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SAP tops list of ERP vendors, but market is more evenly divided

Panorama Consulting says SAP continues as market leader among the top four ERP vendors. But the market has evened, and Microsoft Dynamics moved past Oracle into second place.

SAP leads the list of top ERP vendors in market share, but the field is much tighter than in years past.

SAP, Oracle, Microsoft Dynamics and Infor make up the top tier of ERP vendors, according to the Clash of the Titans 2017 report by Denver-based Panorama Consulting Solutions. SAP has been the market-leading ERP vendor in all previous reports, but this year's report indicates a much more even playing field. It also shows that Microsoft Dynamics has overtaken the second spot, passing Oracle, which now trails with Infor.

The report summarizes qualitative research about the four identified market-leading ERP companies. Panorama Consulting is not affiliated with any vendor, and the report is an objective comparison of which ERP vendors have the most market share and the largest and most complete product suites, Eric Kimberling, founder and managing partner of Panorama Consulting, said in a webinar discussing the report.

Panorama collects data year-round, and the results of the current survey came from polls conducted between October 2015 and November 2016 of 470 companies that implemented systems from one of the four vendors. The respondents were from organizations of all sizes, industries and locations around the world.

"Each vendor has distinct strengths and weaknesses, and that was shown in the data at least in terms of how they compare to one another," Kimberling said. "It's an actual study of people who have implemented the systems across the board. There are some that have been wildly successful and some that have been failures -- and a lot of in-betweens."

For overall market share, SAP leads with 19%, followed by Microsoft Dynamics at 16%, with Oracle and Infor both at 13%. The rest of the market is divided between various Tier 2 vendors (21%) and Tier 3 vendors (18%). Compared with last year's Clash of the Titans report, SAP dropped by 4%, Oracle and Infor each dropped by 3%, and Microsoft Dynamics went up by 7%.

This reflects both an opening and evening of the market, Kimberling said.

"Perhaps not surprisingly, SAP is No. 1 in this survey and has been No. 1 for as long as the survey has been done, but this is changing quite a bit," he said. "In the past, they weren't just No. 1, but they were No. 1 by a long shot. But now, you see that their market share is pretty comparable to the others, and [there is] no one vendor that has a clear advantage in market share."

The most interesting finding from this year's report was the increase in market share for Microsoft Dynamics and the overall closeness of all the ERP vendors, according to Kimberling, which he said is good for customers.

"The most telling thing here, in addition to the fact that Microsoft Dynamics and Oracle switched spots, is that the numbers have settled down to where they're pretty even," he said. "This shows that it's getting a lot more competitive -- 39% are now Tier 2 and Tier 3. This is good news for the marketplace; it shows there are more viable options, and it will typically lead to better pricing when it's this competitive."

Out of the four top ERP vendors, SAP was also the most frequently shortlisted and the most selected after being shortlisted -- 38% for each -- which was unsurprising to Kimberling, given its position as market leader. However, Microsoft Dynamics increased shortlist frequency (31%) and selection (22%) from previous years. This may be a reflection of Microsoft Dynamics' approach of providing products that appeal to organizations of all sizes, Kimberling said.

"More companies are comfortable shortlisting Dynamics, which is not that surprising, because they have made a good, solid suite of products that appeal to small companies, as well as midsize and big companies," he said. "We see an equal number of big companies and small that are implementing Microsoft Dynamics, and that might be a reason why Oracle acquired NetSuite, because it gives them an option at the lower end of the market and a better SaaS [software-as-a-service] option than what they had. All these vendors are trying to figure out how to appeal to that SMB market, not just to the big guys."

There were a few other notable findings with this year's Clash of the Titans report, according to Kimberling.

For overall project cost, Oracle was the most expensive, with an average of $2.38 million, while Infor was the least costly at $1.51 million. The actual project cost for all four ERP vendors exceeded planned costs, with SAP having the largest gap between planned cost ($1.44 million) and actual cost ($2.09 million). Although it had the highest actual cost, Oracle had the smallest discrepancy between that and the planned cost at 2%.

"For some companies, that discrepancy number can be just as important as the actual numbers, because they want to have realistic expectations and people don't want to get fired because they have miscalculated how much a project is going to cost," Kimberling said. "SAP has the biggest discrepancy, which may indicate that there's a mismanagement of expectations with SAP customers in what they're estimating and what they're getting."

All of the systems took longer to implement, with the exception of Infor. Oracle had the longest implementation time at 24.5 months, while Microsoft Dynamics had the biggest discrepancy between the planned implementation duration (21.2 months) and actual duration (23.6 months). Infor took 15.3 months on average to implement, compared with the planned duration of 15.8 months.

"In most cases, the actual takes more than the planned duration, and coming in under is not typically seen," Kimberling said. "That may be a statistical anomaly, but it still shows that Infor is being implemented in less time and [has] fewer time overruns than the others."

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