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Electronics firm places trust in Oracle hosting service

Officials at Mercury Computer Systems Inc. are placing a lot of trust in Oracle. The maker of defense electronics and medical imaging equipment is choosing to store all of its critical business data at Oracle's giant data center in Texas.

As Chelmsford, Mass.-based Mercury Computer Systems Inc. began having success selling its medical imaging and defense electronics products, executives there quickly saw the need to improve efficiency by streamlining its disparate systems.

We decided we didn't need to be buying disk drives and worry about patches, and we knew we would not be customizing the product.
Steve Nigzus,
CIOMercury Computer Systems Inc.

Choosing to outsource its business processes to Oracle about three years ago, the firm decided to run the E-Business Suite of applications and database through Oracle's hosting model. All of the company's business data, sales and human resources information is farmed out to Oracle, which hosts the data on giant servers in Austin, Texas.

Oracle On Demand, previously called Oracle Outsourcing, is a popular alternative for small companies looking to cut IT costs, according to the company. Mercury Computer Systems started by choosing Oracle Financials, Human Resources and several other modules within the E-Business Suite. It recently installed Oracle CRM and plans to put it in production early next year.

Mercury Computer will be highlighted as an on-demand customer at the Oracle OpenWorld conference in San Francisco next month. The conference will be held Dec. 5-9 and will underscore both Oracle database and applications customers.

Some companies find a hosted software model appealing when upgrading a small remote division, said Andy Efstathiou, program manager for the business and IT services practice at Boston-based research firm, The Yankee Group. Other small and mid-sized companies with limited budgets turn to remote software hosting because they don't do very much customization to business software and don't want to have a large IT team.

"In the long run, businesses should bring it back in-house and manage customization there and the cost of running it if they can economically," Efstathiou said. "I'm a big proponent of this model, but it makes no sense at all unless you do weigh the pros and cons with respect to each situation."

Mercury Computer chose Oracle over enterprise resource planning giant SAP AG after hiring an outside consultant to help narrow down its options, said Steve Nigzus, chief information officer for Mercury Computer Systems. Oracle offered very strong functionality and support in the manufacturing, finance and HR areas, Nigzus said.

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"What we don't want to do is divert energy from core confidences," Nigzus said. "We chose an outsourced environment because we decided we didn't need to be buying disk drives and worry about patches, and we knew we would not be customizing the product."

When the company decided to move to the hosted model, Nigzus said the company didn't have to lay off staff. Instead the company centralized its IT group of six people supporting applications.

"Our objective wasn't to downsize," Nigzus said. "In fact, our staff has increased a little bit because we've added more modules."

While the company chose to send its business data to Oracle, its true research and development data, such as computer-aided design diagrams and other proprietary documentation is kept on site, Nigzus said. Mercury Computer is also relying on Oracle Consulting and several outside consultants to help plan upgrades.

Before choosing Oracle CRM, the company considered Siebel Systems Inc. and Salesforce.com, but employees asked for Oracle, according to Nigzus. Oracle also offered financial incentives for choosing the additional CRM module, Nigzus said.

Nearly all of the company's 665 employees use Oracle, Nigzus said. The sales force is excited about using the new CRM modules and compensation feature, which allows salespeople to monitor their commissions based on the financial incentives they give their customers.

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