Several of our mid- to large-size ERP software clients turn to Panorama for assistance in choosing between the two industry behemoths: SAP and Oracle. Since these two solutions own a commanding share of the enterprise software market, this is not at all surprising or uncommon. What is surprising, however, is how different these two ERP vendors really are when you look under the covers of each.
As our ERP research has shown, both SAP and Oracle eBusiness Suite (EBS) have strengths, weaknesses, and tradeoffs. Different clients have different needs, ranging from functional requirements, technical maturity, tolerance for risk, budget, and a host of other factors. The vast differences between these two ERP solutions are underscored by the fact that we often recommend different solutions for different clients in the exact same industry.
So what are the differences between these two solutions? Although there are numerous variances in the detailed workflows and functionality of the solutions, there are five key high-level variables to consider when evaluating SAP and Oracle EBS:
- Best of breed functionality vs. more tightly integrated modules. The software strategy of the two vendors could not be much different. While SAP has built a solution primarily from the ground up, Oracle has grown primarily through acquisition of best-of-breed point solutions. For example, Oracle has acquired Demantra for advanced sales and operations planning, Hyperion for financial reporting, and Siebel for CRM, while SAP has built much of this functionality into its core ECC and All In One ERP solutions.
- Product roadmap. SAP continues to build upon and enhance its core product offering, while Oracle is moving toward Fusion. While some may suggest that Oracle is more innovative or visionary in its technology direction, it also means that there may be more uncertainty with Oracle’s product lines. This is especially true for clients considering Oracle’s JD Edwards and Peoplesoft solutions.
- Flexibility. Although very powerful, SAP can be more difficult to change as a business evolves. This is both a strength and a weakness: it is tightly integrated and helps enforce standardized business processes across an enterprise, but it can be more difficult to modify the software to adjust to evolutions to core processes and requirements. Oracle’s best of breed approach, on the other hand, can allow for more flexibility to accommodate changing business needs, but this strength can become a weakness when it becomes harder to enforce standardized processes across a larger organization.
- Implementation cost, duration, and risk. Although both solutions typically cost more and take longer to implement than most Tier II ERP software, there are distinct differences between the two. Oracle has a slight advantage in average implementation duration and an even larger advantage in average implementation cost, at 20% less than SAP. SAP, on the other hand, has the lowest business risk of the two, measured via the probability of a material operational disruption at the time of go-live.
- Business benefits and satisfaction. This is perhaps SAP’s greatest strength. Although Oracle has the highest executive satisfaction level of all ERP vendors included in our 2008 ERP Study of 1,300 implementations across the globe, SAP leads the pack in actual business benefits realized. Assuming the #1 reason most companies implement ERP software is to achieve tangible business benefits, this can be enough to justify SAP as a solid solution for many companies.
While the above points highlight some of the key differences, there are a number of similarities between the two. Both are aggressively pursuing Software as a Service (SaaS) and/or on-demand ERP offerings. Both are also more likely to take longer and cost more to implement than other ERP solutions in the marketplace, such as Microsoft Dynamics ERP, Epicor, and Infor, even when normalized to account for larger clients. And both are scalable, able to handle international requirements, and proven among larger organizations.
The key takeaway here is that, as with any ERP solution, SAP and Oracle both have their strengths and weaknesses. One solution may be the best fit for one organization, while not a good fit for others, even within the same industry. The only way to make sense of the pros and cons in a way that is meaningful to your organization is to engage in a robust ERP software selection process that considers your requirements, priorities, and competitive advantages to find the right fit.
Learn more about an effective ERP selection process by reading about Panorama’s software selection process.