Concord, Mass.-based Welch Foods Inc., the international fruit-juice company with annual sales exceeding $575 million, has chosen Oracle Corp. over SAP for a massive, company-wide enterprise resource planning (ERP) implementation.
Welch recently signed a contract with Oracle to implement its E-Business Suite, and the company plans to go live with the first of two phases of the project in September, a Welch's executive said yesterday.
The leader of Welch's ERP selection committee, Larry Rencken, said the competition between the two software vendors was close. Oracle won the contract when it discounted its initial price significantly, Rencken said, and after committee members became convinced that Oracle would be less difficult to implement on a large scale.
"It was a consensus vote from the selection team, and that selection team looked at functionality, ease of implementation and flexibility -- in addition to TCO," Rencken said. "While functionality was very close between the two products, ease of implementation and flexibility was won fairly-handedly by Oracle."
Rencken declined to disclose any financial figures associated with the project.
SAP and Oracle, whose rivalry has been more intense than ever recently, entered into a sort of bidding war for the project, putting Welch's in the enviable position of being able to leverage one offer against the other. The two companies competed for several weeks, but by the time SAP submitted a competitive bid, the decision had been made, Rencken said.
"In the end, SAP did come back with a counteroffer that was a very close, competitive counter, but we [had] already made our decision," Rencken said. "They were not as competitive as they could have been in the initial rounds."
Oracle CEO Larry Ellison has declared war on SAP, saying his determined attempts to acquire PeopleSoft Inc. are part of a plan to build an ERP empire and challenge SAP in the space it dominates.
The Welch's deal proves that no single vendor owns the ERP market, said Joshua Greenbaum, who owns Daly City, Calif.-based Enterprise Applications Consulting.
"This proves to me that there is still a lot of competition in the marketplace and, particularly, that SAP does not have a lock on the market," Greenbaum said. "What this says is that there's a lot of issues in a competitive deal and that the market system still works for enterprise software." The new reality, Greenbaum said, is that many software buyers can negotiate deals that weren't possible before the large ERP market became saturated and the economy became so tight.
Bill Wohl, SAP's vice president of public relations, called the decision by Welch's a "disappointment."
"What happened at Welch's essentially flies in the face of what is a clear track record of customer success," Wohl said. "The reality is that what we have is strong competition in the market."
Rencken said that Welch's is using IBM Global Services to help implement Oracle's software suite. IBM is working with Oracle Consulting on part of the implementation, he said.
"We certainly had an infrastructure with a lot of spaghetti code keeping it together, and now we have a desire for one fully integrated enterprise," Rencken said.
Currently, Welch's is using a proprietary order entry system, financial tools from the former J.D. Edwards & Co., and a Prism system for material requirements planning. Rencken said the company wants to make a complete move to Oracle.
Welch's has already begun the first of two phases in the project. Welch's will implement Oracle Financials and HR in the first phase, and then bring in other modules, including Oracle Order to Cash, Warehouse Management, Inventory Management, and Production and Purchasing.
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