In-Depth

Oracle Takes Dead Aim at Supply Chain Competitors

Oracle’s retooled Supply Chain Management offering reflects its ambitions as a rising star in the SCM space

• By Stephen Swoyer
• 08/18/2004

Later this fall, Oracle Corp. plans to deliver a substantially retooled Supply Chain Management (SCM) offering as part of its 11i.10 application suite.

Oracle says that the updated 11i.10 SCM boasts key improvements in the areas of supply chain globalization, efficiency, and risk management.

More to the point, says Jonathan Colehower, Oracle’s vice-president of supply chain management, the retooled 11i.10 SCM module reflects Oracle’s ambitions as a purveyor of a resurgent supply chain management offering.

In this regard, Colehower cites market research from AMR Research Inc. and Gartner Inc. that says Oracle’s SCM suite was among the top revenue generators in 2003. AMR, for example, found that Oracle was second among all vendors in terms of new licensing revenues, and further projected that the database giant would grow its revenues by 9 percent in 2004. Gartner, for its part, also had Oracle at number two, and said that the company’s SCM offering had experienced double-digit growth in 2003.

During the same period, Colehower points out, the revenues of entrenched supply chain players i2 Technologies and Manugistics Inc. have stagnated or suffered declines. He cites this as proof of Oracle’s contention that it will compete primarily against the likes of SAP AG—and not SCM specialists I2 or Manugistics—for future market share.

“We’re always going to be faced with the point solutions, customers are going to say, 'We have unique needs, we have to be able to do this.' But if I look five years out, and what the market looks like, it’s going to be dominated by two or three vendors, whether it’s Oracle or SAP, or any of the major ERP vendors. They’re all building out their functionality,” he comments. “I think you’ll see that the point solutions are going to be the ones that suffer.”

Among other improvements, 11i.10 SCM can deliver a single-instance global view of a company’s supply chain for customers that wish to enable it. “We’ve been talking about globalization for years, and we believe that most vendors have neglected the ability to implement a global supply chain,” says Colehower. “We believe the right way to run a global supply chain is on a single instance of your supply chain that everybody can see … [and] manage.”

Companies can use this capability to support a variety of emerging scenarios, he continues, including things like international drop ship, or the ability to manage subcontractors around the world.

At the same time, Colehower concedes, a single global supply chain instance isn’t for everyone. “We understand that’s not going to be right for absolutely everybody. This whole notion of global has to do as much with an open architecture and the ability to deploy solutions in a modular way as it does anything else,” he argues. “If you don’t create an open architecture for all of your supply chain applications, you’ll never be able to hook in all of your trading partners that you need to.”

Elsewhere, 11i.10 SCM boasts improved support for a variety of compliance measures, including radio frequency identification (RFID). “You’ll also see a whole bunch of new transaction sets for Rosetta Net, or for UCCnet, which is an important standard for the consumer products industry, as well as compliance capability around RFID,” he indicates.

To ensure compliance with regulatory legislation such as the Sarbanes-Oxley Act of 2002 (SOX), 11i.10 SCM borrows from SOX-aware code Oracle has built into its financial applications, Colehower says.

“We’ve leveraged quite heavily the work that we’ve built into our financial applications, specifically around Internal Controls Manager, where if an accountant is signing the books and they’re making regulatory- or compliance-type decisions, what we’ve done is extended that into the supply chain—so if you have somebody in the shop floor who’s making a decision on a lot inspection or a lot quality, the you have full traceability.”

Oracle has pledged to ship the full 11i.10 application suite, including a revamped SCM component, in the next 90 days.