Just Software: A CEO Diary

Vendor Profile

Both SAP and Oracle have demonstrated over the last couple of decades that each had sufficient ability to adapt to the changing economic climate during the late 1980’s through 1990s.SAP began its life as an ERP company with $9.7 billion in revenue last year. Whereas Oracle Corporation started as a tools company with $5 billion in annual only applications revenue now.Both companies write code. But Oracle is writing bigger checks instead of software. Oracle has bought companies like J.D. Edwards (ERP), PeopleSoft (ERP), Siebel (CRM), Retek (retail solutions), Oblix (user authentication) and others. If Oracle succeeds, Oracle not only will reshape his company but the entire industry. However it fails, Oracle won’t be in immediate peril.The war between Oracle and SAP is moving to the courtroom. Oracle has sued SAP “about corporate theft on a grand scale” seeking undisclosed damages. Oracle argues to have discovered in November “heavy download activity on Oracle’s customer support Web site for PeopleSoft and J.D. Edwards products. The site contained information on program and software updates, patches and instructions.Vendor Costumers

Oracle eBusiness

• Cisco Systems
• LG Electronics
• McDonald’s Latin America
• Welch’sAir India
• Amadeus
• Boehringer Ingelheim
• Canon Europe
• Capgemini
• China Petrochemical Development Corp.
• Coca Cola Egypt
• Dell Inc.
• Ducati Motor Holding
• Emirates National Oil Company
• Fuji
• Xerox
• Korea
• General Electric
• Google Inc.
• HP
• IBM
• Mastercard
• Qantas
• Starbucks
• Toyota Motor Europe
• Versace

Oracle Siebel

• CompUSA
• Tata Motors
• Bank of Ireland
• Bank of New York
• Boehringer Ingelheim
• DaimlerChrysler
• Deloitte Consulting
• DHL
• Fujitsu
• Siemens
• Honeywell
• Aerospace
• HP
• IBM
• La Fnac
• New York City
• Novartis
• SAAB Cars USA
• Sabre Holdings Corporation
• Subaru of America
• Sun Microsystems
• UPSVerizon Wireless

Oracle PeopleSoft

• ABN AMRO Bank
• Business Objects
• Expedia
• BNP Paribas
• Canon
• Capital One
• Cognos
• Daimler-Chrysler
• Dell
• Ford Motor Company
• HP
• Lufthansa
• Marriott International
• PriceWaterhouseCoopers
• Société Générale

Oracle JD Edwards

• Cargill
• Christofle
• Deely Harley-Davidson Canada
• EMC
• HP
• Omron China Company Limited
• Otis Elevator Investment

SAP CRM

• Adidas
• Adobe Systems
• AMD
• Audi
• Chupa Chups
• Coca-Cola
• FEMSA
• Colgate-Palmolive
• Heineken
• Italia
• Hero
• Honda Motors
• LAN Airlines
• OSRAM
• PhilipsSiemens
• TATA Telecom
• Texas Instruments
• T-Mobile
• DeutschlandVolkswagen

SAP ERP

• Air France
• Airbus
• Black & Decker
• Coca-Cola
• SABCO
• German Aerospace Center
• Gillette
• IBM Global Business Services Australia
• Panasonic
• Siemens
• Texas Instruments
• The Hershey Company

SAP for an ERP point of view has a clear advantage from a customer base. Although there are emblematic cases like Dell Computers whose innovative manufacturing and distribution processes that could not be accommodated by the existing SAP system and migrated to Oracle Applications.

Roadmap and Functionality

Business applications are a much bigger commitment for an IT buyer than are databases and other underlying technology. Oracle Project Fusion is combining its own software with programs from PeopleSoft, Retek and J.D. Edwards. It’s aiming to release a new product from that effort in 2008.

SAP NetWeaver takes SAP’s advantage in building out its own applications. SAP’s has experience in 28 verticals, and the software functionality to prove it; whereas Oracle needs to acquire industries experience in healthcare, telecommunications, financial services, education and government. Companies in the high-tech manufacturing market segment would likely be better off with Oracle, while companies in the pharmaceutical and utilities industries would be more likely to choose SAP.

Halfway to Fusion Applications (as Oracle has announced) for this market given the benefit of the doubt is not enough when the result must be a suite of highly verticalized service-oriented applications based on least six different code bases is hard even for the best. Oracle is big with full of some of the smartest minds in the industry… so is Microsoft, whose next-generation version of its enterprise software suite – Project Green – has been delayed.SAP also has a monumental development task with NetWeaver but it has the advantage of the experience of the code developed by them within 20-plus years.

Technical capabilities

Oracle has a strong middleware product. Oracle Corporation has worked on simplifying and opening its Applications architecture. Oracle also has worked in a unified data model have one source of record. The result is faster access to actionable information at less expense.Both are SOA and standards and both are incorporating BI functionality directly into those architectures.

Oracle’s Fusion applications will only run on Oracle’s database, while SAP’s new applications will run only on SAP’s middleware.Web services and service-oriented architectures are making the battle between Oracle and SAP the assembly of the application at the customer site will become more important than the individual components where they come from.Oracle’s offering also shines in several areas with regard to extensibility — Web applications, workflow and reporting.

Implementations

No “out-of-the-box” ERP system can meet the needs of every customer.Nobody in this business should cast stones as both vendors have had implementation problems. Whether these failures were the principal responsibility of the customer or the vendor does not change the reality of the industry: at the end, this is only a supplier’s fault.

The company who is going to implement should see that even though the weakest link is the supplier, the one who is hurt is the company itself. So the company must be ready to embrace the project with full capacity and enthusiasm as one made for and by them.

Every implementation is unique. Although there are some radical people who is inclined to vote for one of the two vendors and give some reasons the implementations to be easier, the complexity of the implementation will be linked to the kind of company you what vertical you are in, the unique process you want to have, the quality of managers of your company, the team to implement the project with a proven methodologies, the key users, the formation and training of the common user, the level of implication of direction, the knowledge of the system department, the right amount of training to users and computer department and the environment of the company at that time. However remember that bad software doesn’t kill implementations, bad managers do.

Migrating your data to the new solution, customizing the user interface, and aligning the solution with your existing applications in other cases you may need to work with your solutions provider to ensure that financial, customer, inventory, and other information that resides on legacy systems can be migrated to the new solution efficiently.

Given all this factors, neither Oracle nor SAP will be much (more than a big percentage) responsible to the success of the implementation. The cost of the software implementation is typically calculated by the number of user licenses you need.

Total cost of ownership total value of the company

Gartner Group has given a lifetime cycle to evaluate the TCO. In the case of an ERP:AcquisitionImplementationOperationMaintenanceReplacementDirect cost in every part of the cycle must include:

— Hardware

— Software license

— Hardware and Software Implementation

— Hardware warranties and maintenance

— Software license tracking costs

— Operations Infrastructure costs and benefits

— Infrastructure (space)

— Network hardware and software

— Recurring Communications

— IT Personnel Salaries and Benefits

— “C” Level Management Time

— Backup and Recovery

— Technology Training Costs

— Insurance Costs

— Replacement CostsHidden yet Substantial CostsEnterprises are finding that hidden costs, such as non-technical personnel attempting to resolve technology problems, can account for as much as 25 percent of the entire technology cost.

Perhaps then the two greatest costs associated with short-sighted technology implementations are:

1. The time-value cost of inexperienced IT personnel or non-IT personnel grappling with IT problems; and

2. Cost of a business interruption.

Therefore when we consider SAP or Oracle TCO we must consider, of course the cost associated with the project although the real reason in a first place to implement a new ERP is not the cost, but the cost reduction and the associated benefits of the solution. For this reason the vertical fitness to the company must place the first step ( and the most important variable) when calculating the total cost and benefit of the project. Here we are going to have less customization come faster deployments, lower consulting costs and internal resources that return to business operations quicker.

When we read exclamations to be SAP or TCO lower than each other could be a statistical fact that does not apply to our company. This is one of the few times when we must not hear the market analysis of the cost for the rest of the companies.

Maybe for this reason no one has ever undertaken such a rigorous TCO evaluation. It would be nice for all us to have such data, but reality dictates that we have to do it for everyone every time we need to evaluate between the two solutions.SearchSAP.com and SearchOracle.com asked industry experts Joshua Greenbaum and Faun deHenry to debate the technology strategies of both software vendors. Faun deHenry’s argues that SAP is far more expensive than Oracle. In response Burckhard Zoellner, who worked with both Oracle and SAP users throughout his career, believes deHenry is right on in its conclusion that Oracle’s average three-year total cost of ownership (TCO) is 48% lower than SAP’s. “My feeling is that the pricing from SAP is far too high,” Zoellner said. “I know this has been a problem.”