Figuring out who's winning the SAP-Oracle battle in banking platform services doesn't require a scorecard yet. But an umpire might help.
Despite each company's high-profile gambits to siphon away the other's application customer base, and the head-ramming going on in Europe and the Pacific Rim, all's quiet on the North American front in the financial services field. No U.S. banks have taken up Germany-based SAP's "SafePassage" offer to switch from Oracle/PeopleSoft programs to its ERP and NetWeaver solutions. In turn, SAP's nascent presence in the U.S. financial services field (SAP is in 50 of the world's top banks, including Barclays and UBS) leaves few candidates for Oracle to poach with "Off SAP," its offer to transition SAP customers unwilling to pay the upgrade costs of new SAP products. Both programs are "very loud blanks," quips AMR Research's Bill Swanton, "but blanks nonetheless."
But SAP's conversion of JPMorgan Chase & Co.'s general ledger in May might herald the posture of the combative counterparts when the bullets really start flying. The two companies markedly disagree on the circumstances of JPMorgan's decision to deploy the legacy SAP platform from the Bank One merger instead of Oracle presiding on the JPM side. SAP America calls it a straight-out victory, while Oracle's view is more Solomon-esque.
"Lost is an interesting term there, because we were both in the account," says Andrea Klein, vp of financial services industry strategy and marketing. "They actually split the baby in that they kept SAP for domestic and they kept Oracle for international...I'd say we're both in there now."
"There was a very, very detailed deep bake-off, and we were pleased to say that they decided to use us for the domain," gleams Thomas McAllister, vp of SAP's banking solutions and field services. "The corporate record is on the SAP general ledger, and that's been significant for us, especially significant in displacing Oracle."
Whichever Rashomon perspective gains traction in this and other head-to-head settings, it can be agreed SAP and Oracle of Redwood Shores, CA, are taking unique paths with a shared idea: selling institutions on a market shift to single-source enterprise IT. "Its bigger than just getting market share for ERP," says Cubillas Ding, a London-based senior analyst for Celent. "It's really getting access to the next generation of customers that would buy into that middleware that both Oracle and SAP are introducing."
Oracle's proposed $5.85 billion acquisition of CRM player Siebel Systems in September followed August's majority stake investment in core banking firm IFlex are opportunities taken by chairman and CEO Larry Ellison's crew to build out a fully unified suite of business applications and services. The IFlex solution will permit Oracle to provide straight-through processing integrated with existing ERP systems of institutions, according to Klein. "We're trying to do a proof of concept with a couple of the large banks before the end of year."
"The challenge for Oracle is to grow vertically by upgrading accounts more into the solution space," says TowerGroup vp and cross-industry analyst Guillermo Kopp. "The challenge for SAP coming from a solutions and core systems perspective is to say they have the ability to deliver in U.S. markets. ...I think we will see more of both, we will see more Oracle buying and partnering with solutions providers, and we'll see more of SAP appealing to banks, particularly tier two."
SAP's build out is coming after investments creating more functionality, component features and SOA interoperability for its NetWeaver enterprise platform, such as accounting for both Websphere and .NET Web services integrations. Two years ago it expanded ties with Accenture for deployment services into banking and insurance. The results may be slow in coming since SAP just out of the gates domestically, McAllister says, but "we are talking to a lot of banks today that are PeopleSoft customers that are very interested in looking to move to SAP."
SAP launched its program to attract PeopleSoft enterprise clients wary of Oracle's plans for their CRM and HR solution. AMR's Swanton says many PeopleSoft and JD Edwards clients "didn't have a whole lot of confidence" at the time of last December's merger that Oracle would provide adequate support or new functionality over time. Oracle has promised PeopleSoft clients the product would be supported through 2013 as the software is melded into Oracle solutions through its Fusion strategy. A PeopleSoft upgrade is coming out this year, along with new versions of PeopleSoft and JD Edwards' EntepriseOne in 2006.
Besides SAP's direct "SafePassage" assault (which McAllister says has brought 13 conversions in retail and manufacturing verticals), SAP is also heavily promoting transitional and maintenance solutions that place it directly in between Oracle and its customers. SAP's purchase this year of TomorrowNow provides another avenue to PeopleSoft customers through discount third-party maintenance. SAP has grown TomorrowNow to 100 employees since acquiring it in January.
A possible second front on maintenance challengers opened last month against Oracle. The Wall Street Journal reported former TomorrowNow and PeopleSoft executive Seth Ravin announced he's formed a new firm to provide discount services to Siebel customers who may not want to get on board with Oracle. Maintenance fees made up for more than one-third of Siebel's 2004 sales.
To drum up interest in conversions rather than support for Oracle products, SAP points out to banking prospects the risk of investing in IT systems that, in McAllister's words, have questionable long-term support issues.
But Klein points out that SAP is introducing a new product without a long-term domestic track record, saying, "There is risk no matter how you look at trying to change what [banks] have."
Swanton agrees bank executives may see the light in single-source vendor gamelans of SAP, Oracle and others, but many will likely decide to hold up taking the plunge-precisely because the industry shakeout is still in its early phases. "What you're going to see over the next couple of years, especially with PeopleSoft and JDE customers, is banks making a conscious decision to say, 'is there anything coming out of it I'm going to need, or...sit on it for three or four years and then decide what to do.' What you'll see is the customer bases eroding to some degree there as people take their next strategic move, or save money until they need to," Swanton says.
