Oracle's CPG Failures Teaches Valuable Lessons About ERP Integration

CIO — To sell a multimillion-dollar software system to a big company, a vendor needs a showcase customer. Jay Shreiner, former CIO of the cereal giant Kellogg, played that role for Oracle, which sells, among other things, ERP software. As showcase customers go, Shreiner was ideal: well known and good with customers and the press.

He needed to be good. Shreiner was helping the Redwood City, Calif.-based Oracle sell a radically ambitious software product. Launched in 1996, Oracle CPG (consumer packaged goods), promised to integrate four complex software packages from four different vendors?Oracle’s ERP software, Indus’s enterprise asset management, Manugistic’s supply chain management and IMI’s order management?into a seamless whole. The combination of software would let CPG companies, which manufacture just about anything sold in a supermarket, run all aspects of their business, from estimating product demand to manufacturing to delivery. Oracle pledged to take responsibility for the integration and support of all of the separate software within CPG.

From a marketing perspective, CPG sounded great. Business executives in the consumer packaged goods industry saw Oracle’s grand vision as a way to take a particularly angry monkey off their backs: the need for their own IT departments to do the work of integrating software from different software vendors.

Shreiner also saw it that way. He met with skeptical techies from potential CPG customers and did many interviews with the press affirming his faith in Oracle’s ability to pull off this integration miracle. Why did Shreiner put himself on the line for Oracle? Because he was deeply invested as CPG’s first customer. According to one source close to the project, Kellogg spent at least $10 million and devoted as many as 30 programmers over the course of more than three years to helping Oracle piece together the CPG software package. In return, the Battle Creek, Mich.-based company was able to influence the features and functions of CPG to meet the cereal company’s particular needs. Kellogg was the "poster child" for the Oracle CPG product, says the source.

But after three years of trying, CPG never worked at Kellogg?or anywhere else for that matter, at least not the way Oracle had promised it would. "No one ever got CPG up and running [in its full form]," says Dave Boulanger, research director for enterprise management at AMR Research in Boston. "It was never completed." Some customers got pieces of CPG running, he says, but not the full product.

Donald Klaiss, Oracle’s senior vice president of applications development, disagrees. He says that cpg was completed and that Oracle supports the software today. "We had an aggressive plan with our software partners to build integrations between the different pieces of CPG, and those were all built,’’ Klaiss says. But former customers claim that Oracle did fail to finish CPG, and that failure cost them millions. "Millions thrown down a rat hole," says one former CIO and CPG customer from the food industry who declined to be identified. Of the three CPG customers interviewed for this story, two abandoned CPG altogether and replaced it with ERP systems from competing vendors. Another customer, Paragon Brands, a diaper manufacturer, is pursuing litigation against Oracle, and still another, Tri Valley Growers, a farm co-op in San Ramon, Calif., ended up in bankruptcy after spending millions trying to get CPG up and running.

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