The most common debate for any large, complex company looking to implement an ERP system is whether to choose SAP or Oracle.
An ERP (Enterprise Resource Planning) is a modular software that is designed to manage and integrate the main functional areas of a business into a unified system.
Undoubtedly, ERP plays an important role in the success of any business. That’s why it’s crucial to choose the right platform for your workload.
To determine which is the best fit for your business, it depends on your unique business requirements. However, we still compare two big-name ERP software packages – SAP and Oracle based on industry benchmarks.
Both SAP and Oracle are two very powerful and comparable ERP software, and both vendors are the clear market share leaders.
A Brief Overview of SAP and Oracle
SAP ERP is an end-to-end enterprise resource planning software, which was developed by SAP SE in Germany. It is designed to support and integrate key business functions of an organization, including sales and distribution, finance, accounting, human resources, production planning, logistics, manufacturing, warehouse management, etc. Its most recent flagship product is named S/4HANA ERP for larger enterprises.
Oracle ERP is a holistic software application suite which was introduced by Oracle Corporation in 2012. It also manages enterprise functions including accounting, financial management, project management, procurement, and more.
Difference Between SAP and Oracle ERP
SAP and Oracle both provide a full business suite of solutions, including CRM software, HCM software, SCM software, etc. But they have very different results in implementing and using these two products.
To understand the difference between the two, we have narrowed eleven key areas:
1. Implementation Duration and Cost
The most important aspect of choosing an ERP system is its implementation cost and duration. This is because ERP implementation can cause operational disruptions, such as the inability to ship or manufacture products.
While the average Oracle customer takes 12 months to implement, SAP projects implementation goes for around 14.7 months. One reason why SAP ERP installation takes longer because it usually targets global and complex companies. SAP vendor targets companies with at least $1 billion in annual revenue. And, Oracle targets companies with at least $750 million in annual revenue. Thus, global ERP projects will naturally take longer time owing to their multiple locations and other standardization.
While talking about implementation cost in terms of the percentage of a company’s annual revenue, SAP is the higher cost option. The average SAP customer spends 4% of its annual revenue on its total cost of ownership, whereas the average Oracle customer spends 1.7% only. This again can be attributed to the fact that SAP targets more complex structure and therefore, higher cost.
2. Implementation Risk
Implementing either of the ERP solutions come with its own risks. However, you should be more concerned about which of the two offers tools and methods to help mitigate the risk of failure.
There were recent reports about high-profile transformation failures such as the SAP failure at Lidl. More SAP users are claiming implementation failure than Oracle’s customers. In fact, SAP customer even experienced some sort of material operational disruption at the time of going live.
In the case of Oracle, its flagship Oracle Cloud ERP software was not listed among the top ERP systems of 2019, by Third Stage Consulting Group. Every ERP customer is associated with a higher degree of risk, and both the system entails a complex transformation that is bound to affect the whole organization in some way.
To help deal with it, SAP’s All-in-One product features include the best practices and pre-configurations that is intended to reduce risks and accelerate implementation. Oracle has also developed tools in the same manner to accelerate the implementation. It also has a User Productivity Kit that makes the whole testing, training, and implementing the process more efficient.
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3. Cloud Adoption
Gone are the days of big, complex internal IT infrastructures that were required to host ERP software or any other software applications. A large number of organizations are now opting for cloud-based deployment. You can either deploy it through pure software as a service software or get it hosted by a third-party provider.
While both vendors offer cloud delivery models, data suggests that Oracle has seen much success in this area. There are rumors that SAP’s Business One, which was once considered to be the most viable cloud-based offering, is losing its ground now. Thus, customers realize that leveraging Oracle’s cloud options has more measurable benefits than SAP’s.
Furthermore, only Oracle offers an on-premise solution. Even though many organizations are putting their faith in cloud models, there are still many industries which don’t use cloud-based products for compliance reasons. So this again makes for a significant factor when choosing software.
Businesses are continually looking for ways to expand and grow. That’s why it’s essential that whichever ERP they choose provides them the operational backbone to help build and scale their businesses.
Most Fortune 500-listed companies are using either or both the system. Thus, it is safe to say that the world’s largest organizations are able to scale their companies with either product. SAP and Oracle are quite even, but their degree of scalability depends on the particular needs of your organization.
They differ in the fact that SAP offers a consistent and single system feel. It has primarily developed its products from the ground and consolidated it into a unique system. Whereas, Oracle has created more of a best-of-breed option with its various solutions. Some of which includes JD Edwards, Fusion, E-Business Suite, Hyperion, and Siebel.
Therefore, SAP is the best option for companies who are looking for scalability through standardization and consistency. And, Oracle ERP works best for the organizations who have a decentralized model and more flexibility.
5. Functionality and Customization
Apart from having a strong technological background, an ERP should have a robust set of functionality that continually works towards improving business operations. In this case, there is no doubt that both SAP and Oracle works well towards enhancing their system functionality. But it has been seen that SAP customers are able to realize more benefits from their expected functionality than Oracle’s users. Whereas, Oracle’s customer realizes a faster payback than SAP’s customer.
Another important feature of any ERP system is the ease of customization. To ensure a good fit, customization between the ERP system and the company’s operational need is a must. To our surprise, both Oracle and SAP have their own way of offering customization to their customers.
SAP’s ERP system offers customization and flexibility to integrate tools into its software for its enterprise customers. And, Oracle has best-of-breed solutions which allow project managers to easily choose to integrate with the software as per their needs.
6. Customer Relationship Management (CRM)
SAP S/4HANA has dismantled the traditional customer relationship management (CRM) tool and integrated it throughout the ERP system by including customer records within the sales, procurement, and finance functions. Whereas, Oracles offers CRM or sales enablement tools such as customer experience, sales, marketing, service, and social tools as a stand-alone service, which can be integrated with the Oracle ERP Cloud.
SAP S/4HANA built-in sales feature enables the sales force to easily manage accounts, build invoices, streamlines procurements processes, and manage orders and contracts from the ERP interface. It has you covered in all fronts that involving the customer.
It offers a full customer experience suite that enables you to see your customers’ histories. Thus, you are able to tackle your lead generation more effectively. Besides, it is fully integrated with marketing, sales, and finance, which gives you the whole story on your customers. This added information about your customers helps you make smarter selling strategies.
On the other hand, Oracle doesn’t have a dedicated sales tool within the ERP Cloud product. This could be a minor disadvantage for sales-focused companies. However, it has some really outstanding features like a strong financial management tool, which stores vital customer information. And so you can easily filter the information by the customer and find their financial records, orders, and quote information.
In a nutshell, even though Oracle ERP has a good Customer Account Management, but SAP excels in this area. But at the same time, Oracle strengths lie in its reporting and data capabilities.
7. Human Resource Management
SAP ERP scores a bit higher than the Oracle ERP here. Oracle’s human resource management is not as robust as SAP. SAP goes the extra mile to provide companies with loads of HR functions, such as facilitating payroll process, simplifying employee onboarding, and allowing employees to access critical information from a single place. Moreover, it empowers employees to self-manage timesheets, procurement processes, and personal information.
Not only that, but SAP also offers e-recruiting functionality, which provides all relevant information about employee retention and battling turnover rates.
What makes Oracle stand apart is its excellent reporting capabilities. On top of that, it supports visual representations, which makes the communication real quick and easy. So for a company which is more data-oriented while making its decision, then Oracle will be a good choice. It has the capability to grasp the overall trend and analyze it for you so that you can have a good understanding of your company’s future.
8. Supply Chain Management (SCM)
When it comes to supply chain management, both ERPs have comparable SCM software. They have their own strong areas. Therefore, you should choose the one whose features align with your business needs.
Some of the features include:
- Purchase Order Processing: Both the ERPs are equally capable of it. SAP utilizes ‘procure to pay’ module, which helps companies streamline their purchase activities and provides buyers with real-time information to make smart and quick decisions.
- Distribution Management: Both the ERPs are well-equipped to provide information on warehouse profitability and automate related processes.
- Order to Cash: SAP and Oracle both are equally efficient in managing quotes and other aspects of contracts with clients or suppliers.
There is also supplier invoice to payment process management tool, which includes contract creation, invoice payment took, registration, etc. It makes the whole purchase and production processes easier for the company. In fact, it brings more transparency to the entire process.
SAP and Oracle differ in their caliber when it comes to the advanced planning system (APS) and event management. Oracle has better APS, which lets you better track cost and allocate resources more efficiently. Whereas, SAP excels in event management where it provides better insights and visibility into your supply chain.
Both SAP and Oracle ERP system offer a comprehensive and scalable financial management solution. Some of the features include account receivable, account payable, ledger, and more. However, unlike SAP, Oracle lets you purchase all of these functionalities in one single package or separately as you want. It gives the user a sense of freedom while buying the product.
Moreover, Oracle scores better than SAP in some financial areas. Oracle has improved business management tools, and it focuses on financial data movement within a company. Companies can integrate this data and manipulate it depending on their needs.
Besides, Oracle offers risk management solutions that can be quite helpful in terms of enforcing enterprise-wide compliance. It also automates some standard compliance applicable in various industries. The advantage of it is that it brings a level of policy enforcement and helps prevent cash leakage. SAP’s risk management is no less, though. It helps your business identify and better understand risk factors.
Some of the advanced Oracle ERP modules are ‘Transaction to Cash Position,’ which takes a point-of-sale approach and integrates it with long-term financial data. Then, there is ‘Asset Management to Retirement,’ which covers the full lifecycle of assets — from acquisition to amortization and eventual disposal.
10. Inventory Management
Inventory management is a crucial part of the manufacturing process and warehouse management. Luckily, both ERP solutions offer a holistic inventory management tool.
Since both are cloud-deployed, they can provide real-time information about stock availability at any time of the day. It ensures that the company stays up-to-date with their stock level, and thus, the production process is not disrupted because of a shortage of supply. It results in an efficient supply method, and the company is able to meet their customer’s demand on time.
While both ERP may be equally efficient in doing what they do, Oracle boasts of boosted productivity. And, SAP takes pride in the fact that it completely prevents stock shortages.
11. In-Memory Technology
In-memory technology helps ERP system to run the applications and analytics faster. It helps in increasing system productivity and efficiency.
While both ERP claim how their in-memory technology is going to change the future of ERP, SAP is making significant progress with their in-memory database. SAP HANA is a highly functional ‘all-in-memory’ system. However, it is only beneficial for a centralized business model as it provides all in a single platform. It may be an advantage but it also means higher cost of deployment and compatibility limitations.
Oracle is not behind the race. Their new in-memory system is highly functional and easy to integrate with the existing database and applications. Being a cost-effective option, it gives them an edge over the SAP ERP system. However, this system may not be a great choice for an organization looking for a more centralized system.
Conclusion: Choosing SAP ERP vs. Oracle ERP
Fully functional ERP tools help businesses to drive better decision making through its clear insights on actual finances and operations. The above points may have made it clear that both SAP and Oracle ERP software does well and has their own set of advantages in certain areas. It may provide you some context to compare these two products.
Potential ERP buyers can evaluate their software options — every organization is different and have different priorities. Implementing a new ERP system requires a significant investment in time as well as capital. That’s why you must do your research and understand your company’s present and future needs. Besides, also check out their after-sale support to make your final pick.
To conclude, it all comes down to which is better for your organization. Both of these software products offer a wide variety of functions that may or may not apply to what your enterprise needs or wants.