Cultural Differences in Companies
The Globalization of Enterprise Software:
Comparing Oracle and SAP and Their Challenges
One of the most mercurial and fast-changing areas of technology today is enterprise software. Systems that to better serve their customers while orchestrating complex supply chains continue to rapidly evolve as Internet-based technologies and usability improve (Rettig, 2007). The approaches companies take however to those challenges differ drastically due to ethical, legal, social and political differences in their location and formation. Oracle, founded in Redwood City, California and SAP, founded in Walldorf, Germany exemplify these stark differences. The intent of this paper is to complete a comparative analysis of these two firms, analyzing the ethical, legal, social and political differences of each including an assessment of how these differences impact their decision-making processes as well. Recommendations and conclusions are included as well. There are also many potential frameworks to use for measuring the differences in cultures, yet the most precise and empirically proven is the Hofstede Model of Cultural Dimensions (Hofstede, 1993). This model and its five dimensions will be used for comparing the cultures of Germany and the United States.
Comparative Analysis of Oracle and SAP
For any company competing in the enterprise software industry, the intensity of effort to continually deliver innovative products, platforms and services is relentless. The ability of enterprise software vendors to innovate however is more defined by their cultures internally and how well the manage the myriad of ethical, legal, social and political factors both within their home nations and across the many nations they also compete in (Engelstatter, 2012). Oracle’s growth trajectory and future is defined by its continual reliance on maintenance fees and license revenues, which has forced the company over time to create a comprehensive legal department. In addition to the legality of enterprise software, the ethicacy of how pricing and maintenance fees are defined is also one of Oracle’s key strengths (Rettig, 2007). These factors taken together have created a culture of exceptional competitive intensity within Oracle, which often uses Machiavellian political strategies internally and with government agencies to ensure their dominance in key markets (Engelstatter, 2012). Oracle’s culture reflects a very competitive mindset and its interactions with customers, stakeholders and the broader community also validate this point. Using the Hofstede Model for Cultural Dimensions shown in Figure 1, the Individuality (IDV) dimension is significantly higher for the U.S. than Germany. In the context of the enterprise software community, Oracle is clearly dominant on the IDV attribute and the analysis shown in Figure 1 is accurate for the dynamics occurring in enterprise software globally today.
SAP typifies what many German-based engineering-centric companies value most from an ethical, legal, social and political standpoint. Their approach to managing the ethical dilemmas is predicated on logical, framework-driven analysis and intensive use of local and national statutes and guidelines. Their approach to managing contracts and the legality of their firm is also precised more on clarity of role assignment and accuracy of measurements (Engelstatter, 2012). Unlike Oracle, they do not use legal means to force customers to pay more maintenance fees or upgrade to new releases without providing ample notice first (Rettig, 2007). Where Oracle is driven by a highly competitive culture that uses ethical and legal means to gain a competitive advantage, SAP relies more on technical acuity and precision of execution (Engelstatter, 2012). As a result the culture within SAP is more attuned to highly competitive employees who routinely try to outdo each other on challenging, . SAP reflects the German values shown in Figure 1 as a result. Each of the five dimensions of the Hofstede Model provides a different perspective of cultural differences between nations and the companies that are headquartered there (Hofstede, Jonker, Verwaart, 2012). The following figure shows how IDV is highly valued in the U.S. relative to Germany and conversely, how Uncertainty Avoidance (UAI) is highly valued in Germany, more than the U.S. These findings are directly applicable to the differences between SAP and Oracle.
Figure 1: The Hofstede Model of Cultural Dimensions Applied to Germany and the United States
Source: http://geert-hofstede.com/germany.html
Conclusion
The impact of a nation’s culture on the composition, character and approach to operating a business is unmistakable. This is especially evident in how enterprise software continues to reflect this dynamic, with Oracle being more attuned to competing with a very high level of individuality (IDV) which is consistent with the American cultural values of self-sufficiency. The SAP culture on the other hand is more attuned to collegial success and the continual working together for the attainment of challenging objectives. The Hofstede Model of Cultural Dimensions provides a useful framework for quantifying the differences in German and U.S. cultures that explain the cultures of Oracle and SAP today, and what they will become in the future based on their nationalist influences.
References
Chang, L. (2003). An examination of cross-cultural negotiation: Using Hofstede framework. Journal of American Academy of Business, Cambridge, 2(2), 567-570.
Engelstatter, B. (2012). It is not all about performance gains – enterprise software and innovations. Economics of Innovation and New Technology, 21(3), 223.
Hofstede, G. (1993). Cultural constraints in management theories. The Executive, 7(1), 81-81.
Hofstede, G.J., Jonker, C.M., & Verwaart, T. (2012). Cultural differentiation of negotiating agents. Group Decision and Negotiation, 21(1), 79-98.
Rettig, C. (2007). The trouble with enterprise software. MIT Sloan Management Review, 49(1), 21-27.
