The battle between SAP, Oracle and Microsoft Dynamics – the three leading ERP vendors in the market – is one that isn’t likely to be settled anytime soon. As outlined in our 2014 Clash of the Titans Report, published earlier this year, each vendor has its own set of strengths, weaknesses and tradeoffs that tend to neutralize the appeal of each of these leading ERP systems.
Although each has its own niches and a relatively even market share, the product roadmaps, functionality, architecture and acquisition plans may all affect these titans’ standings in the market in the future. Looking ahead to the year 2020, it is likely that each of their positions will look slightly different than they do today.
Below are just a few of the trends we expect to see with SAP, Oracle and Microsoft Dynamics between now and 2020:
SAP will continue its dominance of larger enterprises. SAP’s biggest challenge today is convincing small and medium-sized organizations that they need its robust and broad software – along with the complexities, costs and risks that it entails. Larger, more global, and more complex organizations, on the other hand, have always been SAP’s sweet spot. Given SAP’s foothold in this market and its strategy of primarily building its product from the ground up rather than through acquisition, this is a strength that isn’t likely to go away anytime soon. This is particularly true of companies that will be seeking to standardize and consolidate business processes across their far-flung operations, since the relatively standardized functionality of SAP is more likely to appeal to these types of organizations.
Microsoft Dynamics will increase its prominence among small and mid-size organizations. With its acquisitions of Navision, Axapta and especially Great Plains, Microsoft has made significant inroads among small and mid-size organizations. As the company continues to consolidate these three systems to create a more consistent and robust Microsoft Dynamics platform, it will continue to expand its appeal among organizations looking for a less complex solution than SAP to replace Outlook, Excel spreadsheets and other solutions common among the Fortune 500’s smaller counterparts. The other advantage of Microsoft Dynamics is that it has the simple look and feel of Microsoft’s Windows, which is often a key purchasing criterion for smaller organizations that have yet to adopt larger and more complex ERP systems.
Oracle will more effectively play the “middle of the field.” While SAP and Microsoft have established solid positions among larger and smaller organizations, respectively, Oracle has the unique advantage of further penetrating both sides of the spectrum. E-Business Suite and JD Edwards may not have great appeal among the smallest and largest organizations in the world, but both products appeal to a number of niches in between. This is largely due to Oracle’s strategy of developing and acquiring robust product lines that can provide a number of alternatives to various industry niches. In addition, Oracle is aggressively investing R&D dollars in JD Edwards, suggesting that they have no plans to discontinue support for the product or to standardize customers onto a single platform, which could help the company perform well in a variety of niches going forward.
SAP will continue to struggle in the market for smaller organizations. Barring any large acquisition, SAP isn’t likely to have the same appeal among smaller organizations. Not only is the product perceived to be more complex than those offered by Oracle and Microsoft Dynamics, but its cloud and SaaS offerings – which are especially appealing to smaller organizations – have fallen behind the competition. With the ERP software growth potential in this market being so large, this should be a concern for SAP going forward.
Organizational change management and business process reengineering will remain important for all three vendors. The larger ERP implementations involving these three ERP vendors have historically underinvested in organizational change management and business process reengineering, which is a key reason why so many of these projects fail. As the technology becomes more simplified and penetrates more organizations across the globe, it will become even easier for CIOs and project managers to mistakenly overlook these important critical success factors. With this in mind, it will become increasingly important for companies implementing any of these three products to shift focus away from technology and toward the more important people and process issues that are more likely to make or break projects.
While each of these vendors will occupy different positions in the market in 2020 and beyond, two things won’t change: the fact that all three possess solid positions in the market, and that people and process issues will determine success or failure – much more so than the technology itself.