Report:

Magic Quadrant for Cloud ERP for Service-Centric Enterprises

Top Vendor Products for Cloud ERP for Service-Centric Enterprises in 2024

• Microsoft (Dynamics 365)
• Oracle (Fusion Cloud ERP)
• SAP (S/4HANA Cloud)
• Workday

Cloud ERP for Service-Centric Enterprises Vendor Product Comparisons 2024

• Microsoft (Dynamics 365) - Leader
  

  Pros:

  • GenAI: Microsoft Dynamics 365 leads in delivering embedded GenAI capabilities through Copilot in Dynamics 365. These Copilot capabilities support business functions critical to service-centric organizations, including finance (i.e., business performance planning), project operations, HR, field service, procurement and commerce. In addition, Microsoft launched Copilot for Finance in preview for finance-specific automation and insight within Microsoft 365 apps such as Excel and Outlook.
  • Large-enterprise FMS capabilities: Microsoft's broad core financial management solution for midmarket and large organizations is well-integrated with Microsoft Dynamics 365 customer engagement applications, Microsoft Teams, Microsoft 365 and the Power Platform. AI-driven insights help finance teams identify trends, anomalies and opportunities for cost savings and revenue growth. New tools and features also support global regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), as well as various tax laws.
  • Microsoft Azure capabilities: With the Azure cloud platform's capabilities, Dynamics 365 has out-of-the-box integrations with a rich set of enterprise-class platform services, such as Microsoft Fabric, Microsoft Power BI, Power Apps and Dataverse. Azure can handle large volumes of data, which customers using Microsoft tools may view as an attractive differentiator.

  Cons:

  • Global and complex customer references: Global and complex enterprises report difficulty finding references for implementing Microsoft Dynamics 365 on a large scale. Microsoft plans capabilities to make the solution more attractive to these customers, including increased automation support for complex financial consolidations.
  • HR functionality: For HR capabilities, Microsoft remains relatively untested in the large-enterprise market by organizations of more than 1,000 employees. Microsoft Dynamics 365 has major functional gaps in payroll, career and succession management. In 2024, Microsoft did release a recruiting capability powered by Copilot, business performance planning for workforce planning, and Copilot in HR for service management.
  • Complex customization: Although Dynamics 365 offers rich customization capabilities, customers have told Gartner that leveraging them often requires advanced technical skills and deep platform knowledge. Although the Power Platform provides a low-code method to extend applications, those requiring substantial tailoring to fill functional gaps or to extend complex applications may need skilled developers or consultants to use these capabilities.


• Oracle (Fusion Cloud ERP) - Leader
  

  Pros:

  • Operational ERP: Oracle Fusion Cloud ERP continues to show maturity in multiple service-centric core functions, from cloud financial management to people and third-party resource management, project management, procurement, xP&A and order to cash (O2C) capabilities.
  • Technology platform: Oracle continues to provide strong application and data integration, extension development and AI-enabled capabilities through the Oracle Cloud Infrastructure (OCI)-based platform strategy.
  • Embedded AI capabilities: Oracle is embedding AI and GenAI in a wide range of use cases, from financial and HR capabilities to prompt-based user experience (UX). At this point, Oracle notes that those ERP-embedded features have no additional licensing costs for Fusion users, which may appeal to customers interested in launching ERP automation strategies.

  Cons:

  • Oracle ERP on-premises migration: In Gartner interactions with clients, on-premises Oracle ERP customers (e.g., PeopleSoft, EBS and JDEdwards) evaluating a migration to Oracle Fusion often report concern about gaps between it and their existing solutions. On-premises Oracle ERP customers evaluating Fusion Cloud ERP are encouraged to scrutinize the offering to ensure that functional parity exists across the depth and breadth of their requirements.
  • Global partner ecosystem: Although Oracle has a large network of partners delivering Oracle Fusion engagements worldwide, delivery quality consistency in a multiple country rollout is not always the same, even when global system integrators (SIs) lead the effort. That may be even more visible outside NA and Europe. Although this may result from the strength of global Oracle Cloud ERP customer demand, Gartner clients report that global partners particularly lack the same level of experience with Oracle Fusion in their teams worldwide.
  • Price: Gartner customers continue to report that the price initially proposed can be high, compared with other providers that may be under consideration. This is particularly true for midsize organizations.


• SAP (S/4HANA Cloud) - Leader
  

  Pros:

  • Modern technology portfolio: SAP S/4HANA Cloud Public Edition is part of a wide SAP technology portfolio that includes an associated cloud platform (SAP BTP) offering capabilities to deliver modern customization and integration.
  • AI and GenAI: SAP is moving forward with its AI capabilities strategy. Offerings such as Joule, alongside partnerships with other technology vendors (e.g., Microsoft), help customers envision how this may deliver value to those planning to leverage ERP-embedded AI.
  • Global partner support: SAP stands out with one of the most extensive implementation partner networks in the market. This supports its presence across multiple geographies and types of customers, enabling customers with a global footprint to consider this solution as a strong contender.

  Cons:

  • Cross-functional complexity: Service-centric enterprises looking to adopt a cross-functional ERP scope, including HR and Strategic Sourcing capabilities, may need to rely on stand-alone applications (e.g., SuccessFactors and Ariba). Although integrated and harmonized, they are not part of the core S/4HANA application. Although licensing access to these applications may be included as part of the commercial bundle, they come with the need to manage, at minimum, a different UX and associated integrations. This is an issue for some prospective buyers, especially midsize organizations.
  • Live customers in complex organizations: Gartner has observed that most live customers of the S/4HANA Public Edition are lower and midsize organizations. Larger global customers considering this solution should scrutinize it against their requirements to ensure that it can meet their needs.
  • Complex cost models: Customers looking to adopt embedded AI capabilities or SAP BTP features may be challenged to understand how their total cost of ownership (TCO) will be affected by the associated consumption of data and/or messages. This is a key concern for customers that anticipate relying heavily on AI-enabled capabilities or extensions created in SAP BTP.


• Workday - Leader
  

  Pros:

  • Unified data core: Workday offers a unified data core. It is fully harmonized across its ERP suite and enhances its built-in analytics and AI capabilities. This improves its ability to integrate its business functions by eliminating data silos and improving operational efficiency and decision making for users.
  • Advanced HR capabilities: Workday Human Capital Management is one of the leading HR solutions in the ERP market. Workday introduced a talent marketplace and Skills Cloud to better match employees with internal opportunities and enhance skills tracking and development. Workday also recently acquired HiredScore, further bolstering its product line with a comprehensive AI-powered talent acquisition and internal mobility solution.
  • Services CPQ: Workday's new services configure-price-quote (CPQ) solution integrates with its financial management system (FMS), HCM, PSA and planning capabilities, and it tightly integrates with Salesforce's CRM. The solution improves quoting, adds quote capability to project automation and captures resource demand.

  Cons:

  • Global reach and support: Workday's global reach and depth of expertise lags other leading vendors in this market, which is particularly critical for large global enterprises headquartered outside NA. Although it now has deployments worldwide, prospective buyers need to determine whether its resources are sufficient to meet their needs.
  • Financial close and consolidation: Workday recently introduced Workday Adaptive Planning and consolidation to meet the needs of the enterprise performance management (EPM) market. This new packaged offering unites Workday Adaptive Planning with substantial close and consolidation capabilities within Workday Financial Management. Prospective buyers should assess the newly packaged offering for advanced features they may require, such as the ability to manage complex multientity structures, versus other available third-party solutions.
  • Native recurring billing management: Although Workday offers some capabilities for managing recurring billing scenarios, it continues to rely on ecosystem partner solutions to provide more comprehensive solutions. It recently detailed plans to introduce a native solution strengthening needed capabilities. Prospective buyers should determine whether the current and/or newly packaged solution meets their requirements versus other available third-party solutions.


• Oracle (NetSuite) - Challenger
  

  Pros:

  • Global presence: Oracle continues to extend NetSuite's presence to all regions, using its own and Oracle's larger network of offices around the world to increase business in countries throughout EMEA; the APAC region, including Japan; and Latin America (LATAM).
  • 360-degree dashboards: Oracle continues to invest in 360-degree dashboards that bring together traditionally disparate data points to provide more comprehensive views of key business relationships. This feature makes reporting and insights readily available at the consolidated, subsidiary and detailed transactional level. NetSuite Analytics Warehouse applies ML algorithms to customer data to produce predictions, forecasts and classifications for data analysis and visualization.
  • Technology platform: NetSuite benefits from OCI, powered by Oracle's innovation and AI services. Benefits include enhanced performance, scalability, security and access to Oracle's broader suite of enterprise-grade cloud services, such as Oracle Autonomous Database, Analytics Cloud and Integration Cloud.

  Cons:

  • Extended planning and analysis: NetSuite functionality for modeling project financials and workforce planning with third-party workers requires customization to configure what is needed where an out-of-the-box application may fit a particular need without requiring customization.
  • Project resource management: Although NetSuite supports the ability to manage internal employee resources and availability, it remains unable to support the management of third-party workers. This limits its applicability for customers that require such capabilities. Organizations seeking to manage both internal and external HR will need to evaluate third-party solutions to fill this gap.
  • Product delivery schedules: Despite continuous development, NetSuite has lagged in areas such as GenAI. Although it plans an aggressive rollout aimed at addressing this in the future, prospective buyers evaluating the solution should scrutinize delivery schedules for innovative capabilities to align with their modernization strategies.


• Certinia - Niche Player
  

  Pros:

  • Strong customer-centric operations: Certinia's integration with Salesforce provides strong, customer-focused out-of-the box capabilities. This is particularly true with respect to process flows, reporting and dashboards; mapping financial records to sales opportunities; and guiding customers from selling to month-end financial close.
  • User community and customer service: Certinia offers engaging customer service and extensive support resources, including forums, webinars and training, and strong user community interactions available for guidance on more complex configuration or reporting. Gartner Peer Insights reviewers have praised its user community and customer service.
  • Intuitive native capabilities: Certinia recently added accounting playbooks that simplify the period and year-end close processes, and it also added the ability to create board books with contextual commentary. Customers, including reviewers in Gartner Peer Insights, report satisfaction with the comprehensive, out-of-the-box views of transactions in reporting and dashboards, with good low-code capabilities to customize them.

  Cons:

  • Partner dependency on HR capabilities: Certinia continues to lack native HR capabilities, which are available only through its partnership with ADP. Organizations looking for a comprehensive, service-centric ERP suite should consider additional third-party integrations.
  • Sustainability: Certinia doesn't offer out-of-the-box environmental, social and governance (ESG) capabilities and reporting. Instead, it provides customers with the flexibility to add additional data to supplier record tables, and to use this data to create ad hoc sustainability reporting or to define sourcing from suppliers with sustainable business practices.
  • Embedded AI capabilities: Certinia's overall GenAI efforts lag in the market, although it has embedded Salesforce Einstein Discovery into the ERP and introduced AI capabilities to support customers seeking actionable insights in forecasting and cash flow. For example, Certinia plans to add accounts payable (AP) automation by the middle of 2025, long after some top competitors will have already introduced the capability. Certinia was recently named an initial development partner for Salesforce AgentForce, which may help accelerate innovation in tangible use cases.


• Microsoft (Business Central) - Niche Player
  

  Pros:

  • Continuing market momentum: Business Central customer adoption levels are growing consistently, with Microsoft reporting adoption by 40,000 customers. Growth can be attributed to a combination of factors, including integration with other Microsoft products, its large ecosystem of value-added resellers (VARs) and independent software vendors (ISVs), broad global reach, and well-recognized Microsoft brand.
  • AI-enabled Copilot: Like other solutions in the Microsoft applications portfolio, Business Central has incorporated Copilot and AI-enabled capabilities in the suite. Compared with other solutions that target small or midsize businesses (SMBs), Business Central's AI roadmap vision looks above average. This includes currently available auto-reconciliation of bank statements, in-product analytics built with natural language, in-product guidance and data search with natural language.
  • Microsoft stack integration: Customers that are Microsoft-centric may benefit from Business Central integration with other Microsoft offerings, such as Microsoft 365, Power BI, Teams and Power Platform.

  Cons:

  • Migration from other Microsoft ERPs: Customers using Microsoft NAV or other SMB ERP solutions, such as GP or SL from Microsoft, have been told that Business Central was their natural modernization path. This is not necessarily the best approach for all scenarios. It depends on the level of customization and complexity.
  • Horizontal ERP strategy: The horizontal (as opposed to industry-vertical) approach of Business Central requires customers to consider AppSource as an essential element in fulfilling their particular business needs. The number of multiple offerings, some of them with apparent overlapping features, is a challenge, according to customer feedback.
  • HR functionality: HR capabilities are still considered too simple and are suitable only for small and/or low-complexity organizations seeking a lightweight systems of record for HR. Customers that want a comprehensive suite will need to rely on solutions that have prebuilt integrations with Business Central available in AppSource.


• Sage - Niche Player
  

  Pros:

  • Financial management: Sage is a strong financial management solution for midsize enterprises (MSEs), with solid multientity and multicountry global consolidation capabilities. New AP automation capabilities include AI-driven, multiline GL coding. Other enhancements include AP invoice matching with variance notifications extending to the line level, support for complex legal business structures, and the use of the Sage Network to automate and synchronize financial transactions and processes between businesses.
  • Support for project-driven organizations: Sage has introduced a Professional Services Automation solution that offers AI-powered project resource management. It includes a project intelligence dashboard that enables project managers, grant managers and administrators to track key performance indicators (KPIs).
  • Improved industry focus: Sage is gaining traction in the construction industry as the financial management component of Sage Construction Management. Likewise, it has improved its support for not-for-profit organizations by connecting operational and financial processes, adding fundraising via DonorPerfect, and new capabilities for grantmaking and donor-advised funds.

  Cons:

  • Concentration in NA: Sage has a limited presence outside NA, despite expanding into key English-speaking markets around the world, as well as France and Germany.
  • Incomplete procurement and HR strategy: Sage does not offer a complete procure to pay (P2P) solution. Rather, it depends on partners to fill the gap in delivering procurement as part of its core finance capabilities. It's the same with HR, where it doesn't offer capabilities for benefits administration, career and succession management, or HR service management.
  • Financial planning capabilities: Larger midsize businesses may find Sage Planning to be functionally limited. It is fully integrated with its core accounting solution and is sufficient for smaller organizations. Those requiring financial planning capabilities should perform due diligence to ensure that it supports the full range of their requirements.


• SAP (Business ByDesign) - Niche Player
  

  Pros:

  • Modern platform: SAP's S/4HANA technology and the availability of the SAP BTP enable ByDesign customers to leverage advanced analytics, including SAP Analytics Cloud; embrace modern, low-code customization and integration capabilities; and gain access to AI and ML services. They also enable partners to build unique capabilities designed for their industry or region.
  • Breadth of industry-specific solutions: MSE customers that want to go live quickly, without the need for process designing, typically appreciate the variety of prebuilt functionality and processes developed from SAP and its partners. These solutions are tailored to a variety of industry needs.
  • Service provider ecosystem: SAP Business ByDesign has established a large ecosystem of service providers that offer a range of industry knowledge to help customers with implementations.

  Cons:

  • Slowing product roadmap: SAP considers SAP ByDesign to be a mature, functionally complete product. As a result, it does not plan to deliver modern innovations, such as GenAI, directly to its core ERP. Instead, innovation will be delivered through integration with the SAP BTP and may require additional licensing charges for customers.
  • Service-industry partner add-ons: New industry add-ons and special solutions from partners will be built on SAP's BTP for consumption by customers. This is in addition to the option to embed capabilities to extend ByDesign scenarios with Cloud Applications Studio (SDK) in SAP Business ByDesign. Although SAP provides many of the administrative and operational ERP capabilities required by service-centric industries, customers may experience additional licensing fees for these add-ons and customer-specific solutions. They may also find that these add-ons aren't specifically tailored to the needs of MSEs, as were those created in the past specifically for the SAP Business ByDesign solution.
  • Articulated future strategy: SAP has been approaching existing customers and encouraging them to migrate over to SAP S/4HANA Public Cloud. Similarly, it has been approaching and encouraging partners to upskill toward GROW with SAP S/4HANA Cloud Public Edition. These often mixed and rephrased messages continue to fuel growing concerns and speculation about the future of SAP Business ByDesign.

Reference

• Gartner, Magic Quadrant for Cloud ERP for Service-Centric Enterprises, 4 November 2024, ID G00801744

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