If your business decided to embark on the ERP journey, you might come across a plethora of ERP solutions and vendors, all of whom seem to be a good fit for your business. But do they? Well, at least one of them is, but the comparison process can be daunting.
Fortunately, the market-leading consulting group, Panorama, annually publishes reports comparing top ERP vendors across different industries, including manufacturing, distribution, healthcare, retail and more. Insights from these reports are a great start to your ERP journey.
In today's article, we will briefly go through the top four ERP vendors that Panorama classifies as "Tier 1" or "Giants" and learn what makes them the solutions of choice of many organisations.
What’s so special about “Tier 1 ERP vendors”?
In today’s competitive business environment, businesses struggle to keep pace with their competitors with the current legacy systems. Many have decided that it is to leverage a more modern system that enables them to gain access to real-time data, optimise the supply chain, and enhance the customer experience. 53.1% of participants in Panorama’s 2021 ERP report1 selected cloud software over on-premise due to the easy access (over the Internet, via any browser) and easy, automatic updates.
The battle among Tier 1 ERP vendors probably will never cease. Before we dive deeper into these brands, let's cover some basic terminologies. ERP vendors are typically categorised into three different tiers based on:
- The client's size and budgets
- The solution's scalability and complexity
- Global support
Read more: An overview of the ERP market
ERP vendors that belong to the Tier 1 are leaders in their offerings. These Tier 1 giants are quite easy to spot. Internationally recognised brands such as SAP, Oracle and Microsoft are all parts of the group.
What you might not have known is that Tier 1 has a fourth contender. Though lesser-known, this vendor has delivered remarkable results to clients. In their annual ERP Vendors - Clash of the Titans Report, Panorama always listed these companies as the "Big 4" of ERP software. The final mysterious provider (if you are new to this whole ERP thing) is Infor and their reputable Infor CloudSuites.
Throughout the years, the Big 4 of ERP - SAP, Oracle, Microsoft, Infor, have not only maintained their leading positions but also have brought forward new and innovative cloud strategies to empower their customers.
An advantage that larger vendors offer is families of applications compatible with the ERP system. These applications can range from artificial intelligence to business intelligence, the Internet of Things, data lakes, and more.
Being categorised as Tier 1 certainly is not synonymous with being the most suitable solution for your business. The selection process for ERP can be extremely lengthy and daunting. Thus, it is essential to equip yourself with adequate information about each solution.
Single ERP system vs Best-of-breed
In short, best-of-breed systems are standalone solutions and, just like the name implies, the best of their kind to accommodate the daily operations of a specific business function.
For example, your Accounting department has outgrown spreadsheets and is looking for best-of-breed financial management software to help them meet the complex and ever-changing regulatory requirements and make impactful financial decisions faster.
An ERP system encompasses all these disparate systems to make one superior solution. Thus, it is often complex, time-consuming, and expensive to implement.
Due to its industry-specific and deep functionalities, it comes as no surprise that Infor has the highest percentage of customers choosing its ERP suite. Infor's tightly integrated system provides customers with real-time, high-quality data at the fingertips along with robust analytic tools to help users make sense of data gives customers little reason to look elsewhere.
In contrast, Microsoft customers prefer a single ERP system but often opt for best-of-breed instead. On the plus side, Microsoft holds an extensive ecosystem of partners, products and services to complement its own systems.
Whether to choose a single ERP system and best-of-breed is an age-old question. Organisations need to carefully evaluate their specific needs, long-term goals, and budgets prior to deciding on the solution.
A digital transformation project or an ERP implementation
Due to its large ecosystem and number of cloud-based products and services, the number of customers who chooses SAP solutions as part of their digital transformation is the highest among the four vendors.
On the other hand, Infor customers merely just implement the system, but the percentage of Infor projects that were digital transformations have increased significantly since last year. Much of Infor's resources have been invested into its cloud infrastructure and solutions to serve its customers better.
Interestingly, Panorama noted that larger and more complex organisations often take on digital transformation. Less complex organisations opt for just ERP implementation, which typically involves less significant organisational changes. In the latter case, these businesses would prioritise the adoption of ERP best practices by improving their processes to fit the industry standards and the pre-configurations of their chosen ERP system.
Learn more: How to kick-start digital transformation
Results from Panorama's study also reveals that:
- Microsoft customers have a strong focus on e-commerce functionality (along with human capital management, customer relationship management, and transportation management). This could be due to a large portion of Microsoft's customer base is using Amazon and looking to diversify their channel to market.
- Infor has a strong base of industrial clients. Thus, the most popular functionalities among their customers are enterprise asset management (EAM), warehouse management and supply chain management. Infor also offers a mobile version of the applications for easy management on the go.
- Many of SAP's customers are already mature and extremely large. Therefore, they want to leverage SAP's data management functionality to exploit the overwhelming amount of data they have on hand.
Resource allocation and project costs
Compared to Panorama's 2019 ERP Giants Report, Microsoft and Infor have displayed tremendous growth in the percentage of internal resources in 2020. Both vendors even surpassed SAP and Oracle in this particular area.
As we have mentioned in our previous article, using internal resources or external to implement ERP systems can affect the implementation costs. The more internal resources used, the lower the costs might be. Nevertheless, the total cost of ownership could vary depending on many different factors.
Despite being able to bring down costs, utilising internal teams to implement the system can put a toll on employees as they might still be doing their other responsibilities on top of the ERP project. Thus, businesses should re-evaluate all priorities and release employees from their usual duties before assigning them this special task.
On the same subject of costs, the report would not be complete without comparing project costs among these ERP giants.
The report exposed that customers who implemented SAP products spent the most on their projects, approximately 8 times more than the other three vendors. Organisations that implemented SAP's ECC, S/4HANA, Business ByDesign and SuccessFactors purchased an average of 655 licenses. A definite and notable advantage of SAP is its customers span a wide range of industries, many of which are multinational and very complex enterprises.
Read more: Why ERP is moving to the cloud
On the other end of the spectrum, customers that implemented a Microsoft product have the highest percentage of internal resources and the lowest project costs. The reason being Microsoft focuses on delivering smaller product suites and caters to smaller markets. The smaller product offers also results in faster implementation time and more affordable pricing as a whole.
ERP is a complex solution. Selecting a suitable vendor and product for your particular business requires careful evaluation and research. And, of course, there is no one size fits all solution nor a simple approach. It all comes down to understanding your specific business needs and long-term digital strategy.
Our team at TRG International has been covering the topic of ERP implementation in-depth to provide you with as much knowledge as possible, so you can embark on your journey with confidence and achieve the highest positive results possible.
Check out our available resources here:
- Buyer’s guide to the market-leading ERP software
- ERP accounting module vs Accounting software for manufacturing
- How a Cloud ERP system can fuel growth and innovation
- Hit or miss – Lessons learned from ERP implementations
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