ERP Software Clash of the Titans: SAP vs. Oracle
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.
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About Eric Kimberling
After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change, and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP initiatives, including Kodak, Samsonite, Coors, Duke Energy, and Lucent Technologies to name a few. In addition to extensive ERP experience, Eric has also helped clients with business process re-engineering, merger and acquisition integration, strategic planning, and six sigma. Eric holds an MBA from Daniels College of Business at the University of Denver.
The article just confirms that there is not purely black or white as no exact answer what is the best, because of business circumstances and priorities. I would say, that selection process should fit to companies’ IT strategy and the company should focus on developing and preserving standartization of business processes supported by competencies of ERP users regardless of ERP name.
Kind regards,
Sergey
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Why do some companies come to you to compare SAP and Oracle? is it because they did a thorough selection process and this is their short list or simply because these are considered to be the best ERP vendors in the world and your customers want the best for their company?
From my experience, many companies wanting to implement Oracle or SAP realize that Infor, Epicor or other products are the best fit for their needs (and budget). A while ago, someone told me that some executives from large companies choose to implement Oracle or SAP so they can put it in their CV for the next job.
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Eric,
Thanks for getting it out there that there is no ‘best’ solution. Even within the same industry / revenue band. Panorama can serve a real need by providing balanced information to the clients they represent.
I come from the Oracle camp and wanted to comment on a couple of your summarized comparisons above.
The idea that SAP has grown organically and that Oracle has grown thru acquisition is the standard elevator pitch response. The reality is that SAP has made over 30 acquisitions since 2000.
You specifically give the example of Oracle Hyperion for financial reporting vs. SAP home built. Are you implying that SAP is not selling the financial reporting tools of the three companies it acquired Outlooksoft, Business Objects and Pilot? These three acquired products make up SAP’s financial reporting backbone.
You compare SAP CRM vs acquired Oracle Seibel CRM. An apples to apples comparison would be SAP CRM to Oracle EBS CRM. In which case both vendors have an ‘organic’ offering. For companies that have heavy CRM needs neither ERP based CRM package is adequate. Of the tens of thousands of SAP CRM licenses sold SAP cannot show over 10% of those actually in use. Over 50% of Seibel’s customer base runs SAP ERP is an idication that Seibel is on a higher tier than ERP based CRM and should not be compared directly.
I am not trying to start a bashing session here or flame war. I read this blog to get a balanced view and wanted to help get some facts out there.
Thank You.
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We use Oracle EBS 11.5.10 in our company. I can’t compare it with SAP because I have no experience with the latter but I can say Oracle EBS has a steep learning curve. I imagine the same is true for SAP. We have management here in our company who was not in favor or Oracle EBS. They favored an offering from Microsoft like Great Plains. However, from your article above it seems that only Oracle EBS and SAP are a good fit for multi-national corporations and this is the type of company I work for. We have business operations in America, Europe, and Asia and we deal with lots of different currencies. I believe the choice our CEO made was the correct one but I often have to deal with nay sayers who argue Microsoft’s solutions would have been better. Of course no one is going to spend a million dollars to implement a Microsoft solution just to prove they are wrong so I guess I will have to live with their complaints.
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Eric,
Thanks for the good insights. Really useful inputs for a comparative analysis. I would like to introduce the aspect of resource availability and resource costs. Though it has been touched tangentially, the higher implementation costs have a considerable contribution from high hourly rate resource costs for these two top-shot ERP skilled professionals.
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Few helpful points in the comparision of both the ERPs:
1. Run a ‘strategy to execution’ scenarios of the business critical processes in both the ERP Products.Find out how much time it takes for each process chain – for example to O2C, P2P,R2R.
2.Make few site visits or gather experiences from the similar industry with matchin size/scale/geography who have implemented these ERP Products.
3.The statistics on the bugs/ short comings in each prodcut (i think the competitor will give the insight
)
May be after few years of successful implementatoin both ERP may give the similar results in day to day operations.
However the cost of implementation / business benefits will determine the the true sucess. I completely agree with Eric on the advantage of SAP w.r.t Business Benfits / Tight integration.
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