If you are considering SAP S/4HANA as one of your ERP solutions of choice, you may also be wondering about comparable alternatives to SAP.
A large subset of our client base evaluates SAP S/4HANA as part of their digital transformation strategy for the 2020s and beyond. However, many clients often inquire about alternative options beyond SAP. These inquiries primarily come from larger organizations, multinationals, and complex organizations aiming to scale and standardize their operations. They often perceive SAP as their best or only option. Therefore, today, I would like to discuss the top alternatives and options comparable to S/4HANA that you should consider as part of your digital transformation strategy moving forward.
One of the most common systems organizations evaluate alongside SAP S/4HANA is Oracle Fusion Cloud. Oracle is generally considered one of the top two vendors, alongside SAP, especially for larger and more complex organizations. Oracle Fusion Cloud, in particular, is a scalable and diverse solution. While it can be somewhat complex due to its extensive range of capabilities, it can handle various advanced operations, planning, and predictive analytics needs. If you have complex operations, a diversified structure, or specific requirements that might strain a traditional ERP system or other systems in the market, Oracle Fusion Cloud can be a great option.
When comparing Oracle Fusion Cloud to SAP, it can be challenging to identify their differences and understand the strengths and weaknesses of each product. To summarize some of the differences between the products, one notable distinction is flexibility. Oracle is generally considered more flexible than SAP. So if you find SAP S/4HANA to be rigid or lacking the desired level of flexibility, Oracle Fusion Cloud can be a suitable alternative.
The second major difference lies in enterprise performance management and business analytics. Oracle Fusion Cloud generally offers stronger reporting and business intelligence capabilities compared to SAP. This is partly due to Oracle's acquisition of products such as Hyperion, which is now part of Oracle's enterprise performance management suite. Hyperion is considered a gold standard in areas like reporting, consolidation, financial reporting, business intelligence, and predictive analytics. Therefore, if you require robust quantitative capabilities that may be lacking in SAP, Oracle can be a great fit.
Regarding other considerations such as overall functionality, ecosystem, and the quality of system integrators and resources in the market, the two products are relatively even, although certain industries may find one product stronger than the other. In general, Oracle Fusion Cloud is a viable alternative to SAP S/4HANA that you should consider.
Another flexible and scalable product to consider alongside S/4HANA is Microsoft Dynamics 365 (D365). D365 consists of two sub-products: Finance and Operations, and Business Central. Business Central is a SaaS-based solution that competes more directly with NetSuite. However, most organizations considering S/4HANA will focus on the Finance and Operations component of D365.
Microsoft is often a good option for SAP S/4HANA prospects because it offers a breadth of capabilities expected from a leading Tier 1 system. One key differentiation between D365 and SAP is its flexibility. D365, like Oracle, is generally more flexible, with stronger capabilities, open architecture, and integration possibilities compared to S/4HANA. Additionally, D365 is built on a generally open architecture, making it easier to find developers and individuals who can integrate with the system. In contrast, S/4HANA requires a more specialized skill set, which can be harder to find and more expensive.
Furthermore, D365 implementations tend to be easier and more cost-effective. Implementation costs for D365 are generally lower than S/4HANA due to its flexibility and familiarity with the Microsoft Office productivity interface. However, one downside of D365 is that it may not provide the same level of rigidity or standardization as S/4HANA, making it less suitable for organizations seeking strict operational standardization or scalability.
These are some of the major differences and considerations when exploring alternatives to S/4HANA, particularly for organizations in industrial industries such as manufacturing, distribution, automotive parts, medical devices, or other industrial product manufacturers.
There's a product in the manufacturing space called QAD, which directly competes with SAP. Although many people may not have heard of QAD, it has been around for a long time and is a common choice in the manufacturing industry. It serves as a good alternative to S/4HANA and is worth considering for several reasons.
First and foremost, QAD offers a strong and deep breadth of capabilities specifically tailored for manufacturing. This makes it an excellent option for manufacturers who are seeking alternatives to S/4HANA. With QAD, you not only get a scalable product from a well-known and established vendor but also benefit from its focused expertise in the manufacturing domain. This focus is crucial, especially considering that S/4HANA is still in the process of developing its manufacturing capabilities during its transition from legacy on-premise systems to the cloud. In contrast, QAD has already been operating in the cloud for several years, giving it an advantage over S/4HANA in terms of cloud maturity and experience.
Another advantage of QAD is its flexibility, albeit in a slightly different way than D365 and Oracle. QAD offers a feature called "low code," which allows you to make changes to the software's functionality, workflows, and user interface without modifying the source code itself. This low-code approach provides organizations with maximum flexibility while still maintaining strong manufacturing capabilities and supporting repeatable and standardized business processes.
In addition to Oracle Fusion Cloud, another Oracle product worth considering in certain cases is Oracle NetSuite. This may seem counterintuitive, especially if you're familiar with these two products, as they are quite different. However, for smaller to mid-sized organizations seeking an ERP replacement, there is often a gap between their current state and the point where they are ready to fully adopt a system like S/4HANA. This is where NetSuite can serve as a suitable alternative. It can be viewed as a stepping stone solution that allows gradual growth and prepares organizations for the eventual adoption of S/4HANA.
Similar to S/4HANA, NetSuite is known for its standardized business processes and workflows, which come with a certain level of inflexibility. However, this standardization can be advantageous for organizations aiming to streamline their operations. NetSuite is particularly well-suited for smaller to mid-sized organizations experiencing rapid growth, as it offers scalability and supports the need for standardization. It is especially effective for organizations that do not deal with highly complex products, such as those in the manufacturing or aerospace and defense industries with engineer-to-order or make-to-order requirements.
If you are involved in the production of relatively complex products as a manufacturer, S/4HANA might be a better fit due to its broader range of capabilities in those specific areas. However, for other organizations, NetSuite is a compelling option to consider.
Another consideration for potential S/4HANA customers is exploring industry-specific solutions rather than focusing on a particular vendor. There are numerous niche players in the market that offer scalable and competitive solutions, comparable to S/4HANA, within specific industries. For instance, in the manufacturing sector, we mentioned QAD as one of the vendors earlier. Additionally, you have Epicor, which specializes in manufacturing, and Acumatica and DCom, both considered tier 2 providers.
If your organization operates in the construction industry and requires field services and mobile workforce management, you might want to consider an industry-specific solution like IFS. These niche solutions cater to specific verticals and offer deep capabilities within those industries. If your organization is focused on a single industry and doesn't require the complex functionalities of larger organizations, exploring second and third-tier ERP solutions within your industry can be beneficial.
The final category to consider when exploring alternatives to S/4HANA is the range of best-of-breed options. This category is similar to industry solutions but with a slightly different focus. Industry solutions are comprehensive ERP systems tailored to specific industries, while best-of-breed options are functionally focused solutions.
For instance, in the human capital space, you have Workday, and in the sales force automation and CRM space, you have Salesforce. These are two examples of best-of-breed options that excel in specific functional areas and may offer better capabilities in those areas compared to a full ERP system like S/4HANA.
Considering the best-of-breed path involves identifying the functional areas you want to automate or transform and finding the solutions that best fit each area. By combining these solutions, you can evaluate how they compare to S/4HANA in terms of functionality, cost, and overall business value.
I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.
