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SAP users slow to migrate to mySAP, opens door for Oracle

SAP customers are slow in adopting mySAP applications, according Forrester Research Inc., keeping the door slightly open for Oracle Corp. to lure customers away from SAP.

An estimated 95% of SAP customers are not using mySAP applications, keeping the door slightly ajar for Oracle Corp. to attract those customers to its software suite, according to analysts at Forrester Research Inc.

Forrester estimates between 90% and 95% of customers remain on SAP R/3 Enterprise applications, and Oracle executives want to figure out a way to reach those customers with an alternative, said Ray Wang, a senior analyst at Forrester Research. Oracle is increasing its presence in vertical industries by acquiring companies to prove expertise, Wang said.

Oracle's latest move, spending more than $900 million to claim a majority stake in I-flex Solutions Ltd., an Indian-based banking software vendor, is part of its strategy to bolster specific industries. Its purchase of retail software vendor Retek Inc. in March also helped bolster industry functionality.

Further acquisitions are anticipated, Wang said.

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"Oracle still needs to show legitimacy in specialized needs," Wang said. "They have a shot if they can prove expertise in vertical markets."

Wang and other researchers are projecting a small surge in sales of new enterprise resource planning (ERP) systems, as companies scrap legacy systems and upgrade to the latest versions using the next generation of applications that leverage Web services and a standardized architecture.

"Many of these systems will be replaced and many of them come with a ton of customizations," Wang said.

The ERP vendor that can prove it has the most industry expertise, with highly customized software, could lure the most customers, he said.

Until recently, SAP customers have been hard-pressed to develop a business case to upgrade to mySAP ERP and use NetWeaver.

SAP's Sapphire user conference gave customers more detail about the next version and SAP's Enterprise Services Architecture (ESA) strategy, which calls for Web services-enabling all SAP applications by 2007. SAP executives said they expect a steady flow of upgrades over the next several years.

Many SAP customers choose to avoid being early adopters and may be waiting to see the products developed from ESA. Until SAP begins rolling out services-enabled versions of its software suite, many customers may remain on the sideline, Wang said.

Companies using SAP R/3 Enterprise can use some of the components in the NetWeaver stack. NetWeaver is SAP's integration and application development platform, which is similar to IBM's WebSphere and BEA Systems Inc.'s WebLogic platform.

Meanwhile, Oracle is developing the next version of its software, called Project Fusion. Similar to mySAP ERP, Fusion is a mixture of middleware products being developed to services-enable Oracle's E-Business Suite. Parts of Fusion are expected to be launched by 2008.

"Although the underlying technology is different, the overall middleware strategy is similar to SAP's NetWeaver," Wang said. "Companies will have a healthy mix of choices over the next several years."

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