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March 7, 2006 4:38 pm

When a system starts to creak

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Switching business software systems is a massive task and few companies attempt it unless they have no alternative. In 2000, McData, a data storage company based in Colorado, took that bold step.

Its existing enterprise resource planning system, supplied by SAP, was creaking at the seams. McData’s main product line was storage area networking systems. These had to be configured to meet customers’ requirements during manufacturing.

McData had to adapt its ERP system considerably to handle this demanding pro-cess. But customising the system made each upgrade harder and more expensive.

By 2000, McData’s business was growing rapidly, sometimes by as much as 30 per cent a quarter, but its ERP systems were long out of date. “We were several release levels behind,” says Deb Morton, director of enterprise business systems at McData.

The logical step was to ask its current supplier for help. “The proposal SAP came up with was for a 14 month upgrade, and the costs it quoted were vast,” says Ms Morton. “We thought: ‘Maybe we should rethink Oracle’.”

The upgrade Oracle proposed was both faster and cheaper. McData signed a contract in September 2000, and switched the system on in May 2001. It now handles manufacturing, logistics, accounting and customer relationship management.

“We thought it would be one-third the cost, and we have actually done better than that. I calculated a 170 per cent return on investment in the first year,” says Ms Morton.

With the previous system, four programmers were needed to extract data. For the new one, they decided to use the business intelligence suite provided by Oracle.

“Within three months, I had people in logistics running their own reports. They were even showing other people how to do it,” says Ms Morton.

Oracle’s acquisition binge doesn’t worry Ms Morton. Quite the reverse, in fact. McData has made an acquisition of its own, a company called Computer Network Technology, which has nearly 400 support staff in a call centre powered by software from Siebel, recently acquired by Oracle.

Ms Morton expects that having the two software suppliers under the same ownership will aid the integration process.

Switching vendors is an extreme step, which few companies would contemplate. But for McData, it has worked well.

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