Businesses face Oracle applications support timebomb

Analysis

Businesses face Oracle applications support timebomb

Cliff Saran

Organisations still running Oracle E-Business Suite release 11.x have less than a year to move to the 12.x release. But many have yet to start their migration project.

Oracle has said while its Sustaining Support service for Oracle E-Business Suite release 11.5.10, will be provided from December 2013 to December 2015, it will only provide payroll regulatory updates for the US, Canada, UK and Australia for fiscal years ending in 2014.

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As such, UK organisations running the older software will need to update their systems before 6 April 2015. After this date Oracle will no longer provide updates for changes in taxation and other legislation.

Research conducted by Original Software, a software quality company, in conjunction with UK Oracle User Group (UKOUG) reveals that a third of organisations using Oracle E-Business Suite have not yet upgraded from release 11 (R11) to release 12 (R12), and a minority plan to remain on 11i with third-party support or sustained support.

David Warburton-Broadhurst, chairman of the UKOUG said: "Oracle E-Business Suite users have a clear idea on what they regard as the most important factors for success in an upgrade. With the economy in a delicate position, every investment in IT has to be carefully justified."

Moving to R12 is a critical step for Oracle in moving its customers on an upgrade path towards its Fusion Applications strategy.

Warburton-Broadhurst said: "Oracle Fusion is gaining ground. Some of the folk who haven’t upgraded are waiting to see what happens with Fusion and whether to do R12 or go with Fusion onto the cloud. A lot of our members are committed to following the Oracle upgrade path. Many have upgraded to R12, or are dedicated to going to R12."

However, he admitted that a minority plan to remain on 11i.

Last February, when Forrester surveyed its clients who were Oracle users about upgrading, 65% had no plans to implement Oracle Fusion Applications, and another 24% did not know if they would. Clients reported lack of clarity about Oracle’s app strategy and Fusion’s immaturity as the biggest barriers, Forrester noted.

Preparing for Release 12

Any upgrade can be costly, both in terms of absolute budget and people time. Colin Armitage, CEO of Original Software, said: "On average, an Oracle upgrade can cost between $5m to $10m for large organisations. For large organisations, the number of people involved is often upwards from 30 people to hundreds depending on the number of modules being upgraded and the geographical spread of the organisation."

The challenges we have seen come from discovering the integrations with other systems

R "Ray Wang", Constellation Research

R "Ray" Wang, principal analyst and founder, Constellation Research, said: "Most customers do not leave enough time, budget and resources to upgrade. However, we do see that Oracle and the system integrators have been helping to prepare customers. If you think you need four months, make it six. If you think you need 25 people, make it 40. The challenges we have seen come from discovering the integrations with other systems. Many are undocumented and break when you upgrade."

He said the big challenge for most customers is deciding what modules to move over and when.

Finance and accounting systems are part of the R12 upgrade. If accountancy and finance systems need to be upgraded, anything that goes wrong could affect the financial reporting and the company

"Most start with adding onto E-Busines Suite then they get comfortable and make the upgrade on [the core] financials system," Wang said.

In February, Oracle won partial ruling in the "Oracle versus Rimini Street"

In his experience from talking to organisations that have upgraded, best practices suggests upgrading the financials module first, in spite of the inherent risks associated with working on the core ERP system.

Support issues

Staying on R11 may become increasingly difficult following the February ruling against third-party support provider Rimini Street. In February, Oracle won partial ruling in the "Oracle versus Rimini Street" where Rimini was found in breach of Oracle intellectual property. 

In effect, Rimini did not have the right to host its customers’ legal copies of Oracle enterprise software patches on its own servers. The ruling prevents Rimini and other third-party support providers from supplying hosted patch management services. Some experts believe this could prevent third parties from offering support when Oracle stops supporting R11.


Moving to Oracle Fusion Applications

Oracle Fusion Applications is Oracle's next-generation enterprise application platform, which integrates the products Oracle has acquired, including CRM (Siebel acquisition) and HR (from the acquisition of PeopleSoft), with E-Business Suite.

However, in a white paper covering the upgrade, PwC noted that it is not possible to migrate to Fusion directly from R11i. Organisations must migrate to R12 first. PwC said going to R12 is beneficial because the Oracle has made 300 enhancements to its financial module – including support for sub-ledger accounting and a new global tax engine. "R12 will hold particular appeal to CFOs and controllers," PwC said.

Organisations can upgrade one module at a time or reimplement the whole system. According to Oracle, reimplementation provides an opportunity to redesign financial structures and take advantage of new features in Oracle Fusion Applications. "Although reimplementation may initially seem more costly than an upgrade approach, in some cases a reimplementation to replace Oracle Applications with Oracle Fusion Applications is actually more cost-effective," Oracle said.


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