Oracle vs. SAP: What you need to know

July 6, 2021 | 5 minute read
Charles Homs
VP Global Competitive Strategies
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In February of 2021, two leading German business magazines—Wirtschaftswoche (Economy Weekly) and Manager Magazin published articles about the state of SAP and the implications for SAP customers. Neither article was flattering.

“SAP is vulnerable,” said Wirtschaftswoche. (Wirtschaftswoche, “Prefer to get out?” 12 Feb 2021). Manager Magazin questions the SAP platform, stating that SAP’s many acquisitions “were put under a single [S/4HANA] brand but not on a single technology platform, much to the dismay of SAP customers.” (Manager Magazin, “Why SAP is losing the connection,” 18 Feb 2021). Even the head of SAP’s German user group DSAG – Jens Hungershausen – is skeptical, stating in the same Wirtschaftswoche article that “the migration to S/4HANA is such a mammoth undertaking, customers may as well consider alternatives.”

More recently, Morgan Stanley questions SAP’s strategy, stating, “The key investor debate on SAP continues to be around its cloud transition—and therefore around Cloud subscription growth.” (Morgan Stanley, “Can Cloud outperform this year?” 1 June 2021).

At Oracle, we understand why a company might have chosen SAP for their organization in the past. Factors that contributed to this choice probably included:

  • SAP business processes that cut across 1990s departmental silos
  • The integration that came along with SAP ECC or Business Suite (and is no longer there in S/4HANA)
  • The ability to customize SAP
  • The ability to work with SAP in real time
  • The large number of companies that were using SAP, possibly including your competitors and business partners

But is all of this still true today?

After SAP acquired Ariba in 2012, you might have noticed that they didn’t integrate SAP’s core modules with Ariba. The same happened with SuccessFactors, Concur, Qualtrics, and many other acquisitions. While those solutions each individually offered good functionality, it was up to the SAP user to integrate them with the core SAP ERP. This quickly became an expensive and complex proposition. Even worse:  when you create the integration yourself, you find out that this becomes a barrier to upgrades.

SAP customers have struggled with the lack of integration and customization complexities, and many aren’t convinced that the new SAP S/4HANA will solve all issues. Says IDC analyst Bo Lykkegaard, “The numbers show how unhappy SAP customers are being forced to migrate to S/4HANA. Many SAP customers don’t see any business value that warrant a migration.” (Wirtschaftswoche, “Prefer to get out?” 12 Feb 2021)

SAP is obviously aware. At its annual user conference, SAP addressed three main initiatives, but the complexities remain the same:

  • Business Network. SAP is currently focusing on the Business Network, connecting companies together with SAP products Ariba Network, SAP Logistics Business Network, and SAP Asset Intelligence Network. But the SAP Business Network is proprietary. Companies tend to prefer open technology, which is why Oracle works with E2Open.
  • Rise With SAP. This is an initiative to get customers on older SAP releases to move to SAP Cloud. But customer sentiment doesn’t seem to be in favor.
  • Process optimization. With its newly acquired tool Signavio, SAP wants customers to optimize its SAP solutions. But the first thing that SAP customers uncover with this tool is that there are too many different interfaces in S/4HANA.

One of the product versions that appears to be cloud is called S/4HANA Private Cloud. The name seems to suggest that it’s indeed cloud, but this S/4HANA version is identical to the S/4HANA on-premise version—and it can still be customized, with all the potential issues that come with this approach.

To make it even look more like cloud, SAP runs on hyperscalers like Microsoft Azure, Amazon Web Services, and Google, among others. But that adds other issues: the hyperscalers only take partial responsibility, managing the lower end of the technology stack including networking, storage, servers, and virtualization. SAP (or a partner) will need to manage to the upper layers of the stack, including the operating system, middleware, runtime, data, and the SAP applications. The issues?

  • One SLA only works if you only run SAP on one hyperscaler. Most companies use a hyperscaler for more than just SAP, ending up with multiple SLAs and points of contact for service and support.
  • Updates are not synchronized between the upper and lower level of the stack
  • Innovation in the lower level of the stack is often not utilized in the upper level of the stack and vice versa
  • Each hyperscaler has different tool sets and applied technologies that aren’t optimized for SAP
  • It’s unclear who’s responsible for customizations

At Oracle, we take a different approach:

  • Oracle is the only vendor that is both a SaaS applications vendor and a best-in-class technology vendor. We bring those technologies not only in features and functions, but also in technology core capabilities
  • With every quarterly update, applications customers get cumulative updates across the stack
  • There is a single SLA that covers data and processes from Oracle Fusion Cloud Applications, as well as third-party applications and data run on Oracle Cloud Infrastructure (OCI)
  • You can even run SAP on OCI (SAP ECC and Business Suite)
  • Oracle provides an SAP adapter to integrate SAP with Oracle Fusion Cloud Applications

What we provide at Oracle is not an old product that is now available in the cloud, but a new, complete suite of applications designed for cloud, in an environment that is Software as a Service (SaaS).  The emphasis is on “service.” You shouldn’t have to worry about how the lower end of the stack works/doesn’t work with the applications you want to run on it. Oracle manages all the hardware and software, including middleware, applications, and security.

It’s for these reasons that Boston Consulting Group ranked Oracle #15 in its list of most innovative companies (gaining 10 places compared to last year). In contrast, SAP is in 40th position, 13 places lower than last year.

Oracle SaaS customers can dramatically lower costs; deploy, scale, and upgrade business solutions faster than with on-premises systems and software; and predict total cost of ownership with greater accuracy. Modern SaaS applications have become platforms for innovation to meet the competitive challenges of the digital age, such as:

  • The remote workforce. You can extend the functionality of your SaaS applications to support collaboration apps like Slack and Zoom.
  • The power of small. Cloud, mobile, and social are helping small and startup enterprises to create innovative products and reach markets with unprecedented speed.
  • The age of consumer discontent. Armed with mobile and social, consumers have more choices and more information than ever before.

Learn more about how Oracle Cloud ERP compares to SAP.

Listen to Oracle Live: The Future of Business with Steve Miranda to hear from customers including Koger, Mondelēz, TTX, and others on why they needed to modernize their processes and make rapid decisions in today's fast changing environment and why they switched to Oracle Fusion Cloud Applications.

Charles Homs

VP Global Competitive Strategies

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