Making the switch to Oracle Fusion Apps
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Patrick McCullough was recently looking to upgrade his company's enterprise resource planning (ERP) system, and the idea of an Oracle Fusion Applications implementation came up. But not in the way you might expect.
His firm, Seal Beach, Calif.-based solar power company Amonix Inc., was not trying to decide whether to adopt Fusion Apps, Oracle Corp.'s newest application suite. It was trying to decide whether to adopt the older and more established Oracle E-Business Suite version 11 or 12.
We're coming out of a deep recession, and something ERP customers have learned over the years is to hold onto your stuff for as long as you possibly can.
vice president of technology, EiS Technologies
"The discussion of Fusion was out there," McCullough, the current CEO and former CFO of Amonix, said, "but it was in terms of 12.0 making it easier to migrate to Fusion down the road. That was the extent of it at that point."
That's a problem for Oracle, according to a recent Forrester report. The study, released this month, contends that the database and business applications giant has a dilemma because few customers are interested in an Oracle Fusion Applications implementation. According to the Forrester report, 65% of Oracle applications customers surveyed had no plans to implement Fusion Apps. Another 24% were unsure if they would.
According to an interview in December, Oracle executive vice president Steve Miranda said his company boasts "over 100 live customers" and is averaging one go-live per day. That would put the number of live customers today at about 150 -- a small number when one considers that there are currently about 26,000 Oracle applications customers, and Fusion Applications became generally available in the fall of 2011.
As McCullough simply said, "It was too early."
Forrester analysts think the slow Fusion Applications adoption is in part due to the success of Oracle's Applications Unlimited program, which is a plan by the company to continue improving its existing applications -- E-Business Suite, PeopleSoft, J.D. Edwards and so forth -- at the same time it develops Fusion Apps.
"They sort of have equal status," said Andrew Bartels, a Forrester vice president and principal analyst. "Oracle insists that there is no contradiction between Applications Unlimited and Fusion."
Oracle ERP adoption historically slow
But hold on a second. Yes, Oracle Fusion Applications implementation has been slow. But that has historically been the case for Oracle ERP software such as E-Business Suite anyway.
For example, Oracle E-Business Suite version 12 first came out quite a while ago in 2007. And yet, an Oracle Applications Users Group survey done last year showed that only about one-third of E-Business Suite users had adopted version 12. More than 60% were still on version 11.5.10, which was released in 2004. The conclusion? Enterprises are like glaciers when it comes to ERP software -- full of inertia and hard to budge. They're prone to thinking that if it ain't broke, don't fix it.
"If you look at Oracle's adoption lifecycle, it runs seven years from initial release before people get serious about taking it up," said Floyd Teter, vice president of technology at Duluth, Ga.-based Oracle ERP services company EiS Technologies. "We're coming out of a deep recession, and something ERP customers have learned over the years is to hold onto your stuff for as long as you possibly can."
Further bolstering Teter's claims is that the Forrester report, while released this month, was based on survey results from June and July of 2012, less than one year after Fusion Applications went GA.
"I think Forrester made this call way too early in the game," Teter said.
Is coexistence hurting Fusion Apps?
The idea of two Oracle ERP software packages being developed side-by-side has a history that dates back to 2004. Shortly after acquiring PeopleSoft, Oracle CEO Larry Ellison stated that it was the company's intention to push users off PeopleSoft and J.D. Edwards (which PeopleSoft had acquired) to Oracle's own E-Business Suite. Further, Ellison said Oracle would only support PeopleSoft and J.D. Edwards until 2013. At that same press conference, which happened in early 2005, Ellison announced the seedlings of what would become Fusion Applications, a merging of EBS, PeopleSoft and J.D. Edwards.
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In 2006, the company reversed course and introduced Applications Unlimited. It promised to continue developing EBS, PeopleSoft and J.D. Edwards alongside Fusion Applications. Frank Scavo, an analyst at Monta Vista, Calif.-based Constellation Research Inc., gives credit to Oracle for realizing that ending support for PeopleSoft and J.D. Edwards was the wrong decision. It was leaving existing PeopleSoft and J.D. Edwards customers in the lurch, and as a result, some of them would look to migrate off Oracle entirely in the long term.
Applications Unlimited continues today. Now, what Oracle has is two fully baked ERP systems sitting side-by-side. Forrester bills that as the two competing against each other. Oracle's rebuttal to the Forrester report disagreed, instead calling the situation a "coexistence strategy."
But Scavo agrees with Forrester in thinking that Applications Unlimited is slowing Fusion Apps adoption. "Oracle's Application Unlimited program has been too successful," he wrote. "By continuing investment in its existing application suites, Oracle gives customers little incentive to move aggressively to Fusion. There is no burning reason for customers to change."
As it stands now, most Oracle Fusion Applications implementations are rolled out one module at a time -- human capital management here, customer relationship management there. Those Fusion Applications modules can work alongside existing Oracle applications such as E-Business Suite and PeopleSoft. Teter said that's exactly how Oracle wants it. It's a creeping strategy.
"To be honest, I think that's the play," he said. "Oracle has deep enough pockets that if it takes seven years to reach critical mass [with Fusion Apps], they can play that game no problem. I do think that stitching in an application here and a module there will lead to more upgrades, but I still think it's far down the road."