Fonterra plans switch to SAP

By ADAM GIFFORD

Fonterra is set to switch its core financial software from Oracle to SAP in a deal which could be worth tens of millions of dollars to the German vendor.

"We have a preferred supplier - SAP," said Fonterra spokeswoman Jacky Curson.

She said the company has been reviewing its financial management information systems and the decision is subject to commercial negotiations, the validation of the business case and board approval.

The sale of Oracle financial and manufacturing applications into the former New Zealand Dairy Group almost a decade ago was one of Oracle's largest deals up to that point, and accounted for a significant part of the local subsidiary's revenues for several years.

The New Zealand Dairy Board also adopted Oracle solutions. However, the merger of those organisations with Kiwi Dairies to form Fonterra meant all systems were up for review.

Last year Fonterra selected an SAP supply chain system to run its distribution activities around the word, in a deal estimated at the time to be worth at least $15 million.

Oracle spokesman Nigel Murphy said while the company was disappointed to lose a part of its Fonterra business, the company continued to use Oracle software to run its manufacturing processes and store data.

"Fonterra indicated one of the reasons for the project was to drive change, which might have put us at a disadvantage as the incumbent, and that it wanted tight integration between the financial system and the supply chain," Murphy said.

At the time the supply chain deal was struck with SAP, Fonterra chief information officer Marcel Van den Assum said the company saw software integration as a key way to get achieve savings benefits from the merger.