Monday Jan 14, 2013

The Problem with Technical Upgrades

Author: Rick Beers Senior Director, Product Management, Oracle Fusion Middleware

Planning an ERP upgrade soon? If recent research by Unisphere Research, a division of InformationToday, is any indication there is a likelihood that you either have one underway or will soon. In surveys of applications managers across Quest and OAUG membership, Unisphere explored upgrade plans and approaches and published the findings in separate research reports. (Quest Membership Survey , OAUG Membership Survey). The research revealed that 80% of respondents either have an ERP upgrade underway or have one planned within the next 24 months. I was struck by the consistency in responses across Oracle’s ERP installed base of E-Business Suite, PeopleSoft and JDEdwards, which tends to validate the findings.

The report leads off with some very encouraging perspectives: “Moving to the latest release of an enterprise application suite (enterprise resource planning, or ERP system) is often perceived as a daunting task in the popular imagination. Fears are further exacerbated by media and analyst reports of such projects as expensive and invasive time-sinks that take up the attention of the business. However, a new survey of enterprise application managers finds that the vast majority of ERP upgrade efforts tend to be short in duration, fall within reasonable budgets, and rarely disrupt the business at large”.

Scratch a little bit under the surface though and something seems wrong.  As stated:“….the vast majority of ERP upgrade efforts tend to be short in duration, fall within reasonable budgets, and rarely disrupt the business at large.”.  The casual observer might breeze right through this statement as I did until I read the report for the second time. Something seems wrong here; is ‘shorter’ always better? Is ‘nondisruptive’ always good?

There was one finding that caught my eye and that was in Figure 2 (‘Scope of Enterprise Application/ERP Upgrades‘). Here we find that 2/3 of ERP Upgrades are either Technical or purely Functional (a continuation of the existing ERP Footprint). Combined table below:

I know,  it’s long been considered best practice to first perform a technical upgrade and once done, to then look more strategically across the overall enterprise systems footprint to determine if more transformative actions are needed. I know; I followed this practice back in my own enterprise IT days. But it just seems to me that this approach is becoming increasing flawed. Consider:

·         The pace of business change and the rate of technology innovation are accelerating and not naturally in sync. Anything that perpetuates the status quo without a strategic review puts us further behind the curve.

·         Upgrades normally run in 3-5 year cycles. During that time customizations and workarounds creep in and multiply as business models and processes change beyond the limits of ERP code. These simply perpetuate in technical upgrades.

·         Finally, let’s face it, most of us never get around to the strategic view following a technical upgrade; we move on to other things. We lose the transformative potential once the technical upgrade is complete.

Within most enterprises, ERP is increasingly codependent with other applications and technologies across the enterprise. No single component, even one as dominant as ERP, should be considered individually. We recommend that ERP upgrades be preceded by an architectural review of the enterprise systems footprint by taking a ‘Simplify-Differentiate-Innovate’ approach to transformation.  

As business conditions shift and technology evolves over time, the enterprise systems landscape needs to adapt as well. The transformative potential of Enterprise Systems lies in their ability to adapt to changing business conditions and provide business leaders ways to lead rather than follow. Fusion Middleware is playing an increasing role in providing this adaptability to Oracle’s Enterprise Applications customers by extending ERP’s business value, and the FMW team offers a variety of ways to consider these opportunities prior to an ERP upgrade, through Applications Technology Evaluations, Workshops, Webcasts and Product Demo’s.

Collaborate is less than 3 months away, and certain to be a frequent topic during the event will be ERP Upgrades. The Fusion Middleware team will be well represented and conducting a number of sessions highlighting the opportunities that FMW provides to Oracle’s Enterprise Applications to transform the enterprise.  I’ll have one as well. We all look forward to seeing you there.

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