SAP is reaching out to business process outsourcers (BPOs) in its latest bid to lure away PeopleSoft and J.D. Edwards
customers from Oracle Corp.
Industry analysts and experts who have been monitoring the increasing use of BPOs, said SAP is ahead of other large enterprise resource planning (ERP) vendors in recognizing the growing trend away from traditional software delivery.
SAP extended its Safe Passage program, which provides license credits and software services, to PeopleSoft and JDE customers who are using the software through a BPO. Through the extension, BPOs could tap experts and migration tools to assist their customers to migrate to SAP.
SAP said the extension would allow BPOs to minimize migration cost and limit the risks of business disruption.
SAP is also partnering with Brussels-based Arinso International, a human resources services provider, through its certification program. Arinso developed a set of tools and pre-configuration and standardized processes to migrate its customers to SAP's HR software.
Meanwhile, Oracle has chosen a different route than SAP and hasn't addressed the BPO trend, said Charles King, principal analyst at Hayward, Calif.-based Pund-IT Research. The company is in a state of transition as it builds through acquisitions and works to integrate what it has acquired into its products, King said.
"The sense I get is that Oracle wants to prove they can grow themselves into the same kind of company SAP is," King said. "Oracle wants to be a business-centric applications company rather than the database monster that everybody knows."
Phil Fersht, an analyst who serves as research director at BPO advisory firm EquaTerra Inc., said SAP is making its software BPO-friendly to stave off a threat to its traditional ERP delivery model.
"SAP recognized that BPO is not just a reflection point in the industry," Fersht said. "They are being flexible in thinking and recognizing that BPO is a threat to themselves if they don't change their ways."
Fersht said SAP's move is a shot across the bow of Oracle, which has not established similar relationships with BPOs. Oracle's technologies and its recent acquisitions put it in a less-likely position to create partnerships with BPOs, Fersht said.
"Oracle is totally foreign in the way it has evolved in that it's all about ERP, data hubs and database technology," Fersht said. "The amount of internal reengineering that Oracle has to go through at this point puts SAP way ahead, because SAP has adapted quickly to the changing culture."
Small, medium and large enterprises have been eliminating legacy HR systems and are choosing to outsource those business processes to BPOs. The growth is related to the cost savings and a speedy return on investment, Fersht said.