SAP Joins The Pepsi Generation

PepsiCo Inc. is switching some of its enterprise software to SAP from Oracle, marking a major win for the German company.

PepsiCo, which has been an Oracle customer since 1997, has licensed the MySAP Business Suite, which includes enterprise-resource planning, customer-relationship management, and supply-chain-management software, SAP said Wednesday.

PepsiCo, will deploy the suite in all of its divisions worldwide as part of an "overall business transformation," Ed Lange, executive VP of SAP America, said. "The MySAP suite is intended to be the unifying enterprise application for PepsiCo."

SAP declined to release financial details, but said PepsiCo would use SAP technology to integrate legacy systems across its many divisions, which include Frito-Lay, Quaker Oats, and the Pepsi Bottling Co.

SAP, which is currently in the planning stages of deployment with PepsiCo, declined to discuss the impact on its new customer's use of Oracle, which also lists PepsiCo as a database customer.

Oracle declined to discuss PepsiCo's deal with SAP, or its impact on the company's use of Oracle applications. The company said in a statement that "PepsiCo continues to be a strong worldwide Oracle Corp. application and technology customer"; however, a search of Oracle's Web site revealed that marketing materials on PepsiCo as a customer were no longer accessible.

PepsiCo, which reported nearly $27 billion in revenue last year, chose SAP because of its integration technology, called NetWeaver, which ties its own applications, along with legacy and mainframe systems.

"We can offer a level of integration on a global scale that isn't offered by anyone else," Lange said.

While most experts are unlikely to give SAP such high praise, some acknowledge that its integration technology is better than Oracle's at connecting with third-party systems.

Oracle's technology "is not quite as smooth or seamless as SAP's right now," said Meta Group analyst Tom Murphy.

The SAP win comes at a time when Oracle is embroiled in a legal battle with the Justice Department, which opposes Oracle's hostile bid for rival PeopleSoft. The case is currently on trial in San Francisco.

SAP is the third-largest software maker in the world, behind No. 2 Oracle and leader Microsoft. Other consumer-packaged-goods companies that have signed deals with SAP include Colgate-Palmolive, Kimberly-Clark, Hershey, and General Mills.