A difficult economy is among the key reasons organizations are delaying their Oracle E-Business Suite R12 upgrades from versions 11i and earlier.
Generalizing on why organizations are slow to migrate to Oracle EBS 12 is difficult because each organization uses the applications in different ways. But the economy is a factor.
“Getting funding for back-office systems is hard enough, so we need to be effective,” said one customer. “There always seems to be other, more important priorities or items on our wish list. An upgrade to R12 will probably not make it to the top of the list until Oracle decides to discontinue support.”
Other challenges to upgrading include the disruption involved, the worry about meeting International Financial Reporting Standards (IFRS), and, according to another customer, “an assumption that R12 will have the same challenges that earlier versions of 11i had.”
The reality of these economic times is that organizations demand greater proof of an ROI, forcing projects that may otherwise have been funded to be delayed until there is a more compelling business case. Former Oracle co-president Charles Phillips said at the Collaborate conference in April 2010 that migration to Fusion Applications would be from Oracle EBS R12. That could compel more organizations to stay current by upgrading.
Our check of the channel revealed that reasons to upgrade to Oracle E-Business Suite R12 were:
- Better support for IFRS
- Ability to leverage Multi-Org Access Control for easier use in a shared-services environment
- Migration to a more common data model for easier integration with other systems, especially within the Oracle software portfolio
- Module-specific functionality already introduced in R12 or functionality soon to be introduced that will require being on the R12 platform
- Use of modules that require current support for statutory or regulatory purposes
Organizations delaying their upgrade Oracle E-Business Suite R12 gave the following as reasons
- Difficulty in getting projects funded and approved
- No clear cost-benefit
- Increased costs of support are less than cost to upgrade
- Competing priorities for resources such as IFRS projects and implementation of other modules that have a more rapid ROI and quicker impact
Governance, risk, and compliance (GRC) issues have also had an impact on Oracle EBS R12 upgrades. We have seen a significant increase in interest and implementation of GRC software even during this difficult economic period. Project costs associated with GRC have decreased dramatically because of increased competition, a maturing market and lower-priced implementation services.
Organizations have used GRC software to reduce costs and increase visibility to control-related issues, and they have used the framework of GRC software to extend beyond compliance issues to manage a broader array of risks within their organizations. Some companies have used GRC as a catalyst to delay their Oracle E-Business Suite R12 project, choosing to focus on GRC-related initiatives before taking on the massive R12 upgrade project. Other organizations have melded their GRC initiatives into their R12 projects, helping to provide some of the incentive for the upgrade project.
No matter how you size up Oracle’s R12 version of the applications, in many cases, difficult economic times are causing many organizations to delay their upgrade project.
Jeffrey T. Hare is the CEO of Oracle applications consultancy ERP Risk Advisor and is a member of the Oracle Applications Users Group (OAUG). He can be reached at email@example.com.