Deciding If or When to Adopt Oracle Fusion Applications
Oracle Fusion Applications are now generally available. Use these best practices to identify whether you should consider Oracle Fusion Applications to augment and/or replace existing applications, or wait for the time being.
- Oracle Fusion Applications are now generally available.
- The functional footprint of available modules is not yet a complete replacement for any of the current Oracle Applications Unlimited application (Oracle AUL) suites, but is expanding quickly and can be suitable for some organizations, depending on the requirements and industry.
- Oracle Fusion Applications are a new application architecture based on current technology components, which is different from any existing Oracle AUL applications.
- Oracle Fusion Applications functionality can be implemented to replace and/or augment current Oracle AUL modules. Oracle Fusion Applications functionality may also be suitable to replace some legacy or other applications in your portfolio.
- At the time of publishing, Gartner estimates there are approximately 50 live customers out of more than 200 that have licensed Oracle Fusion Applications. Most have deployed a relatively small functional footprint.
- Evaluate the currently available functionality of Oracle Fusion Applications and discuss the road map with Oracle, to identify if it might be a potential functional fit for some of your application portfolio.
- If you decide to implement Oracle Fusion Applications during the next 12 months, be prepared for the risks associated with being an early implementer.
- Do not decide to replace some or all of your Oracle AUL portfolio with Oracle Fusion Applications based on a high-level strategic decision, and do not make bypassing an upgrade of your current Oracle AUL applications a primary driver for adopting Oracle Fusion Applications.
- Identify the impact of different deployment options and additional licensing charges before making any decision to proceed with Oracle Fusion Applications.
Oracle Fusion Applications are now generally available and many existing Oracle application users are considering how these fit into their application strategies. As discussed in "Weighing the Decision to Become an Early Adopter of Oracle Fusion Applications," there can be business and technology reasons for considering Oracle Fusion Applications. However, Oracle Fusion Applications are not yet a comprehensive business application suite and Oracle is delivering new functionality on a frequent basis. This means that Oracle Fusion Applications are a "moving target," and Gartner cannot make general recommendations about which organizations should consider adopting Oracle Fusion Applications at the current time. Instead, any current users of Oracle AUL business applications (see Note 1) will need to make their own assessments of Oracle Fusion Applications to decide if and how they should adopt the available functionality, or if they should defer any action on Oracle Fusion Applications and instead focus on their existing Oracle AUL applications.
This research sets out some best practices to help organizations assess whether they need to consider Oracle Fusion Applications now or wait until Oracle Fusion Applications become more widely adopted.
Oracle announced general availability of Oracle Fusion Applications at Oracle OpenWorld in September 2011, and the Oracle Fusion Applications early adopter program ended in the first part of 2012. At the time of publishing, over 200 organizations have licensed some footprint of Oracle Fusion Applications, and Gartner estimates that approximately 50 organizations are live. These range from organizations with one or two Oracle Fusion Applications modules alongside existing Oracle AUL products, to those which have implemented a broader footprint of human capital management (HCM), CRM or ERP applications (for example, a large, U.S.-based restaurant chain, which has deployed Oracle Fusion Financials, Oracle Fusion Procurement and Oracle Fusion HCM). Oracle Fusion Applications adoption is not just limited to the U.S., as there is a small number of live customers in EMEA and the Asia/Pacific region.
The number of live customers will increase in the coming months, and Gartner estimates there will be 100 to 200 organizations live with some form of Oracle Fusion Applications implementation by the end of 2012. If you are considering Oracle Fusion Applications, you should monitor Oracle's announcements of "go lives" and try to identify organizations that have gone live with, or are implementing, a similar functional footprint to yours. The Oracle Applications User Group (OAUG) can be a good forum for keeping abreast of Oracle Fusion Applications adoption. It is important to speak with references, although they can be hard to obtain because the reference accounts are being overused.
Oracle Fusion Applications are mainly being considered by existing Oracle users, but Oracle is also using Oracle Fusion Applications in competitive sales situations against software as a service (SaaS) vendors, like Workday, which is actively targeting the PeopleSoft installed base. Oracle states that it has had competitive wins in the HCM space against vendors like SuccessFactors and Workday, and we believe Oracle will use cloud-based deployments of Oracle Fusion Applications to compete with cloud application vendors encroaching on their accounts.
While Oracle positions Oracle Fusion Applications as a full suite of business applications, this is still a work in progress from a functionality perspective. While the functionality is fairly broad in some areas (such as financials and HCM), it is lacking in others (for example, there is no manufacturing functionality and no time scale as to when this will be available). There is also missing functionality for some industries. For example, there is currently no public-sector budgetary control functionality in financials, while CRM does not have the depth of industry functionality found in Siebel CRM. Consequently, any organization considering Oracle Fusion Applications must look beyond the high-level sales and marketing messages and understand whether the currently available functionality has enough breadth and depth to replace current applications, including localization and language needs. Do not decide to replace some or all of your AUL portfolio with Oracle Fusion Applications based on a high-level strategic decision.
The current functional footprint of Oracle Fusion Applications covers financials, procurement, project portfolio management, HCM, supply chain management (SCM), CRM sales, CRM marketing, CRM customer data management, partner relationship management, and some governance, risk and compliance. See Oracle Price Lists for on-premises pricing and available modules. Use this resource to identify the main functionality that is available and to perform a more detailed analysis to identify any functional gaps. Discuss the upcoming Oracle Fusion Applications road map with Oracle to identify when functional gaps may be addressed to identify when Oracle Fusion Applications might be appropriate for you, but keep in mind these discussions are not contractual commitments.
Oracle's product strategy for Oracle Fusion Applications is subject to change. For example, the recent acquisition of Taleo may impact its plans in the area of talent management (see "The Impact of the Taleo Acquisition on Oracle's HCM Strategy") and it is likely there will be more acquisitions, especially of cloud-based application providers. Continue to monitor any acquisitions and press Oracle for product road maps that explain how any acquired products will impact Oracle Fusion Applications.
Oracle Fusion Applications are a new application suite that has been built from the ground up using Oracle Fusion Middleware. It has many attributes of what Gartner defines as a process-centric, model-driven application (see "What Types of Model-Driven Applications Are Most Appropriate for a High Pace of Process Change?"); for example, the process model is largely encapsulated in BPEL using Oracle BPEL Process Manager. Oracle Fusion Applications also include analytics tightly embedded into the applications; for example, Oracle Essbase is used to maintain hierarchical aggregations of data in most modules. Oracle Fusion Applications also support both on-premises and SaaS deployment.
While this architecture has potential benefits and leverages components of the well-established Oracle Fusion Middleware stack, it is very different from any of the existing AUL application architectures and employs many new design concepts. Oracle states these have been well-tested, and Oracle Fusion Applications' references that spoke at Oracle Industry Analyst World in April 2012 said they felt the quality of the code in their implementations was acceptable, which is a good sign. However, the code base is developing rapidly and the number of comprehensive deployments is still small. Oracle is also adopting a "rolling upgrade" model for Oracle Fusion Applications, in line with the SaaS model (with three to four releases each year); therefore, Oracle's ability to manage this upgrade strategy in a hybrid environment, with a mix of SaaS and on-premises customers, needs to be proven with a larger number of customers.
Consequently, it is Gartner's opinion that any organization considering implementing Oracle Fusion Applications within the next 12 months will be at the leading edge of adoption. Type A (see Note 2) organizations are most likely to be successful. A strong, positive relationship with Oracle will be an important success factor. If your organization is not Type A, then ensure that the executives signing off on any potential Oracle Fusion Applications project are aware of its maturity in the market.
Working with system integrator (SI) partners can also help manage risk, but be aware that, while there is a reasonable pool of trained resources in the Oracle ecosystem, real-world experience of Oracle Fusion Applications implementations is limited. Therefore, Gartner recommends that all Oracle Fusion Applications projects for the next 12 months should have some direct Oracle involvement while SI experience matures. Some early adopters have stressed that the involvement of Oracle in the project was key for success, while others adopted a conservative rollout approach by implementing and going live in phases.
Some users of Oracle AUL products may find it tempting to jump directly to the next generation Oracle Fusion Applications products as a long-term strategic move, while also avoiding the potential complexity of an upgrade to the current AUL products. However, organizations that have been implementing a broader footprint of Oracle Fusion Applications have either done a full reimplementation (for example, a large, U.S.-based restaurant chain that replaced JD Edwards World with Oracle Fusion Applications ERP, core HRMS and talent management as part of a business transformation program) or a mix of reimplementation and upgrade, where changes were made to the way the applications were used to support changes in the business. Gartner has not yet spoken with any organization that has performed a straight upgrade, and Oracle is still rolling out tools to help with the move from AUL products to Oracle Fusion Applications.
Gartner believes that an upgrade bypass should not be the primary justification for moving to Oracle Fusion Applications. Instead, the decision should be based on functional and business reasons, with any opportunity to bypass an AUL upgrade viewed as an additional, rather than primary, benefit. Consequently, most Type B and Type C (see Note 2) organizations should upgrade their AUL applications to current versions that will give them at least three to five years of support, so that they can monitor how Oracle Fusion Applications mature in the market and how the functionality footprint evolves before deciding when to migrate to Oracle Fusion Applications. See "Prepare for Oracle Negotiations by Using Oracle Websites" to identify current AUL support policies.
It is Gartner's opinion that Oracle Fusion Applications are not yet broad enough in their functional footprint and market presence for the majority of AUL users to consider wholesale replacement. Oracle has wisely recognized this and is not aggressively pushing users to "rip and replace," as the vendor needs to maintain the highly profitable maintenance revenue stream from its AUL products. Instead, Oracle is using an augmentation strategy, in which it sells Oracle Fusion Applications modules as extensions of an existing AUL footprint, or perhaps to replace some elements in an existing AUL portfolio. This has been quite common with CRM and HCM (for example, an organization that implemented Oracle Fusion HCM for talent management and workforce compensation alongside its Oracle E-Business Suite ERP implementation). Oracle's intention is to build a footprint of Oracle Fusion Applications within current user organizations, so that when a major replacement of the main AUL products is considered, Oracle Fusion Applications become the logical choice for wider deployment.
This is a pragmatic strategy on Oracle's part, and organizations that have a long-term strategy to move to Oracle Fusion Applications at some point in the future should consider this approach. This will allow you to become familiar with Oracle Fusion Applications technology and architecture in a more controlled manner, compared with a major rip-and-replace project. However, it is important to evaluate any Oracle Fusion Applications modules against specialist solutions and to adopt a pace-layered approach, as these applications are more likely to fall within areas of differentiation or even innovation (see "How to Get Started With a Pace-Layered Application Strategy"). Do not let users lock you into a future Oracle Fusion Applications strategy by allowing them to start adopting Oracle Fusion Applications modules without evaluating alternatives.
A key aspect to consider when implementing Oracle Fusion Applications modules in this way is the "connective tissue," which includes harmonizing master data, common analytics and process integration. Oracle is developing point-to-point integration for specific Oracle Fusion Applications to AUL scenarios, and you should determine if these are available for your chosen scenario, and how they compare to alternative approaches offered by specialist vendors.
Oracle Fusion Applications can be deployed on-premises, hosted as SaaS by Oracle, through the Oracle Cloud (which Oracle offers on a monthly basis with no minimum term) or in hybrid configurations. These options are important, because the technology stack for Oracle Fusion Applications is based on Oracle Fusion Middleware and the Oracle RDBMS, which may deter some current AUL users from on-premises deployment (for example, an organization running AUL applications on the Microsoft SQL Server RDBMS). Consequently, these deployment options offer Oracle a way to enable Oracle AUL users on non-Oracle technology stacks to move to Oracle Fusion Applications without a major technology shift. Oracle's long-term strategy is that the majority of Oracle Fusion Applications users will be hosted via SaaS or Oracle Cloud, rather than on-premises, and, in some cases (especially in HCM), we have seen Oracle push customers to SaaS rather than on-premises. Therefore, it is important to consider which deployment approach to Oracle Fusion Applications would fit best with your application and technology strategy.
In previous research, we indicated that Oracle stated that Oracle Fusion Applications were available as an upgrade for existing clients on maintenance on a "like for like" functionality basis, and any modules that deliver additional functionality would be chargeable. Now that Oracle has published pricing, it is possible to get an indication of which AUL modules may have an additional cost. For example, a user of Oracle E-Business Suite Financials would be able to move to Oracle Fusion Financials under maintenance, but the new embedded analytics (Oracle Fusion Financial Reports Center and Oracle Fusion Transactional Business Intelligence for Financials) may come at an additional cost.
While these costs may not be significant in absolute terms, it is still important to identify them and understand that there may be some incremental charges involved in moving to Oracle Fusion Applications. Seek out older documentation that clarifies the original licensed functionality to be prepared to negotiate like-for-like replacements in the Oracle Fusion Applications products. Oracle generally will allow customers to continue to use existing products for 12 months while converting. This may not be enough time, and some organizations may want to keep the original software for archival reasons. When negotiating deals for Oracle Fusion Applications, if you feel the conversion may take longer than 12 months or that you will want to keep the older product for archival reasons, ensure that you have negotiated these rights in the Oracle license agreement.
Oracle has also indicated that it intends to offer some form of upgrade strategy for organizations moving from on-premises licenses to subscription pricing, but details have not been made public. Organizations considering Oracle Fusion Applications for any form of AUL replacement should engage Oracle early in the process to identify the scale of any potential incremental charges.
Oracle Applications Unlimited is Oracle's strategy to continue enhancing and supporting current application product lines (including Oracle E-Business Suite, Oracle PeopleSoft Enterprise, Oracle JD Edwards EnterpriseOne, Oracle JD Edwards World and Oracle Siebel), while simultaneously developing Oracle Fusion Applications.
Type A enterprises are aggressive adopters of technology that use IT to gain a competitive advantage. Type A enterprises view technology as a strategic part of their plans. As a result, technologies are readily tried out in an attempt to make tactical gains and obtain knowledge that will be useful for future moves.
Type B enterprises adopt technologies once they have been proved useful. Selections are made as a result of strategic planning and the experiences of others. Type B enterprises are mainstream adopters of technology that use IT to maintain parity or catch up with early adopters.
Type C enterprises are slow adopters of technology that use IT only when obvious, or when required to meet mandated or market requirements. Type C enterprises have strong financial motivation and are often purely efficiency-focused. Technologies are only adopted when necessary and must be justified. Many opportunities are passed on to avoid risk or expense. As conservative adopters of IT and innovation, Type C enterprises are often characterized by caution and late adoption.