Ellison's other moving plan

By ADAM GIFFORD

Oracle chairman Larry Ellison's hints about setting up a holiday home and/or a development centre in New Zealand may be a ploy to get the Government to commit to the $7.5 million GoProcure portal, which uses Oracle's electronic procurement software.

Officials in Wellington have clammed up about the project, a joint venture between Oracle and Cap Gemini Ernst & Young, saying the Cabinet has yet to make a decision on whether to proceed.

But it appears that a scoping exercise in which CGEY tried to get Government departments to commit to the system, did not get sufficient numbers signing up.

Police and Defence have already spent millions on procurement systems from German software vendor SAP - one of Team New Zealand's Americas Cup sponsors - and without them and other big spending departments, it is hard to see how the system can build up the transaction volume necessary to make it pay.

Last week Ellison hinted he would expect concessions, possibly in the form of tax breaks, as he sought to establish a research and development lab in New Zealand - most likely in the Bay of Islands.

He said New Zealand's strict laws on foreign ownership and the taxation of foreign nationals were issues that would have to be considered.

But cheap telecoms costs and the availability of good real estate were factors that would encourage him to set up shop in New Zealand.

Oracle wants a reference site to help it sell its procurement system to larger Governments, but it may be forced to look elsewhere.

Oracle Asia Pacific vice-president Derek Williams told the Herald last month that electronic marketplaces remained a big part of Oracle's strategy, despite the dotcom bust.

But after a meeting with State Services Commission e-government unit head Brendan Boyle, Williams admitted to "dismay", without being prepared to expand further.

If GoProcure doesn't go ahead, it won't be because the technology doesn't work.

As Williams said before meeting Boyle, technology is only a small part of a successful IT project.

"The recipe for success is 20 per cent technology, 40 per cent culture and 40 per cent process change," he said.

"What is now the impediment for change is people being prepared to change their processes. If people just want to automate what they have got now, that will never work.

"And there is cultural change, associated with people being prepared to do self-service and get much more involved with working with the system at a lower level than the management did before.

Leadership from the top doesn't really fit the way the state sector is now organised.

Chief executives are responsible for their individual departments, making whole-of-government moves difficult.

Apart from doubts over its Government business, Oracle has other major customers it needs to shore up.

Dairy giant Fonterra is consolidating its manufacturing systems on Oracle - a legacy of Oracle's close relationship with NZ Dairy Group and the Dairy Board - but the company did not make the shortlist for its major supply chain project, which gave SAP a big foot in the door.

It also missed out at Air New Zealand to PeopleSoft, despite its long history with the airline.

Williams said the software market was returning to normal replacement cycles, after the huge late 90s spike caused by the exceptional growth of the United States economy, Y2K and the dotcom boom.

"What I am starting to do is look at 1997, 1998, when we thought we were doing well, and ask how I compare. When I do that, and take out that unrealistic spike, I start to feel quite good."

Williams is helped by having China and India, "the two jewels in Oracle's crown".

Since 1990 he has built up the business in China from scratch, and Oracle is now benefiting as companies there rush to buy western-style accounting systems to prepare themselves for entry to the World Trade Organisation.