Procurement Wars: Oracle and Ariba/SAP (Beyond Thunderdome)
Earlier this week, I spent a few days at Oracle’s first annual Value Chain Summit. Procurement featured prominently in one of the breakout tracks at the event throughout the three days. And Oracle took the time to go through many of its procurement related solutions in material detail during the track sessions. While a lot of the good stuff came from side conversations and demonstrations, the presentations were a useful refresher and primer nonetheless.
For me, the event highlighted the different approaches that Oracle is taking relative to Ariba/SAP in delivering solutions for the procurement market. This is not the zero sum game of Mel Gibson and Mad Max, however. In essence, Oracle is trying to open up a new front in the procurement technology wars (ironically, where they rarely compete head-to-head against SAP, although Ariba is another story). I don’t believe this is by design or some uber-strategy. Rather, the collection of assets (i.e. the Endeca acquisition) Oracle has amassed both through organic development and acquisition has come together to create a portfolio of enabling technology that is unique in the market.
SAP, however, certainly is fighting from its own high ground (and won the bidding for the Ariba asset). Oracle will likely never win the network game, given Ariba’s volume and proven supplier-paid revenue model (whether you agree with it or not). Nor will Oracle be able to fully navigate the feature/function minefield against Ariba and SAP in Ariba’s particularly strong areas (e.g., end-to-end P2P including eProcurement, network, and invoicing linkages), except for rounding out its Oracle E-Business Suite, Oracle PeopleSoft, Oracle Fusion Applications, and Oracle JD Edwards product lines with incremental enhancements and partnerships.
But Oracle does have significant advantages in key areas that play to its strengths with a hodge-podge set of advanced assets rather than singularly focused enterprise applications and network capability alone. These include a supplier management and master data management service/solution for procurement that is rapidly gaining traction beyond procurement at a level that feels significantly faster than any others we are aware of. MDM for supplier data is not simple stuff. It clearly plays to Oracle’s technical prowess and the “hub” solutions it has across its product lines. And it’s selling.
In addition, Oracle now has the most valuable application of in-memory database capabilities for everyday procurement applications. While SAP Supplier InfoNet may be re-architected for HANA to manage supply risk, Oracle’s Endeca solution is now natively integrated with eBusiness Suite procurement (stay tuned for forthcoming coverage). Spend Matters believes this will be a game changer for eProcurement and search and Oracle has now proven it can leverage these assets across different enterprise application lines. And just wait until it becomes the core of Oracle’s overall spend and procurement analytics strategy.
Oracle is an interesting beast in the procurement area. Even though SAP has placed a bet-the-farm move on enabling procurement and a network business model with Ariba, Oracle has a range of truly unique technology assets at its disposal and mounting traction in what we believe is one of the most valuable areas of procurement today: supplier management and supplier master data management. Unlike Mad Max, however, this is not a market where “two men enter, one man will leave.” We believe both SAP and Oracle are likely to succeed and grow the total pie for procurement rather than taking out the chainsaws against one and other, however different their strategies and capabilities might be.
As for procurement organizations, suppliers, and others who might feel lost along the way in navigating the nuances of the Oracle and Ariba/SAP worlds, we say: “Bust a deal, face the wheel!” And don’t blame your provider for being put on the rack – or worse. It’s on you to get smart!
With Spend Matters Network (including Spend Matters PRO) and so many other resources available, there’s no reason not to invest the time to understand the solution capability and nuances of Oracle, Ariba, SAP and the dozens of other providers in the market.