Ernie:
I'll answer your points with a ===>
Guess theyv'e done pretty well this year, didn't expect that quick a jump...
===> I think SAP have been easily outselling Oracle for 2 years. Their first R/3 deal in the US was Chevron and that was in late 1992.
Also, a question is how much does SAP cost in relation to Oracle Financials??? You stated dollar amounts, what about actual installations???
===> From what I hear SAP is expensive. To completely implement it worldwide for a large multi-national will cost hundreds of millions of dollars, and the software licensing itself will be tens of millions of dollars. Licensing is based on a per user basis and I do not know how that varies depending on the number of modules being accessed. I do not know about actual installations, but in the US it must easily be > 100 R/3 sites by now.
Also, does that number include Consulting for the product??? Most vendors add the cost of consultants into the total cost for an installation of the software, and for a 6 to 12 month project, that could be substantial, I believe SPA consultants go for upward of $300 an hour, while Oracle's are upwards of $150... (depending on the customer, etc..)
==> 6 to 12 months...you've got to be kidding, try 2 to 3 years to implement R/3. As to costs, I think that a 10x multiplier for R/3 is not unreasonable (10 times the license cost = consulting cost). But as SAP only do limited consulting the sales revenues they post will be predominantly licenses. And yes, SAP consultants do charge more per hour because of the high demand (higher than Oracle because there are more installations - its that demand/supply thing).
By the way, what does Oracle say about Independant Studies????
===> Well I heard through the grapevine that Ray Lane and Jeff Henley have been very unhappy about this picture. There have been reviews task forces and so on. But nothing seems to have come out of any of them. However, what really hurts them is SAP's momentum and a product set that is functionally superior to Oracle's. In the end applications are bought by end users not MIS people, so Oracle's traditional distribution strength is blunted.
It also has to be remembered that SAP was started by some ex-IBM'ers in Germany who bid to build some accounting modules for ICI Germany, a very large British chemical company. So from the start the functionality had to support a multi-national customer with multiple currencies, rapid consolidations and so on. This turned into the R/2 product. However they also managed to build it using their own proprietary language ABAP/4, and when this was ported to Unix they could move over all that tightly integrated mainframe functionality quite easily. Oracle, on the other hand, have been building their products from scratch.
Oracle may have been first out with Open Systems applications but they squandered their early market position with a poorly architected, bug ridden product. Now real competition has arrived, and the market is speaking. Also you have to look out for Peoplesoft. They have moved from just supplying HR software to offering mainstream accounting modules as well. Oracle is looking like dogmeat at the moment.
One interesting teaser is if Oracle were only an applications vendor, would they still be in business? Fortunately their RDBMS business is pretty solid and they can afford to fund applications for a while. But what would the effect on the EPS if they jettisoned applications? |
