The advantages of enterprise resource planning (ERP) software have been well established. By utilizing such a system, an organization has a well-integrated and continually updated picture of all core business processes, through a common database. Data can thus be easily shared among all departments, as information flows back and forth, making coordination far more efficient.
Typically, ERP systems run on a myriad of hardware and network configurations, via a database and repository. Consider this. All of these processes can be integrated in one place:
- Procurement: Supplier relationship management (SRM), when coordinated with production management, can result in greater efficiency and cost savings.
- Production: ERP can help in planning the manufacturing process, having the right resources at the right time, and ensuring that the distribution process meets its goals.
- Distribution: Controlling warehouse processes and the movement of goods to customers as efficiently as possible.
- Accounting: Automating financial operations with other departments will allow real-time updates and insights, as well as ensuring regulatory compliance.
- HR: Keeping a complete database of all employees, and coordinating departmental needs to best utilize current work force and determine where new needs may be. And all of this is coordinated with accounting as well.
- CRM: A good ERP system will maintain all customer information and monitor relationships.
- Sales: Coordinating all functions related to receiving orders, scheduling order fulfillment with production and distribution, as well as invoicing in coordination with accounting.
Obviously, there are other processes that are often placed within an ERP system, based upon unique organizational needs. For example, a healthcare enterprise will have a component that relates to regulations and HIPAA requirements. A bank will have far different components, based upon its regulatory environment. Among the top three Tier I ERP providers, though there is room for that customization.
The Big Three: Oracle, SAP and Microsoft Dynamics
Relative to ERP software, the three “big boys” are Oracle, SAP, and Microsoft Dynamics 365. All now offer SaaS, which is certainly more attractive to the smaller and mid-size enterprises that all three are attempting to “woo.”
Many large enterprises continue to maintain an in-house system, though that percentage is falling. In fact, the most recent report released by ERP consulting firm Panorama, shows that 64% of businesses and enterprises that have moved into ERP service solutions, are using a SaaS model, 21% are using cloud solutions, and only 15% remain with an in-house system. The benefits for small and mid-sized companies are obvious – cost and agility.
Costs are not the only factor to consider though when choosing the right ERP system for your business. Our team benchmarked the top three providers based on the popular assessment criteria for software.
Functionality and Ease of Use
A survey of users reported by Ax Dynamics showed that 86% of Oracle users are more than 50% satisfied with its functionality; 80% of Dynamics 365 users are; and only 44% of SAP users are. Clearly, SAP has a way to go if it is to achieve a customer satisfaction rate that the others now enjoy.
On the other hand, there are many factors that contribute to satisfaction rates, so any company looking for an ERP solution should consider the pros and cons of each.
Oracle ERP – Pros & Cons
|Among Oracle’s functional strengths is the integration of numerous modules into one system – this increases ease of use.||The Oracle platform is probably less user-friendly, and there may be a longer learning curve.|
|Oracle also allows organizations to automate many processes, eliminating manual tasks, and thus errors. For example, it can track inventory levels and automatically generate purchase orders when supply has fallen below a pre-set level.||Some of the default modules are not what a particular company needs, and this forces those companies to develop their own customized modules.|
|Oracle is powerful, to be sure, and can meet almost all business needs. It is capable of being customized, and that includes integration of company-produced modules, if the default ones are not a “fit.”|
Microsoft Dynamics ERP – Pros & Cons
|Probably the biggest plus is that the Microsoft infrastructure allows easy syncing with any other Windows applications. Information and data can be easily transferred to other Microsoft systems.||Some complain that Dynamics cloud solution is underperforming in comparison with the other two.|
|Dynamics is also multi-lingual and can support multiple currencies. Large businesses with an international presence will appreciate this.||Dynamics was originally hailed as being friendlier to small businesses. It has since moved into the larger enterprise environment, and small businesses are feeling ignored and not served as well as they should be.|
SAP ERP – Pros & Cons
As early as 2012, SAP moved out ahead of the competition with about 25% of market share. It still holds that position today, with 33%, compared to 27% for Dynamics and Oracle.
|SAP is more versatile serving large enterprises but also offering a product specifically for small businesses.||There can be a lengthy learning curve to master SAP, compared to the other two.|
|SAP comes with great BI features with intuitive dashboards, data storage, and report writing.|
Cost of Ownership
Respondents to Panorama’s most recent survey stated that they expected the cost of ERP solutions to be less than 2% of the company’s annual revenue. 64% of respondents did admit that they had cost overruns during implementation. The good news is that companies can be selective in which modules they choose, and that can help keep costs in check. While individual circumstances must vary, general cost comparisons are as follows:
SAP, at first glance, seems to be in the middle of the road as far as initial cost. What brings the costs up are the customizations that are usually unavoidable. In the end, SAP can be pricey.
Oracle has grown its solutions by acquiring some high-end providers – NetSuite, MICROS, and PeopleSoft, just to name a few. While this has resulted in premier ERP software, it has also made it the most expensive solution.
Dynamics costs the least of the three, primarily because it did not build its solution from the ground up. For this reason, small businesses tend to choose this system. Also, it “looks” and “feels” like Windows, which means less training and faster adoption.
Integration and Ease of Implementation
There is definitely a need for good planning to integrate and implement an ERP system. According to the Panorama study, 79% of respondents stated that the implementation went beyond their initial timeline projections. And, when considering the difference in integration and implementation, it is important to remember that specific comparisons are not possible. Because companies have options within each one of these solutions, ease of implementation will vary. In general, however, the following can be said:
Companies report that SAP implementations have gone smoothly. One of the biggest reasons for this is that SAP built its own system and added its own features and upgrades in-house. While the product is packed with great functionality, if your company wants to incorporate any custom third-party applications or customize the standard setup, you will have to proactively reach out to the company and pay extra for those.
SAP is a huge system, and implementation can be lengthy. To ease this, companies need to carefully assess their needs for every module and perhaps eliminate those they do not need.
Another huge system, Oracle will take a long time to implement. But there is lots of flexibility in that implementation, as companies can choose which systems to take and leave.
Interestingly, Dynamics products require a longer install time and longer training with a steeper learning curve. And there are issues with integrating non-Microsoft products as well.
In all three circumstances, however, there is support as implementations and integrations occur.
Choosing an ERP system is a lot like buying a car. Every buyer has unique needs and wants. Some want all of the available bells and whistles; at the other extreme are those who want just the basics; some need large vans or station wagons because of their family sizes. Still others have no need for a car at all, because they can use public transportation. Business needs vary just as much.
Begin your journey by identifying exactly what you want your ERP software to do. Conduct some research, read the reviews, and have discussions with those who have made your short list. Like every other change in an organization, it must be carefully planned and everyone needs to be prepared for the transition. It will take time, money, and patience, but in the end, you may have just the system that is going to save you money and time and allow your business to operate in an efficient and cost-effective manner.
Infopulse is a certified technology partner of such leading ERP solution providers as Microsoft, SAP, and Oracle.