It used to be that the ERP market had an 800-lb gorilla, SAP, and a number of smaller competitors. Then Oracle went on a shopping spree, gobbling up companies like J.D. Edwards, PeopleSoft, Siebel, Retek and others. Suddenly, there are two gorillas in the market, along with a whole bunch of customers who now find themselves under the Oracle umbrella. Is this a good thing or a bad thing? So far, customers have been courted by sales reps from both sides and often benefited from having aggressive reps compete over who can offer up the sweetest deal for going all-SAP or all-Oracle.
But the larger issue is: what does the future hold for the ERP market? What good is a bargain today if you have to jump ship again in a few years? More specifically, is Oracle's vision of Project Fusion a pie in sky dream that will only lead to disaster for customers? Or perhaps SAP should be more concerned about issues like TCO and flexibility than they appear to be?
You be the judge -- here are two columns from prominent experts in their respective fields making the case for SAP vs. Oracle. These columns are posted simultaneously on SearchSAP.com and SearchOracle.com, and we invite you to send in your comments. Did the authors miss something? Do you have something to add? If you're a former SAP customer who decided to go all-Oracle, we want to know why, and vice-versa.
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The case for SAP
By Joshua Greenbaum
The case for Oracle
By Faun deHenry
NetWeaver Vs. Fusion: Survival of fittest favors the fit
The NetWeaver vs. Fusion competition looks more and more like a Darwinian race for survival, with two distinct but similar species competing for resources in the same biological niche. That niche, of course, is your IT budget, and the race for survival is manifesting itself in briefings and sales presentations across the globe.
The natural world has several strategies for how such a race is run – and won – and each provides some insight into what the eventual outcome of the NetWeaver vs. Fusion struggle will be. One such strategy is competitive coexistence, though at the price of constant conflict. Another biological model is parasitism. A third, the least likely, is symbiosis. But the most probable outcome, the one that everyone at SAP and Oracle would prefer over any other, is the one that nature seems to favor more often than not: total dominance. And, based on what we now know about the two companies' strategies, given such an outcome, NetWeaver would be the winner, hands down.
Why I believe NetWeaver would win out is based on no small amount of digging into the two companies' plans. SAP has been plugging away at its NetWeaver strategy for several years now, while Oracle recently updated analysts, the press, and some customers at a conference in San Francisco. And while there are details and plans galore on both sides (ad infinitum, if not ad nauseam), there are three irrefutable facts that give NetWeaver a serious edge over Fusion.
The first is that I believe SAP has done a better job of both articulating its roadmap for NetWeaver and delivering on it. To be fair, that is in part because they have been at it longer than Oracle. Remember, Fusion is barely a year old, whereas NetWeaver has been bandied about as a concept for almost three years. But I also believe that SAP's advantage in building out its own applications – as opposed Oracle's strategy of acquiring or partnering to build its applications portfolio – has allowed the market to see more clearly where SAP is going and what functionality will be available once the full force of NetWeaver's service architecture can be brought to bear on the market. Oracle's Fusion Middleware strategy is relatively well thought-out and well-defined, but the roadmap for Fusion Applications still has a lot of blank space in it – placeholders for as-yet unannounced acquisitions and partnerships.
This brings me to my second point. In my opinion, vertical industry-specific functionality is where the rubber hits the road as the future of enterprise applications unfolds. Indeed, all that trouble to build and implement service architectures like NetWeaver and Fusion would largely be for naught if all they did was enable more monolithic, general-purpose enterprise software. The real value-add for service architectures comes from their ability to take individual services and build them, Lego-like, into applications that are essentially mass-customized for individual business in individual industries.
This means that, in addition to a strong services infrastructure, a vendor needs a large portfolio of services to assemble – the more the merrier. This is where SAP's next advantage comes into play. SAP's has experience in 28 verticals, and the software functionality to prove it. As NetWeaver unfolds, one of SAP's tasks will be to service-orient all that functionality and make it available as building blocks for the future. That's a non-trivial task, but one that, once done, provides SAP customers with an exceptionally large palette of vertical industry functionality on which to build their service-oriented future.
Oracle, on the other hand, has always lagged in providing deep vertical functionality, a fact acknowledged by the vertical focus of their acquisition and partnering strategy. While there is some deep vertical functionality now in the Fusion playbook – Retek in retail was a major coup, and Siebel can provide some CRM-specific vertical functionality in the industries that it targeted – the scope of this functionality still lags behind that of SAP. And while Oracle is now vowing to fill in the blanks with more partner products, until we can evaluate exactly what those products can do and how many vertical industries they allow Oracle to compete in, SAP still has the vertical industry advantage.
The Fusion timeline
Finally, I have trouble with Oracle's very ambitious timeline for its Fusion Applications. Oracle argues that they are "halfway to Fusion", largely on the strength of their work on Fusion Middleware. I'll grant them that. But halfway to Fusion Applications – particular a suite of highly verticalized service-oriented applications based on least six different code bases (if you count the pieces of software that make up its Oracle, PeopleSoft, J.D. Edwards, Siebel, Retek, and ProfitLogic product lines) – I'm having trouble with the scope of that task. Bear in mind, Fusion Applications are slated to come out in 2008, after Oracle releases updates to its eBusiness Suite, PeopleSoft, and J.D. Edwards lines. That is, to use a technical term, a boatload of application development work.
Sure Oracle is big, sure they're full of some of the smartest minds in the industry… so is Microsoft, whose ambitious plans to develop its own next-generation version of its enterprise software suite – Project Green – foundered and has been radically redrawn and retimed. (Not to mention Microsoft's plans for its operating system, middleware, and a fair amount of the rest of its offerings.) In other words, history tells us that that huge software projects at a minimum tend to miss their deadlines, if not fail hugely. And while I don't think Oracle will fail – Fusion Applications will some day see the light of day – I don't believe that day will dawn in 2008.
Again, to be fair, SAP also has a monumental development task – but it's from a single code-base of software that the company has spent 20-plus years developing. NetWeaver's timetable benefits greatly from its status as a next-generation project based on internally developed software, and not on a massive blending and rewriting of a half-dozen different applications and code-bases.
In the end, software evolution plays by different rules than biological evolution, and Fusion's prospects could change quickly in the next year or so. But, as things stand today, Fusion looks like a candidate for endangered species protection, even before it actually enters the race for survival. If biology defines software destiny, Fusion's destiny looks perilous at best.
Joshua Greenbaum, Market Research Analyst & Consultant, Enterprise Applications
Why select Oracle Applications for your organization's ERP system?
What do Ingersoll Rand, Starbucks Coffee Company, General Dynamics and Harvard University have in common? They use Oracle Applications 11i to automate their operations.
Set aside all the sales and political machinations that can, and do, occur in the executive offices when an organization decides to purchase an ERP system. Let's ask the question: What are the compelling attributes of Oracle Applications? Does Oracle really have a better offering than SAP? This article takes a brief look at Oracle Applications' strengths -- the product's extensibility, its technology stack, ease of implementation and the total cost of ownership -- and what they mean for companies that are selecting an ERP system.
While no "out-of-the-box" ERP system can meet the needs of every customer, Oracle Applications' flexibility is an attribute that has drawn many companies into its fold. Oracle's offering also shines in several areas with regard to extensibility -- Web applications, workflow and reporting.
Oracle's approach to Web applications is so flexible that an organization's IT department can personalize a Web application, such as iProcurement, so that employees logging in from Bangkok see relevant information for that region, and employees logging in from Dallas, Texas, access information that is appropriate to their region. iExpense is another example of the incredible configurability of Oracle's Web applications. Many companies have used this portion of Oracle Applications to streamline their business processes associated with employee expense reimbursements. Robb Robison, Purchasing Manager at a Bay Area software company, is a fan. "I worked with SAP at my previous employer. I'm working with Oracle now. It's just more flexible. For example, iExpense is simpler and easier to work with than anything SAP has. And it's in English!"
Oracle's workflow and business event system allows companies to configure business processes in a variety of ways, with the capability of sending e-mail notifications and alerts to practically anyone associated with the organization. SAP does not offer anything that is equally configurable or flexible.
One of the common complaints of SAP customers relates to the difficulty associated with getting actionable information out of SAP. A senior manager at a utility and SAP customer bemoaned the fact that he needed additional headcount for business system analysts to produce reports and access needed financial information. In contrast, Oracle reporting is so easy and accessible that any user with the proper privileges can produce a report. Further, with Oracle's addition of Daily Business Intelligence, retrieving actionable data from the applications has become a matter of reading a dashboard and drilling into the necessary data.
Oracle's technology stack for its Applications makes the flexibility and configurability possible. It is true that better "best of breed" solutions exist in the market. Still Oracle embraced the middleware market early on when it began talking about using its middleware as the cornerstone for a "service oriented architecture" in 1999 (see Note 1).
Consequently, the company has a strong middleware product. Further, Oracle Corporation has worked on simplifying and opening its Applications architecture. The benefit to Oracle's customers is a product that is easier to install, maintain and use productively. Finally, the company's efforts toward creating a unified data model are paying off. With Oracle Applications' unified data model, organizations have one source of record. There is no more jockeying between departments -- sales and accounting, for example -- about which numbers are valid. SAP still makes its customers work with five different data models. If a company wants a single source of truth with SAP, it must build a data warehouse. Oracle's Daily Business Intelligence product makes a data warehouse optional for many of its customers. The result is faster access to actionable information at less expense.
ERP systems are complex. An ERP implementation is such a major undertaking for any organization that poor planning, misaligned scope or mediocre execution can result in bringing the company's operations to a complete halt. Over the years, news reports have described the more egregious implementation failures -- Irish Health Services, Hewlett Packard, Hershey Foods, Whirlpool and King County, Washington. Whether these failures were the principal responsibility of the customer or the vendor does not change the reality of increased challenges that any company faces when it attempts to implement SAP's software. According to Nucleus Research, companies that it interviewed encountered a couple of daunting issues implementing SAP -- customization and integration. These two challenges led to additional, equally serious problems confronting SAP customers, increased duration and internal costs for deployment. SAP requires on average four times more internal resources, and companies spend almost twice as much for SAP training (see Note 2). Further, the SAP customization and integration issues can increase consulting costs substantially.
A company can install Oracle Applications and begin conducting its operations successfully in six months. Oracle Applications was installed and deployed at Brocade Communications in San Jose, California, in six months, as well as at OpenWave in Cupertino, California. American Tower in Boston, Massachusetts, completed its implementation in eight months. Toni & Guy USA based in Carrollton, Texas, assisted by BearingPoint's R2i methodology, completed its Oracle Applications deployment in five months! How many companies have been able to implement and be productive on SAP in eight months or less? As of January 2006, the answer is none that this author is aware of.
SAP has been successful with its pitch to CEOs and CFOs regarding the benefits and features of its products. However, in speaking with the very people who will actually deploy, maintain and use the ERP system -- system analysts, business analysts, subject matter experts and end users -- they maintain that Oracle Applications, even with its warts, is easier, more user-friendly and less time-consuming than SAP.
Total cost of ownership
All roads -- extensibility, technology and implementation -- lead to total cost of ownership (TCO) and ROI. Which is better, Oracle's or SAP's? Oracle Applications' extensibility and flexibility alleviate the need for customization. With less customization come faster deployments, lower consulting costs and internal resources that return to business operations quicker. The effect of all these attributes is a lower cost of ownership. In fact, not only are Oracle's costs lower than SAP's, but Oracle's average three-year TCO is 48% lower than SAP's (see Note 3). With a difference that substantial, why select SAP?
If an organization is looking to sustain its competitive advantage and become a market leader in its industry, this means constant organizational change through streamlining business processes, reorganization and restructuring, and so forth. As economic history confirms, these activities are demanding in and of themselves. They become nearly impossible with an ERP system that is inflexible, difficult to implement and maintain, hard to use and unnecessarily costly. Oracle Applications, on the other hand, can be successfully deployed in a short time frame. It is flexible and highly configurable. It has a lower TCO than SAP. Working with Oracle Applications is easier than SAP, according to users who have seen both. Does Oracle really have a better offering than SAP? The answer is a resounding "Yes!"
1. Davis, Dwight B., "Middleware Could Prove Decisive in SAP and Oracle Battle," Summit
Strategies, November 2005.
Faun deHenry is President and CEO of FMT Systems Inc. Ms. deHenry has worked in small business for 20 years operating consulting and training organizations. After a decade of working on system integrations with such clients as PG&E, Tandem, Applied Materials and Brocade Communications, Ms. deHenry refined her thinking into the FMT delivery methodology. She can be reached at firstname.lastname@example.org.
DON"T MISS THE FOLLOW-UP ARTICLE WHERE GREENBAUM AND DEHENRY RESPONDS TO THE COLUMNS ABOVE!
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This was first published in February 2006