Companies with a long-term IT digital strategy that involves rapid growth and innovation often look to large ERP vendors, like SAP, Oracle and other Tier I vendors. This is not surprising. After all, one advantage large vendors have over smaller vendors is other applications in their portfolio that complement their main ERP system.
This may be an artificial intelligence (AI) solution that can analyze a massive amount of data, or an IoT solution that assists in the efficient picking and packing of products. If you’re interested in such applications, then you’ve probably been searching for articles about SAP vs. Oracle.
This is one of those articles. However, it’s not like most SAP vs. Oracle articles – this article is based on our experts’ hands-on experience with a variety of these vendors’ products. It’s also based on our benchmark data gathered from companies across industries and locations.
A Brief Overview of SAP vs. Oracle
Clients often ask us, “which is the better ERP software system?” Of course, as an independent ERP consultant, we determine the best fit for our clients based on their unique business requirements. However, we’d still like to provide a comparison of SAP and Oracle.
Let’s begin with a quick snapshot from our Clash of the Titans report (we’ll dive deeper into this data later in this post).
What is Clash of the Titans? Well, every year, we conduct an independent analysis of the Tier I ERP vendors. We base this analysis on data we collect from companies implementing these vendors’ products.
This year, we analyzed data on implementation duration, resource strategy and type of project. You can see these data points in the table below.
This table also reveals some of the functional strengths of each vendor based on our ERP demo experience (you can find more detailed information in the Client Experience section of this post).
Who is SAP?
SAP primarily builds its products from the ground up rather than through acquisition. We’ve found that SAP ERP software has deep functionality, so it requires a very technical, time-consuming implementation.
In addition to Clash of the Titans, SAP was featured in our Top 10 ERP Vendors Report. This report highlights vendors of all sizes that we believe are viable vendors with strong functionality.
Some of the SAP systems we included in our Top 10 ERP Vendors Report included S/4HANA, SAP Business One and SAP Business ByDesign.
SAP S/4HANA is designed for large, enterprise organizations, and has strong capabilities across all functional areas. For example, S/4HANA Cash Application enables real time, intelligent invoice-matching powered by machine learning.
SAP Business One and SAP Business ByDesign are designed for the small and midmarket. They provide comprehensive solutions for financials, sales, operations and customer relations.
SAP ECC was not included in our report because SAP will be ending support for the product in 2025.
Who is Oracle?
Oracle’s primary strength is acquiring product lines that can provide flexible functionality to a variety of industry niches. For example, in 2016 they purchased ERP vendor, NetSuite. Oracle and NetSuite continue to gain benefits from their merger. For example, NetSuite has improved Oracle’s SaaS ERP offerings.
One area of struggle that Oracle has experienced is quickly transitioning niche functionality from EBS and JD Edwards into Oracle’s newer products, like Oracle Cloud ERP (this was the product we featured in our Top 10 ERP Vendors Report). Oracle Cloud ERP is designed for large, enterprise organizations with many functional areas. While it is a relatively new product, it is continuing to gain market share as well as enrich and build functionality.
Oracle EBS and Oracle JDE are both sunsetting. To learn more about what “sunsetting” means and what it specifically means for Oracle JDE, read our blog post, Oracle’s Shift in Focus: From Oracle JDE to Oracle Cloud Applications.
Both SAP and Oracle provide a full business suite of solutions, including HCM software, CRM software, SCM software, etc. Both vendors were featured in our manufacturing ERP report and distribution ERP report on the top ERP systems for those industries. The vendors in these reports have robust supply chain management and inventory management capabilities. They also offer strong production management software.
What Other ERP Systems Exist Aside From SAP and Oracle?
Becuase we’re unbiased, we had to include this section in our post. The answer is there’s a lot of other ERP systems and ERP vendors out there, and many that are suitable for large companies. To learn about some of these systems, read our post, What Types of ERP Systems are There?
Clash of the Titans 2020
This report analyzes some of the notable differences between SAP, Oracle, Microsoft and Infor.
Panorama Client Experience: The Difference Between SAP and Oracle
Based on our experience evaluating and implementing ERP solutions for clients, we’ve gleaned some interesting insights about the difference between SAP and Oracle:
1. Business Requirements
We help clients create requests for information (RFIs) to send to ERP vendors. These RFIs list the client’s business requirements in detail. Vendors must indicate if (and how) their solution can fulfill each requirement.
Below are examples of some of the requirements fulfilled (or not fulfilled) by various SAP and Oracle products. It is broken down by functional area:
Business Requirement: The ability to support manufacturing production management.
Business Requirement: The ability to auto-recommend warehouse staging location for products based on delivery (ship-via) type.
Finance and Accounting
Business Requirement: The ability to support user-configurable invoice structure.
Is one of your business requirements “the ability to handle bill of materils?” If so, you are in luck because most ERPs can handle this. Read our post, Is ERP Good Enough to Manage Bill of Materials?, to learn more.
Business Requirement: The ability to track historical product pricing at the customer level by sales rep (user).
Business Requirement: The ability to create and display user defined hierarchies for dashboards and reporting purposes.
Business Requirement: The ability to support integration with external benefits platforms.
As you can see, SAP and Oracle can both support a variety of business requirements with minimal software configuration. These are the kind of answers companies want to see in a RFI response. Even if some configuration is required, it is greatly preferred to ERP customization, which SAP and Oracle both strongly recommend against due to the upgrade challenges it can create.
However, if you do customize your software, SAP has a unique dashboard within its software showing businesses exactly what needs to happen before a software upgrade.
2. Demo Scores
We regularly coordinate ERP vendor demonstrations for clients. After each demo, clients score functionality on a scale from 1 to 5. The highest score a vendor can receive is a 5. The following metrics are a combined average based on clients’ recent ratings of SAP and Oracle across a variety of products:
SAP and Oracle Products Scored Closely in These Areas
Demand Forecasting – (SAP) 2.3 / (Oracle) 2.2
Industry Intelligence – IBM partnered with SAP to create a Cognitive Demand Forecasting Solution for the retail industry. The solution can be integrated into SAP S/4HANA and the SAP Customer Activity Repository. Oracle Demand Management Cloud is a supply chain management solution that accurately predicts customer demand for a broad range of industries.
Material Requirements Planning – (SAP) 1.8 / (Oracle) 1.9
Industry Intelligence – While these may seem like low scores, this was before SAP’s recent updates to its material requirements planning (MRP) capabilities within SAP S/4HANA. Oracle NetSuite also has recent updates to its MRP.
Fixed Asset Management – (SAP) 3.3 / (Oracle) 3.3
Industry Intelligence – SAP Business One has a fixed asset management function that eliminates the need for repetitive manual data entry. Oracle NetSuite Fixed Asset Management automates asset acquisition, depreciation, revaluation and retirement.
eCommerce – (SAP) 2.2 / (Oracle) 2.2
Industry Intelligence – SAP Upscale Commerce allows manufacturers and merchants to quickly launch “pop-up” ecommerce stores. Oracle Commerce On-premise, has likely stopped releasing updates. However, Oracle Commerce Cloud is frequently updated, with its last update this month.
SAP Products Scored Higher in These Areas
Audit Management – (SAP) 3.8 / (Oracle) 3.4
Industry Intelligence – SAP Audit Management instantly captures audit documentation while providing drag-and-drop tools. You can access the application through mobile devices.
User-Defined Dashboards – (SAP) 3.9 / (Oracle) 1.4
Industry Intelligence – Not all BI vendors provide user-friendly dashboards. However, SAP BusinessObjects allows you to create interactive, role-based dashboards accessible from any device. An alternative is SAP Analytics Cloud, which allows you to easily create predictive models and integrate them into workflows.
Oracle Products Scored Higher in These Areas
Workflow Configuration – (SAP) 2.9 / (Oracle) 3.3
Industry Intelligence – Oracle has a new set of artificial intelligence applications that automate processes within its cloud suite.
Customer Contract Management – (SAP) 3.0 / (Oracle) 3.7
Industry Intelligence – Oracle Project Contract Billing Cloud provides pre-built templates and automates project billing. The application ensures contracts are compliant with project billing requirements.
Purchasing – (SAP) 2.8 / (Oracle) 3.3
Industry Intelligence – Oracle Purchasing Cloud automates routine transactions, such as invoice validation. The application fully integrates with accounts payable modules.
Quality Assurance – (SAP) 2.1 / (Oracle) 3.1
Industry Intelligence – Oracle Product Lifecycle Management Cloud allows you to define inspection plans by connecting product design standards and quality specifications.
While these scores are just averages of more detailed metrics, they show the strengths and weaknesses of each ERP system. Demo scores are one of several factors to consider during an evaluation of SAP and Oracle.
3. Deployment and Hosting Options
SAP and Oracle both have products with multiple hosting and deployment options. They typically encourage our clients to consider cloud-based technology even if they’ve expressed interest in on-premise technology.
Focusing on cloud ERP is a smart move for SAP and Oracle as the market is increasingly demanding flexible hosting and deployment options. While many companies are excited about the cloud, they are still a bit cautious.
Case in point: We’ve found that neither SAP nor Oracle have very many references for cloud implementations at large, complex companies. This indicates that most large companies are not moving to the cloud, and the lack of references gives them one more reason not to. It’s a viscous cycle.
While ERP vendors have done a good job from a marketing and a sales perspective, when you start actually implementing these applications, you have to consider integrations, and that’s a nightmare for many vendors.
Nevertheless, SAP and Oracle are working hard to improve their cloud platforms. For example, Microsoft Azure was recently selected as an SAP preferred partner to ease customers’ transition to SAP S/4HANA and the SAP Cloud Platform.
In addition, Oracle continues to release quarterly updates to its cloud solution, bringing new features and functionality, such as the Oracle Cloud Data Science Platform. This service makes it quick and easy for companies to build and deploy machine learning models.
4. Vendor Viability
While SAP and Oracle aren’t likely to go out of business any time soon, they occasionally discontinue certain products.
SAP S/4HANA is a fairly new platform for SAP. The product has strong R&D funding as does Oracle ERP Cloud. However, R&D spending on Oracle EBS on-premise, is waning as the product is moving exclusively to the cloud. It’s difficult to find technical resources to implement EBS on-premise – most Oracle system integrators are focused on the cloud.
While many produce phase-outs are confirmed, others aren’t. If rumors are going around that a product is sunsetting, these may be just rumors. The story below is a good illustration of this:
The Long and Winding Road of SAP Business ByDesign
In 2014, there was much talk of SAP Business ByDesign being phased out. At the time, NetSuite created a bit of controversy by offering SAP customers a migration path from SAP Business ByDesign to its own flagship product targeting the small and mid-market.
This in and of itself might not have been that controversial, except for the fact that the SaaS ERP vendor issued the press release under the pretext of SAP customers needing a migration path since the SAP was allegedly discontinuing the product.
In truth, NetSuite was partially right – ByDesign was struggling to gain traction. Despite spending three billion Euros developing the product over seven years, it hadn’t gained much market traction – roughly 800 customers and 23 million Euros in annual revenue. In response, SAP cut R&D funding for the product and shifted their focus to its HANA platform.
Fast forward to today, and SAP Business ByDesign is now profitable and a popular solution for the midmarket. In fact, SAP recently published a 2020 roadmap for the product. From this it is clear that the product is moving toward many of the same innovations found in S/4HANA, such as IIoT and advanced business intelligence.
Want to learn more about S/4HANA? Our SAP vs. Oracle white paper features a client case study about SAP S/4HANA and Oracle EBS.
Manufacturing Functionality: Oracle ERP Cloud vs. SAP HANA
Oracle ERP Cloud
While not all functionality is within the new cloud offering to serve all manufacturing sub-industries, the application does enable real-time production monitoring and equipment monitoring. This enables companies to prevent shop floor issues before they happen.
For example, Oracle’s IoT-enabled equipment solution allows companies to get plant data by accessing the IoT technology on their assets. They also can get extensive drilldowns to find out exactly what is going on in their supply chain facility.
This system provides digital collaboration capabilities that bridge the gap between engineering and manufacturing.
As one of the leaders in the practical use of AI on the shop floor, SAP is using S/4HANA to make AI in ERP more accessible, and they’re giving tangible evidence of how to use AI with workflow automation and business intelligence.
For example, IoT sensors and other devices can integrate with manufacturing execution system data to generate automated alerts and workflows for corrective action.
In addition, S/4HANA’s machine learning capabilities can develop an understanding of shop floor equipment and help monitor production and safety more efficiently.
Oracle ERP Cloud vs. SAP HANA
These are pretty comparable systems as they are both designed for large enterprises. Oracle ERP Cloud is part of the Oracle Cloud Applications suite. These cloud applications are not as mature as S/4HANA, especially in terms of their ability to serve all manufacturing sub-industries.
However, Oracle ERP Cloud is a strong system in other functional areas as it has led the Magic Quadrant for cloud core financial managmenet suites for large, midsize and global entprises for three years straight.
If you’re evaluating Tier I ERP systems, like S/4HANA, be sure to check out our post, How to Select a Tier 1 ERP System.
ERP Industry Benchmarks
When evaluating ERP vendors, it can be helpful to consider industry benchmarks and independent research. Our recent report, 2020 Clash of the Titans, provides benchmarks on some of the challenges companies experience when implementing SAP or Oracle.
These benchmarks don’t prove one vendor is better than the other but highlight challenges companies may face. Diving deeper into these challenges, it’s apparent that they’re not caused by technical shortcomings. Both of these vendors provide value to companies that understand how to use enterprise resource planning software to acheive their organizational goals.
However, benchmarks can be interesting if you look at them in context:
SAP Projects Takes Slightly Longer Than Oracle Projects
According to our report, SAP projects last around 15 months, while Oracle projects take about 14 months. One possible reason that SAP projects take longer is because its clients are typically global and complex companies. These companies choose SAP because of its scalability and robust functionality.
Global ERP projects naturally require a longer time commitment due to the number of locations and decisions about standardization vs. localization.
SAP Customers Have a Slightly Higher Ratio of Internal to External Resources
Resource allocation is one of the most common struggles for companies implementing enterprise software. While ERP vendors typically recommend at least eight to twelve full-time internal resources, this isn’t feasible for most companies.
In fact, many companies heavily rely on external resources from their vendor and systems integrator. Unfortunately, this increases implementation costs.
Companies implementing Oracle use slightly more external resources than companies implementing SAP. One reason for this could be the size of companies implementing Oracle. These companies may be slightly smaller than companies implementing SAP, and therefore, have fewer internal resources that possess implementation skillsets.
The Importance of Process Improvement
While many companies implement SAP and Oracle with the intent of improving business processes, they often end up with an ERP solution that replicates their old system’s inefficiencies. In our experience, inefficiency is a leading causing of ERP system dissatisfaction.
When clients ask us for ERP selection guidance, we always recommend that they look for opportunities for process improvement before evaluating systems. This is essential because a new system will not automatically improve business processes – not even if a company is moving from a legacy system to a modern ERP system.
Once companies have improved their processes, they should invite vendors for on-site discovery, allowing the same amount of time for each of their top vendors to understand their ERP requirements.
How a Distribution Company Decided Between SAP and Oracle
A large, Fortune 500 company in the distribution industry hired Panorama to assist in their ERP selection. Prior to engaging Panorama, the client’s North American division was using Epicor Prelude as its main ERP system.
The client had shortlisted Oracle EBS, SAP S/4HANA and Microsoft Dynamics 365. Unlike Epicor Prelude, these were all Tier I vendors suited for large organizations.
Due to scalability concerns, the client wasn’t considering cloud deployment. However, Oracle was insistent that their new cloud application would meet requirements.
Eventually, Oracle proposed a combination of EBS and their cloud applications. This did not sway the client, so Panorama did not allow Oracle to demo their product in the cloud. SAP was also encouraging cloud deployment, but again, Panorama respected the client’s wishes.
Besides cloud scalability concerns, the client was also concerned about the lack of references these vendors had for cloud deployments at large, complex organizations.
The CIO of the client was formerly the CIO of another large, Fortune 500 company that was using Oracle, so he was leaning toward selecting Oracle EBS. In addition, the client was currently using Oracle’s cloud financial application and wanted to integrate it with an Oracle product as opposed to replacing it.
The client also had an existing relationship with SAP before engaging Panorama. In situations like this, it’s helpful to have an objective and unbiased opinion, which is what Panorama provided.
The client had already optimized their business processes, which provided a good basis for Panorama to evaluate software options.
Panorama spent several weeks conducting a technical fit assessment. The team drilled down into the software functionality to determine if and how it met the client’s business requirements.
During the evaluation, the client experienced a major acquisition. As a result, this distribution company became a manufacturing company! Many new requirements needed to be met, including disassembly (reverse bill of materials), which can be difficult to configure in some ERP systems.
Panorama found that SAP and Oracle were both able to handle a large number of transactions, while Microsoft Dynamics 365 couldn’t scale to meet the client’s needs.
Panorama also reviewed vendor references. While Oracle had numerous references for customers implementing EBS in the client’s industry, SAP had very few S/4HANA references in the client’s industry. S/4HANA was a newer product and had yet to establish itself in the market.
Ultimately, Panorama recommended SAP S/4HANA despite a lack of references for their newest platform. The product was scalable and had strong R&D funding contributing to its robust functionality.
R&D spending on Oracle EBS on-premise, on the other hand, was waning, as the product was in the process of moving exclusively to the cloud. It was difficult to find technical resources to implement EBS on-premise as most Oracle system integrators were focused on the cloud. In addition, EBS did not have many customization options.
Panorama didn’t recommend a particular deployment model for SAP S/4HANA. Both deployment options were scalable to the client’s needs.
The Final Decision
Despite Panorama’s recommendation, the client’s CIO decided they preferred Oracle EBS. However, when he recommended it to the board of directors, they rejected his decision because the European division had chosen Microsoft Dynamics 365.
Fatigued by the long selection process, the client backtracked and dismantled its shortlist. Staying on their current system, Epicor Prelude, seemed liked the best decision at this point. The client re-platformed the system onto an IBM server to achieve the necessary speed and availability.
What caused this client to abandon its original shortlist, and decide to stay with its existing system? There were several factors that complicated the evaluation process, but perhaps the most challenging aspect for them was understanding the maturity of various cloud applications.
The client’s CIO is like many CIOs of large organizations – they hesitate to move to the cloud because they don’t want to be one of the first to take the leap. While ERP vendors like SAP and Oracle are becoming increasingly excited about the cloud, most organizations do not share this sentiment.
Moving to Oracle EBS in the cloud can be especially difficult for organizations that have already implemented Oracle EBS on-premise. The process is time-consuming as it typically requires a phased approach. You don’t want to disrupt existing integrations and interdependencies.
Deployment options aside, deciding between SAP and Oracle was still difficult. While the client needed software that would position their organization for continued growth, internal bias put functional fit in the back seat. However, with Panorama’s independence and expertise, the client gained the insight necessary to make a more objective decision.
An Informed Decision
In the end, the client didn’t follow Panorama’s recommendation. They chose to postpone software selection by reimplementing their current software. Whether the decision was right or wrong, it was at least more informed than it would have been had the client not worked with Panorama to analyze software functionality.
Panorama also provided insight into vendor viability that allowed the client to consider the long-term impact of their decision.
Oracle vs. SAP
Comparing Oracle and SAP requires an in-depth understanding of software capabilities, deployment options and product viability. An informed decision also requires business process reengineering and requirements definition prior to selection.
Armed with this insight, you can decide whether SAP, Oracle, or another system altogether, best fits your business needs. Selecting the right system is essential because when a system aligns with your organizational goals, it will deliver the most ERP business benefits.
If your company is trying to decide between an SAP product and an Oracle product, our ERP consultants can help. Request a free consultation below.