Porsche and SAP; joy and tears for German giants

As if we needed reminding of the complexity of the global economy, in the week that Ireland and its banks pretty much declared themselves bankrupt, and we face potential war in the East, Porsche, the luxury car-makes, declared a seven-fold profit increase and plans to invest 150 million Euros into their R&D centre to help make cars go even faster. and help footballers attract young blonde woman more easily.

Clearly, plenty of people out there still have serious amounts of cash; as Bloomberg reports:

Earnings before interest and tax advanced to 395 million euros ($526 million) between August and October from 52 million euros a year earlier, the Stuttgart, Germany-based manufacturer said in an e-mailed statement. Sales climbed 80 percent to 2.1 billion euros.

But for another household name German company, it wasn't such as good week.  We covered here the court case between SAP and Oracle, and, as the BBC reports, the court decided this week in favour of Oracle, awarding them $1.3 Billion in damages.  We don't know yet if SAP will appeal.

Now SAP make a couple of billion Euros a year in profit, so this isn't going to affect their overall viability in the slightest, but are there implications here for procurement or users of SAP or Oracle? Well, I guess it takes a chunk out of SAP's cash that might have gone towards acquisitions; and the reverse for Oracle.  It was a recently purchased company that was the cause of the problem for SAP in the first place, so might that make them also feel a little more risk averse in terms of future acquisitions?

It is also a reminder that you don't cross Oracle and Larry Ellison lightly.  It's a few years now since I was involved in software procurement, but Oracle were without a doubt the most feared supplier when it came to negotiations.  I would put my absolute top people onto any dealings with them; nothing unprofessional about Oracle I would stress, but very tough 'opponents' across the negotiating table.

And there is a point to note there.  When you first buy ERP software, you have considerable negotiating clout.  Once you have Oracle installed across the organisation, you are to a large extent locked-in and the negotiating power has shifted.  (Of course, ERP software isn't the only spend area for which this is true).  So get everything you can possibly think of agreed at the beginning; including scenarios you might think are pretty unlikely.  Because two years down the line you won't find the provider quite as accommodating when you want to re-negotiate aspects of the contract!

I know this sounds a little obvious, but too often it doesn't happen.  People are in a hurry to sign the initial contract; or just don't consider future needs or different scenarios.  Then later, they pay for this in a big way.

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