Nortel software move highlights hot battle

Expect to see more heated competition between Oracle Corp. and its German competitor SAP AG as their customers get caught in the middle of an ongoing database tug-of-war, according to industry observers.

And the rivalry is failing to give a clear trend of who’s winning, said Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif.

“There isn’t a trend one way or the other in terms of either of these companies replacing the other in established customers. (But) we’re going to see a lot of back-and-forth switches as each of the vendors works hard to get more key customers, claiming it is better than the other,” Greenbaum said. He described the competition as a “no-holds-barred, take-no-prisoner, devil-may-care” struggle.

If the example of one big-name Canadian customer is any indication, however, there is room for some account poaching in this battle. Nortel Networks Ltd. announced last month that it was switching its financial transaction application from Oracle to SAP’s Master Data Management (MDM). The move is part of the telecom firm’s effort to standardize its enterprise resource planning (ERP) systems, said Sunil Gupta, solutions marketing director for SAP’s platform technology group.

“SAP’s MDM (tools) will help Nortel in managing reference data across the enterprise as well as delivering a consistent information foundation for compliance-related business processes,” said Gupta.

MDM is a tool that synchronizes data from different repositories. It does so across an organization, allowing the company to standardize its database into one global location. For a big company such as Nortel, which has made a number of acquisitions and technology investments through the years, it is logical to look at ways of integrating all these different technologies, said George Goodall, senior research analyst at London, Ont.-based Info-Tech Research.

“The master data management tool is a way of essentially creating a Rosetta stone to translate between those data sources, (one) that’s really much more attractive than Oracle’s traditional strategy of forcing everybody into one data model,” Goodall said.

He added that Oracle would be in a much better position to counter SAP’s integration strategy with its upcoming Oracle Fusion project. “SAP’s master data management strategy and its acceptance of heterogeneous environments is certainly getting them in good stead, (but) Oracle is in a position of being a fast follower to catch up with project Fusion.”

Oracle’s acquisition strategy may also prove less attractive to customers than SAP’s “business process-driven” approach, and that difference is what could drive a company like Nortel to favour SAP over Oracle, according to Greenbaum.

Oracle can talk about product roadmaps “in theory” as it builds up a product portfolio through acquisitions. SAP, on the other hand, has made significant investments in R&D that allows it to present a “very coherent framework” for what it can offer to a company like Nortel based on solid facts, Greenbaum said. “I think [SAP’s strategy] is a better message for dealing with business level-issues than what Oracle is able to do.”

Reacting to the analysts’ comments, Oracle claimed SAP customers have been migrating “in great numbers” to Oracle applications. In particular, Oracle’s Off SAP program, which offers SAP customers a migration path toward the Oracle platform, has received inquiries from over 1,000 SAP customers, according to David Rumer, senior director of marketing for Oracle Canada. He was unable to specify, however, the number of customers that have actually migrated through the Off SAP program. “Oracle’s been in the middleware arena far longer than SAP and I think we are a far superior choice to integration through the middleware (tools),” said Rumer.

Nortel’s decision to standardize on SAP’s ERP tools may be a big gain for the Waldorf, Germany-based company, but it can hardly be considered a major setback for Oracle, said Warren Shiau, senior associate and lead technology analyst at Toronto firm The Strategic Counsel.

The Brampton, Ont.-based telecom company earlier made known its intention to standardize its ERP sets on SAP tools and the decision to replace its Oracle-based financial system was anything but unexpected, Shiau pointed out.

“Nortel uses SAP ERP, so I don’t think it’s surprising that they would undertake some serious standardization in their financials,” said Shiau, adding that one of the reasons why Nortel had difficulties in financial reporting was the disparity in its financial data systems. “It wasn’t always able to fully consolidate the information in a timely way.”

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