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  • SAP versus Oracle

    Deciding between SAP and Oracle is essentially a decision between two different cultures. These are large investments that tie the customer into one of two separate and distinct cultures. And since buyer’s remorse would be prohibitively costly, making the right decision before committing is crucial. Technically speaking, these are global corporations. But SAP is primarily a German company, while Oracle is immersed in San Francisco’s tech culture.

    SAP is the world enterprise resource planning (ERP) leader, with 24% of the market. This is its core competency, and has been since the company started in 1972. It is headquartered an hour outside of Frankfurt, Germany’s fifth largest city, in the town of Waldorf. With US$ 21 billion in revenue (2013) and 66,000 employees, it is the third largest software company in the world.

    With US$ 38 billion in revenue and 122,000 employees, Oracle is the second largest software company in the world, but only holds second place in ERP with an 18% market share. The company started in 1977, but didn’t make tentative steps into ERP until the 1990’s, only getting serious after 2004, through a series of acquisitions. Though it has tried to position itself as the more nimble choice to German stodgy tradition, both organizations are behemoths.

    These two companies have been playing out the greater debate on which direction capitalism should take by being flagship examples of the difference between German and U.S. economic systems, with America standing for competitive and destructive creation, while Germany holds the line on planning, prudence, and stability. This contrast is reflected in their ERP systems, with SAP taking a more centralized approach, and Oracle providing various, less integrated options. So what are the practical differences for someone weighing the pros and cons?

    SAP has more customers claiming implementation failures and significant operational disruption. Their total cost of ownership (TCO) runs 4%, being the more expensive choice to Oracle’s 1.7% TCO. But their time to implementation runs 4 months, against Oracle’s unimpressive 22.5 month showing.

    The main differences here revolve around functionality. SAP’s service provides a more integrated, comprehensive platform, whereas Oracle is piecing together different platforms to offer a more tailored experience. SAP rates better on delivering the expected functionality, whereas Oracle wins the contest when it comes to a faster payback, with less training required for a less all-inclusive product. Furthermore, there are some differences in direction for future technologies. For example, SAP in-memory technology is being focused as highly functional and integrated while Oracle is selling itself as being easier to integrate with existing systems. And it has been more successful at transitioning into the cloud.

    Overall, Oracle is the cheaper alternative, but not as convenient and useful as a more comprehensive, centralized system. If more customization is required, Oracle may be the better selection. But if a company wants to be up and running quickly with a minimum of hassle, than SAP could be the better course of action. Finally, SAP may have an advantage in the future being the European market leader. ERP is projected to grow 22% in Western Europe in the next several years, while ERP worldwide has only been hitting 2.2%. For companies that have a significant European presence, or want to expand into this market, SAP would come out on top.