The big three ERP vendors are now the big four, as Infor has joined SAP, Oracle and Microsoft in the top tier,...
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according to the Clash of the Titans 2016 report comparing ERP implementations by Denver-based Panorama Consulting Solutions.
The report also shows that Microsoft Dynamics ERP implementations now take significantly longer, almost doubling in time. SAP and Oracle have the largest overall project costs -- with Oracle's rising sharply since the previous report -- while Microsoft Dynamics has the lowest costs. SAP, Oracle and Microsoft Dynamics all showed an increase in actual costs versus planned for ERP implementations, while Infor showed a slight decrease in actual versus planned costs.
The Clash of the Titans report analyzed responses collected on the Panorama Consulting website from June 2014 to October 2015, with 519 respondents who have selected or implemented SAP, Oracle, Microsoft Dynamics or Infor ERP systems.
For overall market share, SAP leads the major ERP vendors with 23%; Oracle and newcomer Infor follow with 16%; and Microsoft trails with 9%. Smaller vendors still play a significant role in the market, as Tier II vendors have 12%, and Tier III and others have 26%. Defining the tiers is somewhat ambiguous, according to Eric Kimberling, Panorama Consulting's founder and president; however, the criteria to define the tier levels includes the system's scalability -- how easily they can move up to handle large and complex implementations -- the size of their installed base and the breadth of system functionality. Panorama considers SAP, Oracle, Microsoft and now Infor to be the only Tier I vendors, with a number of companies making up the Tier II and III ranks.
"The big change this year is that we now consider Infor to be a top-tier vendor [up from Tier II]," Kimberling said. "This is based on overall market share, as well as the nature of the installed base, as they have bigger implementations now in bigger enterprises. They have chipped away some business from SAP and Oracle, but I believe they have taken most away from Microsoft Dynamics. Ultimately, they have taken some from all three."
Infor's move to the top tier can be explained in part by its rapid growth in the past few years, in large part by acquisition, Kimberling explained, but also because it has invested heavily in user interface (UI) development and embraced open-standards architecture. Infor has differentiated itself by building industry-specific functionality into vertical applications, thereby reducing the need for costly customizations. It has also employed an in-house creative lab, Hook & Loop, to develop intuitive, touch-based, user experience-centric UIs.
Implementation time for ERP projects from all four vendors has increased from the 2013 report. However, SAP and Oracle implementation times have increased only a little, while Microsoft Dynamics has increased much more. The average SAP implementation was 18.5 months in 2013 and 19.5 in 2015; Oracle was 22.5 in 2013 and 23.4 in 2015; and Microsoft Dynamics rose from 12.5 months in 2013 to 24.9 months in 2015. The increase in implementation duration for Microsoft Dynamics can be in part attributed to the changing customer focus and open nature of the platform, Kimberling noted. More Microsoft Dynamics customers are large multibillion dollar enterprises in part because the software can now scale to support those complex implementations.
"[SAP's shorter duration time] could be because SAP is now going more for the [small- and medium-sized business] market, which does not have as long implementation times, while Microsoft Dynamics is going more upstream after larger implementations, which take longer," he said. "Microsoft Dynamics is a more open system, which makes it easier to customize, so implementations may be taking longer because people are spending time customizing."
Paradoxically, however, Microsoft's overall market share has decreased fairly significantly, which Kimberling attributes more to the fragmentation of its value-added reseller network, rather than any failing of the software itself.
Complex customizations increase costs; on-premises deployments still rule
Project costs for SAP, Oracle and Microsoft Dynamics all increased from the planned budget to the actual cost, with SAP at the smallest increase of 5%. Microsoft Dynamics' increase was 13%, and Oracle's was 17%, which was attributed primarily to the complexity of customizations. For actual cost of ownership, Oracle was the most expensive at $2.7 million per average implementation, followed by SAP at $2.2 million, Infor at $2.1 million and Microsoft Dynamics at $1.7 million. Oracle has increased from $2.25 million in the 2014 report, while SAP has decreased from $2.55 million and Microsoft Dynamics has decreased from $1.8 million.
The report indicates that the vast majority of implementations from all four vendors are traditional on-premises implementations. Infor had the lowest percentage of cloud deployments at 24%, while SAP, Oracle and Microsoft were all at 29% for cloud deployments. However, 100% of Infor users reported 40% cost savings from the cloud. Only 20% of SAP and Oracle users and 17% of Microsoft users reported that level of cost savings from the cloud.
In reaction to the report, SAP said in a statement via email that it has a number of initiatives to help businesses with implementation time and lowered cost of ownership. "While every company sets its own pace and scope, we recognize that time to value can never come fast enough and remain steadfastly committed to making deployment faster and easier through technology innovation," the statement said.
An Oracle spokeswoman said via email that the company was not aware of the report and had no comment. Microsoft and Infor did not respond to requests for comment.
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