This interesting post popped up this morning in my Google alert: Oracle vs. SAP Smackdown: Who Has the Better ERP Applications Strategy? Since my recent two-part series about how you could/should use information technology (IT) analyst firms, my eyes get drawn to such stories even when they have the drawback of Tinker telling me what Evans said about Chance.
The oddity in this article is that CIO.com's columnist says Forrester has changed its opinion about Oracle vs. SAP dramatically in Oracle's favor since two years ago but never says why. Not only that, the article is mostly all about what Forrester thought SAP was doing right vis a vis Oracle two years ago, none of which has changed, in my opinion. So I did my own two-minute-drill analysis using the same characteristics CIO says Forrester used, and I still don't see why Forrester would have changed its opinion between 2006 and 2008.
Here are my back-of-the-envelope scratchings:
|Market penetration||Gaining on SAP in ERP (see definition below), especially in North America but still significantly behind SAP in ERP market share||Conversely SAP is gaining in middleware market share based on NetWeaver success (probably already number four after IBM, Microsoft and Oracle)|
|Large lead over SAP in standalone applications market share, primarily through acquisition||SAP does not really compete in standalone applications market; almost all of its application functionality runs on same middleware|
|Partnership strategy||Strong middleware partnerships that should be transferable to applications||As my 4-year-old granddaughter's teacher says, "does not work well with others" (but, in SAP's case, this is not new in last 2 years)|
|Industry applications strategy||A lot of standalone, unintegrated industry-centric point products||Integrated industry centricity of its ERP offering has been the key to SAP's 25-year-old success story|
|Middleware and tools||Paraphrasing Pulitzer prize winner Robert Frost, "miles to go" before it's done||Solid modern middleware base somewhat held back by customer trust in the 20-year-old ABAP and Basis|
|Support for openness and standards||Consistently not a useful market dynamic in looking at strategy but||neither SAP nor Oracle is better than the other vis a vis openness or standards anyway|
|Midmarket strategy||Not a major market goal of Oracle's applications division according to public statements; may be counting on NetSuite "off the books"||Will take another run at NetWeaver-based BusinessbyDesign, probably renamed (or simply slipped under the BusinessOne brand).|
|Vision for next generation||Which next Oracle generation? The one announced in 2003 for delivery in 2005 and now planned for 2010?||The only next generation SAP has talked about is already shipping (but, per note about ABAP/Basis, application-middleware generations last a few decades)|
Note that the CIO blog post heading says "ERP strategy," but the article says Forrester reviewed the two companies' "enterprise applications" strategies. Don't mix up the two terms. A lot of my finding depends on my definition of ERP, which is a single piece of enterprise software on which you could automate your business.
ERP at least includes (1) basic accounting and purchasing functionality, and (2) some industry-specific functionality (e.g., an MRP and BOMP in manufacturing, an open-to-buy merchandise management module in retailing, and so forth). Further, ERP software is (3) an integrated suite running on the same underlying application middleware. It might also include other cross-industry functionality (e.g., human resource software) or industry-specific extensions (plant maintenance features to complement the MRP and BOMP). But if it doesn't have the three numbered characteristics, it's not ERP, and it's a specialized standalone application. You cannot run your business with a specialized standalone application and nothing else.
The CIO article concludes:
However, as the (Forrester) analysts point out, Oracle's "biggest test is yet to come" it must deliver the Oracle Fusion Applications system with its associated promises of better flexibility and lower cost of ownership and do it within the next two years to keep the upper hand in apps innovation." (Many expected Fusion to be delivered by 2008, but it now seems like the suite will arrive in 2010, according to Oracle's most recent promises.) But Fusion needs to arrive not only soon but also in good form. The analysts state that "if Oracle Fusion Applications fall flat, SAP wins by forfeit."
So it looks like we won't know if the game is even on for two years, and then it will take a decade to play out. Write to me care of "the home" in 2020 and tell me how it turns out.
I'll have more in an upcoming year-end review of the ERP market, including a look at Lawson, Infor, Microsoft, Intuit and new players in the ERP market like Compiere. It will be available at IT Business Edge in December.