Oracle Corp and German ERP vendor SAP AG are in head-on competition for one of the world’s most lucrative contracts – to provide software to run the business of BP Amoco, created by the biggest-ever $50bn merger of British Petroleum Plc and Chicago- based Amoco. Oracle is in the driving seat because BP, the 60% dominant partner in the merger, turned its back on SAP in favor of an International Supply Systems ISP Program, written by its own IT department, to handle all its commercial transactions. ISP, written to work with Oracle databases and integrated with Oracle Financials package, so impressed Oracle that it bought the program by BP last year for an undisclosed sum. It also took on the bulk of the team who wrote the program and agreed to pay BP a royalty on license sales. Oracle has integrated ISP into a package targeted at the oil and gas industry as part of its applications strategy of offering industry-specific software. BP developed ISP at a time when it was common for large companies’ IT departments to develop software to cater for their organization’s particular needs. By selling it to Oracle, BP saw a way to ensure its continued development without bearing the costs itself. Amoco’s system is based around SAP R/3 software running off Oracle databases – so whatever happens, Oracle will have a substantial base in the world’s third largest oil company. But the big question is whether SAP or Oracle’s application software will emerge dominant in the merged company. With lawyers crawling over the two companies working out the technicalities of the merger, no decision is likely for many months. We won’t get into that kind of integration timetable until December, said a BP official. The outcome is of considerable importance to Oracle. SAP can brush aside the set-back if it loses out because it is such a big player in the industry. Royal Dutch Shell, one of the industry giants that BP Amoco was set-up to challenge, set up a SAP consultancy at the start of this year to capitalize on the skills of its staff and claims to have won business of $500m. For Oracle, now looking to the applications business for the kind of growth that has faded from databases, a big win with BP Amoco will give it some credibility. Despite boasting that its energy suite offers business solutions for the entire value chain, from prospect to pump, Oracle has yet to trumpet the kind of contract wins to suggest it is making much headway.
