Oracle resurgent 2 - the ERP competitive landscape

Profile picture for user brianssommer By Brian Sommer September 27, 2019
Summary:
A blow-by-blow competitive assessment of Oracle v the rest of the ERP world in the wake of last week's OpenWorld conference.

oow19

Many of Oracle’s competitors have problems. Management is distracted. Capital got squandered over the last decade and now the competitors will have to play catch up. Some vendors may never be able to match Oracle technically or functionally. Continuing my takeaway from OpenWorld, here's an assessment of where Oracle stands vis-à-vis its ERP competitors.

Oracle Strength: Oracle and the large, single ERP suite

Oracle’s Fusion Cloud offerings are significant from a functional breadth perspective. They cover the front and back office as well as supply chain, manufacturing and soon process manufacturing. Oracle’s footprint is impressive and it rivals that of SAP and Infor. However, in Oracle’s case, the Oracle suite is almost entirely on one platform, one database, etc. (Oracle made a couple of recent acquisitions that still may require some additional integration work.). Oracle Cloud applications now support over 300 industry focused services in 23 industries.

Oracle ERP

Competitors’ Weaknesses: Too many of Oracle’s ERP competitors either have small functional footprints (e.g., mostly just Finance and/or HR) or only serve a couple of verticals (e.g., people or service industries). Customers at OpenWorld were clear that they wanted to get as much functionality as possible from a single vendor AND all under the same technical architecture. Oracle will doubtlessly use this application breadth, little to no data redundancy, and, pre-built integration to drive further sales success and frustrate competitors.

Even Oracle customers that have only implemented some of the Cloud Suite products (e.g., HR) intend to implement more apps from Oracle soon. I heard this from a major university, a global manufacturer, etc.  Buyers like large, INTEGRATED suites and don’t like a dog’s breakfast of cobbled together best of breed or acquired applications if they can avoid them.

Oracle Strength: the level of app-to-app integration

Software buyers today routinely tell me that they want three things:

  1. To be out of the data center business (which is why they want a cloud solution)
  2. To be out of the application maintenance business (which is why they want a multi-tenant solution that a vendor maintains for them)
  3. To be out of the integration business

It’s that last one that I heard a lot about with Oracle customers at the show. They don’t want loosely integrated connections between an ERP vendor’s products (e.g., they hate integrations between the vendor’s products and partner products or with acquired products). They don’t want the data redundancy or latency issues that crop up because two apps are on two different clouds with two different data models and databases.  They don’t want to mediate between two or more vendors as to who broke the integration (and who will ultimately fix it). No – customers want native apps all running on the same cloud, same database, same data model, etc. Oracle is offering this now and many of its major competitors are behind in this capability.  To this point, three major company CIOs specifically discussed this matter with me at the show.

Competitors’ Weaknesses: Too many ERP vendors did a lot of cloud product acquisitions in recent years but didn’t really integrate these products with their core solutions. They took this route because:

  • Their core solutions weren’t public cloud, multi-tenant, etc. ready until just recently.
  • It gave them some cloud street cred even though their core, legacy solutions were far from cloud solutions or architected for the cloud. Most legacy product was architected decades ago.
  • They used these cloud apps as fodder for their sales organization to peddle to existing customers.
  • It was easy to lightly integrate these ‘line of business’ apps to the core and would permit them a way to avoid costly re-working of the tech stack underneath each acquired application.

Unfortunately, many of these cloud app purchases never got re-worked and fully integrated with the core suite of applications.  When the sales pros of some of Oracle’s competitors try to sell multiple applications to customers, they also have to sell (or provide at no charge) special integration modules to connect these products to other solutions within the suite (and more connectors to connect them to third party products, too). That’s not what customers want. Customers also don’t want a variety of different user interfaces that these acquired products bring.

Oracle’s everything under one cloud architecture will be a differentiator and other solutions feel like an ugly patchwork. Customers/prospects can see that, too.

Oracle Strength: one database  

Oracle executives pounded home how they can put all kinds of data into a single Oracle database. One security mechanism, one access method, etc. controls it all. So, whether you are placing transaction data, IIoT/sensor data, big data from third parties, or other information into the Oracle environment, it’s under one toolset.  Oracle appears to be redefining and expanding on what Workday has claimed for years under its “Power of One” mantra.

Competitors’ Weaknesses: Several of Oracle’s ERP competitors use specialized databases and tools to manage specific kinds of data. They might, for example, use an in-memory database for high speed access to recent transaction data, a traditional RDBMS for persistent storage, Hadoop for parsing large datasets (e.g., social sentiment data) and specialized data stores for advanced analytics and data warehouses/lakes.

Specialized data stores for specialized use cases make sense when performance is the primary buyer value. Oracle made so many performance claims around its OCI (Oracle Cloud Infrastructure) and the performance of its database that it wants to neutralize any advantage that specialized data stores might have. Even if Oracle’s claims are only modestly on point, they would nonetheless present a technical environment that could have less data redundancy, easier security to administer, etc.

Oracle’s making the database a key application software selection issue again. The database hasn’t really been an application selection concern since the 1990s. This is interesting as it will require Oracle’s ERP competitors to justify why their database choice(s) are relevant and capable. Oracle will press its security and update capabilities against competing solutions using open-source or other databases. It will press the long-term presence, R&D investments, and, its market successes in its database product against those of HANA and other vendors.

Again, Oracle’s making the database an issue in application selections. Can your ERP salesperson speak to these issues?

Oracle Strength: one look and feel

The Oracle Cloud apps had one UI and the new conversational Redwood UX is going into all of these applications now.

Competitors’ Weaknesses: Sorry folks, but when a major vendor shows a prospect four (4!) different user interfaces in a couple of hours of demonstrations, prospects smell a rat. That same client of mine also saw antiquated user interfaces from another vendor (complete with DLL loading messages) and multiple UIs from a third vendor. All of this happened in the last year or so. At another client, we saw everything from slick modern user interfaces from one HR vendor to an interface only a mother could love from another vendor. The only thing worse than an old user interface from an application software vendor is multiple old interfaces.

Vendors that have grown their cloud portfolio via acquisitions may have added additional user interfaces to their product mix, too. Customers aren’t dumb. They realize that all of these different user interfaces carry learning curve and training challenges for their employees, suppliers, jobseekers and other constituents.

Oracle Strength: smart capital utilization

You can really see where Oracle’s R&D expenditures have been going.  The database, OCI and other technology stack components got a lot of investment and it’s apparent. Oracle’s applications got new functionality and Oracle’s industry solutions have seen improvements, too. As to the applications, I got a good look at the Cloud HCM solution a few months ago. You could see that the data model for this product appears to include the best elements of the PeopleSoft and Taleo data models.  Oracle also enhanced its vertical solutions. It announced a new Process Manufacturing solution at OOW. Other vertical industry enhancements included: Vocado Student Financial Planning for Higher Education, Joint Venture Management for Oil & Gas companies, IoT Monetization and Subscription functionality for product firms moving to a servitization business model, new lease accounting functionality and more.

Competitors’ Weaknesses: Many of Oracle’s ERP competitors have little to show for their capital spending the last decade or so. Where did these firms spend their capital?  Much of the money went into finding some kind of path to upgrade the old customers and the old products through a (tortured and expensive) upgrade path to a cloud or cloud-like solution. This wasn’t an innovation effort - it was a way to keep old customers from defecting to newer competitive solutions. These ERP firms tried to find a way to migrate horse-drawn carriages to the Tesla-era of automobiles. It was a lengthy, expensive effort that delivered solutions with substantially the same functionality and data model of the predecessor solutions. It was a waste of shareholder capital.

Scarce shareholder capital was also squandered on acquisitions of cloud products by old-school ERP vendors.  Buying other firms’ products with their varied technology stacks, data models and hosting arrangements is expensive. Yes, the products could be connected to other cloud and on-premises solutions using connectors but this is substandard. A patchwork solution brings different security protocols, data redundancy, data latency and other headaches. This ‘best-of-breed’ approach to building a cloud ‘suite’ was a fool’s errand and ERP customers today don’t want it.

Buying niche cloud products and not integrating them, fully and completely, with the core apps and technical architecture will come back to bite these ERP vendors. The time to have fully integrated these apps was years ago.

Oracle Strength: focus 

Oracle wants the entirety of a customer’s IT spend and they are at least trying to create a solid technology and application stack to get a lot of it.

Competitors’ Weaknesses: Many of Oracle’s ERP competitors are distracted. They are trying to push a liquidity event (e.g., IPO), fend off activist shareholders or deal with private equity owners and their ‘management’ fees, debt loads, etc. It’s hard to focus on designing and delivering next generation ERP technologies when your focus is on Wall Street and/or job security.

My take 

All that said, what does Oracle need to do to fully exploit this new competitive opportunity. Coming up in the final part of this series of articles.