Handicapping the SAP/Oracle Procurement Race

In sports, it's common to handicap competitors. This allows observers of the game -- not to mention those actually participating in the festivities -- to better understand how they stack up to their peers. Now, many factors can comprise a handicap. Some are purely quantitative (in golf, a handicap is calculated from your scores on given courses, each with its own set rating). Others are more qualitative, often based on a combination of expert analysis and a competitive-market pricing environment (betting at the race track, football/soccer game spreads through your friend in Vegas, etc.) Regardless of how the actual handicap or comparative benchmark is created, it's the range of factors that go into creating the score -- or the specific votes in the form of educated guesses and bets -- that matter most for truly understanding how a competitor stacks up

For example, It's one thing to know that Horse A faces 20-1 odds, but when handicapping the race yourself it's far more useful to know that Horse A's past performance on specific track conditions is actually stronger than the relative measure portends, and might not be factored into the current odds by other participants in the market. At this point you're probably asking yourself, "What the heck does this mean when handicapping SAP and Oracle in the procurement sector?" I'd argue that it means quite a bit, because unless you know the relative strengths of their approaches to each other, it becomes hard to see through the noise of individual announcement, product reviews, and analyst rankings.

Given this, I thought I'd take a few minutes to put digital pen to virtual paper and lay out some of the strengths I see in each provider that would factor into any type of handicap. Granted, this exercise is more theoretical than anything else because it's quite rare for SAP or Oracle to run up against each other; still, I think it's worth engaging in.

First, let's cover some common strengths, and scratch these from the individual comparative factors:

Both SAP and Oracle are moderately aggressive on pricing for customers looking to give the solutions a quick once-over with just a handful of seats (e.g., in the e-sourcing area).

Both have very strong channel relationships, including partner/SI ecosystems already built around their products.

The product pipelines for both providers seem solid, based on the conversations I've had with those on both the inside and the outside.

With both providers, it's now possible to (largely) separate out procurement-specific software decisions from general ERP-upgrade decisions. In the current offerings there are some essential differences between them in this regard, but the general work-around for each is to deliver On-Demand capabilities directly or through partners that alleviate the need to upgrade to a certain back-end level. Is this the end of the forklift upgrade? Not on your life. But it does provide a degree of flexibility with ERP business applications that never existed before.

Oracle: Comparative Strengths (Relative to SAP)

I sense that Oracle is building out product more quickly.

Oracle has better technology assets that are more easily leveraged directly into future procurement products (or underlying product components).

Oracle is able to react to customer and market requests at a level that in certain cases looks more like that of best-of-breed providers, compared to the SAP product-release turtle.

Oracle understood the need for a network-based transactional enablement approach long before SAP.

In certain cases, Oracle understands how to deliver solutions that stand alone as a total package (from a deployment perspective), without the need for significantly involving hosting partners, integrators or third-party content providers. The result is a potentially lower total cost.

Oracle's emphasis on usability has created more user-friendly procurement products.

Oracle has taken greater ownership of On-Demand solutions versus relying on partners to deliver suite-wide hosted capability.

SAP: Comparative Strengths (Relative to Oracle)

In the past twelve months SAP has done a commendable job of catching up in the area of usability. It has also provided some insightful glimpses into the future with recent products that have the potential to outflank best-of-breed competitors (e.g., its Spend Performance Management solution).

SAP understands the role of content and supplier information at a surprisingly deep level.

Our favorite German ERP provider has been able to take significant advantage of its Business Objects toolset with new product prototypes and general capabilities in emerging areas (e.g., supply risk management).

To me, SAP appears to have greater potential for leveraging information and capabilities across products and functional areas, especially in a manufacturing environment.

SAP has tighter BPO/outsourcing relationships (and the means to manage them). In this regard, we're not just talking about outsourcing in the large, multi-tower sense, but specific to the functional procurement requirements of boutique and large service providers alike.

SAP offers tight functional and process integration into core ERP/MRP across the solution suite (including E-Sourcing On-Demand), and is winning deals as a result.

Is there anything we're missing in this handicapping exercise when it comes to relative general strengths (as opposed to the solution-specific level)? Drop a line or post a comment; I'd be curious to collect additional thoughts on the matter, and to hear whether anyone disagrees.

- Jason Busch