Saudi bank to switch to SAP

Islamic Development Bank (IDB) has embarked on a massive project to replace its existing banking systems with an all-encompassing SAP solution.

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By  Diana Milne Published  February 19, 2006

Islamic Development Bank (IDB) has embarked on a massive project to replace its existing banking systems with an all-encompassing SAP solution. It will take around three years for the multi million-dollar implementation of SAP’s Core Banking solution and Business Suite solutions, which will be run on an IBM platform. Up until now IDB has run its operations using Oracle’s Financials software along with solutions from other vendors. Once implemented SAP’s Core Banking solution will manage the funds, loans and projects distributed by the bank while SAP Business Suite will manage back office operations. Together the solutions will enable the bank, which provides funds for economic development projects in member countries across the world, to streamline its operations and save on administrative costs, according to Phil Blower, sales director for SAP Arabia. “It will streamline the way they operate the bank and the very valuable work that they do,” Blower told IT Weekly. It is understood that the bank had been using Oracle’s Financials solution for the past three years but wanted to replace its disparate systems with a single all encompassing solution. Oracle said that customers do change vendors, but noted it has also won customers from SAP in the region. “Companies do change software vendors from time to time, and this is a two-way traffic. That doesn't change the fact that Oracle is the clear market leader in enterprise software in the Middle East, and we continue to win business at the expense of SAP and others across the region,” said an Oracle spokesperson. “Recent examples include Tadawul, Aldar, and Qatar Steel,” he added. “Oracle remains committed to providing its 750 applications customers in the region with the best products and services,” the spokesman said. Regardless, SAP Arabia made no secret of its delight at winning the IDB business. For a bank to undertake a three-year implementation on this scale is a major undertaking according to Blower who described the project as a “huge decision” and “the equivalent of a brain not even a heart transplant for them.” He said the deal is a “vital” one for SAP, which is currently investing heavily in developing solutions for the banking sector. SAP claims it is gaining valuable ground on Oracle, its arch-rival worldwide as well as in the region. SAP Arabia cited research from analyst firm IDC, which said it has a market share of 30% in the Middle East and North Africa region. While Oracle undoubtedly still has far more companies as customers in the region than SAP, the latter can claim to have some of the largest implementations. These include its deal with Saudi oil giant Aramco and its contract with Saudi Electricity Company (SEC), which was wrapped up last year and will see its enterprise resource planning (ERP) software deployed across the organisation. SAP Arabia said it won 20 new clients in the Middle East in 2005 including five customer win-backs: IDB, Magrabi and Talaat Mostafa which were using Oracle solutions; and Gulf News and Al Gurg which were using JD Edwards solutions. In November 2005 SAP announced that it had signed another multi million deal with the Saudi food distribution company Abbar and Zainy, in which it would deploy its ERP solution across the company’s six branches in Saudi Arabia, replacing the existing 3i Infotech system (see IT Weekly 26 November - 2 December 2006). Blower said IDB would see many benefits from the SAP software. “When you are involved in project financing it’s very important to have a strict process of authorising a project. This about looking at whether a project is worthy,” he said. “From a financial point of view it is about looking at whether the finances are available,” he added. “All those processes are built into the SAP system from identifying a project right through to the dispersement of the funds,” Blower claimed.

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