| Abstract: | Southco, a 107-year-old maker of hinges and fasteners, selects SAP's ERP software for its global operations, citing the vendor's global support and strategy, as well as the availability of expertise. |
Following a hotly contested battle that reflected both vendors' determination to dominate the growing enterprise application mid-market, SAP AG has been selected over Oracle Corp. to provide ERP software to Southco Inc., a Concordville, PA, maker of hinges and fasteners. Contract value was not revealed.
Southco, which makes latches for automotive, high-tech, and other applications, selected the mySAP Business Suite over Oracle's E-Business Suite following a six-month evaluation process. Southco has launched a two-year project to implement the SAP ERP software across its 15 worldwide plants, beginning with a facility in Sweden. Southco also plans to implement SAP's CRM and data warehouse products following the ERP rollout.
The competition between Oracle and SAP for the deal was intense and generated a good deal of high-level attention and pre-sales resources from both vendors, said Lutz Richter, vice president and CFO at Southco. Both vendors sent waves of discrete manufacturing specialists to meet with Southco officials, Richter said. SAP Americas CEO and President Bill McDermott was assigned to head a steering committee overseeing SAP's handling of the Southco deal.
"The attention we got was equally strong from Oracle and SAP. We were amazed," Richter said. "They both made it clear that they were very serious about this account."
It's perhaps not that surprising that the Southco deal attracted such high-level attention and resources. Both Oracle and SAP have been targeting mid-market and even small customers as growth in the enterprise market has waned. Both have been expanding their reseller networks and beefing up their product offerings for mid-market companies. Oracle's acquisition of PeopleSoft and JD Edwards, for example, significantly boosted the company's mid-market presence.
Additionally, Southco is an unusually attractive mid-market customer. Through organic growth and acquisition, the company has doubled in size over the past four years and is currently growing at a double-digit rate. On top of that, the 2,900-person, 107-year-old, privately held company supports global operations and customers. Southco has four plants in China and three in Europe, operates in 65 countries, and manages 100,000 SKUs.
That global footprint was the principal reason Southco ended up concentrating its ERP search on Oracle and SAP.
"We needed someone capable of providing services globally and with a product that catered to local requirements," Richter said. "That separated the men from the boys. It eliminated everyone but SAP and Oracle."
In addition to the global reach it needed to support, Southco also wanted to license the enterprise software directly from the vendor, not from a reseller. "We were concerned that there might be a blame game if something went wrong," Richter said. That eliminated Microsoft, which, while focused on the mid-market, markets primarily through resellers.
Southco was looking for a new enterprise software product to replace a suite it had deployed in 1992. That product -- Symix, now owned by Infor Global Solutions -- while adequate for a small, mostly domestic manufacturer like Southco in the early 1990s, could not keep up with the company's growing needs. Southco's old ERP system, for example, didn't support EDI communications with automotive customers, nor did it include integrated analytics.
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