In the recent earnings call for Oracle’s Q3 FY21 results, Oracle Chairman Larry Ellison once again went on the offensive against SAP when it comes to their ERP capabilities.
First, some background…
At the 27th Citi Technology Investors Conference in September 2020, SAP CFO, Luka Mucic, said that SAP hadn’t lost a single ERP customer to Oracle. This was in response to a question based on Larry Ellison’s claims during a previous Oracle earnings call that Oracle were making inroads into SAP’s top 10 customers and were moving into their top 50 accounts too. Mucic said:
We are not aware of any competitive replacement. We actually are aware of quite a few we have competitively replaced other ERP solutions from our traditional competition through S/4HANA recently
He then said:
“I think also the relative growth that we are able to post versus that traditional competitor…actually speaks the clear language…perhaps at some point there will be more transparency given to us [as to] which customer…exactly [the] competition is talking about.”
and finished off by clearly stating:
“I have checked and we have not lost a single customer.”
SAP SE (SAP) Management Presents at Citi’s 2020 Global Technology Virtual Conference – (Transcript) | Seeking Alpha
Ellison stated:
“In Q3 alone [Oracle] signed contracts, totalling hundreds of millions of dollars to migrate several very large SAP ERP customers, to Oracle Fusion ERP”
And then, clearly in response to Mucic’s request for more transparency as to which customers are involved, he went on to list over 100 customers that have, or are in the process of, switching from SAP to Oracle Fusion ERP! Customers listed included:
- TPS Company
- G4S
- First Solar
- CEMEX
- New Zealand IRS
- University of The Andes
- Postcon (2nd largest mail carrier in Germany)
- Birmingham City Council (in the UK)
- Fedex
- Grupo Bimbo
- Natwest Group
- The largest private company in Belgium
And there were plenty more too.
These are all customers that Ellison claims have replaced all their SAP with Oracle, or they’re in the process of doing so. He had another section of the list for organisations that are purchasing Oracle ERP but still running SAP ERP too and said it is Oracle’s expectation is that “the vast majority” of those organisations will ultimately move entirely across to Oracle ERP.
He finished off by saying:
“SAP, the once-dominant on-premise[s] ERP market leader is currently not competitive in the cloud ERP market. … SAP … never rewrote their ERP system for the cloud and it’s too late for them to start now”
When asked why this SAP to Oracle migration is happening now, Ellison had more to say about SAP’s strategy:
“SAP instead, embedded their own database called HANA and focused on this new database and never really rewrote their ERP code for the cloud. I mean, it’s just an unbelievable error. S/4HANA in the cloud is … not a cloud product at all. It is the 35-year-old … programming language called ABAP”
and finished with:
“SAP really is more responsible for our leadership position than we are”
Conclusion
It’s difficult to know what the facts are here. SAP clearly stated they haven’t lost any customers to Oracle…but Oracle have publicly listed dozens of customers they say they’ve taken. They can’t both be right…but surely neither would have made such false claims? I can only assume there’s a way that they ARE both right…perhaps different definitions of what “losing” a customer is?
These two companies have long been rivals but things really seem to be heating up now. Whether this is because Oracle truly believe they’re the stronger option or this is a case of “the best form of defence is attack” remains to be seen but either way, this escalating ERP battle us sure to have an impact on customers.
If you’re an SAP ERP customer, can you use this to your advantage? Will the mere mention of looking at Oracle ERP prompt SAP to offer discounts and favourable terms in your next negotiation?
Maybe there’s no smoke without fire and Oracle really ARE miles ahead of SAP now (disclaimer – I have no idea!). If so, should you seriously evaluate them before moving to SAP S/4 HANA?
I’m intrigued to see the next steps in this conflict for sure!
Cloudy with a chance of Licensing 