How to offset Oracle costs when preparing a move to the cloud

Savvy IT departments can mix and match support contracts as they negotiate with Oracle on a Fusion upgrade

As Oracle begins to get its Fusion cloud-based product line together, reports are emerging that the company is heavily incentivising sales of its cloud products.

“Oracle is pushing to force us to buy Oracle cloud products that we do not need,” said one US-based Oracle customer.

If businesses are found to be under-licensed, Oracle may force them to buy cloud products, said Martin Thompson, chair of the Campaign for Clear Licensing.

“Oracle customers are telling us they are being forced to take Oracle cloud to ‘absolve their sins’ for any shortfalls during forced audits,” he said. “This adoption may fool a few investors that Oracle is winning the migration to the cloud in the short term – but this is not sustainable cloud growth.”

In fact, for some organisations, migrating to Fusion is many years away. In the interim, they need to continue paying for software maintenance on their existing Oracle product.

The US operation of Atkins Global runs Oracle eBusiness Suite 11.5.10 (EBS), while JD Edwards ERP software is used in London.

With Oracle eBusiness Suite 11i  becoming an unsupported platform, Randy Martin, Atkins Global’s director of corporate systems, said: “Our 2020 strategy is to migrate onto Fusion as a global cloud platform. But we could not find a compelling business case to move to Release 12 of EBS.”

Along with the actual cost of the software, Martin said moving to Release 12 would have been a major update involving a multi-month IT project to implement and test the new functionality.

“Our version of eBusiness Suite was reaching end of life, where we would have to pay more to get a reduced level of support,” he said. The economics of doing an upgrade simply to sustain an acceptable level of support did not stack up, Martin added.

In effect, Atkins Global needed to support its Oracle 11i ERP for four years while it got ready to eventually move over to Oracle Fusion. Oracle offers a trade-in for customers who buy Fusion. But for Martin, the trade-in was not cost-effective, given the timescale Atkins was looking at, not migrating over until 2020.

Read more about Oracle licensing

  • Oracle’s results show it is turning from software licensing towards a ‘stunningly profitable’ cloud business.
  • CIOs will need to ringfence spending with their existing enterprise IT suppliers to liberate capital for other business initiatives.

Using third-party Oracle support

Martin said Oracle wanted to charge $500,000 a year to support Atkins Global’s 11i ERP, while third-party support from Rimini Street worked out at half this cost. “We will save $250,000 a year for four years, so Rimini will pay for itself even if we lose the trade-in deals for Fusion,” he said.

The transition from Oracle to Rimini support was relatively straightforward for Atkins Global, said Martin. “Our system was pretty stable and we weren’t using Oracle support that much anyway, so we weren’t logging many tickets with Oracle.”

But the big issue is patch management, said Martin, which was highlighted by the Oracle versus Rimini court case, in which the district court of Nevada ruled that Rimini Street had violated Oracle’s copyright by hosting clients’ patches.

“We read through the details of the Oracle case and looked at their objectives,” he said. “The issue was, from an ownership perspective, to ensure the patches were kept on our servers.”

To avoid a similar lawsuit, said Martin, “we needed to capture all the patches from Oracle that were available to us”. Identifying and copying the Oracle patches that Atkins had rights to took several weeks, he said. The patches were downloaded and stored in the cloud on AWS.

Atkins needed to put a lot of trust in Rimini Street, which undertook the initial survey of the Oracle software deployed to ensure it had identified all the official Oracle patches it would need over the four-year term of the support contract.

But there will always be times when the company needs to make a change, such as to support new legislation. A recent example is an amendment to the accounts payable module, said Martin.

“There are US regulatory tax updates – the 1099 tax statements that go out to contractors for the IRS [US Inland Revenue Service]. This is one area where specific patches need to be built,” he said. Rimini had to be able to prepare and deliver these patches for Atkins.

Getting ready for Fusion

Atkins Global is taking a phased approach to its Fusion rollout, starting with human capital management. Its decision not to move off the unsupported 11i platform has saved the huge cost of migrating to a supported platform while it prepares for its Fusion deployment. On top of this, by swapping Oracle for third-party support, the company has made big savings on annual software maintenance.

Rory Canavan, author of the SAM Process Kit, said: “There is no need to leap to cloud if your existing software is working well. Unless there is a compelling reason to move to Fusion, people are sticking with their existing software.”

Assuming most businesses will have some level of customisation in their version of eBusiness Suite to reflect their unique business processes, migration to Oracle Fusion is likely to be a multi-year project. Whether or not a CIO chooses to migrate to Fusion, as Atkins Global has found, it is well worth considering third-party support for Oracle products, given the relatively rapid return on investment.

Read more on Software licensing

Data Center
Data Management