UK Oracle User Group

With Oracle Fusion applications set to storm the market who is going to have the best position in the ERP market - Oracle or SAP?

15 May 2013

Enterprise Resource Planning, or ERP, is one of those businesses that have a strong influence in various sectors of the business world. ERP is useful for virtually any company that has a large amount of data to share, integrate and transfer. As such, the ERP market is of key importance for both those who develop such integrated software and those who are affected by this.

Currently, there are a number of active competitors in this field, notably Oracle and SAP. Yet with the Oracle Fusion applications around the corner, things may be set to change. Infosys have become the latest company to invest in the new software and there are expectations within the IT industry that these apps could become very popular...very quickly.
We have taken a closer look at some of the factors that may become key influences as the both Oracle and SAP continue to vie for the lucrative ERP market.

What is the current market share of both?

The NASDAQ market offers an average idea of current market prices in terms of the current market share. Markets, of course, constantly vary but the 52-week highs and lows provide a good idea of the existing state of play.
Looking at Oracle, trading under ORCL, there is a 52-week high of $36.43 and a low of $25.33. For SAP, there is a high of $84.66 and low of $54.78. The difference here is evident enough to suggest that SAP has the larger market share. Even at its lowest, it’s still got a stronger share than Oracle. (All figures correct up to 24/03/2013)

What are the positives and negatives of both options?

A large amount of the future changes will depend on the products, so what are the benefits of either Oracle or SAP when it comes to ERP options? Both products are highly useful services, with years of experience providing core functionality for a range of services.
However, there are some key differences.
Many of SAP's products, such as SAP R/3 for instance, utilise a 3-tier method. These 3 layers offer complexity and separation where needed, allow for greater control through powerful and complex, yet simple, controls.
SAP can also be customised and modified for specific goals, but it uses its own source code, known as Advanced Business Application Programming, or ABAP. That said, the focus on the end-user could actually be seen as a negative feature of the service; users with greater access have a lot more to deal with, such as the ABAP system (which is a key part of utilising SQL with the service).
When looking at Oracle, one can see an information system that asks less of the end user. Data is stored as files, as well as logically through tables. Multiple instances can be run, typically throughout different servers, all connected via a central storage array. The end result is a diverse option that boasts high performance yet is easy on the end-user.
Oracle also offers a wide range of additional applications that can be installed and connected to this system. This adds more complexity, but adds customisation and greater flexibility to suit the needs of the enterprise and business in question.

How is the market going to cope with such a small number of fusion application trained consultants?

Of course, whilst Oracle may be looking to gain new business and success with its Oracle Fusion, it does require trained consultants. As a relatively new product on the market, this presents a major challenge; something that is arguably true for any new ERP system. Whilst clients and enterprises may want to utilise this next generation suite of ERP applications, does the lack of consultants make this difficult?
This is, however, something that has been taken into consideration by Oracle. Divisions of the Oracle Partner Network can provide trained consultation. Planning, design and architectural services can be provided from the Oracle On Demand Group. This is now known as the Oracle Cloud Services, since the company is now moving towards cloud-based applications as well.

Who has already implemented/purchased licences for fusion applications?

Understanding the success of fusion ultimately means including companies that have already implemented or purchased Fusion or its applications. This includes financial businesses, such as Shellpoint Partners, and production-based companies, such as Acorn Papers. It should also be noted that a large number of these are choosing Fusion applications such as SaaS (Software as a Service) rather than an on-site instance. Combined with a bigger focus on cloud options, this arguably makes for an easier implementation. Likewise, financial companies show signs of favouring on-site instances, in a focus to “own” their sensitive data and ERP containing it.
There is also some evidence of the use of fusion on a worldwide scale. In March this year, South Africa's Internet Solutions (IS) chose to utilise Oracle Fusion.
One can also consider some of the companies that have a stronger, more active involvement with Oracle, as part of their 'diamond-partners' scheme. This is comprised of 10 large corporations, such as IBM, Accenture and Fujitsu. These vendors have all made at least $40 million through oracle licenses (although not specifically fusion).

How much does the implementation cost? Is it a smooth process?

One of the key problems in Oracle Fusion's future success is the costs of implementing the new software and applications. The ERP has had some criticism for the process of upgrading and the cost of such a process. However, one can also argue that, as previously mentioned, a stronger focus on cloud options makes this easier in some aspects. Perhaps this is one of the reasons and areas in which the SaaS model makes for a smoother transition.
Furthermore, there is even strong resistance from existing Oracle customers and license holders. A study published in June 2012 by Forrester Research concluded that, out of 79 companies asked, 65% had no plans to upgrade. Another 24% were largely indecisive. This meant only 11% had any intention of upgrading.
Part of this was due to Applications Unlimited, an initiative launched in 2006. Whilst, at the time, this allowed existing customers to upgrade applications within their Oracle ERP, the same scheme now offers a reason not to upgrade.

By: Lloyd Gordon | VIA: Maximus

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