For the giant multinationals of the world, SAP continues to be the dominant ERP player. But once you move down a notch, the picture changes dramatically. Microsoft, once content to play second fiddle to SAP's ERP core, is quietly but steadily ramping up its Dynamics series with a uniform Dynamics package offering in the works for a 2008 release.
SAP's All-in-One product has many strong points, but so does Dynamics. On the flip side, either solution has its distinct weaknesses compared to the other guy. Which path is best for your company?
You be the judge -- here are two columns from prominent experts in their respective fields making the case for SAP All-in-One vs. MS Dynamics. These columns are posted simultaneously on SearchSAP.com and SearchSMB.com, and we invite you to send in your comments. Did the authors miss something? Do you have something to add? If you're a former SAP customer who decided to jump on the Dynamics bandwagon, we want to know why, and vice-versa.
One random contributor from SearchSAP.com and one random contributor from SearchSMB.com will receive a $100 Amazon.com gift certificate!
The case for All-in-One
By Axel Angeli
The case for Dynamics
By Joe Gulino
|Dynamics is good, but SAP is the wiser choice
Most big enterprises run SAP R/3 as their central ERP hub. This has enabled SAP AG to become the undisputed leader in the high-end ERP system market, and this is very likely to remain unchanged for many years to come. Therefore, the primary market for new license sales is well saturated. In their quest to obtain new revenues, the vendors of ERP systems – including SAP AG themselves – have repeatedly tried to attract the interest of the Small and Midsize Businesses (SMB) where there is still a high potential for deploying ERP software.
However, they find themselves in a very special market here. While big enterprises have widely standardized processes (or at least are working hard to achieve slim workflows within their organizations,) an SMB survives mainly from being flexible and the ability to do specialized work in niche areas. It is cumbersome and beyond the scope of this paper to discuss the real reasons why some large organization need weeks of administration and involvement to replace, for example, a machine that produces screws with one that does the same job with higher efficacy and better quality.
Agility is the Key Factor
Many of the software offers that an SMB can choose from are implementations that were originally designed to be used by a single company. The problem comes in that the software houses that originally did the job are now trying to market the development investments to a wider audience. Even then, these offers seldom become known to a wider audience. They have often been developed on proprietary runtime environments and implement sophisticated, yet very specialized, business logic that reflects all the peculiarities of the original user. They may as well be named "prototypes" and hardly sport sufficient runtime stability. Furthermore, their agility depends entirely on the skills and goodwill of the original developer.
There is no doubt that bringing the specialty know-how that has been accumulated over the years into a standardized ERP framework may be the answer to deliver substantial benefit to the software users with respect to reliability, life-time support and software quality. It is therefore a not so surprising move that the big players of ERP packages like Microsoft, SAP, Oracle, and IBM are trying to revamp their applications and are aiming them at the heart of the SMB market niches.
Open Source is Serious Competition
SAP and Microsoft Repack Their ERP
SAP takes its chances with a choice of two ERP solutions: SAP Business One for the very small businesses (up to 100 employees) and SAP All-in-One – a preconfigured R/3 – for the rest of us.
SAP All-in-One vs. AX
SAP All-In-One is essentially a preconfigured R/3 release that has been flavoured by one of the SAP distribution partners to meet the needs of a specific industry. Hence you find versions for Wholesales (from IBM), Food&Beverages (Deloitte), Automotive Suppliers and many others. It in fact implements SAP Best Practice recommendations as a pre-configured industry specific variant. It is evident that SAP is suitable and performant in larger enterprises as well. The question is rather whether giving a standardized business process solution an individual flavor is really flexible enough to match the needs of agility for SMBs.
Microsoft Dynamics AX was acquired by Navision before Microsoft took over command. The current release implements a "newer" three-tier architecture, that essentially means that it now runs managed and controllable code on a virtual machine, just like the ABAP engine. The base package can be customized in many aspects and a large number of variations are deployed by specialized partners. Microsoft leaves the adoption to customer needs completely up to the partners.
Principally both solutions are suitable and performant enough for larger enterprises as well. This is evident in the case of SAP, but holds true for AX as well.
All-in-One versus "Hub and Spoke"
That way SAP is trying to roll out its successful approach by providing a completely integrated package to the SMBs. As a consequence, SAP is best suited to those companies that have uniform business processes across their sites. This may be the case in mass manufacturers that produce products according to the same master blueprint in all sites with as little variations as possible.
Microsoft seeks its success through supporting disparate system installations, which is exactly what the new name "Dynamics" stands for. In order to make this vision transparent to the clients, Microsoft introduced the metaphor of "Hub and Spoke" technology. It pictures a central ERP residing as the hub of a wheel whilst still being connected to satellite systems through the spokes. Practically it means that one installs a central ERP system and more local installations are installed where they are needed. Both the hub and the satellites can be any ERP solution as long as they are able to exchange messages with each other. And this is certainly one of Microsoft's strengths. Through Windows technology it is extremely easy to build interfaces between arbitrary applications.
The initial idea was to have a well established, stable ERP hub like SAP and encourage bringing customized Dynamics satellites into the picture as subsidiaries or remote sites (like plants or sales organizations).
This philosophy is one answer to the demand of companies that have highly diversified business between the different sites. There is a growing number of SMBs that fulfill this characteristic. This can be seen in the traditionally diversified processes within the chemical industry as a result of the sell-out of SMBs to financial investors that tend to compile any specialized plants into one common holding.
The Hub and Spoke architecture prepares for a clever and efficient Service Oriented Architecture, and this will most certainly be more and more in demand in the near future. Albeit the regular change in name, SAP still has only one ERP offering which is R/3 in its kernel. There is still much difficulty in breaking this down to slim and efficient satellite applications. A dynamic and agile ERP infrastructure is essential for any SMB that find success in being able to act quickly on new demands.To put it frankly: Dynamics has achieved what Netweaver is destined to be!
The User Interface
Microsoft addresses this need through the substantial support of a wide variety of networked partners. Microsoft aims to encourage them to code their specific industry know-how into Axapta add-on solutions.
SAP is also aware that they are not capable of catering for software solutions for the specialized industries. They also bring partners onto the boat with the goal to deliver their know-how in the form of pre-configuration scenarios for SAP.
The SAP partner network had been growing over the last 12 years of R/3 success. Although the wide majority of SAP partners are companies in the range of 50-400 employees, it is mainly a playground for the very big. The highly specialized industries still need to find their partners themselves as SAP favors the financially potential partners like IBM. There is a high likelihood that a solution for nearly every sector exists but finding them can be a nightmare. Help from SAP AG is questionable as they need to press their partners through a rigorous certification procedure leading to a situation were many solutions are already their but not endorsed by SAP.
Platform and Reliability
Dynamics is a Windows deal. All components have been designed for Windows and are dependent on the operating system. In the case of AX there is, however, now a data and code abstraction layer that allows managed program execution. Theoretically this 3-tier technology would allow running AX on other operating systems. The Windows integration allows AX to concentrate on modeling business cases and reuse strong components. This is,for example, the case for the important area of reporting, where AX reuses the MS SQL reporting services.
In the case of Dynamics the three standard applications are actually built on Microsoft .NET. This allows for fair extensibility of the pre-coded modules, but one cannot really speak of a uniform development platform. NAV, AX and CRM are three independent applications that are based on their own respective runtime.
If it is clear from the beginning that the business can only be modeled by means of substantial extensions or enhancements of the standard package then there is much argument in favor of SAP. The reliability and the speed that developments can be prototyped, implemented, tested and deployed can easily save more money in project costs than the base All-in-One system cost initially. While the .NET environment is certainly not the worst framework for developments and it has a definitive appeal when it comes to distribution and adapter implementation, it would not weigh up to the advantages of the ABAP workbench and runtime.
A real problem for Dynamics is the lack of development resources. Although the programming language for AX is similar to C# there is still the need to build a community that both understands the core application and is able to write extensions.
At least both parties understand that they cannot reach customers. Although it is obvious that doing like most software vendors and advertise the products with a clear feature list and a price on a web site would be the most clever move, they decided to connect to their new markets through a partner network.
Who Wins the Race?
Axel Angeli, EAI Development Mentor and SAP Project Manager, Logos! GmbH
Axel has more than 20 years of experience in the industry as a developer, author, conference speaker and consultant. Speaking five languages and having learned about work and life style in many parts of the world, Axel now concentrates on management and troubleshooting of critical mission tasks as head and/or mentor of large, international development teams..
|Dynamics better overall choice than SAP AiO
When selecting an enterprise resource planning (ERP) solution, executive management should ask, "Do we really want to run our business using the same ERP package that most of our competitors use?" Most businesses have unique processes that help drive success over their competitors. Wouldn't the better choice be to select a product that gives an organization an edge over the competition?
Products like SAP AG's All-in-One require a business to change the very processes that contribute to its success to match the functionality of the software. For the routine processes within an organization, this technique allows it to get the most out of its ERP investment. When it comes to the unique business processes that give a company a competitive edge, this technique can be detrimental to the success of the business.
Unlike traditional and legacy products like SAP All-in-One, Microsoft Dynamics AX is designed to give companies the ability to quickly and cost-effectively configure and customize their business applications to support the unique needs of the business. This also allows companies to change their applications as the business grows and changes in order to maintain their competitive edge.
Dynamics AX has the industry's most advanced architecture and tools to enable companies to make the necessary customizations. These tools provide companies with complete customization capabilities that enable the means to add new functionality and modify existing functionality quickly and with limited coding. Dynamics AX also takes advantage of industry-standard Microsoft tools and technologies with which millions of developers are already familiar.
One of the biggest fears companies have about customizing their ERP applications is the increased cost of upgrading to new versions of the application. Dynamics AX uses a layered technology that gives the technical staff clear visibility to where these customizations reside. Advanced tools are provided to automate integrating the valuable customizations to a new version.
The flexibility and extensibility of Dynamics AX not only offer companies the means to support the current business needs, but they also give management comfort in knowing that as the business changes the ERP solution can change as well. Offering an affordable and adaptable solution provides greater value and enables customers to get a better return on their investment. In fact, Nucleus Research Inc. independently found that Microsoft Dynamics AX achieved a top score of 18 and a composite score of 4.2 higher than other solutions, including SAP.
Works the way your people work
Most employees who work for midmarket companies use Microsoft Outlook to read and respond to email, track scheduled appointments and organize contacts. How many of these employees have had formal training in Outlook? The answer is very few. Outlook is an intuitive tool that is easy to understand and use. How much would a company benefit if its ERP application was as intuitive as Outlook? Again, the answer is obvious.
Microsoft Dynamics AX has been designed to work like software that employees are very familiar with -- Microsoft Office. Dynamics AX also provides a seamless Microsoft user experience for handling both structured (Microsoft Dynamics) and unstructured (Microsoft Office) data. Microsoft has provided a seamless environment for accessing ERP data within the Office applications. This capability is not an additional product that needs to be purchased. It is inherent in the base Dynamics AX application.
One of the biggest reasons ERP implementations fail is the inability to get employees to adopt the system. The familiar user interface of Dynamics AX increases the user acceptance rate. The tight integration between Dynamics AX and Microsoft Office also helps increase the productivity of employees throughout your business in less time. Employees can take advantage of the innovations built into Dynamics AX to use the best tool for the task at hand. For employees, that means software that works the way they do. For the business, that can mean an accelerated return on your investment, and a business that's managed more smoothly, more effectively and more profitably.
Business partner vs. software vendor
When an SAP salesperson is sitting across the table from a potential customer, he or she is focused on one thing: selling that customer an SAP product. The implementation of that product is someone else's problem. The SAP salesperson receives no compensation for the professional services necessary to implement the software; therefore it is the last thing he or she is concerned about. A different firm is brought in to help the company implement its new SAP All-in-One software product, and the implementation firm takes no responsibility for what specific SAP products were purchased.
Conversely, when a company evaluates Microsoft Dynamics AX as an ERP solution it works with a certified Microsoft Dynamics AX Partner. This one partner company is responsible for both selling a customer the correct products to fit its business needs, and for the implementation and ongoing support of the system. These partners are domain experts in the customer's field of business, and have undergone rigorous training in the Dynamics AX applications and technology. Typically, they also have many customers who run their businesses on Dynamics AX.
Microsoft offers a larger and more robust service and solution provider ecosystem than SAP All-in-One. A 2005 study by Framingham, Mass.-based IDC titled "Worldwide Software Channel Program 2005 Vendor Profiles" favorably positions the Microsoft Partner Program as a leader among the top 25 software vendors worldwide. There are 1,300 solution and service providers available globally with deep skills and dedicated resources. This gives customers a greater choice when selecting a business partner that will take responsibility for the important initiative of implementing and supporting its ERP solution.
Ultimately it's about the best solution for your business
A new ERP solution can be a terrific tool to help support a company's success today and in the future. When selecting an ERP tool for your business, the most important element to remember is to select a tool that best supports your unique value proposition. As a business grows the value proposition can quite possibly change. It is just as important that your ERP tool has the flexibility to change as your business changes. If you agree with this philosophy, the clear choice for your business is Microsoft Dynamics AX.
Joe Gulino, ERP Practice Director, Green Beacon Solutions
Joe has over 20 years of experience building and running midmarket focused ERP consulting practices. With expertise in solving business problems through the use of technology, he has domain experience in several industries including manufacturing, distribution and professional services. Green Beacon focuses on solutions specifically for Industrial Equipment Manufacturers and Professional Service Firms.
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This was first published in September 2008