SAP dominates the ERP market, commanding 24 percent of total ERP market share in 2010, with Oracle close behind, with 18 percent of the market in 2010. The rivalry is heating up even more following SAP CTO Vishal Sikka’s recent comments that SAP plans to support its flagship Business Suite ERP software on its HANA in-memory database platform by the end of 2012. Industry observers see this as a move to entice companies to choose HANA over Oracle databases.
Ali versus Frazier, Hearns versus Leonard, the list of iconic rivalries is long. And SAP ERP versus Oracle ERP is right up there among them. While others are alive and kicking in the ERP space, and upstarts with cloud-based systems are beginning to emerge, these tech titans are the only two classic heavyweights left in the fight.
According to Panorama Consulting, SAP commanded 24 percent of the total ERP market in 2010, while Oracle had 18 percent of the market. The only other single company even close in market share was Microsoft, which owned 11 percent of the market with its Dynamics product. The remaining 47 percent of the market went to multiple Tier II and Tier III companies that serve mostly small and medium-size customers.
The rivalry is heating up even more following SAP’s Jan. 25 earnings call, during which CTO Vishal Sikka said SAP planned to support its flagship Business Suite ERP software on its HANA in-memory database platform by the end of 2012. This is widely seen as a move to entice companies to choose HANA over Oracle databases.
We checked with some well-known industry observers to get their take on the ERP rivalry.
Haymaker or Jab
Boxing tactics vary widely from one fighter to another. Some patiently jab their opponents with small blows while managing to evade counter punches. Others hammer at their opponent looking for a fast knockout. Oracle is more prone to the latter approach, though SAP has proved more than a match for Oracle haymakers to date.
China Martens, a Forrester Research analyst, looked at how Oracle and SAP differ in their appeal to the user. She first emphasized the differing histories and orientations of the software giants. SAP has been in ERP from its early days and this continues to be its core competency. Oracle morphed from a database provider, moving into enterprise applications by acquiring software companies including JD Edwards, PeopleSoft and Siebel Systems. It is even moving into the hardware side, following its 2010 purchase of Sun Microsystems.
“Oracle’s focus is more around what it can provide through its stack of products – all the way from servers and storage through database and middleware to business intelligence and applications – both general purpose and more industry-specific,” said Martens. “SAP is looking over time to win over its customers who are currently using Oracle middleware and Oracle database to using SAP middleware, SAP’s Sybase relational database and SAP’s HANA in-memory computing platform.”
She viewed the acquisitions of both business intelligence pureplay Business Objects and mobile specialist Sybase as being key in reinvigorating SAP and expanding its portfolio to make it more competitive with Oracle across a wider swathe of products. She said the fight has moved beyond the bounds of an ERP contest.
“SAP has been more bullish about in-memory technology and cloud computing, but Oracle is now also pushing those strategies,” she said. “It could be argued that SAP has embraced cloud computing concepts more warmly than Oracle given Oracle leadership’s continued public ambivalence about the benefits of multi-tenancy.”
She gives SAP the lead, too, in the SME side. SAP aims products specifically at small and midsized businesses with its Business One, Business ByDesign and Business All-in-One lines of software. Oracle may target some mid-market customers through its partners, but it doesn’t offer specific mid-market products, aside from its manufacturing-focused JD Edwards ERP. That could change, though, with a simple acquisition – a popular strategy for Oracle.
“I always tend to think of it as Oracle having carved out a NetSuite-shaped hole for a potential future acquisition of SaaS ERP,” said Martens.
Overall, though, Martens doesn’t believe there is much to differentiate the two rivals from each other from a customer standpoint. On that basis, she said, Oracle versus SAP offers a similar experience. The same system integrators handle both ERPs, the price point is likely pretty similar, and the functionality is similar. Both need to improve ERP application usability and their mobile ERP applications, Martens opined.
One area where she sees a real ERP battle forming, however, is in human capital management (HCM). That’s why SAP bought SuccessFactors and why Oracle has developed Fusion HCM.
“Over time, both Oracle and SAP have seen software-as-a-service HCM players, particularly in the talent management area, start to make inroads into their installed customer bases,” she said. “As an aside, something similar has been going on in the CRM market where Oracle and SAP customers are moving to Salesforce.com and to Microsoft – and you’ve seen part of Oracle’s response with its recent purchase of RightNow.”
Summary: They each have pluses and minuses, but they are too well matched to predict a victor any time soon.
Best Pound-for-Pound Champion
Rather than looking at tactics and emphasis, Eric Kimberling, an analyst with Panorama Consulting, took a statistical approach to the matter of who is the true ERP heavyweight champ. In simple market share, SAP leads with 24 percent, with Oracle not far behind at 18 percent, according to Panorama research. When it comes to bids and quotes, Panorama found SAP makes the short list more than the others – 38 percent of the time. But Oracle wins more bids when it makes it onto the short list compared to SAP.
In terms of customer satisfaction, Oracle has the highest rate at 80 percent compared to SAP at 39 percent. SAP also takes an average of 13 months to implement, two months longer than Oracle. And Oracle comes out a little cheaper than SAP measured by total cost of ownership.
But while SAP may be more expensive, Kimberling said that it has the lowest average cost overrun (8 percent over budget), with Oracle at 15 percent. To his mind, that means while SAP users may spend more, they generally have a better sense of what it takes to implement ERP and budget accordingly.
Summary: Both fighters have their strengths and weaknesses, but there is little to make either an obvious choice over the other.
While recent product releases and acquisitions may have gained the spotlight, both Oracle and SAP are thinking several years ahead in their attempts to unseat the other and land the final knockout blow. Both sides may have been a little slow to the SaaS party, but they are moving fast to catch up. And both are in the midst of a complete revamp of their product offering.
“Both companies are trying to reinvent themselves with their responses to Big Data,” said Martens. “SAP with HANA and Oracle with all its Exa- offerings.”
Each has embarked upon ambitious programs to redesign their underlying architectures. Oracle’s Fusion program, which has been going on for five years, is resulting in a steady rollout of middleware and applications that cover the enterprise spectrum. When fully completed, the company sees this as the enterprise suite of the future. It will be able to run in the cloud and on premise. Rather than being underpinned by a myriad of programming languages and complex middleware, it is based on Java with standardized middleware and baked-in analytics.
SAP, too, has been working diligently on its HANA analytics project, which it sees as a key element in its platform redesign. The company is in the process of refactoring its applications around the HANA in-memory computing engine. It’s all about speed of information access and dealing with an ever expanding amount of data. Similarly, its Business ByDesign is an SME-oriented cloud-based ERP product with built-in analytics.
“SAP has become more cautious on the rollout of Business ByDesign while Oracle positions its Fusion applications more in a coexistence and complementary role to its existing apps – E-Business Suite, JD Edwards, PeopleSoft, and Siebel as well as its more industry-specific apps – rather than an all-out replacement for these apps,” said Martens. “SAP only has the one enterprise offering – Business Suite – which it offers in a variety of industry flavors – hence its focus on industry ERP acquisitions as tuck-in purchases.”
Conclusion: This contest is far from over. Both fighters have dominated individual rounds but they are well matched on the judges’ scorecards. It’s unclear as to whether a knockout is in either company’s future.