Oracle loses ground at Fonterra

One of the software giants slugging it out for prime position within NZ dairy cooperative Fonterra's ERP operations appears to have lost a significant advantage after the cooperative tipped SAP financials to replace its Oracle system.

The Dairy Board, one of three organisations which combined to form Fonterra, was Oracle's flagship ERP site in New Zealand. It has been an Oracle customer for nine years.

Only last year Oracle gained a position in the Kiwi Dairies arm, a win seen in some quarters as a positive sign that Oracle may become the dominant force in Fonterra ERP.

In the latest round of the battle Fonterra's inheritance of Oracle Financials version 10.7 from the Dairy Board was being analysed, "and we were suggesting they move to the latest version, 11i", says Oracle spokesman Nigel Murphy. Other ERP competitors were in the hunt for the financials contract, probably including PeopleSoft, he says.

But the decision went SAP's way.

"They wanted tight integration between financials and the supply chain [which already runs on SAP] and that they 'wanted to drive significant organisational change'."

Murphy says he is not completely clear on the meaning of the second phrase, but assumes it relates again to harmonising the merged company's financial IT.

Fonterra would not comment definitively on the decision. Despite Oracle's firm impression it had lost, Fonterra suggested final negotiation and approval had yet to take place.

A written statement from the company says: "Fonterra is running a process to choose a software partner to integrate and enhance its financial management information systems. We have a preferred supplier — SAP. The final decision is subject to commercial negotiations, the validation of the business case and board approval."

Oracle is not completely out of Fonterra. The dairy company still uses the Oracle database system, and even within ERP Oracle retains the manufacturing side, at least for the present.

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