Oracle Corp. is a multinational concern that sells both computer hardware and software for businesses–among its software offerings is a system for Enterprise Resource Planning (ERP). ERP refers to the ability of a company to process centrally, stream, and then distribute information that begins as geographically scattered data.
What is Oracle’s ERP: An Example
Oracle, on its website, explains the workings of its ERP offering with the example of Hill-Rom, the medical technology subsidiary of Hillenbrand Industries. Hill-Rom provides a wide range of medical products. Some are high-volume items, others sell in lower volume but the potential for high growth. It rents many of its products, such as hospital beds, to patients recently released from acute hospital care, and it bills third-parties: insurers, Medicare, or Medicaid.
There are endless challenges in relations with these third-party payers. The payers want to know the type of equipment the patient is receiving, the options, the diagnosis, and so forth. By centralizing and enabling a systemic view of their own operations, the JD Edwards Enterprise One ERP software that Oracle sold allowed Hill-Rom to balance its established and its new lines of business.
Part of the E-Business Suite
ERP is part of Oracle’s “E-Business Suite,” which also includes customer relationship management (CRM) and supply chain management (SCM). On a conference call in March 2010, Oracle’s chief executive officer, Larry Ellison, said that his company’s share of the ERP market was then at 26 percent. Larry Dignan, writing in ZDNet, noted that Oracle was on the move, “notching customer wins as (market leader) SAP works out its vision amid management changes.”
The Advent of Oracle
Before there was ERP there was MRP–Manufacturing Resource Planning. A manufacturer, for example, needs to keep track of workflow, resource and capacity planning, shop floor conditions, quality control, and much else. Each department might have its own isolated software applications, but such an atomized arrangement would hamper productivity and performance. The development of ERP proper involved the extension of manufacturing-based systems to take in engineering, finance and the customer corporations’ operations. Promix software, devised by Lindsay Rewcastle in 1988, was a big step in the development of ERP proper.
In the 1990s, SAP AG, the German software giant, was the dominant provider of ERP. In August 1998, InfoWorld, an IT industry online periodical, reported that “versions for other ERP suites, such as Baan and Oracle, are in the works.”
An Aggressive Second Place
Baan, a Netherlands company, did develop ERP software, but soon thereafter ran into legal and financial difficulties that limited that product’s market penetration. Although SAP continues to be the leading figure in the ERP market, Oracle has come to play the role of an aggressive second-place runner.
Another development that may redound to the benefit of Oracle is the complaint by a smaller market participant, Versata, that market leader SAP has abused its dominant position, excluding Versata from vending to three-quarters of SAP’s biggest customers by “withholding the information necessary to interoperate.”