew serving as a group president and executive board member of a German company doing business in Silicon Valley, a place that has among the highest concentration of non-US born engineers and computer scientists in the country. While I could hardly be called a multiculturalist or a promotoer of diversity for diversity's sake, I do love how the free flow of capital produces such novel, and presumably profitable, combinations of human resources.

Secondly, the strategy of amassing such a large talent pool may be an indicator that the SAP is after bigger stakes than just the enterprise integration market. What those those other markets may be remains to be seen, but it is something I'll surely keep my eyes open for. One way to know would be to have more information on the backgrounds of the people hired away. If Agassi is hiring mostly functional managers from the competition, then I would assume that his long-term plan is to build an "excellent" organization. If however, he is hiring away people who have been group presidents, business development managers, people who have had profit/loss responsibility for global brands, then I am thinking he has more ambitious plans. After all, it would be extremely cynical and ultimately counter-productive to hire away other firm's potential CEOs and then leave them to wilt on the vine, that is to say, to not give them a chance to run their own business units.

And this relates to my last point, how the market views this strategy. There is ample research showing that hiring and firing C-level executives can have a significant and lasting effect on a firms stock price or market value. It would be interesting to see if any of the high profile talent acquisitions have resulted in either an increase in the market value of the acquirer or a loss of it by the prior employer. It is possible, of course, that no effect will be noticed in the short term for many of the hires, particulary for those that are not upper level. Still, the effect on a firm's morale of from being unable to defend itself against raiders can't be sending very positive signs to the firm's shareholders. If the top management of the firms on the losing end of the raids don't find a way to stop the losses, expect to see some of them walking the plank.