Oracle, Microsoft, SAP, Workday Lead Cloud ERP Market: Gartner

From Oracle Fusion Cloud and Microsoft Dynamics 365 to Workday and Sage, here’s the leading cloud enterprise resource planning (ERP) systems in the world, according to Gartner’s 2023 Magic Quadrant.

Many of the world’s largest software companies are investing heavily in enterprise resource planning (ERP) systems as the market value increased to $44 billion in 2023.

Microsoft, Oracle, Workday and SAP are leading the way with leading software products such as Oracle Fusion Cloud and NetSuite; SAP S/4HANA Cloud and Business ByDesign; and Microsoft’s Dynamics 365.

In Gartner’s new 2023 Magic Quadrant for Cloud ERP, the IT research firm ranks the top nine ERP products in the market today for service-centric enterprises.

“No single vendor dominates the market, though for large organizations there are several vendors that account for the majority of new and existing solutions,” said Gartner in its cloud ERP Magic Quadrant report.

Cloud ERP Market 2023 Snapshot

By 2027, more than 50 percent of enterprises in service-centric industries will look for an ERP suite approach to meet their need for system-of-record capabilities, according to Gartner data.

The ERP market continues to represent a significant portion of the enterprise applications market. According to Gartner, worldwide ERP software revenue grew by 8 percent year over year to a market value of $44 billion in total software revenue.

“Service-centric organizations continue to move ERP platforms to the cloud,” Gartner said. “This is mainly due to the reduced complexity of order-to-cash and supply chains for service-centric organizations compared with product-centric.”

Gartner’s Cloud ERP Magic Quadrant

To make Gartner’s Magic Quadrant list, companies needed more than $75 million in annual revenue in production using their ERP applications, as well as at least 500 customers.

Gartner defines a cloud ERP solution as a suite that is sold as an integrated product that provides functionality around financial management system (FMS), order-to-cash (O2C), source-to-pay, human capital management or other administrative ERP functionality. The Magic Quadrant ranks vendors on their ability to execute and completeness of vision and places them in four categories: Niche Players (low on vision and execution), Visionaries (good vision but low execution), Challengers (good execution but low vision) and Leaders (excelling in both vision and execution).

CRN breaks down Gartner’s rankings of Microsoft, Oracle, SAP, Workday, Sage and Certinia, as well as the strengths and weaknesses of each ERP provider.

Leader: Oracle Fusion Cloud ERP

Oracle’s Fusion Cloud ERP is the gold standard for the market, according to Gartner’s report, winning both in vision and execution on the Magic Quadrant. Fusion Cloud ERP is a modular and configurable SaaS solution that offers extensive capabilities required by many service industries. The fully managed cloud solution runs either in Oracle data centers or as an Oracle Cloud@Customer tenant.

Strength: Fusion Cloud ERP has mature cloud financial management, people and third-party resource management, procurement and O2C capabilities. Oracle’s 2022 acquisition of Cerner boosted its ability to deliver ERP software in the healthcare market.

Weakness: Gartner said customers report that the price initially proposed for Fusion Cloud ERP can be high. Customers said they had to negotiate robustly to maintain discounts and manage pricing.

Leader: Workday

Workday won the silver medal for both execution and vision on Gartner’s Magic Quadrant for Cloud ERP for service-centric enterprises. Workday Enterprise Management Cloud is a fully native cloud solution that provides embedded industry-specific capabilities for select industries and offers extended capabilities primarily through partners. Workday continues to enhance its machine learning-driven capabilities and analytics for HR and financial management capabilities.

Strength: Workday Human Capital Management is one of the global leading HR solutions. The company has also implemented key extended planning and analysis capabilities within its Enterprise Management Cloud.

Weakness: Workday offers payroll localization in six countries, which is fewer than other major vendors. The company also currently targets a limited number of industries compared to others on this list.

Leader: SAP S/4HANA Cloud

SAP’s S/4HANA Cloud public edition ranks No. 3 for both execution and vision on Gartner’s Magic Quadrant. The fully managed SaaS cloud solution is sold both directly to customers and via partners. It has financial management, O2C, HR, indirect procurement and vendor management capabilities, while SAP is also adding sustainability features.

Strength: SAP provides service-centric enterprises with many avenues for procuring and managing third-party resources and assets. SAP S/4HANA Cloud public edition offers top notch finance features such as consolidation of multiple global entities, including integration with non-SAP systems.

Weakness: The offering’s native contract life cycle management capabilities are limited. SAP S/4HANA Cloud public edition has few customers in the healthcare, higher education and hospitality industries.

Challenger: Oracle NetSuite

Oracle’s NetSuite ranks No. 4 for execution and No. 5 for vision on Gartner’s Magic Quadrant. NetSuite is a comprehensive SaaS solution suite that runs exclusively in Oracle or NetSuite-owned data centers. Oracle has partnerships to expand NetSuite’s vertical-specific functionality in the areas of O2C, HR and procurement.

Strength: NetSuite’s presence extends across the world, while Oracle’s data center expansion and sales office presence has helped increase its business in Asia/Pacific and South America. NetSuite recently released workforce management, CPQ, data warehouse and analytics capabilities.

Weakness: Some planning model capabilities vital to service-centric industries are still missing in NetSuite, such as planning models for project financials and integrated workforce planning with third-party workers.

Visionary: Microsoft Dynamics 365

Microsoft’s Dynamics 365 ranks No. 4 for vision and No. 5 for execution on Gartner’s 2023 Cloud ERP report. Dynamics 365 is mainly a cloud SaaS solution hosted as a managed service by Microsoft and its partners. The software giant has enhanced Dynamics 365’s project task management support through ERP-embedded Microsoft Project functions, and has recently added enhanced AI and generative AI capabilities.

Strength: Dynamics 365 has out-of-the-box integrations with a rich set of Azure platform services, such as Microsoft Power BI, Power Apps and Dataverse. Gartner said Microsoft customers may view this integration as an attractive differentiator.

Weakness: Microsoft Dynamics 365 has major functional gaps in terms of payroll, recruiting, career management, workforce planning, and integrated HR service management. Gartner said the product is relatively untested in large enterprises.

Niche Player: SAP Business ByDesign

SAP’s Business ByDesign is a fully managed cloud solution that includes native capabilities for financial management and procurement applications, but often relies on partners’ solutions in other functional areas. Business ByDesign is starting to leverage enhanced integration with SAP’s Business Technology Platform (BTP) to supplement core ERP capabilities.

Strength: SAP’s HANA technology and BTP enables customers and partners to build unique capabilities required by their industry or region. Business ByDesign’s customers include a large number of small professional services firms that leverage its advanced project staffing, management and accounting capabilities.

Weakness: Although SAP provides many administrative and operational ERP capabilities, new industry add-ons and special solutions from partners will be built in BTP for consumption by customers—rather than building them into SAP Business ByDesign.

Niche Player: Microsoft (Dynamics 365 Business Central)

Microsoft’s Dynamics 365 Business Central is a fully managed cloud solution delivered from Microsoft data centers. The company is enhancing Business Central through embedded AI and generative AI capabilities. For HR and operational capabilities, it relies heavily on partner solutions available on the Microsoft AppSource store.

Strength: Business Central customer adoption levels are growing consistently. The offering is a good choice for customers looking for a robust solution for basic accounting requirements, supported by a wide range of Microsoft partners in many regions across the globe.

Weakness: Gartner said existing customers said Business Central’s native HR capabilities are still considered too simple and suitable only for small or low-complexity organizations seeking a lightweight system of record for HR.

Niche Player: Sage

Sage mainly has clients in North America but has an emerging presence in some European counties. The Sage Intacct cloud solution mainly focuses on financial management applications, which includes a planning solution, and is investing heavily in source-to-pay automation to broaden its offering. For other capabilities in many areas, the company relies on partner solutions.

Strength: Sage has a strong vision for how to bring new technology into finance processes by using AI to do continuous auditing to detect anomalies. Sage also offers native recruiting and learning capabilities with strong product accounting abilities.

Weakness: Sage has no native capabilities for benefits administration, career and succession management, and HR service management. The company has only a limited presence outside of North America.

Niche Player: Certinia (Formally FinancialForce)

Certinia has built on its strength in professional services automation by adding subscription and usage-based billing. Certinia offers a fully managed cloud SaaS solution that relies heavily on partner solutions for HR capabilities, though its financial modules are mainly internally developed. The company, which focused on project-based service organizations, changed its name from FinancialForce to Certinia in May 2023.

Strength: By using the Salesforce Platform, Certinia leverages platform services, such as Einstein Analytics, as well as research and development funding. Gartner said Salesforce customers may be able to take advantage of connected workflows between the two application sets.

Weakness: Certinia has no native HR capability, and it is suited only in conjunction with an HR system from a separate vendor. The company primarily focuses on Salesforce clients, which means there’s limited awareness beyond the Salesforce community.