Oracle EBS 12.1: To Do or Not To DO

To do or not to do

It was just three years ago. I was leading an Oracle upgrade project. We were debating whether to upgrade from Oracle 11i11.8 to either 11.10 or 12. It was obvious that 12 was the bleeding edge. Thus, we reimplemented to 11.5.10 with the intent of waiting for Oracle Fusion for the next upgrade. One caveat was that we knew we would have to move through 12 to get to Fusion. Well, it’s time to make the move to 12.1. Let’s take a closer look as to why, when and with whom.

Oracle E-Business Suite (EBS) 12.1 is the go-to release for EBS users, and, so far, feedback indicates it is a better-quality release than EBS 12. EBS 11i users need to plan their upgrades, being aware that it is still a major upgrade, and that the availability of skills and resources will remain patchy in the short term.

Key Findings

• Only a small percentage of EBS users have upgrades to EBS 12.1, but momentum is increasing. This means EBS 12.1 skills will be in high demand in the Oracle ecosystem.
  


• Several larger organizations are re-implementing, rather than upgrading. They are changing the conceptual designs of their implementations, because their businesses have changed since the original implementations, and a move to EBS 12 enables them to take advantage of the new capabilities in Oracle Financials to optimize their setups.
  


• EBS 12.1 has fewer quality issues than EBS 12, although users have experienced some critical issues in EBS 12.1’s new functionality. Customers that have a positive working relationship with Oracle and the appropriate escalation path have found these to be important to resolving problems quickly and effectively.
  

Recommendations

• Multinational organizations with Oracle Financials should approach the move to EBS 12.1 with the mind-set of a reimplementation, rather than an upgrade.
  


• Allocate more functional, technical and capital resources to this upgrade than for a point release upgrade on EBS 11i.
  


• Establish good communication lines to Oracle executives and Oracle development to allow you to escalate problems quickly if they can’t be resolved through normal support channels.
  


• Secure required third-party skills early on, because they are likely to be under demand pressure for at least the next 2 years.

What You Need to Know

EBS 12.1 is a major release with substantial new areas of functionality, but does not appear to suffer from the same level of quality issues that created challenges for users upgrading to early releases of EBS 12. Consequently, EBS 12.1 is the go-to release for Oracle EBS customers that are strategically committed to Oracle applications. Although there have been far fewer major issues reported by organizations upgrading to EBS 12.1 (compared with EBS 12), there are still some potential issues in the areas of new functionality of EBS 12.1.

Only a small number of EBS 12.1 upgrades have been completed, so experience among support staff, consultants and service providers is limited. Oracle and its partners are addressing this. However, the increasing numbers of organizations that are initiating EBS 12.1 upgrade projects means these skills are likely to be in demand for at least the next 2 years. Consequently, good project planning and appropriate internal resourcing are important for success with EBS 12.1 upgrades.

Analysis

EBS 12 was a significant release in the life cycle of EBS and is deployed by all new customers of Oracle. However, only a minority of users (at present, approximately 5%) have completed the upgrade to EBS 12 or EBS 12.1. Several organizations that upgraded to EBS 12 in 2008 and 2009 experienced many issues, and Gartner advised a cautionary approach to upgrades. However, in May 2009, Oracle released EBS 12.1 and the experience of organizations upgrading to EBS 12.1 has been more positive than with early versions of EBS 12. Thus, organizations on EBS 11i should plan their upgrade strategies accordingly.

The main elements of EBS 12 were a significant re-architecting of Oracle Financials (including the new sub-ledger accounting capability and a global tax engine), and some significant technology changes (see “Planning for Oracle E-Business Suite Release 12”). EBS 12.1 includes all of these changes, but adds new functionality in many other areas of EBS, including:

• Enhancements to strategic sourcing, including two-stage RFP evaluation, flexible price tier structures and award-based cost factors
  


• The full implementation of the converged inventory system for discrete and process manufacturing, along with enhancements to manufacturing operations functionality, improvements to warehouse management and a new Landed Cost Management module
  


• Human capital management with a focus on strengthening Oracle’s talent management capabilities; there are enhancements to incentive compensation, iRecruitment, workforce life cycle management and performance management, plus new core HR management system integrations with organization charting, resume parsing, background checking and job board posting vendors. EBS 12.1 also provides an extended multi-tenancy model in EBS HR that better supports business process outsourcing.

There are a number of industry enhancements, and Oracle has also packaged several analytical applications (built using Oracle Business Intelligence Enterprise Edition (OBIEE)) with EBS 12.1, including project analytics, HR analytics, procurement and spend analytics, Oracle Manufacturing Operations Center, and a number of value chain planning analytic applications. Some of these were available prior to EBS 12.1, but are now packaged as part of the release. However users will need to purchase these analytic applications. One manufacturing organization that upgrades to EBS 12.1 and did not add these analytic applications felt that it had lost functionality as a result.

EBS 12.1 Upgrade Momentum is Accelerating

Uptake of EBS 12 was slow among the EBS user base. There were two reasons for this: 1) Many organizations were taking a “wait and see” approach, based on the potential impact of Oracle Fusion Applications and the lack of clarity over its delivery, and 2) the functionality improvements were mainly in the financial applications, and, even then, were primarily of value to large, complex multinationals. Many organizations that were on EBS 11i10 did not see major value in upgrading to EBS 12.

EBS 12.1 has a far wider range of functional enhancements that will help build the business case for an upgrade from an end-user perspective, while Oracle has now announced that the first release of Oracle Fusion Applications will be in late 2011.This has resolved the uncertainty about Oracle Fusion Applications. Gartner believes that Oracle Fusion Applications will not be a logical migration path for most EBS users for at least 2-3 years or longer.

Decision Interface’s position is that Oracle Fusion Applications will not be a viable full-ERP replacement for EBS until at least 2013, although some technically aggressive early adopters could consider replacing EBS financial (and, possibly, HR) applications with Oracle Fusion Applications from 2012. However, this will be a small number of early adopters. Consequently, as EBS 11i9 is already on sustaining support, and standard support for EBS 11i10 ends in November 2011 (Oracle waived the fee for the first year of extended support), many EBS users are planning to upgrade to EBS 12.1 prior to moving to Oracle Fusion Applications, as this give them a good window of support, while Oracle Fusion Applications become proven in the market.
This has been borne out by a number of client inquiries by both Gartner and Decision Interface. The volume of inquiries from users considering an upgrade to EBS 12.1 has increased steadily during the past six months. Oracle does not disclose detailed user numbers or upgrade statistics; however, it claims that the uptake of EBS 12.1 is approaching twice the rate of EBS 12 adoption.

Only a minority of the EBS user base has completed an upgrade to EBS 12.1. Consequently, this increasing momentum of EBS 12.1 adoption will put pressure on the availability of EBS 12.1 skills in the Oracle ecosystem in the next 2 years. However, despite this increased momentum, many organizations on EBS 11i10 may struggle to justify the upgrade to EBS 12.1, due to its complexity, especially if they have extensive customizations. Organizations in this situation need to do initial upgrade planning to identify if they can eliminate customizations as part of the upgrade to EBS 12.1, to help support the business case.

Early Upgrade Adopter Feedback on EBS 12.1

The biggest challenge facing early adopters of EBS 12 was product quality. Early releases had significant quality issues in a number of areas, and many upgrade projects stalled or were halted while the issues were addressed. Three reference customers of Oracle, that completed the upgrade to EBS 12.1, commend this releases quality over EBS 12. There have still been issues: Two of the three references encountered a small number of critical issues in manufacturing, warehouse management and inventory that delayed their go-lives and required escalation to Oracle R&D to get the issues resolved (which they were). Despite these issues, all the references said, overall, they were happy with the quality of EBS 12.1 that reinforces the findings of the Gartner Group. These findings were that the number of clients reporting issues with EBS 12.1 upgrades is lower than for EBS 12.

Generally, the more significant issues tend to be in the areas with new functionality, while the financial applications are now relatively stable. Some 12.1 clients had issues with general ledger reporting: however, these were not deemed significant. Also, system integrations working on EBS 12.1 projects have said they encountered fewer issues compared with the EBS 12 release.
Although product quality has improved, organizations upgrading to EBS 12.1 have still encountered some general issues. This is to be expected with any major release, and the following common themes have emerged:

• Custom object upgrade – Several organizations reported that customer objects were not well-handled by the upgrade scripts. Users found that the upgrade process did not flag that some custom objects had not been upgraded that, subsequently, required additional testing activities.
  


• Multiple upgrade iterations – All the reference clients highlighted that they needed more upgrade iterations than originally planned, especially organizations that were implementing new functionality in EBS 12.1 in areas outside Oracle Financials. This varied between two and five upgrade iterations among the reference customers. Although running through multiple iterations is part of any upgrade process, organizations moving to EBS 12.1 should plan for at least one more upgrade iteration than they did for point release upgrades in EBS 11i.
  


• User Testing – EBS 12.1 has a lot of new functionality across the range of EBS (in addition to the major architecture changes introduced in EBS 12 for Oracle Financials). Organizations that had completed the upgrade emphasized the importance of end-user training and change management. One project leader specifically recommended that unit testing was not enough, and that full process testing was required. This was because the combination of new functionality, coupled with user interface (UI) changes, could have a broader impact on the process flow from an end-user perspective.
  


• Skills availability – All the organizations reported a lack of knowledge about EBS 12.1 among Oracle support staff and third-party service providers. None of the organizations could find any service providers with EBS 12.1 upgrade skills, and all felt that the Oracle support team was not fully conversant in EBS 12.1. However, these organizations undertook the upgrades in the second half of 2009 and the first quarter of 2010. Knowledge of EBS 12.1 and skills availability is improving. It is still likely to remain patchy for at least the next 2 years.

Planning an EBS 12.1 Upgrade

Although EBS 12.1 is an improvement over EBS 12 in terms of quality, much of our original advice regarding upgrading to EBS 12 remains valid. The following guidelines should be followed in planning such an upgrade:

• Don’t wait for Oracle Fusion Applications before upgrading to EBS 12.1, unless you are 1) on EBS 11.5.10, 2) have an Oracle Financials-only implementation, 3) are a very aggressive adopter of new technology and 4) have a very positive relationship with Oracle. The key word in this last sentence was the “and”. Oracle Fusion Applications have yet to be delivered to the market and moving to EBS 12.1 gives you a support window that will allow you to pick the right time to consider moving to Oracle Fusion Applications.
  


• Allocate more functional, technical and testing resources to this upgrade than you did for a point release upgrade on EBS 11i. For example, the new sub-ledger accounting and global tax engine can add significant time to the upgrade project. Multi-national companies or any customers using Oracle’s “multi-org” functionality should budget extra time and resources to understand these new features, and consider how they may impact financial processes and management reporting. Also, financial staff will need extensive education and training to understand the concepts and capabilities, and all end users will need training in the new UI and functionality. The extent of this training will depend on the breadth of your EBS implementation and the quality and capabilities of your user base.
  


• Plan for multiple upgrade iterations. Although the release quality with EBS 12.1 (and many of the critical issues reported by early adopters will be patched in EBS 12.1.2 and subsequent releases), plan resourcing to support at least one more upgrade iteration than you did for a point release upgrade in EBS 11i (e.g., upgrading from EBS 11.5.9 to EBS 11.5.10). Ensure that you undertake full process retesting in areas of new functionality, rather than just unit testing.
  


• Decide if you will reimplement or upgrade if you are moving from EBS 11i. The rearchitecting of financial applications in EBS 12 means that many organizations are reimplementing their EBS systems (i.e., changing the instance strategy or conceptual design). Larger and more-complex organizations (typically multi-nationals) that use EBS Financials should approach EBS 12.1 upgrades with the mind-set of a reimplementation, rather than simple upgrades of their environments. However, existing Financials configurations can be migrated as-is, if desired. Smaller organizations, and those in the public sector or the no-for-profit area, should consider a move to EBS 12.1 to be a major upgrade.
  


• Ensure that you have good communication lines to Oracle executives and Oracle development, to allow you to escalate any problems quickly if they cannot be resolved through normal support channels, especially if you are one of the early adopters in you region of operations or your implementation includes functionality outside Financials. Organizations that encountered critical issues with EBS 12.1 upgrades still needed to involve Oracle’s development organization and senior executives to get these issues resolved. Skills and knowledge in EBS 12.1 are still building in the Oracle ecosystem, and the new areas of functionality mean that new critical issues may emerge. Having a clear and agreed-on escalation path will ensure that you can get these issues resolved if they arise.
  


• Identify and secure any required EBS 12.1 skills early in the project. Skills in EBS 12.1 remain in relatively short supply, and demand is ramping up. System integrators are developing upgrade tools to allow them to deliver cost-effective upgrades, but these take time to mature. Consequently, the availability of third-party skills will remain patchy for at least the next couple of years. Also, consider investing more in training your personnel in EBS 12.1, because this is a major change in EBS, and these skills will prove to be valuable over the lifetime of your investment.

Tactical Guidelines

• Allocate more internal resources than you would for an EBS 11i point release upgrade. Significant areas of new functionality across all areas of EBS in 12.1 will require functional design and testing, as well as end-user training -- plan for a minimum of four upgrade iterations.
  


• Develop a positive working relationship with Oracle, including an escalation path to an appropriate executive, if you are planning to upgrade to EBS 12 during the next 2 years.
  


• If you are working with service providers, ensure that they have suitable EBS 12.1 upgrade experience. Be aware that skills may be in limited supply during the next 2 years, as increasing numbers of EBS users initiate upgrade projects.