Is ERP consolidation an Oracle phenomenon?

Instance consolidation is popular among Oracle Corp. customers for a few reasons, says Bill Swanton, vice president at AMR Research Inc. For one, users tended to roll out Oracle software in a fragmented way – Oracle basically encouraged companies to implement its software site by site and even department by department, he says.

In its early days of offering ERP software, Oracle didn’t have mature multinational features. “Until seven or eight years ago, Oracle really couldn’t have supported this kind of implementation,” Swanton says.

And lastly, quality problems with Oracle 11i kept companies from upgrading over the last two years, which means many companies are running old versions of Oracle software. As the vendor prepares to freeze support for Version 10.7, a lot of Oracle users are contemplating upgrades, Swanton says. “And if they’re looking at upgrades, they’re looking at consolidation,” he says.

Oracle customers considering ERP consolidation need look no further than their vendor for inspiration: Oracle is nearing completion of a four-year effort to slash the number of instances it supports from 70 to one.

“We started with over 70 financial instances, basically one per country. Each ran on separate boxes with separate databases,” says Bret Fuller, senior vice president of IT for applications at Oracle. Oracle has whittled its systems down to three instances, and in October it will have one, global database for all of its financial systems.

Compared with Oracle users, there are fewer SAP AG customers undertaking instance consolidation, Swanton says.

But they do exist. “There are plenty of people looking at it in SAP, but it’s very much an Oracle phenomenon,” he says.

One reason instance consolidation projects are less common among SAP users is that SAP has preached the benefits of global ERP longer than its peers. SAP was the first ERP vendor to start talking about one multinational system, at least 10 years ago, Swanton says. “Quite frankly, what drove a lot of large, multinational companies to jump on the SAP bandwagon very early is that they could have this idea of a global system,” he says.

ERP consolidation projects also are less common among users of PeopleSoft Inc., which has its roots in human resources. The vendor’s human resources software was conceived to consolidate workforce-related tasks companywide, so users tended to implement its software as single instances, Swanton says.

Many J.D. Edwards & Co. rollouts could be ripe for instance consolidation, once the vendor’s globalization features mature, he says. “They’re just at this point getting ready to be able to deploy on a really global basis,” Swanton says.