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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Cost Structure Benchmarking


Oracle vs. SAP Applications

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 1


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 2


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

„ The comparison of costs and benefits constitutes a deciding factor for companies looking for an appropriate
ERP supplier. For Companies, the economic and flexible use of software is particularly important in order to
free funds for additional investments, not least in further IT products. Providing for this is also the explicit
goal of most ERP suppliers, like Oracle and SAP, for instance.

„ Nevertheless, RAAD studies conducted in 2008 show that many SAP customers consider the costs for
implementing, customising, and operating SAP software as very high. From this perspective, the objections
against the planned increase of SAP’s maintenance fees is quite understandable. The general feeling that
SAP products are too expensive to purchase and operate has also spread among the non-SAP customers of
Germany’s small and medium-sized businesses. Here, the predominant opinion is, that SAP is too expensive
and too complex. However, RAAD Studies show that SAP’s products and price models are largely unknown to
the decision makers. These opinions are therefore based on preconceptions. To date, no comparable studies
are available regarding Oracle customers in the German-speaking countries. But Oracle also had to suffer
criticism concerning maintenance costs and customer support in the past.
(http://www.computerwoche.de/heftarchiv/2006/47/1216914/)

„ Despite the criticism directed at both software suppliers, a structured analysis comparing cost types and cost
influencing factors of Oracle and SAP systems in respect to acquisition, implementation, and operation is still
missing with regard to German-speaking countries. The study at hand is meant as a first step in this
direction. It is the first of its kind that was supported by both software suppliers.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 3


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Purpose of the Study


Comparing Oracle vs. SAP, but also Oracle vs. Oracle and SAP vs. SAP
„ The primary purpose of the inquiry was to find out whether the expenses for Oracle and SAP systems differ
significantly with regard to a number of easy to inquire cost types and cost influencing factors like licenses,
maintenance fees, project duration, and employees required for operation and support. This study can also
serve as a means for companies to compare their IT according to the results of aspects inquired among the
same ERP user base. In case this deviates from the bulk of the answers, it can be useful for a company to
analyse why and where it does not fare so well and where improvements can be realised.
Benchmarking can only start with this study
„ Benchmarking between companies – although successfully applied in practice – is still a hotly discussed issue
in theory. It is not least the care exercised in selecting the appropriate companies that determines how good
and convincing a benchmark really is. In order to derive recommendations for specific actions, a company
should only compare itself with a small and narrowly defined subset of companies of similar size, industry, IT
affinity, etc. However, as stated above, this is not the immediate objective of this study.
Who is more expensive: Oracle or SAP? Neither?
„ To benchmark the IT costs in total seems inadvisable, as no single definition employed by each and every
company exists for “IT Cost Total”. Which factors are regarded as part of the IT costs can differ considerably
between companies, depending on the structure of the IT. Due to this consideration, next to ‘global’ criteria
like the IT budget and the IT budget for a particular supplier, a number of cost influencing factors have been
queried and compared. These allow conclusions with regard to the total expenses, even though, at the end
of this study, no flat result can be presented which company is more expensive: Oracle or SAP.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 4


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Which Cost Types and Cost Influencing Factors Have Been Queried?

Cost Type
Direct Costs Indirect Costs
Hardware Costs End-user Costs
Software Costs Costs for System Failures
Implementation Costs Additional Service Costs
System/Network Management
Support, Maintenance, Operation

„ When purchasing, implementing, and operating IT systems, the resulting costs can be assigned directly or
indirectly to the investment. Direct hardware and system/network management costs shall be ignored for the
purposes of this study, as shall the indirect costs resulting from end user training, misuse, etc. or from a
necessary increase in service. While the neglected direct costs will accrue regardless of the ERP supplier
employed, end user costs will probably correlate with the respective user-friendliness of the programs used.
Further studies will have to take this into account.

„ The study at hand will therefore focus on the cost types and cost influencing factors for software costs,
implementation costs, support and operating costs, and system failure costs.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 5


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Cost Type
Direct Costs Indirect Costs
Hardware Costs End-user Costs
Software Costs – Chapter 2 Costs for System Failures – Chapter 4
License Expenses per Company Number of System Failures
Number of Licenses per Company
Additional Service Costs
Maintenance Rates

Implementation Costs – Chapter 3


Number of Major Release Changes per Year „ The list of cost influencing factors assigned to
Project Duration in Total each cost type in the table is not comprehensive.
Project-Related Internal/External Person Days Due to the time restraints of the interviews, not
Duration of Customizing all cost influencing factors possible in theory
Customizing-Related Internal/External Person Days
could be addressed. Therefore, the query focused
Maximum, Minimum, Average Consulting Rate
Number of Project-Related Test Days
on factors deemed easy to answer. Directly
asking for cost types was omitted, as the
System/Network Management comparability could have been influenced
Support, Maintenance, Operation – Chapter 4 negatively by different definitions. The queried
Number of IT Employees cost influencing factors therefore had to be
Software Supplier-Specific IT Employees defined as broadly as possible.
Number of IT Employees for operation
Number of Employees for Level 1 Support
Number of Employees in the Application Development
External Consulting Days for Application Development

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 6


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Comparability

„ Ensuring a comparability of costs and cost influencing factors as high as possible requires, that
a) comparability is created by harmonizing the standards for costs and cost influencing factors. Thus,
the license expenses per user are a better yardstick than the expenses for the entire company.
b) the respective cross-sections of Oracle and SAP customers are as similar as possible, with regard to
company size, line of business, corporate affiliation, number of users and functionalities used. The
target group design took this into consideration, as clarified below.

„ The larger the cross-sections interviewed, the more reliable the results derived. Therefore, RAAD tried to
query as many companies in Germany, Austria and Switzerland as possible during the timeframe running
from October to December 2008. In total, 86 IT managers of Oracle-using enterprises and 127 IT managers
of SAP-users participated in the study. The duration of the interviews averaged 7-10 minutes. Even though
IT costs are often not only debated within the IT, but also within a company’s executive board - as shown in
a RAAD study from the beginning of 2008 -, many companies did not wish to participate in the study,
despite a statement of confidentiality from RAAD and the support of the software suppliers. This resulted in
an interview response rate of ca. 8%, which is very low in comparison to other RAAD studies.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 7


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Company employees „ How many employees does your
company have?
(DACH, Oct. - Dec. 2008, n1 = 69, n2 = 115)
„ Both for Oracle and SAP customers,
the number of employees of the legal
100%
entity was inquired.
90% „ The adjoining graph shows that both
samples are comparable with regard
80% to the size of the companies. An
applied statistical test detected no
70% differences between both cross-
Oracle sections regarding the number of
60% employees.
SAP
50%

40%

30% 27%
23%
19%
20% 17% 17%
14% 16%
13% 14%
11%
9% 8%
10% 5% 6%

0%
Median
less than 100 100 - 199 200 - 499 500 - 999 1.000 - 1.9992.000 - 4.999 more than Oracle 500 - 999
5.000
Source: RAAD SAP 500 - 999

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 8


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many Oracle or SAP users
ERP user of the legal person does your company have?
(DACH, Oct. - Dec. 2008, n1 = 60, n2 = 83)
„ The number of ERP users should also
be similar in both questioned groups.
100%
Therefore, the number of ERP users of
90%
the legal entity was inquired. Here as
well, no statistical deviations between
80% both groups could be ascertained.

70%

60%
53%
Oracle
50%
SAP
40%
33% 33%
30%

20%
20% 16% 15%
10%
10% 7% 6%
2% 3%
2% 1%
0%
0% Median
less than 100 100 - 199 200 - 499 500 - 999 1.000 - 1.9992.000 - 4.999 more than Oracle < 100
5.000
Source: RAAD SAP 200 - 499

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 9


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ Does your company belong to a
Group affiliation
corporation?
(DACH, Oct. - Dec. 2008, n1 = 72, n2 = 121)
„ Due to the prevalent sales policy
strongly focussing on large
100%
corporations, at least in the past,
90% 88% most of the responding companies,
83% whether Oracle or SAP customers, are
80% part of a corporation.
„ Here too, the two target groups do
70% not differ from each other.
Oracle
60%
SAP
50%

40%

30%

20% 17%
13%
10%

0%
Yes No

Source: RAAD

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 10


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Industry by SIC-Code „ In which industry does your
company operate?
(DACH, Oct. - Dec. 2008, n1 = 86, n2 = 127)
„ Regarding the distribution across
industries, no statistical difference
2% between Oracle and SAP customers
Public Administration
2% could be established.
7%
Services
9%

11%
Finance, Insurance, And Real Estate
24%

7%
Retail Trade
10%

10%
Wholesale Trade
13%

12%
Transport., Comm., Electric, Gas, And Sanitary
8%

33%
Manufacturing
27%

17%
Construction
6%
SAP
1%
Mining Oracle
0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Source: RAAD

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 11


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Software usage „ Which software products from
Oracle or SAP are licensed?
(DACH, Oct. - Dec. 2008, 19 < n < 123)
„ The software functionalities used by
individual companies should be as similar
Oracle FI (n = 69) 87%
as possible to achieve a viable comparison
between the cost structures of Oracle and
SAP FI (n = 124) 99% SAP customers. To this end, the
Oracle HR (n = 29) 48% applications used in 7 different areas were
queried: Finance (FI), Human Resources
SAP HR (n = 121) 77% (HR), Customer Relationship Management
Oracle CRM (n = 42) 74% (CRM), Supplier Relationship Management
(SRM), Supply Chain Management (SCM),
SAP CRM (n = 111) 23%
Production, und Applications Platform
Oracle SRM (n = 22) 32% (Platform).
SAP SRM (n = 108) 11%
„ The use of particular functionalities is in
part clearly divergent when comparing
Oracle SCM (n = 23) 35% Oracle with SAP customers. Regarding the
SAP SCM (n = 108) 9% use of FI, HR, CRM, SRM and SCM
systems, significant differences can be
Oracle Production (n = 26) 38%
ascertained at the alpha error level =
SAP Production (n = 112) 21% 0,05. Nevertheless, due to the poor
response rate, this divergence from the
Oracle Plattform (n = 20) 25% Oracle
original model had to be accepted in
SAP Plattform (n = 105) 27% SAP order to generate at least enough
interviews for a comparison.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: RAAD

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 12


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Licensed Software Products „ Which software products from
Oracle or SAP are licensed?
(DACH, Oct. - Dec. 2008, n1 = 86, n2 = 127)
„ The study does not aim to examine
specific software packages, like
comparing SAP ERP with Oracle
Applications. The adjoining graph
clearly shows this.
„ The distribution of the SAP products in
SAP 37% 65% 5%
the queried group strongly correlates
with the distribution in the overall
market.

Oracle 53% 13% 17% 22% 13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120%
R/3 SAP ERP
SAP Business Suite Oracle Apps
Peoplesoft J.D. Edwards
Source: RAAD
Siebel Other Oracle software

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 13


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion

„ Oracle and SAP customers are comparable regarding the criteria company size, number of users, line of
business, and corporate affiliation.

„ There is a significant difference between Oracle and SAP customers in the software functionalities used. In
proportion, there are more SAP customers employing SAP’s Finance and Human Resources solutions than
Oracle customers using the corresponding Oracle products. In contrast, Oracle customers more often cover
their CRM, SRM and Production software needs from the Oracle portfolio, than SAP customers do with SAP
software.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 14


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 15


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Software Costs – Chapter 2

Software Costs – Chapter 2


License Expenses per Company
Number of Licenses per Company
Maintenance Rates

„ According to TCO analysis, software costs often contribute less than 10% to the overall costs, depending on
the type of software used. Software costs are composed of licenses and maintenance rates. The most
important cost influencing factors are the number of purchased licenses, the license price, and the
maintenance rates. During the query, it was often difficult for the contact persons in the companies to
spontaneously recapitulate the various prices for user and engine licenses. Therefore, the overall license
costs, i.e. the sum of user and engine license costs, were inquired.

„ With regard to maintenance costs, both the total amount of the maintenance costs and the maintenance
rates were inquired. The cited results refer to the maintenance rates, due to their superior comparability.

„ Regarding Oracle customers, it was explicitly stated that the costs for Oracle database licenses should not be
considered, but rather only the licenses for software of the product categories Oracle Applications,
Peoplesoft, J. D. Edwards and Siebel. In addition, information regarding Agile and Hyperion was also
included in the examination.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 16


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the overall license
Licences overall price, incl. Engines?
(DACH, Oct. - Dec. 2008, n1 = 29, n2 = 27)
„ The overall license price for Oracle
customers does not differ significantly
4500000
from the one for SAP customers.
„ The overall license costs are not
4000000
suitable for comparing Oracle with
SAP, because Oracle and SAP
3500000 customers differ with regard to user
penetration.
3000000

2500000

2000000

1500000

1000000

500000

0 L. Quartile Median U. Quartile


Oracle 118,800 227,273 600,000
Source: RAAD Oracle SAP SAP 167,316 460,000 744,793
See addendum to graph, Median, Quartiles and Test.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 17


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many user licenses does the
Number of Licences per company company have?
(DACH, Oct. - Dec. 2008, n1 = 39, n2 = 110)
„ Compared to Oracle customers, SAP
customers have purchased
8000
significantly more software licenses.
„ The number of purchased licenses for
7000 the SAP customers is about three
times higher than for Oracle
6000 customers, when comparing the
respective Median.

5000

4000

3000

2000

1000

0 L. Quartile Median U. Quartile


Oracle 27.50 100.00 260.00
Source: RAAD Oracle SAP SAP 120.00 290.00 700.00
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 18


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the user penetration
ERP user per employee
(ERP user per employee) in the
(DACH, Oct. - Dec. 2008, n1 = 54, n2 = 79)
company?
„ Due to the higher number of licenses
100%
for SAP customers, the relation of SAP
users to company employees is clearly
90%
higher than for Oracle customers.
80% „ The higher user penetration is not due
to the SAP Business Suite (at least
70% 25% of the employees have to be
licensed) showing up very often in the
60% sample. SAP also has a higher user
penetration in the case of R/3 and
50% SAP ERP customers than comparable
Oracle customers.
40%

30%

20%

10%
Median
0%
Oracle 16%*
Source: RAAD Oracle SAP SAP 40%*
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 19


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the average license
Licences per user price per user?
(DACH, Oct. - Dec. 2008, n1 = 23, n2 = 27)
„ For a better comparability, the overall
license expenses have to be brought
8000
in relation to the number of purchased
licenses. This shows that the license
7000 expenses per user for Oracle and SAP
are almost identical.
6000 „ Until now, the number of the
responses available in both groups is
too small for the evaluation to be able
5000 to ascertain a difference. In this
position, the users within the company
4000 are asked to participate in additional
inquiries in order to be able to
uncover possible differences.
3000

2000

1000

0 L. Quartile Median U. Quartile


Oracle 1,000 2,000 3,111
Source: RAAD Oracle SAP SAP 1,311 2,136 2,828

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 20


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the average license
Licenses per employee price per employee?
(DACH, Oct. - Dec. 2008, n1 = 26, n2 = 24)
„ Due to the insufficient number of
responses, no difference can be
20000
ascertained between the user groups
regarding the license expenses per
18000
employee.
16000

14000

12000

10000

8000

6000

4000

2000

0 L. Quartile Median U. Quartile


Oracle 66 388 641
Source: RAAD Oracle SAP SAP 340 898 2001

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 21


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high are your current
Maintenance charge maintenance costs for your
(DACH, Oct. - Dec. 2008, n1 = 24, n2 = 48)
ORACLE/SAP licenses per year?
„ As expected, the maintenance rates
35
do differ significantly from each other
not only on paper, but also for the
30
customers.
„ Most of the customers pay the
respective standard maintenance rates
25 of 22% (Oracle) or 17% (SAP).
Upward deviations can be explained
by individual maintenance contracts
20 (SAP MaxAttention) or by expiring
standard maintenance contracts for
old releases.
15
„ Downward deviations can be
explained by discounts for large
10 software license sales.

0 L. Quartile Median U. Quartile


Oracle 22 22 23
Source: RAAD Oracle SAP SAP 17 17 18
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 22


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
License expenses per company
„ No difference between Oracle and SAP customers could be determined regarding the license expenses per
company.
„ This probably results from the small number of responses to this question, as SAP customers have
definitely purchased more SAP licenses than Oracle customers have purchased Oracle licenses.
„ This causes the user penetration for SAP customers to be almost three times higher (median
comparison) than for Oracle customers.

License expenses per user, respectively employee


„ The comparison of the standardised variables license expenses per user and license expenses per employee
resulted in no difference between Oracle and SAP customers.

Maintenance rates
„ As expected, the maintenance rates for Oracle customers are significantly higher than for SAP customers.

Future studies
„ The sample available for this study was not large enough to determine a conclusive difference regarding the
major comparison variables license expenses per user and, respectively, per employee. A comparison of the
respective price lists shows differences, these however cannot be globally transferred to the customer
situation, due to sometimes considerable discounts. Before possible detailed studies regarding this issue are
conducted in future, larger samples should be gathered and evaluated, in order to determine whether there
really are no significant differences.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 23


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 24


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Implementation Costs – Chapter 3


„ Implementation costs can severalfold surpass the
Implementation Costs – Chapter 3 software purchase costs, depending on the project’s
Number of Large Release Changes per Year complexity. The comparison of project-related cost
Overall Project Duration
influencing variables for implementation costs in this
Project-Related Internal/External Person Days
Duration of Customisations study always refers to the latest larger Oracle or SAP
Customising-Related Internal/External Person Days project of the respective company. Possible project
Maximum, Minimum, Average Consulting Rate types were release changes, migrations or new
Number of Project-Related Test Days implementations.

„ The major influencing factors on implementation costs are the complexity and complicatedness of an
implementation project, however, these variables and their respective influence are not directly measurable.
They can be indirectly measured via cost influencing variables like project duration, internal and external
person days spent , consultant rates and test days.

„ Due to release changes, implementations of a product are recurring events. Implementation costs therefore
have to be summed up over the entire product lifecycle, so that the number of release changes can
represent a major cost influencing variable for implementation costs.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 25


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ When was the last time you
Date of last major project performed a large modification to
your system?
(DACH, Oct. - Dec. 2008, n1 = 53, n2 = 121)
„ The last large Oracle or SAP project
2010 was given to the IT Managers as
reference for answering all the
questions in this chapter. Possible
2008 project types were new
implementations, migrations or
release changes.
2006
„ In both groups, 50% of the customers
have performed a large modification
2004 during the last two years. With regard
to SAP customers, even 75% of the
projects have been executed during
2002 the period 2006-2008. This also
includes many SAP-ERP
implementations, which have been
2000
noticed to increase on the market in
the last two years.
1998

1996 L. Quartile Median U. Quartile


Oracle 2005 2007 2008
Source: RAAD Oracle SAP SAP 2006 2007 2008

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 26


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ What type was the last major
Type of last major project change to your system?
(DACH, Oct. - Dec. 2008, n1 = 86, n2 = 127) „ In most cases, the last major system
change was a release change.
„ A new implementation was mentioned
in only about one fifth of the cases.
82%
„ Migrations were stated only by one
Release Change percent of the SAP customers. This
79% value shows that the product
migration from SAP R/3 to SAP ERP is
mostly perceived as a release change
by most of the SAP customers.
18%

New Implementation

21%

0%

Migration

1% Oracle
SAP

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: RAAD

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 27


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ On average, how many release
Major release changes per year changes has the company
(DACH, Oct. - Dec. 2008, n1 = 47, n2 = 96)
performed per year since the
introduction of the system?
1,20
„ No significant difference can be
established between the Median
values for both groups.
1,00
„ For 50% of the SAP customers, an
average of up to 0.19 major system
changes takes place per year, which
0,80 means approximately one every five
years. For Oracle customers, the
system changes take place once every
0,60 seven years (0.14 times per year).
„ It is notable that 25% of the Oracle
customers have apparently not
0,40 performed a release change so far.
However, this also includes a number
of new Oracle customers from the last
two years.
0,20

0,00 L. Quartile Median U. Quartile


Oracle 0.00 0.14 0.25
Source: RAAD Oracle SAP SAP 0.11 0.19 0.27

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 28


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many days did the last major
Project duration project (release change /
(DACH, Oct. - Dec. 2008, n1 = 48, n2 = 91)
migration / new implementation)
take in total?
500 (including customising / configuration; in days from
project start until the system went live)

450 „ The medians of the project durations


for Oracle and SAP customers do not
400 differ significantly from each other.
„ However, the values tend to spread
350 wider with regard to Oracle projects.
For instance, here the upper quartile
300 with 75% of the customers amounts
to 191 days, while for SAP projects it
250 only amounts to 90 days.
„ Most of the data only refers to release
200
changes. A differentiation by project
150
type could not be performed due to
the small number of answers.
100

50

0 L. Quartile Median U. Quartile


Oracle 3.75 65.00 191.25
Source: RAAD Oracle SAP SAP 10.00 40.00 90.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 29


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high were the overall
Project related internal person-days internal expenses of the last
(DACH, Oct. - Dec. 2008, n1 = 25, n2 = 27)
project in terms of person days?
„ No significant difference can be
2000
ascertained between the median of
the two group. Only about 25
1800
companies in each group were able to
provide data.
1600
„ 50% of the Oracle customers specified
1400 having spent up to 20 person days,
the remaining 25% needed up to 191
1200 days.
„ The first 50% of the SAP customers
1000 specified that they needed up to 80
days, while an additional 25% needed
800 up to 90 days.
„ The overall spread is distinctly higher
600 with regard to Oracle customers.
400

200

0 L. Quartile Median U. Quartile


Oracle 5.00 20.00 250.00
Source: RAAD Oracle SAP SAP 37.50 80.00 120.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 30


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high were the overall
Project related external person-days external expenses of the last
(DACH, Oct. - Dec. 2008, n1 = 24, n2 = 40)
project in terms of person days?
„ The medians of the two groups do not
2500
differ significantly from each other.
„ On the whole, the number of
externally purchased consultant days
2000 is very low. In most cases, release
changes are evaluated here. These in
general seem to generate only a small
need for external consulting.
1500

1000

500

0 L. Quartile Median U. Quartile


Oracle 0.00 2.00 45.00
Source: RAAD Oracle SAP SAP 0.00 1.00 22.50

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 31


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many days did the
Customizing duration adjustment (customisation /
(DACH, Oct. - Dec. 2008, n1 = 32, n2 = 41)
configuration) of the software to
the company’s needs take with
800 regard to the last major project?
„ The adjustments accompanying
700 projects took longer for Oracle
customers than for SAP customers.
600 „ The difference of the medians is
significant. Up to 50% of the Oracle
customers need up to 22.5 for the
500 adjustment. For SAP customers, this
value amounts to 10 days.
400 „ Why the customisation took longer for
the Oracle customers could not be
300
clarified within the scope of this study.
Here, additional studies are necessary.

200

100

0 L. Quartile Median U. Quartile


Oracle 6.50 22.50 133.75
Source: RAAD Oracle SAP SAP 4.00 10.00 20.00
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 32


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ What percentage of the
Programming part of implementation project adjustment effort went into
(DACH, Oct. - Dec. 2008, n1 = 31, n2 = 54)
additional programming?
„ Customisation is generally composed
120
of two aspects: programming and
configuration. This type of adjustment
is generally tied to extensive
100 programming activities. During
configuration, the parameters
specified by the software are set up.
80 „ The medians for the amount of
additional programming for Oracle and
SAP customers do not differ
60 significantly from each other.
„ The data tends to spread a bit more
for Oracle customers, 50% of their
40 values being between 23% and
72.5%. For SAP, the median 50% are
located between 34% and 50%.
20

0 L. Quartile Median U. Quartile


Oracle 22.50 50.00 72.50
Source: RAAD Oracle SAP SAP 34.38 50.00 50.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 33


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ What percentage of the
Configuration part of implementation project adjustment effort went into the
(DACH, Oct. - Dec. 2008, n1 = 31, n2 = 54)
system configuration?
„ Customisation is generally composed
120
of two aspects: programming and
configuration. This type of adjustment
is generally tied to extensive
100 programming activities. During
configuration, the parameters
specified by the software are set up.
80 „ The picture for the configuration also
does not display any significant
differences for the medians of the two
60 groups.
„ This picture constitutes the
counterpart to the previous one.
40 Together, they respectively show the
distribution of the two values
programming and configuration.
20

0 L. Quartile Median U. Quartile


Oracle 27.50 50.00 77.50
Source: RAAD Oracle SAP SAP 50.00 50.00 65.63

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 34


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How large was the internal
Customizing related internal person-days customisation workload of the
(DACH, Oct. - Dec. 2008, n1 = 13, n2 = 13)
last project in overall person
days?
250
„ In both cases, the number of answers
is very small. In many cases, the
respondents were unable to give an
answer to this question, because the
200
project occurred too long ago, or
because such values did not exist.
„ The differences between both
150 medians are not significant.
„ A convincing piece of information
cannot be obtained due to the small
number of answers, the
100 representation has been included only
for the sake of completeness.

50

0 L. Quartile Median U. Quartile


Oracle 3.00 14.00 100.00
Source: RAAD Oracle SAP SAP 3.00 7.00 20.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 35


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high was the externally
Customizing related external person-days purchased customisation
(DACH, Oct. - Dec. 2008, n1 = 7, n2 = 21)
workload of the last project in
overall person days?
300
„ In both cases, the number of answers
is very small. In many cases, the
respondents were unable to give an
250 answer to this question, because the
project occurred too long ago, or
because such values did not exist. In
200 some cases, a fixed price was agreed
upon, so that the data could not be
broken down into person days.
150 „ The differences between both
medians are not significant here
either.
100 „ A convincing piece of information
cannot be obtained due to the small
number of answers, the
representation has been included only
50
for the sake of completeness.

0 L. Quartile Median U. Quartile


Oracle 1.00 10.00 125.00
Source: RAAD Oracle SAP SAP 0.00 0.00 3.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 36


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high was the average daily
Average daily rate for consultants rate for a consultant?
(DACH, Oct. - Dec. 2008, n1 = 24, n2 = 39)
„ The average daily rate for consultants
for Oracle customers amounts to up to
2500
1,100 Euros in 50% of the cases. For
SAP customers, it amounts to almost
exactly the same, with 1,163 Euros.
However, the difference of these
2000
medians is not significant.

1500

1000

500

0 L. Quartile Median U. Quartile


Oracle 975 1100 1368
Source: RAAD Oracle SAP SAP 1000 1163 1309

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 37


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high was the maximum daily
Maximum daily rate for consultants rate for a consultant?
(DACH, Oct. - Dec. 2008, n1 = 10, n2 = 19)
„ The medians for the maximum daily
rate for a consultant are only a little
2500
higher than the average daily rates for
consultants.
„ There is no significant difference
2000 between the two customer groups.

1500

1000

500

0 L. Quartile Median U. Quartile


Oracle 1306 1450 1650
Source: RAAD Oracle SAP SAP 1165 1290 1493

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 38


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high was the lowest daily
Minimum daily rate for consultants rate for a consultant?
(DACH, Oct. - Dec. 2008, n1 = 6, n2 = 12)
„ Equivalently, the median for the
minimum daily rate for consultants is
1600
not far below the average.
„ However, the values tend to spread
1400 more for Oracle. On the whole, no
significant difference is notable here
1200 either.

1000

800

600

400

200

0 L. Quartile Median U. Quartile


Oracle 575 850 1218
Source: RAAD Oracle SAP SAP 800 1000 1040

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 39


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many days have been
Project related test days needed for testing during the last
(DACH, Oct. - Dec. 2008, n1 = 41, n2 = 54)
major project?
„ Test days describe the period for tests
600
conducted for the final approval
before the system goes live.
„ For testing during the last major
500
project, 50% of the Oracle customers
needed up to 14 days, 50% of the
SAP customers needed up to 10 days.
400 These values do not differ
significantly.
„ With regard to Oracle, however, there
300 are considerable upward deviances.

200

100

0 L. Quartile Median U. Quartile


Oracle 2.00 14.00 60.00
Source: RAAD Oracle SAP SAP 3.25 10.00 20.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 40


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
Reference projects
„ The answers of the IT managers referred to the last major project of the company: New implementation,
migration or release change.
„ In about 80 percent of the responses, the last project performed was a release change, regardless of the
supplier.
„ Most projects were performed within the last two years.

Number of release changes


„ Cost advantages arising from a lower average number of release changes are provided by neither supplier.
The number of release changes performed per year since the introduction of the respective systems does
not differ significantly for Oracle or SAP customers.

Project duration and effort


„ According to the existing data, both the project duration and workload (internal/external person days) do not
differ regarding Oracle or SAP customers. The workload in internal person days is distinctly higher for SAP
customers. However, the number of responses detailing internal and external person days is too small for
statistically sound statements. For that, additional data definitely has to be gathered.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 41


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
Customisation duration and workload
„ Customizing takes significantly longer for Oracle customers than for SAP customers. Due to the lack of data
regarding internal and external person days expended for customisation, it could not be clarified whether the
workload as well is greater for Oracle than for SAP customisations. The reason why Oracle customisation
projects take longer could also not be determined. Additional inquiries are necessary here.

„ Configuration and Programming both have a major influence on Customizing duration and workload. In this
respect, no difference between Oracle and SAP customers can be determined, which implies that the overall
customisation effort could be similar in both cases. However, this assumption has to be verified by further
examination.

Daily rates for external consultants


„ The daily rates for Oracle and SAP consultants are similar.

Number of test days


„ Almost the same number of test days is employed in both groups.

Future studies
„ It is noticeable in this chapter, that the Oracle distributions in general show a higher spread. This could imply
that SAP release changes take place in a more standardized manner when compared to Oracle release
changes (Most of the responses referred to release changes). This issue might be traced back to Oracle’s
wider product portfolio due to acquired software providers. This hypothesis, however, has to be confirmed
by additional studies.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 42


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 43


Cost Structure Benchmarking – Oracle vs. SAP Apps.
Introduction

Support, Maintenance, Operation – Chapter 4

Support, Maintenance, Operation – Chapter 4


Number of IT Employees
Software Vendor-Specific IT Employees
Number of IT Employees for Operation
Number of Employees for Level 1 Support
Number of Employees in Application Development
External Consultant Days for Application Development

„ The largest percentage of the total costs for ERP systems, estimated at 60%, is taken up by support,
maintenance and operation of the software.

„ A fundamental and easily inquired cost influencing factor is the number of employees respectively
responsible for operation, support and additional application development (adjusting the system after it has
entered productive operation).

„ In order not to neglect general structural differences between Oracle and SAP users, the total number of IT
employees was also inquired.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 44


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many full time employees
IT staff overall (FTEs) does the IT of your
(DACH, Oct. - Dec. 2008, n1 = 76, n2 = 115)
company have?
„ A total of 50% of the questioned
2500
Oracle customers stated having up to
20 full time positions in the IT. The
average in this group even is much
greater, however this is primarily
2000
caused by a number of extreme
deviances (companies with strong IT
affinity, like, for instance, IT service
1500
providers).
„ The values for SAP customers are
slightly lower (median at 11 FTE).
„ However, no significant difference can
1000 be ascertained between the two
groups.

500

0 L. Quartile Median U. Quartile


Oracle 5.00 20.00 100.00
Source: RAAD Oracle SAP SAP 5.50 11.00 50.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 45


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many full time employees
IT staff per employee (FTEs) does the IT of your
(DACH, Oct. - Dec. 2008, n1 = 69, n2 = 115)
company have per employee?
„ The number of FTEs in the IT in
100%
proportion to the whole staff of a
company amounts to 2.1% for 50% of
90%
the Oracle customers and to 1.3% for
SAP customers. The number of IT
80%
employees in proportion to the whole
staff is significantly higher for Oracle
70%
customers than for SAP customers.
60% „ This difference is so far not
substantiated by the use of Oracle or
50% SAP. It remains to be established
whether the companies have different
40% IT strategies (homogenous vs. best of
breed?) that justify the difference.
30% „ The deviances in the case of Oracle
customers result from the participation
20% of large IT providers.

10%

0% L. Quartile Median U. Quartile


Oracle 0.7% 2.1% 6.7%
Source: RAAD Oracle SAP SAP 0.5% 1.3% 2.8%
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 46


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many FTEs in your company
IT staff associated to software vendor are responsible for Oracle or SAP?
(DACH, Oct. - Dec. 2008, n1 = 66, n2 = 118)
„ Oracle- and SAP customers employ
approximately the same number of
140
employees responsible for Oracle or
SAP topics in their IT department. The
120 groups do not differ significantly.
„ 50% of the Oracle customers occupy
up to three employees with the Oracle
100 system, for SAP customers this
number amounts to up to 4
employees.
80
„ There are some considerable
deviances in both groups.
60

40

20

0 L. Quartile Median U. Quartile


Oracle 2.00 3.00 8.00
Source: RAAD Oracle SAP SAP 1.50 4.00 8.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 47


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Application staff for daily operational, „ How many FTEs (including
external consultants) are involved
maintenance and support in the daily operation of the
(DACH, Oct. - Dec. 2008, n1 = 61, n2 = 106) system (basic operation,
70 maintenance, support) in your
company?
60
„ For operating their respective system,
Oracle and SAP customers have set
aside the same number of employees.
50 The values for both groups do not
differ significantly.
„ For Oracle, 50% of the customers
40 have up to three employees, for SAP,
this is up to two employees.
30

20

10

0 L. Quartile Median U. Quartile


Oracle 1.75 3.00 5.00
Source: RAAD Oracle SAP SAP 1.00 2.00 4.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 48


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many FTEs (incl. external
Staff for 1. level support consultants) are involved in the
(DACH, Oct. - Dec. 2008, n1 = 54, n2 = 106)
Level 1 Support?
„ Oracle and SAP customers have a very
30
similar number of employees in the
Level 1 Support.
„ For 50% of the Oracle customers, up
25
to two employees are responsible for
Level 1 Support, while 2.25 are
responsible for SAP customers.
20 „ In both groups, 75% of the companies
have up to 5 employees available for
the IT Support for their SAP or Oracle
15 installation.

10

0 L. Quartile Median U. Quartile


Oracle 1.00 2.00 5.00
Source: RAAD Oracle SAP SAP 1.00 2.25 5.38

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 49


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many end users are allowed
No. of end user contacting software vendor support to directly contact the Support of
(DACH, Oct. - Dec. 2008, n1 = 65, n2 = 112)
the software vendor?
„ SAP in particular encourages the
500
creation of Competence Centres in the
company and requires these to
450
conduct the first contact with the end
user. This is obvious in the small
400
number of end users allowed to
directly contact the support of the
350
software vendor.
300 „ Regarding SAP customers, in half of
the companies, no end user is allowed
250 to directly contact support; In the
case of Oracle customers, up to two
200 end users are allowed.

150

100

50

0 L. Quartile Median U. Quartile


Oracle 0.00 2.00 4.00
Source: RAAD Oracle SAP SAP 0.00 0.00 4.00
* significant difference between Oracle and SAP (α = 0,05)

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 50


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ On average, how many days a
System failure year in sum does your system go
(DACH, Oct. - Dec. 2008, n1 = 66, n2 = 124)
down (incl. regular maintenance
and failure cases)?
25
„ System failure is an important
criterion regarding the indirect costs.
High downtimes rapidly sum up to a
long work stoppages and can
20
therefore become expensive. The
amount of downtime costs however
depends on the industry in question.
15 „ Both groups show identical
downtimes. The median amounted to
half a day per year for SAP, and one
day per year for Oracle customers.
10 This value also marks the limit of the
upper quartile, so, for 75% of the
Oracle customers, the system stands
still for up to one day per year.
5 Deviances go up to 20 days. For SAP,
the upper quartile amounts to 2 days.

0 L. Quartile Median U. Quartile


Oracle 0.00 1.00 1.00
Source: RAAD Oracle SAP SAP 0.00 0.50 2.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 51


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
Internal application development department „ Does your company have its own
Oracle or SAP application
(DACH, Oct. - Dec. 2008, n1 = 81, n2 = 122) development?
„ In both groups, 40% and more have
an existing and continuous application
57%
development for their respective
system, only 2% in each group
No internal application development
implement this only in association with
58% a project.
„ A large majority in both customer
groups, however, does not have its
2%
own application development and has
to obtain these services externally.
Project associated application development

2%

42%

Internal application development

40% SAP
Oracle

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Source: RAAD

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 52


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How many FTEs are employed in
Staff for application development application development?
(DACH, Oct. - Dec. 2008, n1 = 25, n2 = 47)
„ The number of FTEs in application
development does not differ between
45
both user groups.
„ If the respective application
40
development is operated internally,
Oracle customers, in 50% of the
35 cases, employ up to 3 full time
employees; For SAP customers, this
30 value amounts to 4.5 FTE.
„ The values do not significantly differ
25 from each other, but they clearly
spread within their groups. Again, this
20 reflects the IT affinity of the
companies in question. Thus, 5
15 percent employ more than 37 FTEs
(Oracle) or even more than 43 FTEs
10
(SAP).

0 L. Quartile Median U. Quartile


Oracle 2.00 3.00 6.42
Source: RAAD Oracle SAP SAP 2.20 4.50 10.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 53


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
External consulting for vendor „ On average, how many external
consultant days do you purchase
specific application development for application development
(DACH, Oct. - Dec. 2008, n1 = 14, n2 = 32) (customisation / configuration)?
30,00
„ Overall, only few Oracle users were
able to even offer an answer to this
question, so no statistical difference
25,00 could be ascertained here.
„ 50% of the Oracle customers
purchasing external application
20,00 services utilize up to 0.19 person
years or 45.6 days. The remaining
companies purchase more days.
15,00 „ In case of SAP customers, this value is
a bit higher, with 0.315 person years
or 75.6 person days. In this group,
10,00 however, distinctly higher deviant
values were given (up to 33 person
years).
5,00

0,00 L. Quartile Median U. Quartile


Oracle 0.00 0.19 0.88
Source: RAAD Oracle SAP SAP 0.00 0.32 1.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 54


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
Vendor-independent number of employees in the IT department
„ Per company, Oracle and SAP customers employ a similar number of employees in their IT departments.
Regarding the relation to the total number of a company’s employees, Oracle customers have considerably
more IT employees than SAP customers. It remains to be ascertained whether Oracle customers follow a
different IT strategy than SAP customers explaining this difference.

Vendor-specific number of employees in the IT department


„ For the number of vendor-specific employees in the respective IT department, neither an absolute, nor a
relative difference can be ascertained between Oracle and SAP customers.

Number of employees for System operation and Level 1 Support


„ The number of employees for system operation and Level 1 Support does not differ between Oracle and SAP
customers.

Number of vendor-specific system failures


„ The number of vendor-specific system failures does not differ between Oracle and SAP customers.

Number of employees for vendor-specific application development


„ The number of employees for vendor-specific application development does not differ between Oracle and
SAP customers. The relative proportion of companies with their own application development is almost
identical in both compared groups.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 55


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
Number of externally purchased consultant years for application development
„ The number of externally purchased consultant years for application development does not differ
significantly between Oracle and SAP customers. However, the number of responses from Oracle customers
is too low for a solid conclusion. Additional inquiries will are needed to clarify this.

Future studies
„ Due to the fact that no significant differences could be ascertained regarding the cost influencing values
queried, future studies will have to take into account the number and scale of, for instance, application
development projects. This would produce relations possibly able to ascertain whether IT departments which
are presently classified as having the same size work with different efficiency.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 56


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 57


Cost Structure Benchmarking – Oracle vs. SAP Apps.

IT-Budgets – Chapter 5
„ The IT budget is a factor strongly influenced by the decision for a particular ERP system, but also setting the
frame for this decision. The absolute size of the IT budget is only of limited significance on its own, at least
when comparing companies of different size. Accordingly, the weight the IT carries within its particular
company more obviously manifests in the percentage of the company’s total revenues assigned to the IT
budget. Both values therefore were collected and compared here.

„ In general, we we presume that the IT budget constitutes a percentage of ca. 3-5% of the revenues. This
value fluctuates highly between industries, depending on the industry’s affinity for IT utilization (e.g.:
Banking = high IT usage, construction companies = lower IT usage).

„ With the optimisation of the IT environment, more leeway for additional innovation can be created in the
budget. In this respect, an optimised ERP environment does not have to reflect solely in the size of the IT
budget. This is the reason, why the query also included the percentage of the budget assigned to the
respective SAP or Oracle system, and the absolute size of this budget.

„ Basing on these values, an overall view of the position and cost value the IT has within the company can be
obtained, and which position the respective SAP or Oracle system occupies in this structure.

„ The budget is always a very sensitive piece of information, which is generally only reluctantly given to
outsiders. Accordingly, the number of responses here decrease significantly.

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 58


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high in total is your IT
IT budget budget per year?
(DACH, Oct. - Dec. 2008, n1 = 19, n2 = 30)
„ No significant difference can be
ascertained between Oracle and SAP
1000000000
customers regarding the absolute size
of the companies’ IT budget.
900000000
„ Accordingly, the companies in both
800000000 groups provide their IT departments
with similar funds, which can be
700000000 allocated by the persons responsible
for the IT department.
600000000 „ However, due to the sensitivity of the
data, the number of responses is very
500000000 low, limiting their significance.
„ 50% of the answers for Oracle
400000000 amounted between 1.2 and 30 Mil.
Euros and for SAP between 1.7 and 16
300000000 Mil. Euros. An outlier provides for the
high upper whisker for Oracle.
200000000

100000000

0 L. Quartile Median U. Quartile


Oracle 1,200,000 4,800,000 30,000,000
Source: RAAD Oracle SAP SAP 1,766,336 6,075,000 15,675,000

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 59


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is your IT budget in
IT budget as percent of revenues percent of the revenue of your
(DACH, Oct. - Dec. 2008, n1 = 20, n2 = 29)
company?
„ A comparison variable which is mostly
12
independent from the size of the
company is the proportion of the IT
budget in relation to the revenue.
10 However, even after normalizing the
IT budget by revenue, no differences
can be ascertained between both
8 groups.
„ The fluctuations within the groups
could be mainly caused by industry
6 affiliation. For 50% of the Oracle
customers, the values lie between 1%
and 4% of the revenue (outlier at
4
11%). For SAP customers they lie
between 1% and 2%.

0 L. Quartile Median U. Quartile


Oracle 1.00 1.70 3.50
Source: RAAD Oracle SAP SAP 1.10 1.68 2.00

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 60


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the Oracle,
IT budget associated to ERP vendor respectively SAP budget?
(DACH, Oct. - Dec. 2008, n1 = 11, n2 = 15)
„ The proportion of the IT budget which
can be assigned to Oracle or SAP
60000000
respectively is represented here in
absolute values. Here too, the low
number of responses point out that
50000000 this information is only reluctantly
provided to outsiders due to its
sensitive nature.
40000000 „ Due to the extremely low response
rate, no significant difference between
the two groups can be ascertained.
30000000 Whether Oracle or SAP customers
provide more funds as budget for their
respective vendor therefore cannot be
20000000
answered.

10000000

0 L. Quartile Median U. Quartile


Oracle 210,000 1,000,000 2,704,500
Source: RAAD Oracle SAP SAP 278,012 800,000 2,434,455

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 61


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Results
„ How high is the respective Oracle
Budget for ERP system as percent of overall IT Budget or SAP percentage in your IT
(DACH, Oct. - Dec. 2008, n1 = 14, n2 = 18)
budget?
„ Regarding the proportion of the SAP
70
or Oracle budget, there were also not
nearly enough companies responding
60 for statistically sound conclusions. On
the whole, no significant difference
can be determined between the two
50 groups.
„ The budget proportion will presumably
be higher for SAP customers than for
40 Oracle customers. User penetration is
almost three times greater for SAP
customers than for Oracle customers,
30
probably affecting budget allocation.
This hypothesis has to be verified in
20 additional studies. If it were to be
disproved, this would mean that more
users can be supplied with a similar
10 budget proportion.

0 L. Quartile Median U. Quartile


Oracle 4.26 10.00 26.43
Source: RAAD Oracle SAP SAP 2.98 20.00 32.31

© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 62


Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
IT-Budgets
„ No difference could be ascertained regarding the IT budgets between Oracle and SAP customers.
„ One reason is, that the number of answers is insufficient for establishing clear differences.
„ A difference in the proportion of the budget to the revenue cannot be observed either.
„ The answers display particularly high fluctuations.

Proportion of Oracle or SAP budget to total IT-Budget


„ The comparison of the normalized values for license expenses per user and license expenses per employee
results in no significant difference between Oracle and SAP customers.
„ The question, whether Oracle or SAP customers provide more funds as budget for their respective vendor
therefore cannot be answered.

Future studies
„ The sample available for this study was not large enough to conclusively provide a differentiation between
the essential variables compared, the IT budget and the Oracle and SAP budgets, respectively. The budget
proportion will presumably be higher for SAP customers than for Oracle customers. User penetration is
almost three times greater for SAP customers than for Oracle customers, probably affecting budget
allocation. This hypothesis has to be verified in additional studies. If it were to be disproved, this would
mean that more users can be supplied with a similar budget proportion.

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Introduction

Software Costs

Implementation Costs

Support, Maintenance, Operation

IT Budgets

Conclusion

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
The cost types and cost influencing variables for Oracle and SAP customers examined in this study do not differ in most of the
cost structures. Basing on simple cost types and cost influencing variables, an attempt has been made to establish with which
vendor, if any, IT could be realized more efficiently. The basic condition for the comparison was that the queried customer
groups of the respective vendors were as similar as possible regarding size, industry and corporate affiliation. The groups
were also very similar regarding the examined projects – generally release changes – and the structure of the IT organisation.

Software costs
„ An expected difference was ascertained regarding maintenance rates. However, it has to be taken into consideration that new
SAP customers also have to pay a standard maintenance rate of 22%. The significant difference is thus only valid for existing
customers. For the most important comparison variable, the license costs per user, no difference could be ascertained
between the groups, even though SAP customers have significantly more license expenses per company. However, the
number of licensed users is also higher, when compared to Oracle customers. On the whole, some results are based on very
few answers. Additional data has to be collected here in future studies, in order to obtain more precise answers.

Implementation costs
„ The investigated cost influencing variables for implementation costs also show no significant differences between the user
groups, although the analyzed medians clearly differ from each other in some cases. This resulted partly from the wide spread
within the respective user groups, but also from very few responses to a number of questions, especially regarding the
internal and external person days employed. The result, that Customisation projects take significantly longer for Oracle
customers was therefore unexpected. An explanation could not be derived from the existing data, and would require
additional investigations.

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Conclusion
Support, Maintenance, Operation
„ Most of the software costs incur for support, maintenance and operation. The results for both vendors are very near to each
other in these regards. The major cost influencing variables, like the number of employees for, respectively, support,
maintenance and operation, and application development do not differ, but are very much alike. A difference becomes visible
only regarding the purchase of external services for application development. Oracle displays a lower median here. However,
due to the relatively few responses, this is not significant compared with the SAP group. In future studies, more detailed
investigations regarding the costs for support, maintenance and operation will have to be performed in order to to work out
the differences between Oracle and SAP.

IT-Budgets
„ The IT budgets as a global yardstick for comparing the expenses of companies both in total and as regards a specific vendor
would generally be, in spite of different definitions, an appropiate approximate value in order to determine: Are more funds
spent on one vendor in comparison to the other? This could not be confirmed, because only a few companies allowed insight
into their budgets and budget distribution. At least the tendency could be established that SAP customers allocate a larger
share of their budget to SAP than Oracle customers do for Oracle applications. This will surely remain an exciting issue in
future.

Prospect
„ In conclusion, it can be established that with this study, first results were obtained for directly comparing costs between
Oracle and SAP by interviewing their respective customers. This however, can only be the first corner stone for additional
studies, to ascertain in more detail where the relative strengths or weaknesses of the respective software vendors lie.
Numerous openings were determined in this study. In future, besides asking “How much does this cost?”, it should also be
asked “What do Oracle and SAP bring for their respective customers?”. Perhaps, such an investigation should start with the
question: “Does the success of a company correlate with its choice of software vendor?”

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Appendix

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Definitions
Visualisation
A variation of the Box Plots was chosen
Licences overall for the visualisation, because they offer a
(DACH, Oct. - Dec. 2008, n1 = 29, n2 = 27)
97,5% Quartile
quick-to-grasp impression of the data
distribution. The median is drawn as the
4500000
location parameter. In contrast to the
4000000 mathematical average, the median is
robust against outliers in the distributions.
3500000 Due to the fact, that many outliers can be
3000000
found, the mathematical average was
abandoned and only the median was
2500000 shown. For additional information
regarding Box Plots and median, see:
2000000
http://de.wikipedia.org/wiki/Boxplot
Upper Quartile(75%)
http://de.wikipedia.org/wiki/Median
1500000

1000000 With help of the Mann-Whitney-U-Test


we tested whether the distributions, and
Median (50%)
500000
thus the medians, significantly differ from
0
each other. Alpha = 0.05 was selected as
So urce: RAAD Oracle SAP significance level. For additional
Lower Quartile (25%) information regarding the test, see:
http://de.wikipedia.org/wiki/Mann-Whitney-U-Test
2,5% Quartile

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Legal notice

Copyrights:
© 2009 RAAD Research GmbH
All rights, including reproduction, duplication or utilisation, respectively communication of the
contents of the present document are reserved. No portion may be reproduced, handed down to
third parties, especially by using electronic systems, processed, duplicated or used for official
rendition in any form without the written consent of RAAD Research GmbH. We reserve the right to
update or modify the contents.

Exclusion:
The information contained in this study originates from sources pertained as reliable. The
information was processed with professional care. However, RAAD Research does not assume any
guarantee regarding the accuracy, integrity or adequacy. RAAD Research does not assume any
liability for errors, omissions or inadequacy in the information contained in this document, or for
interpretations of such. The responsibility for the selection and inspection of the material lies
exclusively with the reader. The Estimates expressed in this document can change at any time,
without prior notice.

Thanks:
Here we wish to thank the IT managers and the persons responsible for the budgets in the
companies, who have given us insight in their IT environment.

Trademarks:
The trademarks mentioned in this study belong to the respective owners.

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Cost Structure Benchmarking – Oracle vs. SAP Apps.

Cost Structure Benchmarking


Oracle vs. SAP Applications

RAAD Research GmbH


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© RAAD Research GmbH 2009 - Status: 01/28/2009 - Slide: 70

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