NetSuite and SAP have both developed widely used midmarket ERP systems. While NetSuite offers a single cloud-based ERP product, SAP has three distinct systems.
NetSuite
NetSuite is a business management system with a variety of modules that help businesses better manage their financials and operations and increase automation across the business. The resulting improvements help companies provide better customer experiences and boost employee productivity. Although accounting and financial reporting are at the heart of NetSuite’s system, it also has extensive capabilities for inventory management, order management, professional services automation (PSA), CRM, analytics, planning and budgeting, HR, and commerce. NetSuite puts critical business data from all of these business functions in one place, using dashboards and easy-to-use reporting tools to generate the insights you need.
From the beginning, NetSuite has been a multi-tenant cloud system deployed via the software-as-a-service (SaaS) model. This means all businesses running NetSuite receive automatic biannual upgrades as well as patches and security updates. All customers are always on the same version of the software. While companies can select the various modules they need and tailor the system to their needs through various customization tools, NetSuite offers only one core ERP Solution.
NetSuite vs. SAP: An Overview
NetSuite and SAP have both developed widely used midmarket ERP systems. While NetSuite offers a single cloud-based ERP product, SAP has three distinct systems.
NetSuite
NetSuite is a business management system with a variety of modules that help businesses better manage their financials and operations and increase automation across the business. The resulting improvements help companies provide better customer experiences and boost employee productivity. Although accounting and financial reporting are at the heart of NetSuite’s system, it also has extensive capabilities for inventory management, order management, professional services automation (PSA), CRM, analytics, planning and budgeting, HR, and commerce. NetSuite puts critical business data from all of these business functions in one place, using dashboards and easy-to-use reporting tools to generate the insights you need.
From the beginning, NetSuite has been a multi-tenant cloud system deployed via the software-as-a-service (SaaS) model. This means all businesses running NetSuite receive automatic biannual upgrades as well as patches and security updates. All customers are always on the same version of the software. While companies can select the various modules they need and tailor the system to their needs through various customization tools, NetSuite offers only one core ERP Solution.
SAP
SAP’s three systems for small and midmarket companies have each found traction with businesses in certain verticals or of a particular size. SAP S/4HANA and Business One can be deployed on-premises or via the cloud, while Business ByDesign is a cloud-only SaaS product.
All three ERP systems come with accounting and finance features and support inventory management, manufacturing, professional services, and human resources to varying degrees. Customers can connect these ERP platforms to other SAP solutions for expanded capabilities like analytics, human capital management (HCM), CRM, procurement, expense management, or ecommerce, but these are not akin to NetSuite modules because many are built on different codebases and require often-complex integrations. In some cases, businesses are forced to use complementary SAP software designed for larger businesses because there are no good alternatives.
Construction machinery manufacturer XCMG found the rigid design of its SAP system slowed the business. When XCMG entered new markets, it took several months to set those up in the system. It moved to a two-tier approach with NetSuite, speeding up setup and reports on various entities.
Product Maturity and History
Evan Goldberg and Oracle cofounder Larry Ellison started NetSuite in 1998 as the first-ever cloud software company. Originally called NetLedger, the company started as an accounting solution and steadily added new functionality to manage other aspects of a business. Eventually, it had a “suite” of products that spanned finance, sales, supply chain, and reporting, so NetLedger became NetSuite. NetSuite addressed a clear market need and grew into a successful company, going public in 2007 before Oracle acquired it for $9.3 billion in 2016.
Throughout its entire history, NetSuite has focused solely on one system that has always lived in the cloud. All development, sales, implementation, and support resources have always been dedicated to a single ERP offering. Today NetSuite has more than 40,000 customers in 217 countries and territories.
Five former IBM employees founded SAP in Germany in 1972 and it has since become one of the world’s largest software companies. SAP serves the full range of small businesses to large enterprises. SAP went public in 1988 and is currently traded on German and US exchanges.
The vendor has a long history of developing on-premises ERP and other core business systems. More recently, it has moved some of those systems to the cloud, but in most cases they were shifted to the cloud rather than rebuilt for cloud deployment. Unlike NetSuite, SAP has a history of reducing investment in and eventually sunsetting its product offerings. This creates uncertainty about the long-term future of its systems. For example, in late 2022, news broke that starting just four months later, SAP ByDesign customers would receive only legally required and critical security updates, putting those companies in a difficult spot.
NetSuite vs. SAP S/4HANA Cloud, Public Edition
SAP released S/4HANA in 2015 as its next-generation ERP system for enterprises but has since launched an effort to get more midmarket organizations to use the solution through its “Grow With SAP” initiative. There are four versions of S/4HANA, with two on-premises and two cloud options, after it cut a fifth cloud “extended edition”.
Midsize companies are most likely to look at S/4HANA Cloud, Public Edition, so we’ll focus on that specific version. Note that the public cloud edition has also had four different names in five years.
It’s critical to note that S/4HANA Cloud, Public Edition has limitations in both overall capabilities and customization options compared to the on-premises versions of the software, but some sales reps are not always transparent about the specific version they’re selling, simply calling it “S/4HANA Cloud” when it could be the cloud private edition, which is a hosted cloud rather than SaaS offering. The numerous versions of S/4HANA also pose the risk that you will select the wrong one and have to reimplement — consider the extended edition that is no longer available. Moving from one edition of S/4HANA to another is a major project akin to replacing it with any other new system.
Despite being on the market for several years, the public cloud edition of S/4HANA still has limited adoption and a small fraction of NetSuite’s 40,000 customers.
Functional Considerations
S/4HANA Cloud, Public Edition comes with a solid set of native capabilities for finance and other departments. However, S/4HANA public edition’s Group Reporting tool for financial consolidations and intercompany netting of transactions between subsidiaries may not fully satisfy your needs on its own. Group Reporting is based on legacy technology, and you may need additional applications to handle all of your use cases. Unlike NetSuite, SAP’s system does not come standard with CRM and analytics applications, either.
NetSuite has robust financial features and comes standard with financial consolidation and intercompany netting functionality. Nontechnical users can easily learn how to pull reports on data from across the business and customize dashboards with SuiteAnalytics. NetSuite also includes inventory management, order management, CRM, procurement, and expense management capabilities out of the box in most editions. It has optional modules for HCM, financial planning and budgeting, PSA, analytics, e-commerce, and more.
Database and Architecture Considerations
S/4HANA’s heritage is in SAP’s ECC (20 years old) and R/3 (30-plus years old) ERP solutions, with the newest system using a similar codebase but hosted on SAP’s HANA database. The public cloud edition has less functionality and customizability than other versions because it utilizes only a subset of the total S/4HANA codebase.
S/4HANA Cloud, Public Edition is a multi-tenant solution that runs in SAP’s own data centers. Beyond critical patches and fixes, the public cloud version of S/4HANA receives continuous features updates throughout the year in addition to two annual updates. While this sounds beneficial, it can mean your IT team spends a lot of time understanding and testing these updates to see how they impact your instance and what adjustments it needs to make.
NetSuite is also a multi-tenant cloud solution, with most customers now running on Oracle Cloud Infrastructure.
data centers and the rest on NetSuite owned and operated data centers. OCI offers best-in-class performance and is rolling out innovative features like Oracle Autonomous Database that will continue to increase performance. NetSuite has twice-per-year upgrades, as well, but customers can access the new version in a test environment before the release takes effect to familiarize themselves with any changes. Additionally, all NetSuite customizations and configurations carry forward with upgrades.
Platform and Integration Capabilities
In contrast with NetSuite’s modular design, S/4HANA Cloud, Public Edition is designed to connect with other SAP products like Ariba for procurement, SuccessFactors for HR, and SAP Analytics Cloud for deeper reporting. Integrating those products to the public cloud version of S/4HANA can require middleware along with consulting work to set up and maintain them.
NetSuite modules that add functionality do not require integrations because they were built for NetSuite on the same codebase. This means your staff sees just one user interface as they move between modules and logs in only once.
Customers can extend this version of S/4HANA with apps available through the SAP Store, but currently there are fewer than 200 apps marked as compatible with the public cloud edition, only a few of which carry official endorsement from SAP. This compares to nearly 650 SuiteApps available on SuiteApp.com
, all of which work with NetSuite ERP.
Configurations and Customizations
SAP partners play a primary role in configuring business processes and making other customizations in S/4HANA Cloud, Public Edition, which can quickly get expensive. But there’s an even bigger problem: Processes and features are highly standardized, and the system lacks the flexibility of NetSuite.
With S/4HANA Cloud, Public Edition, developers must use what SAP calls the Self-Service Configuration User Interface (SSCUI) to configure the software. SAP highlights its Business Technology Platform (BTP) as a way to extend the solution, but a partner must develop the application and integrate it with the system. Even then, there are limitations. Customers can use only SAP-approved APIs for integration with the public cloud version of S/4HANA. Additionally, existing SAP customers cannot apply any customizations from their previous system to this software.
NetSuite has 20-plus industry-specific packages built to address the needs of those industries and reduce the need for customization. But since every business is unique, the platform is designed to let business users and administrators configure and customize the platform as necessary. For example, NetSuite SuiteFlow gives customers a drag-and-drop, what you see is what you get (WYSIWYG) interface where they can build automation workflows around various record types, events, and rules.
Here’s an example that drives home the difference in how these systems approach configurability: Adding a custom field in a NetSuite customer record can be done by your employee in 10 to 15 minutes, while a similar change in S/4HANA public cloud could take a partner two or three weeks and bring a hefty fee.