One of the most common requests from our clients is to help them navigate the SAP vs. Oracle debate. Among our larger, international and more complex clients, these two ERP vendors are ones we most commonly evaluate as part of our independent ERP selection process. Even most of our small- and mid-size clients recognize the merit of considering and evaluating ERP systems from SAP and Oracle.
One reason we are so commonly asked to address this question is because of our independence, our experience with both products and the fact that we aren’t aligned with either vendor. Given this experience and our role as the world’s leading independent ERP consultants, we are able to provide an unbiased and objective view of both.
When helping clients evaluate SAP, Oracle and other ERP vendors, it seems that we hear every bit of misinformation and misperception in the market. Here are the top ten misconceptions we hear when addressing the SAP vs. Oracle discussion:
1. SAP is too complex for mid-size companies. There is a common perception that SAP is too complex and may be a bit of overkill for smaller companies that are not among the Fortune 500. While this may or may not be true to some degree, most modern ERP systems offer more functionality than is required by a majority of clients, so the question becomes: is the extra functionality that your organization may be able to grow into over time worth the risk of complexity in the short-term?
2. Oracle will no longer support JD Edwards. Ever since Oracle acquired JD Edwards several years ago, we’ve been hearing all about how Oracle is just minutes away from pulling the plug on this flagship solution. However, more of our clients are purchasing JD Edwards than are buying Oracle’s E-Business Suite – especially in the manufacturing space. JD Edwards has a huge install base, Oracle is investing millions in R&D and product development and they recently unveiled a new version with a brilliant new user interface – these facts all provide evidence against this common misconception.
3. SAP has too many lawsuits on its record. While it’s no secret that SAP has been sued on several occasions, it is less commonly recognized that most other ERP vendors have lawsuits on their hands as well. Part of the reason SAP is perceived as having more lawsuits is because of the large name recognition that their clients have compared to their competitors. In other words, you may not hear about the lawsuit where Johnny’s Grocers sued Vendor XYZ, but you’ll almost certainly hear when Hershey sues SAP.
4. We will get “Oracle-ized” if we buy their ERP software. Oracle’s strength and weakness is that they sell more than just ERP software. They also sell databases, hardware and other types of enterprise solutions, leading to the perception that their customers are always being upsold on additional products and services. In addition, Oracle has a tendency to adopt creative pricing strategies – such as pricing based on revenue or SG&A costs instead of individual licenses – which can rub some organizations the wrong way. Rather than taking these tactics personally, it is more important to determine whether or not these models are the right fit for your organization.
5. SAP is too expensive. SAP is certainly not the cost leader in ERP systems, but it isn’t always the most expensive, either. In fact, SAP rarely loses the cost battle to many other ERP vendors – especially when Oracle is in the picture. The key is to have options and know where to exercise your negotiation leverage, which is something the Panorama team helps its clients with every day.
6. Oracle’s culture is a liability. Larry Ellison and the Oracle culture may not be the most envied among ERP customers, but let’s face it: it’s pretty safe to say that Larry isn’t going to be managing your ERP implementation. The rest of the organization may very well be aggressive in their sales tactics, which may rub some the wrong way, but it’s important to differentiate between “liking” a vendor and choosing a software solution that will best suit your business goals and objectives. (For more on this, see point #10 below).
7. SAP is too rigid. SAP’s software can indeed be more difficult to configure and customize than its competitors, but the gap isn’t nearly as bad as it was in the 1990s. Back then, you needed an army of ABAP programmers to make the simplest changes to the software, but today’s SAP is much more flexible than it used to be. It may not rival the more flexible, .NET based ERP systems in the market, but it can still be managed with the right resources.
8. Oracle is overkill for most organizations. Just as some think that SAP is too rigid (see point #1 above), some think that Oracle’s products provide too much unnecessary functionality for most organizations. While the breadth of functionality of Oracle products can’t be disputed – whether it be EBS, PeopleSoft or JD Edwards – that isn’t necessarily a bad thing. As long as you aren’t paying materially more money for that unneeded functionality, it provides a potential framework for your organization to grow.
9. SAP implementations fail too often. As mentioned in point #3 above, a common perception is that there are too many SAP lawsuits on record. However, given the fact that SAP has the largest install base of any ERP vendor, their failure rate as a percentage of their install base isn’t materially different than most other vendors in the market. This suggests that implementations fail not because of the software, but because of the way it is implemented. Poor implementation practices will lead any ERP system to fail during implementation, so it is important to focus on how to embrace implementation best practices rather than assign blame to your ERP vendor.
10. Oracle implementations fail too often. See point # 9 above. Whether you are implementing an ERP system from Oracle or any other vendor, ERP success is not dependent on the software itself.
At the end of the day, SAP and Oracle are very viable ERP systems for many organizations in the market, which is reflected in the large market shares of both. Some will find SAP to be a better fit, while others will migrate to an Oracle product instead. The important thing is to separate fact from misperception in order to select and implement the product that makes the most sense for your organization.