Gartner recently released a report addressing the speculations around Oracle’s on-premise and cloud ERP applications. Focusing on Oracle ERP customers’ frequently asked questions, the report is aimed at helping CIOs make informed decisions on whether Cloud applications are a viable replacement for their on-premises suites. Here are the most important takeaways and highlights from the report:
On-premises ERP suites are not at the “end-of-life” stage.
From thousands of client interactions, Gartner concluded that Oracle’s ERP customers are unsure about Oracle’s commitment to its on-premises suite. To put their doubts to rest, Gartner highlighted several factors that reiterate Oracle’s continued investment in their on-premise applications:
Revenue from on-premise applications remains strong
“Oracle’s on-premises suites are not at the end-of-life stage” assures Gartner. “Oracle receives the majority of its software license revenue from customers paying for maintenance, and new sales of its on-premises products,” (68% and 65% in 2016 & 2017 respectively). According to Oracle’s co-founder Larry Ellison, “Oracle spends over $5 billion per year on research and development (R&D) and continues to invest in all its on-premises application products.”
Fluid symbolizes the future for (on-premise) PeopleSoft
Specific to PeopleSoft, the report mentions that the “…extended Support timeline for PeopleSoft is stated through at least 2027,” and with the launch of enhancement features such as Fluid UI for PeopleSoft, Oracle continues to demonstrate its continued investment in their existing on-premise ERP applications.
Best Practice: Map Your Business Requirements Against the Maturity of Oracle’s Cloud Applications
According to Gartner, Oracle’s cloud applications are the inevitable future of ERP functions, but having been released to different timetables, cloud applications have differing levels of maturity and may not (at this time) offer true parity to Oracle’s legacy, on premise suite. As a best practice, Gartner recommends that decision-makers must consider the development roadmap of the respective cloud applications and avoid confusing the desire to source a new technology with the objective of fulfilling a specific business requirement. In other words, stating that “a full ‘rip and replace’ of your current applications may not be your best option.” Gartner goes on to urge customers to map business requirements carefully against the maturity of Oracle’s cloud applications and ensure that present day business objectives can be met so costly and unexpected change management can be avoided. In addition, the report offers a detailed outline of various situations and subsequent appropriate actions for ERP customers using Oracle’s on-premise suites.
Best Practice: “Take the postmodern approach”
Gartner emphasizes that the decision to move to the cloud must be based solely on the value proposition cloud applications offer over existing on-premises applications. While talking about moving to Cloud applications “as part of a business transformation initiative” Gartner asks decision makers to be aware of “the risks and limitations of recent releases.” Instead of a complete “rip and replace” Gartner suggests a “postmodern approach,” where an organization could decide to replace only parts of their on-premises footprint. Gartner also advises Oracle customers to not “assume that the level of expertise that exists for application support and implementation services for on-premises suites also exists for cloud applications.”
As stated above, while the future appears to be headed towards the cloud, the fact remains that a “look before you leap” approach is recommended. A cloud migration project must begin with a thorough evaluation of your business objectives in order to ensure proper alignment between the cloud technology you are adopting and the expected results. Change management can add significant cost and disruption to a project, and while complete elimination of change management is impossible, the more evaluation you undergo prior to the start of a migration project – the more likely to avoid “budget busting” surprises.
So, consider the postmodern approach – what objectives do you need to achieve today vs. what do you need to achieve 5 years from now? Are there specific ERP functions that are working just fine today? If not, are there lightweight optimizations that can be done in the meantime to enhance current functionality? Gartner recommends a postmodern approach in order to avoid a scenario where you go “all in” on the cloud and are left to address an unexpected mess.
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Access the full version of the report HERE