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Oracle, SAP Head-to-Head Over Telecom's IT Contract

 

 

The two global IT giants, the German SAP and the American Oracle Global, find themselves in another battleground in their respective bids to bag a multimillion dollar contract from a state enterprise. The two companies are now fighting to get the contract from the state owned telecom monopoly, the Ethiopian Telecommunications Corporation (ETC), estimated to be worth over 85 million Br.

This is the second bid for a state owned company, in Ethiopia, trying acquire and implement an application dubbed Enterprise Resource Planning (ERP).

It is a company-wide computer software system used to manage and coordinate all resources, information, and functions of a business from a shared database. It has a hardware and software components that communicate using local area networks.

ETC wants to acquire technology in order to integrate the systems of its procurement, warehouse administration and supply chain operations, a senior manager at the company told Fortune. Oracle and SAP are the two leading manufacturers of the product in the industry.

Oracle is bidding in partnership with WIPRO Technologies, India's third largest IT exporter. This consortium has offered 6.1 million dollars.

"But they have a huge amount of bill to charge ETC in annual license fees," said a source knowledgeable of the project.

This offer is 300,000 dollars less expensive than what its bidder, the consortium of SAP and Ernst & Young (E&Y) has offered, sources disclosed.

E&Y is an American audit and consulting firm whose office in Addis Abeba is run by Zemedeneh Negatu It is also a partner to SATYAM, another Indian IT firm hired by the Ethiopian Airlines to provide consulting services in the acquisition of back office information system to integrate its finance, human resources and supply chain departments.

SAP is now the lone bidder negotiating with the Ethiopian Airlines to sign a contract after the latter re-tendered the project in May 2009. The management of the Ethiopian Airlines had cancelled the first tender in last week of April 2009, after an issue of a potential conflict of interest surfaced due to the association of Zemedeneh with both E&Y (the consulting partner) and Fairfax Global Investment, SAP's partner in the bid.

Nevertheless, Oracle did not make it to the second tender because Ethiopian had declined to extend the bid opening date to June 8, 2009 from the originally scheduled deadline of May 8, 2009 as requested by Oracle. However, Ethiopian's management had extended the deadline by 10 days.

The technical committee formed at the ETC to evaluate bid proposals from the contending companies has submitted its findings to the management board last week, sources disclosed.

"I have sent it back to them [the committee] with my suggestions for further consideration," Amare Amsalu, chief executive officer (CEO) of ETC, confirmed to Fortune.

Amare, however, has declined to comment any further before the completion of evaluation process and decision to select the successful bidder is made.

 
 

By Tamrat G. Giorgis
Fortune Staff Writer

 
 
 
   
   
   
 
 
 

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