Oracle-SAP war spells savings

Now’s the time for businesses to take a good, hard look at their enterprise resource planning software as two major ERP vendors battle each other with price discounts, notes one industry analyst.

Now that Oracle Corp. and SAP AG both have programs designed to entice customers away from the other, corporations should scrutinize their enterprise apps, said Joel Martin, vice-president, software at IDC Canada Ltd. Prices are on the way down and it’s a good idea to consider your options.

“You have two industry giants battling for the enterprise’s business,” Martin said. “Be savvy. Spend the time to understand your business processes. Talk to peers in the industry.

Involve non-IT people in the decision-making process. Identify what’s right, what went wrong in previous implementations, and take that to the suppliers.” Ask them, “how can you help me do this better?” Martin’s advice comes on the heels of Oracle Corp.’s announcement last month that it has created a program to convince SAP clients to move to Oracle’s ERP wares. Entitled “Oracle Fusion For SAP” (OFF SAP), the Redwood Shores, Calif.-based software maker’s migration program promises licence discounts and less-expensive implementation costs compared to SAP.

According to Stephan Scholl, Oracle Canada’s group vice-president for applications and consulting, his company saw an opportunity to build OFF SAP when it heard via industry analyst firm Gartner Inc. that just six per cent of SAP’s clients had upgraded from the aging R/3 applications to the newer mySAP apps.

As current SAP customers eye the upgrade path, “It’s a prime opportunity for those customers to…look at alternatives,” Scholl said, noting that 94 per cent of Oracle’s customers are on E-Business Suite 11i, the latest iteration of the vendor’s enterprise application platform.

Scholl said SAP charges hefty licence fees from R/3 users moving up to mySAP, whereas Oracle includes upgrades in the initial 11i licence. OFF SAP includes consultations for interested companies wherein Oracle outlines the strategic benefits of jumping from the SAP ship and the tactical how-to of the move.

But SAP refutes Oracle’s claims. Janice Power, marketing communications manager at SAP Canada Inc., pointed out that Oracle’s 11i has been on the market since 2000, whereas mySAP is just a few years old. No wonder 11i has so much better take-up among Oracle users; they’ve had more time to implement it. Bob Courteau, SAP Canada’s president, called Oracle’s comparison here “an absolute distortion of the facts.”

Regarding licence costs, Bill Wohl, SAP’s U.S. spokesperson, said R/3 customers get a 75 per cent credit on their mySAP licences. That represents a significant amount of money saved, especially considering how powerful an upgrade mySAP is over R/3. “Oracle’s blowing a lot of smoke,” he said.

Oracle’s reps countered by saying 11i may be five years old but it has undergone many upgrades since 2000. And besides, Oracle still has the upper hand, they said, because it knows all about application integration, a hot topic for businesses these days. Oracle’s Fusion Middleware products answer the call.

SAP also has a middleware platform, NetWeaver, but Oracle’s Scholl said it’s “an unproven technology” that’s still too new for most businesses to take seriously. SAP unveiled NetWeaver in 2003.

But SAP Canada’s Courteau said his company has 1,500 NetWeaver reference implementations. “The products are out there, they’re working, people are buying them,” he said, arguing Scholl’s “unproven” comment.

Courteau said SAP’s own migration program, Safe Passage, is going well. It’s meant to give companies using PeopleSoft and JD Edwards apps an opportunity to find out what SAP can do for them.

Oracle purchased PeopleSoft Inc. last November, just after PeopleSoft acquired JD Edwards & Co. Courteau said a “lack of clarity” from Oracle regarding plans for the PeopleSoft and JDE function sets has caused many enterprises to strike up conversations with SAP.

Martin from IDC Canada said OFF SAP isn’t a reaction to Safe Passage. Instead, it’s Oracle’s attempt to seize some SAP clients as they consider upgrading or walking away from the German software vendor.

Who will win the war? Martin said both firms have hurdles before them. “Oracle’s top challenge has to be getting people to think of them as more than the database company.” Oracle started life as a database application venture but it aims to be seen more as an information-systems purveyor than a simple software seller.

“The biggest challenge for SAP is really seeing mass adoption of NetWeaver and mySAP,” Martin said. “They’ve made a lot of investments in moving people from R/3.”

Whatever the final outcome of this Oracle-SAP bout, enterprises will win, Martin said, so long as they’re smart about it. Scrutinizing their ERP installs could help businesses find improvement areas that either Oracle or SAP should be able to address for a song.

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