Comparative Analysis of ERP Vendors SAP Oracle and
Comparative Analysis of ERP Vendors SAP Oracle and
Comparative Analysis of ERP Vendors SAP Oracle and
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In-Saeng Suh
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Abstract
This is a study of the comparative analysis on the enterprise resources planning (ERP)
vendors, SAP, Oracle, and Microsoft. We research on functionalities, cost, features, and
target market for each vendor.
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School of Business and Economics Indiana University South Bend
1. Introduction
ERP system is an integrated information system to support the business within different
organizational parts of an enterprise. The leading global providers are SAP, Oracle, and
Microsoft. ERP packages are designed to be customizable to concrete needs of an
organization and to its legacy systems. The customization of ERP modules for a concrete
user is performed with special tools and using specific or standard programming
languages. Due to already mentioned general ERP characteristics, customization and
implementation usually require specialized knowledge and significant resources.
SAP was founded on April 1, 1972, by five IBM employees. It developed its first product
(financial accounting software) in close cooperation with its first customer. The company
grew initially around ERP and solidified its market leadership by being a pioneer in the
move from mainframe to client-server computing with its R/3 ERP solution introduced in
the 1990s. From there, SAP expanded into a much broader set of applications for other
functions in the enterprise: customer relationship management (CRM), supply chain
management (SCM), product life-cycle management (PLM), and supplier relationship
management (SRM). By bundling and integrating these applications, SAP became
known for high-quality, comprehensive enterprise solutions, which SAP or SAP-trained
SI consultants would then customize.
Oracle was founded in 1977 as Software Development Laboratories. The first Oracle
program was written in assembly language, ran on PDP-11 and with 128k of
memory. The software was never "officially" released though. Version 2 which was
released in 1979 was the first to be released. The company had changed its name by then
to Relational Software Inc. Business grew and by 1982 they had changed their name
again, this time to Oracle and in 1987 the company went public. Today, Oracle remains
one of the leaders in the ERP industry.
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School of Business and Economics Indiana University South Bend
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Challengers score higher the ability to execute and lower on the completeness of
vision. Typically larger, settled businesses with minimal future plans for that
industry
Visionaries score lower on the ability to execute and higher on the completeness
of vision. Typically smaller companies that are unloading their planned potential
Niche players score lower on both criteria: the ability to execute and
completeness of vision. Typically market fledglings
In 2007, both Oracle and SAP were placed towards the bottom of the Challengers
Quadrant. This would indicate they have the ability to execute, though maybe not that
well as they are towards the bottom of the quadrant, and they don‘t seem to have a great
deal of vision. But is that all there is to look at?
In this study, we focus on functionalities and features, the total cost of ownership, and
target market of the ERP vendors: SAP, Oracle, and Microsoft Dynamics.
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applications, and analytical tools. With SAP ERP, we can efficiently deal with business
challenges in the following areas:
End-user service delivery – Ensure that employees can readily access the critical
data, applications, and analytical tools they need to perform all their job functions
efficiently and effectively while also supporting a shared-services organizational
model for human resources, finances, and other key processes. SAP ERP offers
role-based access, self-services, and employee interaction center support through
SAP Manager Self-Service, SAP Employee Self-Service, Duet and employee
interaction center support. Plus, SAP Mobile Time and Travel enables employees
in the field to report time and expenses offline.
SAP ERP Financials – Ensure compliance and predictability of business
performance – so the organization can gain a deeper financial insight across the
enterprise and tighten control of finances. SAP ERP Financials automates
financial and management accounting and financial supply chain management.
The solution also provides rigorous support for corporate-governance mandates
such as Basel II and Sarbanes-Oxley.
SAP ERP Human Capital Management – Optimize the HR processes with a
complete, integrated, and global human capital management (HCM) solution.
SAP ERP provides this HCM solution for organizations of all sizes and in all
industries. You can maximize the potential of your workforce, while supporting
innovation, growth, and flexibility. The SAP ERP HCM solution automates talent
management, core HR processes, and workforce deployment – enabling increased
efficiency and better compliance with changing global and local regulations.
SAP ERP Operations – Manage end-to-end procurement and logistics business
processes for complete business cycles – from self-service requisitioning to
flexible invoicing and payment – optimizing the flow of materials. SAP ERP
Operations also helps discrete and process manufacturers manage the entire life
cycle of product development and manufacturing. The solution automates the
entire manufacturing process and reduces costs by controlling and adapting the
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2.2 Oracle
An Oracle database system is a platform with at least one application running on it to
access and process the data. Data is stored logically in the form of table spaces and
physically in the form of data files. The recommended structure for an Oracle database
is the institute RAC--Real Application Clusters. Multiple instances, usually on different
servers, attach to a central storage array. This offers better performance, scalability and
redundancy for the users.
There are various versions of the Oracle database management software. In addition,
Oracle divides it‘s product into various editions to track marketing and sales.
Enterprise Edition – The full suite of performance, scalability, security and
reliability stored on either a clustered or single server. Runs on all standards and
available with a large number of applications.
Standard Edition – Provides Enterprise level functions for mid-sized
organizations. Sold through Oracles 400 Value Added Resellers.
Standard Edition One – low end—minimum five users—entry level package.
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Though this looks like a large number of options, there are really only three true choices
and they are based on the size (number of seats) of the organization. Of the other three, 2
are for developers and the other just provides access to database information from a
mobile devise. Oracle does, however, offer some other ―flavors‖ to offer as well.
Oracle has grown dramatically mostly through acquisitions. Their product lines include.
PeopleSoft Enterprise
Siebel
JD Edwards
Hyperion
Agile
AutoVue
Fusion
Not counting the other products (PeopleSoft, JD Edwards etc.) Oracle Business Suites
alone have over 140 different applications which can be installed on their platform.
These include:
Enterprise Performance Management – A tool which aides in the executive
decision making process by supporting a broad range of strategic, financial and
operational management processes.
Business Process Outsourcing – an application which seems to work as an
extranet and allows organizations track the non-core business processes which
have been outsourced.
Customer Relationship Management—tracks what is going on in the sales
department. Allows other departments (finance, production) know what they can
expect. It will also allow the marketing groups know how effective campaigns
have been.
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These are just a handful of the applications available. Essentially, whatever the need,
Oracle has a way to meet it.
1
"Human Capital Management Solutions." Oracle, The World's Largest Enterprise Software Company. 19
Nov. 2008 <http://www.oracle.com/applications/human-capital-management.html>.
2
"Transportation Management." Oracle, The World's Largest Enterprise Software Company. 19 Nov. 2008
<http://www.oracle.com/applications/scm/transportation-management/index.html>.
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School of Business and Economics Indiana University South Bend
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School of Business and Economics Indiana University South Bend
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School of Business and Economics Indiana University South Bend
Table 3: ERP Usage and Costs per User per Percentage of Functionality Used
ERP Average # of Average % of Average # Software +
Vendor Modules Functionality of Users Service + 3
Used Used Yrs Maint.
SAP 12.4 69.1% 834 $702
Oracle 11.3 72.4% 1365 $513
Microsoft Dynamics 10.6 73.2% 116 $607
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ongoing support for the ERP solution the average personnel costs were $346,667 and the
average annual ongoing cost was $192,000. Lastly, training costs on average were
$141,375 with one hundred and ninety-five users, twenty-nine hours of training time at a
cost of $25 per hour.
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months
Assumed fully loaded cost of an
employee:$80,000
Median number of users: 120 Median
training time: 24 hours Assumed fully
Training $72,000
loaded hourly cost of an end user:
$25
Total $1,144,750 Median initial cost of deployment
Ongoing Costs
Median annual cost of license: 15%
Software maintenance $75,600
Median initial license price: $168,000
Median number of FTEs required to
support Microsoft Dynamics AX:
Personnel $300,000 1.25
Assumed fully loaded cost of a
support FTE:$80,000
Median 3-year costs of software,
Total 3-Year Cost $1,269,950 consulting, hardware, personnel,
training and maintenance.
3. Target market
SAP serves 75% of the Fortune Global 1000, but less than 1% of Fortune Global million.
The small and medium enterprise (SME) market is a huge opportunity. SAP views SMEs
as its main potential source of growth. As of summer 2006, SAP led the midmarket
segment, but to reach its goal of having 45% - 50% of order entry from SME customers
by 2010, SAP has to address the two most important elements of an SME solution: Total
Cost of Ownership (TCO) and ease-of-use. SAP‘s offering has higher up-front outlays
but lower maintenance rates. SAP aggressively expands SME market via the SAP
NetWeaver platform strategy toward the goal of doubling SAP‘s market cap by 2010.
It would probably be safe to say Oracle targets anyone interested in purchasing an ERP
solution. That wouldn‘t be entirely accurate. It‘s obvious that Oracle has achieved it‘s
success by building for the large Enterprise organizations but they‘ve also been
successful due to their focus on their platform. Enterprise solutions will probably remain
a staple target for them. However, if you look at the products they are now producing
making it easier for smaller organizations to get introduced to their product, it‘s an
obvious sign they are seeking more small to medium businesses in their portfolio. The
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Standard Edition One with a price of $180 per user is a sign of that. They also have a
suite of ‗out of the box‘ applications ready to bolt on once the server is in place. Get the
business used to the Oracle environment when they are small at a competitive price, then
sell more licenses as your software helps them grow seems to be their motto. I can‘t say
that‘s a bad one.
At the end of the day, selecting the best solution comes down to preference. Obviously,
each solution has strengths and weaknesses. But how do you select a solution when one
provider is strong in one area you need while another is strong in another? Additionally,
there are more solutions coming on the scene. Smaller companies who may be able to
provide a different type of service than what the biggest players offer. Another solution
many will consider in the future, especially with the current economic situation, is the
growing Software as a Service trend.3 SAP has already got a jump on the market with
their ByDesign solution. At the end of the day, it will have to come down to what
solution works best for the business making the choice.
3
Maxcer, Chris. "Is SaaS ERP a viable model for manufacturing?" Manufacturing ERP software and
management - SearchManufacturingERP.com. 9 Sep. 2008. 23 Nov. 2008
<http://searchmanufacturingerp.techtarget.com/news/article/0,289142,sid193_gci1329175,00.html>
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School of Business and Economics Indiana University South Bend
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School of Business and Economics Indiana University South Bend
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