SAP and Oracle: Aggravating ERP Customers One Continent at a Time
For your consideration: two deals that SAP and Oracle are haggling over right now in Ethiopia.
When it comes to enterprise software—the various ERP suites, the fierce competition among vendors, the implementation horror stories—I tend to write only about happenings that have direct ties to the United States and occasionally in Europe.
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I fully admit I need to broaden my views. In looking through Oracle's and SAP's most recent annual reports, both companies (and other top ERP vendors, too) derive a good and growing portion of their sales from outside the U.S.—from Japan, India and other countries in Asia, the Middle East and Africa, as well as in South America.
Not surprisingly, battles rage every day between SAP and Oracle sales reps in locales where English isn't the primary language and ERP still receives a savior-like status for prospective customers. But no matter where you go on the planet, ERP-purchasing ordeals often sound eerily familiar.
Just look at the cut-throat deal-making (bidding and underbidding!), brazen negotiating tactics and political fervor taking place in Ethiopia—which is among the world's poorest nations. For instance, SAP and Oracle (and their integrator partners) are battling it out over two ERP contracts: One for the Ethiopian Telecommunications Corporation (ETC) and one for Ethiopian Airlines.
Local media reports paint a picture that resembles most U.S.-based vendor engagements, with a bidding war on the ETC contract (valued at roughly $6.8 million, as best I can tell) that is pitting the local IT operatives and global vendors against one another. Proving that ERP complaints are nearly universal, a source knowledgeable of the ETC project complained to Addis Fortune.com about the fees of Oracle and partner WIPRO Technologies: "They have a huge amount of bill to charge ETC in annual license fees," said the source. (Where have I heard that one before?)
But ironically, Oracle's offer to do the deal (at $6.1 million) is $300,000 less than the offer from the SAP/Ernst & Young team, according to Addis Fortune.com.
As for the proposed Ethiopian Airlines deal, SAP's bid of $8.9 million appears to have won out over Oracle, which at one time or another "felt the value of the contract would be too small for it to get involved directly," said Girma Wake, CEO of Ethiopian Airlines, in a Addis Live! article. (This time Oracle's bid was reportedly $90,000 higher than SAP's offer!)
The process has not been without controversy. Oracle and SAP had both gone through local intermediaries to offer their bids to the Ethiopian Airlines execs, which "according to knowledgeable sources" is against a "sacred policy" of the airline for many years now, reported Addis Live! They both were forced to re-bid the project. Oracle then deemed the project "too small," according to Wake, which is interesting because it had a higher value than the ETC contract.
But then Oracle reps asked for another deadline extension to re-bid the deal later on, to which an exasperated Wake responded: "This was a joke."
Whether it's in Ethiopia, Estonia, Egypt or Ecuador, SAP vs. Oracle never does disappoint, does it.
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