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SAP S/4HANA vs. Oracle Cloud ERP: Which is best for you?
IT leaders must learn the differences between SAP S/4HANA and Oracle Cloud ERP to ensure they make the right choice for their organization and avoid an expensive mistake.
ERP selection is a critical decision with long-lasting implications, and most large enterprises tend to choose SAP S/4HANA or Oracle Cloud ERP.
When evaluating these two software options, software buying teams should consider their company's business needs, industry focus and deployment preferences.
S/4HANA is the latest generation of SAP's flagship ERP system following SAP R/3. S/4HANA includes technology upgrades such as cloud services, embedded analytics, machine learning capabilities and a modernized UI. It sits on top of SAP's HANA in-memory database that enables faster performance, particularly for real-time analytics.
Oracle Cloud ERP, also known as Oracle Fusion Cloud ERP, is the next generation of the company's E-Business Suite. Oracle Cloud ERP marked the company's transition to a cloud-native architecture, with Oracle rebuilding many of the software components from the ground up and incorporating AI and machine learning, advanced analytics and a more modern UI. It runs on Oracle's flagship database and is optimized to run on Oracle Cloud.
An overview of SAP S/4HANA and Oracle Cloud ERP
The right ERP software choice can set the stage for efficiency, innovation and growth, while the wrong choice can cost a company millions of dollars. Here are five factors that IT leaders should consider when deciding between SAP S/4HANA vs. Oracle Cloud ERP.
1. Industry fit
SAP S/4HANA is a good choice for product companies that oversee complex manufacturing processes and those that require industry-specific capabilities. S/4HANA is particularly well-suited for companies in the automotive, aerospace and defense, utilities, and oil and gas industries.
S/4HANA can handle complex supply chain and production planning processes, advanced warehouse management and asset management. SAP has built up an extensive portfolio of specialized modules for S/4HANA, including industry-specific products for retail, utilities, waste and recycling, telecom, automotive, aerospace and defense, and banking.
Oracle Cloud ERP is especially well-suited to the service sector. Oracle's cloud-native design enables rapid deployment and flexibility, which could be especially beneficial for companies in industries that must quickly adapt to changing market conditions or new regulatory requirements. This includes financial services, healthcare, professional services and higher education.
In particular, Oracle's human capital management (HCM) and supply chain management (SCM) capabilities make the software a good fit for companies in service-oriented industries as well as organizations with complex workforce management requirements. The software also offers strong CRM capabilities following Oracle's acquisition of PeopleSoft in the early 2000s.
2. Deployment options
SAP and Oracle have both shifted toward cloud computing, including subscription-based pricing, in recent years. However, the companies embrace different philosophies for deployment options.
SAP S/4HANA is available in on-premises and cloud versions, which offers greater flexibility for companies that prefer to host their ERP system in-house. While SAP does offer its own cloud platform with SAP Business Technology Platform, the majority of organizations opt to run their S/4HANA system on a hyperscaler platform.
Oracle Cloud ERP is cloud-based software first and foremost, and it's aimed at companies that want to fully embrace cloud technology and minimize their need for on-premises infrastructure. Although Oracle Cloud ERP can run on various cloud platforms, it's optimized for Oracle Cloud Infrastructure, so the majority of Oracle's ERP users choose that option.
3. Integrated products
Both companies offer a suite of integrated business applications that work with their ERP products.
Popular SAP S/4HANA options include SAP SuccessFactors for HCM, SAP Ariba for procurement, and SAP Concur for travel and expense management.
Oracle offers a collection of cloud-based applications such as Oracle Cloud SCM, Oracle Cloud EPM, Oracle Cloud CX and Oracle Cloud HCM.
4. Customization
Extensive customization is possible with SAP S/4HANA, but that capability can result in increased complexity and higher implementation costs. Many customizations require long-term maintenance, which could be problematic -- and expensive -- when users upgrade or adopt new ERP features.
Oracle Cloud ERP focuses on configurability. Oracle claims the software requires less customization because of its cloud-native design and emphasis on out-of-the-box functionality. However, companies can create custom apps and interfaces if needed to extend Oracle Cloud ERP's functionality without changing the core application code.
5. Implementation
Both SAP and Oracle offer structured methodologies to guide businesses through the implementation process.
SAP's option, SAP Activate, includes guided configurations, project management tools, a guide to best practices and a roadmap that lays out each phase of the process. SAP's methodology relies heavily on standardized configurations.
Oracle's methodology, Oracle Unified Method (OUM), supports both traditional and agile project management methodologies and emphasizes iterative development and rapid delivery. OUM includes detailed guidance on key activities such as requirements gathering, configuration, testing and change management.
Should you choose SAP S/4HANA or Oracle Cloud ERP?
Choosing SAP S/4HANA or Oracle Cloud ERP depends on a few factors.
Companies that need an on-premises deployment will go with SAP, but organizations that are able to choose a cloud option can select either company.
Industry matters as well. Companies operating in a sector covered by SAP's industry-specific tools will likely choose S/4HANA. Organizations working in healthcare or higher education will likely favor Oracle Cloud ERP.
In addition, companies with extensive customization requirements -- and that have the budget to pay for them -- will likely gravitate toward SAP.
James Kofalt spent 16 years at SAP working with SME business applications and was a product manager for integration technology at Microsoft's Business Solutions division. He is currently the president of DX4 Research, a technology advisory practice specializing in ERP and digital transformation.
