Oracle boss warns of hidden costs in economy

3 Sep 2003

Rising pay and infrastructure costs as well as a rising number of hidden costs of doing business in Ireland could seriously hamper Oracle and other IT players’ decisions to invest in Ireland over the next five years, Oracle’s new managing director for Ireland Nicky Sheridan warned.

Speaking at the launch of Oracle’s new E-business Suite Special Edition, Sheridan indicated that Ireland is facing serious competition from emerging economies elsewhere in the world. He said: “Other countries are emerging and the logic is to invest there. Ireland needs to pick itself up and be more competitive.”

“Ireland is in a great position, but it is facing competition from other parts of the world. Over the next five years Ireland will not get the additional dollars being invested in new operations unless it gets its act together in terms of costs.

“Ireland needs to be vigilant in terms of costs, indirect costs as well as wage costs.

“At Oracle, for example, we implement our budgets every three years and we need to be able to explain to the board why they should invest in Ireland. The country needs to remain competitive,” Sheridan warned. “It’s not just Oracle that feels this way, other IT firms of our calibre that are based in Ireland feel the same way.”

Indicating the growing unease amongst overseas IT firms based here at the falling numbers of science students at secondary level as well as lapsing interest in computer courses at third level, Sheridan warned: “We need qualified people in our skills pool and for that reason the Irish Government needs to get its house in order on this front. It needs to be informing young people and explaining the rewarding careers that exist.

“Ireland should also be setting an example in terms of more effective e-government. Putting motor tax renewals and passport renewals online are good examples of online citizenship. I’d like to see Ireland leading the way in this and accelerate its progress, especially ahead of the forthcoming EU presidency,” Sheridan said.

Oracle employs approximately 1,000 people in Ireland and handles sales of Oracle products in the EMEA region in excess of US$2bn in revenue. In 2002 alone, the company spent €130m in the Irish economy alone. However, to underpin Sheridan’s warning about new emerging competitors for Ireland, Oracle Corporation recently announced that its workforce in India will soon double to 6,000 people. Rival IT player Microsoft recently announced plans to expand its IT operations in India.

Tailored to the requirements of small and medium-sized enterprises (SMEs) — those with between 10 and 500 employees – Oracle E-Business Suite Special Edition is designed for rapid implementation and to allow businesses to achieve greater efficiencies and a higher return on investment. The package incorporates eight key modules of the existing Oracle E-Business Suite, from general ledger and order management to purchasing and accounts payable, and is bundled as a pre-installed, pre-configured offering through Oracle’s implementation partners TMD Ltd and Fujitsu Consulting – all “at a reasonable cost”, according to the software company.

The announcement coincides with the release of a Datamonitor survey for Oracle of European mid-market businesses that reveals 72pc of SMEs are concerned about the impact of the current economic environment on profit margins. According to the survey, the majority of mid-sized companies also state that they want one piece of software that will manage, control and monitor all their business processes from sales order to inventory and purchasing, through to finance and accounting. The survey also identifies several concerns of SMEs, including margin erosion, staff retention, quality issues and competition from lower-cost countries.

Oracle estimates that there are approximately 700 mid-market companies in Ireland with revenues of between €20m and €250m.

“The SME sector is the backbone of the Irish economy and is today facing huge pressure on margins because of increased costs,” said Sheridan. “In this environment, it is essential that processes are streamlined to maximise efficiency gains and support key business decisions by the timely provision of accurate essential information. Oracle’s approach is to bring the same software we currently provide to 8,000 multinationals, corporations and other large organisations around the world, and configure it to work for our mid-size customers at an affordable, mid-market-friendly price.”

Oracle’s move downwards into the mid-market follows a similar initiative by its chief rival in the enterprise applications market, SAP. Earlier this year the German software giant launched two products specifically targeting SMEs: mySAP all-in-one, an off-the-shelf version of the enterprise-level mySAP Business Suite and SAP Business One, a suite of business applications developed specifically for early-stage companies.

By John Kennedy and Brian Skelly