Oracle scores major Russian ERP deal

Oracle Corp. is supplying its E-Business Suite to Russia’s giant telecommunications holding Svyazinvest in a contract that some here are touting as the largest information technology deal in Russian history.

Svyazinvest chose Oracle to supply Enterprise Resource Planning (ERP) system software that will be installed throughout the company, it said in a statement, which did not disclose the sum of the deal, but leading Russian business newspaper Vedomosti reported that it is worth US$153 million. That would far surpass the previous record-holder for top Russian IT deal, a US$100 million systems integration contract signed between largest Russian oil company Yukos and Microsoft Corp. in 2000.

Oracle representatives at the Moscow offices and corporate headquarters refused to comment on the deal and analysts here are warning that until they do, it’s too early to say what it means for the California-based company.

“For Oracle, the question is how much is going to be spent on software,” said Robert Farish the regional manager for Russia, Ukraine and Central Asia at research firm IDC. “Until someone from Oracle comments, we just don’t know.”

A subsidiary of major Russian systems integrator Open Technologies will install the ERP system throughout Svyazinvest’s corporate structure and will provide technical support, Svyazinvest said. A full range of ERP services will be installed.

Considering Svyazinvest’s vast corporate structure, the US$153 million sum sounds reasonable, said Yevgeny Golosnoi, a telecoms analyst with Moscow’s Troika Dialog. He also said he expects such deals will become more and more common among large Russian corporations, which have often been criticized for inefficiencies.

“Many major Russian companies will be looking for these kinds of solutions,” he said. “They’re reaching the stage where they have to improve their business internally – in terms of the flow of information, management, communications – in order to be competitive.”

Svyazinvest, Russia’s state-controlled national fixed-line telephone operator, is in the midst of a major re-organization that has already seen it consolidate more than 70 regional companies into seven regional telecoms. The boards of directors of the seven telecoms must approve the deal and minority shareholders have expressed concerns that a tender was not held for the contract. But with Svyazinvest representatives holding the majority of seats on all the boards, analysts say there is little doubt the deal will be approved. As of Thursday, five of the boards had already approved.