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Nortel to dump Oracle, solve fiscal woes using SAP

Nortel Networks is streamlining its data sources and installing SAP's master data management middleware. But SAP MDM lacks functionality, and customers need third-party tools to meet typical MDM requirements, analyst says.

Telecom equipment maker Nortel Networks Ltd. is working with SAP to solve its stymied data problems that has plagued...

the company with fiscal irregularities in recent years.

SAP hasn't solved the basic MDM problem, which is to manage the item master, material master and custom master in SAP itself.
Bill Swanton
research vice presidentAMR Research Inc.

The company plans on eliminating Oracle Corp. for its financial transactions, and is installing SAP Master Data Management and streamlining other multiple legacy systems in the process.

SAP developed and launched its own set of master data management (MDM) tools in 2002. It abandoned that development when it purchased Los Angeles-based A2i in 2004 and then repackaged A2i's product as its own.

MDM provides a framework to define the reference master data within a company. Reference data is a category of data that describes and defines transactions, such as a sale of Nortel network equipment or optical system to a particular customer.

SAP MDM integrates product data, and identifies and cleanses similar data objects across various systems. Companies that use the new application should be able to receive product data from third-party systems and unify it in a common data format.

When SAP originally launched its MDM product, it aimed at synchronizing products, customers, materials and supplier data across various systems. However, once development was abandoned, SAP relied on A2i's technology, which limits SAP MDM to synchronize product master data, said Bill Swanton, research vice president at AMR Research Inc.

Related information:

Building a business case for MDM

SAP acquires A2i


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"More than likely, SAP customers will go to a third party for customer data integration capabilities," Swanton said. "SAP hasn't solved the basic MDM problem, which is to manage the item master, material master and custom master in SAP itself."

Customers also have the choice of using products by SAP rivals, including Oracle, which uses a product called a data hub that manages data across various Oracle and non-Oracle systems. IBM offers the most advanced portfolio of MDM products that are sold with the company's WebSphere middleware, Swanton said.

To have complete MDM capabilities, SAP customers must chose from third-party MDM vendors that include Brewster, Mass.-based BackOffice Associates, Irvine, Calif.-based Optimo Systems and Dallas-based i2. These firms have layered products that add customer data synchronization capabilities.

Nortel plans on implementing SAP MDM, even though the product is a small part of the company's overall project. Nortel's fiscal woes will be solved by eliminating a tangled web of complicated systems to make financial reports, said Gabriele Bauman, SAP program leader at Nortel. The goal is to increase visibility across the company, she said.

Nortel is currently using SAP R/3 4.6c, and also uses Oracle for some of its financials and other systems for pricing, customer relationship management and supply chain management throughout various divisions. The company plans on moving to mySAP ERP and will phase in the implementation of NetWeaver, SAP's exchange infrastructure, supplier relationship management, enterprise portal and business warehouse across all its various divisions.

"We have disparate systems throughout different regions, so we've identified the need to consolidate onto one global instance," Bauman said.

While uptake with SAP's product has been relatively slow, Sunil Gupta, director of business development for MDM at SAP, said license sales have increased over the last six months as more customers move onto SAP's NetWeaver platform. About half of MDM customers use it to manage data coming from non-SAP sources, including legacy systems, mainframes, and Oracle and Siebel applications, he said.

"It's not about creating another repository, but it was more about creating a set of reference information that could be leveraged internally or externally in a very loosely coupled way," Gupta said. "It gives you the flexibility to re-architect very quickly without worrying where your data is."

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