For Oracle, 2010 is off to a nice start. The same cannot be said for its arch enemy SAP whose CEO Leo Apotheker was just pushed out by its board following four consecutive declines in quarterly sales and a dramatic decrease in customer satisfaction. The worldwide recession was a major contributor to SAP’s troubles as was the questionable decision to raise support fees at a time when customers were under great cost pressure themselves. Some analyst think SAP’s late entry into Software as a Service (SaaS) has contributed to recent sales declines as well.
Beyond these obvious factors, the interesting question is the degree to which Oracle has contributed to SAP’s troubles. Sales of Oracle applications have remained surprisingly strong in light of overall market weakness. It is reasonable to believe that much of Oracle’s success has come at the expense of SAP. This is particularly true because the opportunity for new application sales continues to shift toward mid-sized organizations and emerging markets. This may be because so many of the giants are inclined to stick with software that is in place in tough times. SAP has tended to dominate the very top end of the ERP market but has been far less successful in the rest of the market.
SAP’s reputation as a high cost solution that can take very long to get working makes it very hard to generate new sales in an era when nearly every business is focused on short term results. The SAP sales pitch that its sophistication justifies the extra time and cost is out of synch with the current market mood.
We wonder how often this argument was valid anyway. The added capability provided by SAP software only has value if it is actually used. It has been our experience that very few users of any application suite (JDE included) make use of even a fraction of its capability. What good are features that demonstrate well but that never get used in practice?
In 2009 my company finished a ground up JDE installation at a small division of a giant manufacturing company. The total cost of the project was a few million dollars – an amount that should pay for itself very rapidly. Another division of the same company had just finished installing SAP after spending roughly 100 times as much (the original project budget was exceeded by well over $100 million). The division where SAP was installed was much larger and more capability was put in place. Still, it could take decades to see a positive return on what was spent.
The difference between what SAP offers versus Oracle diminishes every year. When Fusion Applications mature the situation could be reversed. The new leadership at SAP may discover that momentum in the application market has shifted toward Oracle in a way that will be very difficult to reverse.
We would love to hear from anyone working in an organization with JDE installed that is considering a switch to SAP. Even though this option is being chosen less and less each year, we continue to hear of places where the SAP sales team is making a hard push.