With major enterprise resource planning application developers Oracle, SAP and Microsoft in the midst of developing their respective next-generation suites based on service-oriented architecture concepts—all due in the 2007 to 2008 timeframe—users may soon find themselves in a quandary: Pay for an "upgrade" or look to the competition.
A new study released by Gartner Group analyst Yvonne Genovese March 27 takes a critical look at the costs of at least one upgrade path—to Oracle Fusion from the Oracle E-Business Suite, or the PeopleSoft or JD Edwards suites, each of which will have some functionality in Fusion.
Gartners main finding? For Oracle EBS users, the cost of migrating to Fusion will be similar to a 10.7 or 11i upgrade (both major releases for Oracle). For PeopleSoft and JDE users, which Oracle acquired in January 2005 when it bought PeopleSoft, the cost of moving to Fusion is about as expensive as implanting an entirely new application.
"EBS users moving to Fusion will have to adopt a new architecture, integration of new technology (for example, Fusion Middleware), a new user interface and some new business logic," said Genovese in her report titled "Oracle Fusion: Understand the Road Map and Estimate Transition Costs." She continued: "For JD Edwards and PeopleSoft, significant cost implications will occur with a migration to Fusion."
The issue is that the Fusion suite will not be "the best of" each of the three suites, as initially thought. Rather, the data model for Fusion is the EBS data model, as is the business logic for Fusion, according to Genovese. Whats new with Fusion is the user interface, which will based on EBS but with input from PeopleSoft UI engineers.
"Where EBS, JD Edwards and PeopleSoft business logic overlaps—EBS will dominate," Genovese wrote in her report. "Where the functionality of PeopleSoft and JD Edwards differs from EBS, Oracle will make business decisions when/if to rewrite that functionality into the Fusion base."
Genovese indicates that for planning purposes, users should break costs into two distinct camps: licensing and implementation. In terms of licensing, Oracle has indicated it will take some "trade-ins" on PeopleSoft and JD Edwards contracts. That said, those customers looking to migrate to Fusion need to take into account the infrastructure required—Fusion Middleware and (potentially) Oracles database, both of which require license deals, according to Genovese.
On the implementation side, users need to look at three areas: process change, technology change and data change.
"Changing the UI and the business logic will result in large process implementation cost implications for JD Edwards and PeopleSoft users … similar to the implementation of a completely new business application," wrote Genovese.
Process change, according to Genovese, is estimated to be between 75 and 80 percent of the implementation cost for a new application.
"There is no product on the market that will mitigate these costs for JD Edwards and PeopleSoft users and Oracle indicates that it will not develop such a product," wrote Genovese.
Under such cost constraints, whats a user to do?
Among a laundry list of suggestions, Genovese advised companies to "assess the move to Fusion as if it is a new business application solution with the costs of licensing waived."
She also says they should keep in mind that other vendors are offering similar trade in licensing deals.