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Oracle EBS Release 12 – Tempus Fugit

Prōject would like to welcome Patrick Sharkey as a guest contributor to our Blog. Patrick is an independant Oracle Financials Functional Analyst. He has functional experience of Oracle Financials 11i Version 11.5.10, Discoverer and OFA, gained whilst on implementation, development and upgrade projects. He is currently improving his knowledge of Release 12.1 Oracle Financials and is looking forward to participating in an upgrade or re-implementation project in the future.

Wherefore art thou, Fusion Applications?

The following is the subheadline of an artcle in the August 2009 issue of Profit magazine entitled “An Ideal Platform for Consolidation” Interview with Cliff Godwin:

Oracle E-Business Suite Release 12.1 Delivers Exciting New Functionality
Source: Profit, August 2009

How can one ignore or even dismiss such an attractive proposition from the leading ERP supplier in the world? Well it appears that some customers are not totally convinced or ready to move to this new release. Others are evaluating their options and some are taking a somewhat “laid back” approach.

In this article I will try and outline the main options available to Oracle EBS users and then put forward one decision making context that could be used by the Finance and IT departments to focus on the best strategy for their individual businesses.

The first two main options fall into the “zero option” category:

1. Remain on the 11.5.10 (or at least upgrade to this version)
2. Decide to wait for Fusion Applications to be released.

I can see several scenarios where the first option would prevail. Not least the fact that the current economic recession is precluding any additional spending on IT projects or that the business wishes to move away from Oracle EBS altogether. The second option has been put forward by those users that cannot see a business case for moving to Release 12 (R12). There is however a reference to be made at this point. Oracle Chief Executive Officer, Larry Ellison, in a June 2009 conference call gave the following update relating to Fusion Apps:

And then of course we’re going into other spaces as well with our Fusion applications which we haven’t talked about yet which come out I guess, we are code complete on Fusion applications. We’ll be announcing them later this year. Customers are trying them out and we’ll start delivering next year.
Source: Oracle Corporation F4Q09 (Qtr End 05/31/09) Earnings Call Transcript

Not a lot new here and not very much that is specific either. As a preliminary benchmark I would allow Oracle a release date for Fusion Apps of say, June 2010. Then add on two years for a user that does not want to be an early adopter. This gives an Assumed Availability Date for Fusion Apps of June 2012. On the face of it, this leaves some room for planning and resourcing a Fusion Apps implementation project. However, R11/10 Extended Support ends in November 2013 (Oracle Lifetime Support Policy Oracle Applications). Does this give your business enough time to upgrade to Fusion Apps?

Perhaps the even more pertinent question the business has to ask itself, is whether it is prepared to base its ERP strategy on an “unknown” product, albeit from a known supplier? Before moving on to R12 considerations I think it is worthwhile reminding ourselves that there are still some important opportunities available to those users that wish to take a “wait and see” approach:

• Revisit your patching strategy and apply outstanding patches
• Conduct those data cleansing projects that are overdue
• Examine existing setup structures and update where necessary
• End date obsolete flexfields values and combinations
• Explore unused functionality in 11.10 e.g. Role Base Security
• Consider implementing Fusion Middleware elements e.g. BI Publisher
• Review your own technical roadmap e.g. Oracle Workflow vs. Database 11g.

Oracle Workflow Client and Oracle Workflow Server will not be included in Oracle Database Editions 11g and above…. Oracle Workflow will only be included in Oracle E-Business Suite releases…. Existing Oracle Workflow customers continue to receive error correction support up until the same date that error correction support ends for product bundle purchased which include Oracle Workflow. For example, Oracle Database 10gR2 customers using Oracle Workflow will receive error correction support for Oracle Workflow until error correction supports ends for Oracle Database 10gR2.
Source: Oracle Workflow: Statement of Direction – Extracts

Technical leaders, finance managers and the business user community need to be sharing knowledge and working together to avoid all those well known pitfalls that many IT projects risk encountering through weak planning, costing and definition.

If the business and technical community have concluded that the way forward is to move to Release 12.1. Then the options change somewhat but the need for careful examination of the business case and the ultimate project definition remain just as important.

Decisions, decisions, decisions?

Your business has concluded that a move to Release 12.1 would be the most sensible course for the future and has eliminated a “wait and see” approach based on Oracle Fusion Applications becoming available sometime in the future.

Notwithstanding all the tasks that need to be accomplished to bring the current production system to readiness for the move, there is still the “small” matter of what type of move the organisation wishes to pursue.

Broadly speaking, there appears to me to be two classes of migration:

• Upgrade: “Straightforward” migration of data, structures and processes
• Re-implementation: Taking advantage of new functionality.

The Upgrade Path suggests to me the following advantages:

• Leverages existing investment in 11i
• Minimizes potential cost and risk
• Limits changes to business processes and documentation
• Less need to change existing setup in modules
• Quicker end-to-end project time span, ~6 month’s (optimistic estimate)
• Could implement new functionality at a later date.

The disadvantages that immediately spring to mind are:

• Lost opportunities to use new functionality
• Upgrade process can take several days downtime
• Risks will increase if the upgrade does not have a clean 11i base.

I am sure that there are more pros and cons, particularly when a business team looks at this option in relation to their own company. Decision making times, availability of staff, training requirements, communication strategies, level of customizations, personalizations etc will all play a part in implementing this option.

Lastly, I would strongly advise anyone looking at the upgrade option to talk to users who have followed this path, particularly, to understand the level of complexity behind what seems to be a “straightforward upgrade” process.

Looking to the Re-implementation Path, I see some real opportunities, principally as my own experience and that of others suggest that it takes a number of years before an organisation understands the capabilities and strengths of its own Oracle EBS systems.

This leads me to suggest that this path could be the ideal time to re-engineer key business processes. Naturally it is important that the business cases are evaluated and included in the final project assessment. Together with risk assessment and competitive advantage analyses.

This approach is going to cost more money than a “straightforward upgrade” but the project could also use team skills to gain efficiencies in a range of existing processes, as well as implementing new functionality.

For example:

• The re-implementation project could be closely linked with an enhanced Business Intelligence initiative to drive business efficiencies
• Existing business security strategies could be implemented through Multi-Org Access Control
• New or replacement modules could prove beneficial e.g. Advanced Collections or Projects Suite.

Naturally, certain tasks such as creating a clean 11i installation will still have to done. Although, the downtime for the cutover to the new system is likely to be less than an upgrade. Also, the same considerations for decision making times, availability of staff, training requirements, communication strategies, level of customizations, personalizations etc will still apply.

There are over 1,500 new features in Release 12, with significant new functionality in the Financials area.
Source: “E-Business Suite Release 12 is Generally Available” – Steven Chan

Further enhancements have been added with subsequent Release Update Packs (RUP). If a business chooses to ignore the benefits that these features could bring then there could well be opportunity costs associated with that decision.

Furthermore, if the organisation envisages remaining with an Oracle ERP system past Q3 2013 then a move to Fusion Applications will be an even bigger jump from both a technical and functional perspective. In the final analysis, the decision as to which route to take will depend on the Cost–Benefit analyses and the assessments of future competitive advantages of the two options.

Timing is everything?

Having read through your documentation, reviewed the possibilities and sounded out colleagues and contacts then how does one convince a business under the pressure of an economic recession to do anything about upgrading their ERP system? This is the case if the system performance is deemed to be acceptable and therefore not seen as a priority.

The first point about timing is that a large number of businesses start their annual budgeting process in September. This major exercise will often include re-visiting the Business Plan as well, that is their longer term plans, often three, or more likely, five years into the future.

In my experience of planning in difficult trading conditions, it is important to:

• Get your point across succinctly and with impact
• Keep it simple and focused on the key issues and options.

In the absence of any detailed investigation and analysis into the options for the ERP systems in the company (maybe you have been to a briefing or seminar, at best), then I am going to suggest a possible way forward. Remember though the main objective is to get this issue on the table of the planning managers.

I would start with a common endpoint for all options:

Extended Support for R11/10 ends Q3 2013 (actually November)

At this point in time the business needs to be up and running on a new ERP platform – R12.n, Fusion Applications or a completely different system.

In order to accomplish this two main project workstreams need to have been completed – Technical and Functional – leading to an installed, user accepted, and functioning ERP
system.

Next, allow six months for support and bug fixing/patching post go-live:

Go-live of new system must be end Q1 2013

This may look obvious to functional and technical folks but adequate resources need to be built into the business plans of the organisation. Whilst the objective is to work backwards, at this point, I would consider making an estimate of how long it will take your organisation to authorise any decision, starting from the point that you have reached to date. Taking a “today’s” date as the end of Q3 2009:

Authorisation of “New” ERP in place by end of Q1 2010

Six months, may or may not, be a good estimate for your organisation. Once the decision is made, allow another 6 months, say, to recruit staff and build the project team etc. Once the above are in place then we have the main planning assumption:

Implementation Project Time Span = 10 quarters = 30 months = 2.5 years.

That is: Project team in place (End Q3 2010) to Go-Live (End Q1 2013).

I would suggest that for most organisations, commercial or public, a R12 re-implementation project should be achievable within the above timescales.

Logically, a R12 upgrade project should be simpler and more easily attainable within the same timescales and decision times can be extended. A 15 month upgrade project would leave ample time to research and authorise the project. This could well be applicable to Not for Profit organisations which are risk-adverse, need more time to obtain budget approvals and for which the R12 enhancements may have less of a business case.

However, what if the business decides to wait for Fusion Applications and not to be an early adopter? It will hold until the start of Q3 2010, before implementing this version. This scenario only allows nine months to transition from 11i to Fusion Applications.

Financially, it will be difficult to assign definitive costs to any of these options at this stage. However, the majority of the expenditure will be in 2011 and/or 2012, which means that any estimates will be in the business plan rather than next year’s budget. Previous upgrade costs could provide ballpark figures suitable for this purpose.

Notwithstanding this last point, do not under estimate any need to progress patching updates, data cleansing and improvements in the use of the existing systems. This should be included in the 2010 budget. Ideally, funding should be obtained for the information gathering and project planning phases that should be completed in 2009/2010. Backfilling existing staff to allow them to familiarise themselves with R12 would be money well spent. As would investing in staff with skill sets not normally available in the business.

Naturally, different scenarios can be looked at depending on your business capabilities and constraints to arrive at the final direction that the business wishes to take in the future.

In conclusion, it is important to have a strategy in place and therefore it is vital that technical, functional and financials teams are collaborating to evaluate all the options and their acceptability to the business.

The worst case scenario is to be left with insufficient time to plan and execute a controlled, successful transition to the new system.

I trust that you have found this article useful. If it stimulates the above collaboration then it will have achieved its purpose. Any suggestions, experiences or feedback would be most welcome.

1 Sep, 2009 by Barry Goodsell

E-Business Suite