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168 Chapter 6 • Software and Vendor Selection

CASE 6-1
Opening Case
Oracle Wins Out Over SAP at Welch’s

Source: Based on article written by Robert Westervelt, News Writer, March 3, 2004, Search SAP.com

In March 2004, Welch Foods chose Oracle over SAP. The international juice maker with
sales close to $600 million purchased the Oracle Corporation ERP system to implement
companywide. The plan is to implement the e-Business suite over the next several months.
The leader of Welch’s ERP selection committee, Larry Rencken, said the competition
between the two software vendors was close. Oracle won the contract when it discounted
its initial price significantly, Rencken said, and after committee members became
convinced that Oracle would be less difficult to implement on a large scale.
“It was a consensus vote from the selection team, and that selection team looked at
functionality, ease of implementation and flexibility—in addition to TCO,” Rencken said.
“While functionality was very close between the two products, ease of implementation and
flexibility was won fairly handily by Oracle.”
Both SAP and Oracle, vying for the purchase, entered into a sort of bidding war for the
project. Welch’s was able to leverage each of the offers to the betterment of the company.
The competition lasted for several weeks, but by the time SAP submitted a competitive bid,
the decision had been made, Rencken said.
“In the end, SAP did come back with a counteroffer that was a very close, competi-
tive counter, but we [had] already made our decision,” Rencken said. “They were not as
competitive as they could have been in the initial rounds.”
The Welch’s deal proves that no single vendor owns the ERP market, said Joshua
Greenbaum, who owns Daly City, California–based Enterprise Applications Consulting.
“This proves to me that there is still a lot of competition in the marketplace and,
particularly, that SAP does not have a lock on the market,” Greenbaum said. “What this
says is that there are a lot of issues in a competitive deal and that the market system still
works for enterprise software.” The new reality, Greenbaum said, is that many software
buyers can negotiate deals that weren’t possible before the large ERP market became satu-
rated and the economy became so tight.
Bill Wohl, SAP’s vice president of public relations, called the decision by Welch’s a
“disappointment.” “What happened at Welch’s essentially flies in the face of what is a clear
track record of customer success,” Wohl said. “The reality is that what we have is strong
competition in the market.”
Rencken said that Welch’s is using IBM Global Services to help implement Oracle’s
software suite. IBM is working with Oracle Consulting on part of the implementation, he
said. “We certainly had an infrastructure with a lot of spaghetti code keeping it together,
and now we have a desire for one fully integrated enterprise,” Rencken said. The project
consists of two phases: Oracle Financials and HR in the first phase, and then Oracle Order
to Cash, Warehouse Management, Inventory Management, and Production and
Purchasing.