The major competitors of Microsoft Dynamics ERP
system are Oracle, Sage, and SAP ERP products. According to an article on
CIO.com, before Microsoft Dynamics introduced its ERP solutions, competition in
the ERP space was referred to as a two-horse race between Oracle and SAP
(Wailgum, 2008).
Oracle is one of the world’s leading enterprise
solutions vendors. Through a series of acquisitions and their own development,
Oracle has built a sophisticated portfolio of business technology solutions. Its
ERP Cloud applications for mid-size companies offer enterprise-class technology
via an accelerated deployment using Oracle Business Accelerators which are
powerful, cloud-based rapid implementation tools to get companies up and
running quickly and reliably (Oracle, 2014). They offer the broadest and
deepest range of ERP solutions including financial management, business
intelligence, etc. Its products include Peoplesoft, JD Edwards, and E-Business
Suite. For instance some of the financial management tools of JD Edwards
include apps for advanced cost accounting, expense management, fixed asset
accounting, and a general ledger. It also offers apps for compliance with
International accounting standards requirements (IFRS).
The Sage Group, a multinational UK-based company,
offers the world’s third largest ERP software (after Oracle and SAP). It has
6.1 million customers worldwide, and offices in 24 countries. Its
products include Sage Pro 200, which is scalable and fully customizable edition
of Sage ERP package provides unlimited user capacity, an award-winning
architecture, direct access to source code, and powerful financial reporting
and analysis. It has more than 23 modules including Accounting and Operations,
Fixed Asset Management, HR management.
SAP ERP is another competitor system, made by the
German company SAP AG. SAP ERP includes a wide array of accounting functions in
its ERP financials module; they are accounts payable, accounts receivable,
accounting and financial reporting, risk management, regulatory compliance, and
cash flow monitoring.
In comparison to Microsoft Dynamics ERP system,
which offers a per-user pricing for the whole product, Oracle offers per-user
pricing for each module separately and each module should have a certain number
of minimum users. However, it is very hard to get exact pricing for Oracle ERP
products, because partners usually do price quotes by phone for those who are potential
customers. According to a comparison between Oracle and Dynamics ERP systems
published on Microsoft.com, Dynamics ERP provides a lower cost of ownership
than Oracle. The reason is that Oracle annual maintenance fees are very high,
even higher than the software license cost. The report also states that Oracle
requires minimum users which can also play a role in why Oracle cost of
ownership is so high (Microsoft, 2014).
SAP ERP products are very costly to deploy
and maintain too. Mid-size companies usually spend around $10 million to $20
million at most for hardware, software, and consulting costs which is ten times
more than first year cost Microsoft Dynamics ERP.
In comparison to Oracle and SAP, Sage is priced
lower but still higher than Microsoft Dynamics ERP. Its cheapest software
on-premises subscription service, Sage 100, which offers financials module, is
$65 per user per month in comparison with $600 yearly read-only subscription
price for Microsoft Dynamics ERP (Henschen, 2012).
Although Oracle is more complex and has more
functionalities, it is not necessarily a plus. According to
meritsolutions.com, no company can use even a majority of the functionality
available, yet they are paying for the service. This certainly makes Microsoft
Dynamics a more valuable product which offers a higher return on investment
since users are familiar with most of the company products and it is more
user-friendly. Besides, Dynamics ability to integrate with its Windows
applications makes it more beneficial than SAP products. However, SAP can offer
more customization allowing end users to completely dictate the operational
structure of the product. In comparison to the products above, Sage is more
beneficial in terms of implementation and easiness to use. Besides, if
companies want to switch from one Microsoft Dynamics product to another, they
will have to pay for data migration. With Sage, it is free and is directly
built in the system, which is certainly a valuable feature.
As it was discussed in the risk assessment section, major risks with ERP
systems in general include poor fit, lack of experience, high costs, security
and privacy. As with Microsoft Dynamics, using Oracle, Sage, or SAP ERP
products also pose such risks, although at different levels. In case of Oracle,
the risk that lack of experience of using Oracle products will lead to project
failure, is very high because of Oracle’s complex functionality. SAP users face
the risk of paying a lot for implementation and training and still experiencing
problems because of failing to properly specify business objectives, to deal
with organizational differences, and because of inadequate training (SAP ERP,
2014). According to Microsoft Dynamics comparison, the greatest risk with Sage
is that it cannot grow with the business and might not offer long-lasting
support bringing the need to switch to a new software. An example is Sage
Peachtree Accounting software, which does not properly handle the growth of the
company in comparison with Microsoft Dynamics GP product and it becomes
necessary to do some manual work (CAL Business Solutions).
Although
competitors' products offer benefits such as more functionalities (Oracle),
more customization (SAP), and more easiness to use (Sage), they are sometimes
too complex (Oracle), have high implementation and training costs (SAP), or are
unable to grow properly with the business (Sage); for companies like IVK
that do not have in-house expertise it is not suitable to choose an
Oracle product; if IVK cannot realize good ROI with SAP and cannot rely
on Sage products in the future, it is meaningless to invest in those systems.
As a conclusion, Microsoft Dynamics ERP system is probably the best
ERP system for IVK to consider for the reasons mentioned in the competitive
analysis section including more user friendly feature, scalability, less costs
for implementation, less complexity, less risk, and more cost-effectiveness.
The table below summarizes the
comparison of Microsoft Dynamics ERP system with its competitor systems:
SYSTEM
|
COSTS
|
BENEFITS
|
RISKS
|
Microsoft Dynamics ERP
|
$600 per read-only user
|
-User friendly
-Similarity with other Microsoft products
-More Scalable
|
Poor fit
|
Oracle (e.g. JD Edwards)
|
Depends on a specific company, but expensive
|
-More functionalities
-More complex systems
|
Complexity and lack of experience leading to project failure
|
SAP (e.g. SAP ERP)
|
From $10 million to $20 million
|
More customization
|
Very high costs for implementation and training
|
Sage (e.g. Sage 100)
|
$65 per user per month
|
-Easy implementation and easy to use
-Easier migration from one of its products to
another
|
Ability to grow with the business
|
References
Austin, R. (2009). The Adventures of an IT Leader. Boston, Massachusetts. Harvard
Business Press.
Compare Business Management Software | Switch to Microsoft Dynamics.
(n.d.). Compare Business Management Software | Switch to Microsoft Dynamics.
Retrieved June 17, 2014, from http://www.microsoft.com/dynamics/en/za/compare.aspx
Dynamics GP vs. Peachtree. (n.d.). CAL Business
Solutions RSS. Retrieved June 17, 2014, from http://www.calszone.com/microsoft-dynamics-gp/compare-gp/gp-vs-peachtree/
Enterprise Resource Planning (ERP). (n.d.). -
Midsize Companies. Retrieved June 16, 2014, from http://www.oracle.com/us/solutions/midsize/enterprise-resource-planning/overview/index.html?ssSourceSiteId=ocomjp
Henschen, D. (2012, January 1). InformationWeek
News Connects The Business Technology Community. InformationWeek.
Retrieved June 17, 2014, from http://www.informationweek.com/applications/subscriptions-are-first-step-in-sage-erp-and-crm-plan/d/d-id/1103794)
MICROSOFT DYNAMICS AX. (n.d.). Microsoft
Dynamics AX vs Oracle JDEdwards. Retrieved June 17, 2014, from http://www.meritsolutions.com/products/microsoft-dynamics-ax-vs-jdedwards.html
SAP ERP. (2014, June 6). Wikipedia.
Retrieved June 17, 2014, from http://en.wikipedia.org/wiki/SAP_ERP
Wailgum, T. (2008, October 29). With Dynamics, Microsoft's
ERP and CRM Business Apps Go Head-to-Head with Oracle and SAP. CIO.
Retrieved June 17, 2014, from http://www.cio.com/article/458008/With_Dynamics_Microsoft_s_ERP_and_CRM_Business_Apps_Go_Head_to_Head_with_Oracle_and_SAP?page=1&taxonomyId=3000
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