SAP All-in-One vs. MS Dynamics

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 with the other guy. Which path is best for your company? And what can you expect in the years ahead? Will Microsoft's lower cost and ubiquitous presence (i.e., existing "beach heads") translate into market dominance, or will SAP continue its midmarket growth through focus on business values and technical finesse?

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.

The case for All-in-One

The case for Dynamics

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 -- have repeatedly tried to attract the interest of the small and midsized 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 orga...

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nizations), an SMB survives mainly from being flexible and having 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 organizations 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.

It is a fair observation that SMBs have short decision paths and are often willing to experiment instead of planning a process in the long run. In our increasingly automated world of networked computing, it is a real challenge for software implementers to deliver a development environment that reuses predefined processes whilst still allowing for the flexibility to adapt the software to new business processes as they arise.

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, lifetime support and software quality. It is therefore a not-so surprising move that the big players of ERP packages like Microsoft, SAP, Oracle Corp. and IBM are trying to revamp their applications and are aiming them at the heart of the SMB market niches.

The SMB market segment is already crowded with a high number of well-suited products. Companies like SAGE have come from the PC end and have successfully addressed the needs of many companies. This is particularly true for small businesses where these can be seen as a highly respectable solution. The biggest challengers in this sector most certainly come from the open source sector of the market. There are a growing number of open source ERP software products out there and they are particularly targeting the SMB sector. Solutions like Adempiere, Compiere and osCommerce are pretty popular and are showing a high degree of maturity. There are also a number of pseudo open source projects like SynERPy and AvERP that discredit themselves by reserving the right to any consulting services to a private club.

In this column we'll concentrate on the two giants -- SAP and Microsoft -- that address the markets from two diagonal starting points. While SAP stands firm on its undisputed leadership as the supplier of the most complete ERP system in the world, Microsoft exploits the fact that its products exist in nearly every organization already. On this note, Microsoft strongly touts that its software is simple to use and is a logical extension of already-existing office applications. Both giants come with similar promises while repacking some of their long existing solutions.

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.

The battle exists mainly between the fully grown solutions of SAP All-in-One and Microsoft Dynamics AX. Both solutions use a reliable three-tier application technology. Their designs, furthermore, allow for growth as the needs of the users increase, as well as the ability to use specialized add-ons easily.

SAP All-In-One is essentially a preconfigured R/3 release that has been flavored by one of the SAP distribution partners to meet the needs of a specific industry. Hence you find versions for wholesales (from IBM), food and beverages (Deloitte & Touche LLP), automotive suppliers and many others. It, in fact, implements SAP Best Practice recommendations as a preconfigured, industry-specific variant. It is evident that SAP is suitable and performs 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, which essentially means 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 perform strong enough for larger enterprises as well. This is evident in the case of SAP, but holds true for AX as well.

The name says it all: SAP All-in-One designates that SAP wants to deliver a complete and fully integrated ERP package. The solution should cover all aspects of the business without the need to ever have a third-party solution.

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 while 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 sellout 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. Despite 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 most compelling difference between the two is the appearance of their graphical user Interfaces. Dynamics is consequently designed on top of the Windows API and thus inherits the well-known and widely accepted look and feel. SAP All-in-One uses its proprietary SAPGUI that has its own unique look and feel. Dynamics looks fresh and attractive and navigating around it is easy for everybody familiar with applications like Microsoft Outlook. SAP All-in-One, on the contrary, looks like -- well, like SAPGUI. Douglas Adams once wrote: "It is no coincidence that an expression 'Pretty like an airport!' does not exist in any language." Surely, "Pretty like SAPGUI!" does not exist either. Beyond the look and feel, the way individual program components are controlled is pretty homogeneous within Dynamics, while every transaction within R/3 sports a high degree of individualism.

There is no ERP package even close to fulfilling the specific complex and varying needs of manufacturing companies. Have a look at the special chemical industries where there are hardly any two companies that produce the same product at the same time. This always requires the possibility to easily code add-ons and make modifications in the source code.

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 it is not capable of catering for software solutions for the specialized industries. It also brings partners onto the boat with the goal to deliver know-how in the form of preconfiguration 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 it needs to press its partners through a rigorous certification procedure leading to a situation where many solutions are already there but not endorsed by SAP.

One of the strengths of all SAP products is the independence of the hardware and the database. This is achieved through the unbelievable stability of the ABAP process engine. This provides managed program execution and full database abstraction. The downside of any virtual machine is an inherent incompatibility with special technologies, mainly external protocols and file formats.

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 three-tier technology would allow running AX on other operating systems. The Windows integration allows AX to concentrate on modeling business cases and reusing strong components. This is, for example, the case for the important area of reporting, where AX reuses the MS SQL reporting services.

The development environment of SAP is still legend. There is hardly anything that comes close to the stability of the ABAP runtime. Added to this, the change management systems of the ABAP Workbench and Transport Management System TMS within SAP are second to none. The programming language for SAP is ABAP. There are some SAP applications coded in Java, but they are not part of SAP All-in-One.

In the case of Dynamics, the three standard applications are actually built on Microsoft .NET. This allows for fair extensibility of the precoded 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 runtimes.

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.

Both parties have notorious difficulties in promoting their message to the customer. This becomes obvious if one tries to search real product information from the manufacturers. Neither Microsoft nor SAP delivers a clear brochure on its Web site that simply lists the features and content of the packaged solution. While sales to big enterprises mainly work through an obscure trust-building network of relationships, where show events and glamorous brochures play an important role, SMBs tick very differently. They have no money left to throw away, and time is their predominant asset. This inability to work with facts instead of glamour most likely frightens away more customers than SAP would like to admit.

At least both parties understand that they cannot reach customers. Although it is obvious that doing like most software vendors and advertising 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.

It is not easy to give a general recommendation for an SMB on which software to choose. The criterion for it needs to be the quality and degree of implementation of the individual industry sector. The big appeal of Dynamics is its highly decentralized architecture that makes it an ideal candidate for a future SOA architecture. But the decisive factor for SMB is apart from the costs the availability of resources that can extend and adapt the application to the business needs. There is a clear advantage for SAP in this respect because there is SAP development know-how all over. Microsoft will only have a chance if it opens up its software to development communities through free community editions and open source. If Microsoft makes this move it will bring SAP in big trouble when it comes to SMB markets. But for now, SAP is still the wiser choice.

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.

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.

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.

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.


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