Sources inform ''Globes'' that the IDF has decided to put on hold its organization-wide enterprise resource planning (ERP) system, one year after the project, estimated on the IT market to be worth $150-200 million, was originally launched.
ERP systems have become increasingly commonplace in large enterprises. They are supposed to provide a uniform information platform on which to coordinate enterprise activity in logistics, manpower, inventory, budgeting, planning and others. The two leading providers of ERP infrastructure software and other enterprise applications are Oracle Corp. (Nasdaq: ORCL), and SAP AG (NYSE; LSE: SAP; XETRA: SAPG), which have been aggressively competing for this market in recent years.
The IDF has introduced a number of separate ERP systems for various branches of the armed forces such as Israel Air Force, The Technological and Logistics Directorate, Israel Navy and others. The problem, in technological terms, is that each division selected a system that was specifically tailored to its requirements (either SAP or Oracle-based), without regard for the need for a uniform technological and operating capacity across all branches.
The introduction of a uniform ERP system in the IDF could play a pivotal role in the streamlining of resources and easy operation of system data. Issues such as logistics, task planning, personnel, budget management and others could be managed across the IDF fairly easily, compared with the methods employed at present. Against this background, profound disagreements exist both within the IDF and the local IT community as to whether the armed forces’ ERP systems should be consolidated on one platform. The immediate consequence of such a consolidation would be the switching of all existing systems to either SAP or Oracle software infrastructure, or at least the building of interfaces to enable bi-directional access between systems in the IDF’s various branches.
The IDF general staff launched the project a year ago, on the recommendation of a committee set up to study the issue, and the project directorate, headed by outgoing Maj. Gen. Udi Shani, was set up as a unit within the C4I directorate. The project was launched with the initial goal of integrating systems (software modules) in personnel management and quality standards across the IDF. At the same time, the IDF decided to implement the project in a number of stages that would include the design of three key software modules encompassing planning, budgeting and procurement.
The IDF did not intend, at least initially, to change the existing systems but rather, to develop interfaces between them, given that a considerable number of army units require a link to the Ministry of Defense’s SAP-based ERP system. The IDF previously estimated the annual cost of the project at tens of millions dollars, with the first stage in the (i.e. the integration of the first modules), due to be up and running across all divisions within 4-5 years. IT market sources believe that the project has cost $50-100 million to date, and based on this estimate, the total cost would have reached $150-200 million, spread over a number of years.
Published by Globes [online], Israel business news - www.globes.co.il - on December 18, 2006
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