The True Costs and Burdens of Oracle’s Continuous Innovation Model
As noted in the previous article in this series, Oracle’s continuous innovation support model has received scant coverage. In fact, many companies that now use this model may not even realize that it is one of the biggest changes to enterprise support since the advent of SaaS and third-party support.
In our previous article we did a deep dive into the model. In this story, we examine what the model feels like and how it functions on a day-to-day basis for customers. As with all things related to Oracle’s business, there are positives and negatives, and customers have to weigh the tradeoffs to decide whether the model is offers them a good return on their investment.
We will now dive deeper into the true costs of this model and provide some specific examples of how it works in practice across Oracle’s ERP portfolio. PeopleSoft has been updated under this model since 2013, but the extension this update model to E-Business Suite is far more recent. Many customers who had been waiting for E-Business Suite 12.3 were surprised when Oracle took the release entirely off its roadmap in October 2018 and moved EBS 12.2.X to the continuous innovation support model.
Here are some dimensions to consider when performing a cost-benefit analysis of this model.
Do The Updates Help Your Business?
The continuous innovation model promises customers the chance to maintain support without ever having to undergo an upgrade again. It replaces upgrades with continuous updates that Oracle has stated will also introduce new innovations for its applications.
However, the continuous updates developed by Oracle are by design supposed to apply to the entire customer base they serve today. Continuous updates include necessary tax, legal, regulatory (TLR) updates and fixes as well as some new features. What is most critical is to understand is whether and how these updates will move the needle for your business, or even apply to the specific applications that you run today.
As Oracle points out in a PeopleSoft document, “The continuous update model does not come without cost.” In its documentation, Oracle says:
“A cost is associated with applying maintenance and taking new features. The cost must be evaluated for every change applied to the system…. Caveats exist. Some enhancements require latest versions of PeopleTools, so keeping current on tools is encouraged. Also, the longer a customer goes without applying maintenance, the more dependencies and, in turn, the more difficult the process will be.“
It is important to set check points with your teams to evaluate how — and whether — continuous updates are helping your business. Here are a few simple questions to cover:
- How often do you receive updates from Oracle for your application?
- What is included in the updates you receive?
- Are the new features moving the needle for the business?
- What is the total cost and ROI of applying these updates to leverage continuous innovation?
What Is The Update Frequency?
Depending on your Oracle application, Oracle releases continuous updates at varying intervals. PeopleSoft 9.2 has received continuous updates since 2013 and Oracle has delivered over 30 images to date, roughly 5 per year.
For JD Edwards, Oracle has said it will provide updates 2 to 3 times per year for Enterprise One and as needed for JDE World.
So depending on the Oracle applications you run today, your update frequency can vary.
What Is Included In The Updates You Receive?
The updates are elective according to Oracle’s marketing messages, but as we discussed in our previous article, updates are required in many cases to receive full support.
So it is important to understand what exactly is in the updates, and here again this can vary by application. PeopleSoft 9.2, for example, includes the use of a new tool called PeopleSoft Update Manager (PUM). This tool allows customers to download a cumulative set of released updates and create a custom change package to deploy only the items they select and need at that moment. However, Oracle recommends applying a full image update at least annually.
E-Business Suite takes a slightly different approach, leveraging an online patching methodology released with EBS 12.2, where customers apply a suite-wide patch set, which can include tax, legal and regulatory updates as well as fixes and new features.
Regardless of the application suite or the methodology used to apply continuous updates, they all have a few things in common:
- The updates include a combination of required maintenance items such as fixes, tax, legal and regulatory updates as well as any new features.
- Not every application receives an update with every image.
- The updates are not truly optional as Oracle support may require you to be on the latest update to work on your support issue
It is important to scrutinize what you are receiving in the updates to assess their value to your business. One approach to analyzing the content of updates, used by third-party-support provider Rimini Street, breaks each update into categories including tax, legal and regulatory updates, minor updates to existing features, and major enhancements. Rimini Street performed this analysis for 26 of the PeopleSoft 9.2 images, over 400 updates, and found that 95% contained no significant new features.
Are The New Features Moving The Needle For The Business?
Oracle software is very robust and the baseline major releases have been available for many years. As you receive incremental new features, it is good to examine how they compare to existing features. Are they major enhancements, minor features or even things that your IT teams could do themselves?
After many years of continuous updates, some telling trends offer a sense of the value of these new features and whether customers are even adopting them. A survey at the 2018 PeopleSoft Reconnect Conference asked how many new features have customers deployed since moving to continuous updates and selective adoption. Surprisingly, nearly 50% had not rolled out a single new feature to end users.
Regardless of the number of features delivered to date, some customers have a fear of missing out on some new feature in the future, even if they don’t know what feature that is. At events like Oracle Open World, demos showcase a utopia of things to come, but as a customer you must continue to pay for continuous updates while you wait for those features.
If you are waiting for new features, ask yourself whether you already own the technology to do what Oracle is promising. In other words, is Oracle delivering innovation, or tools to create your own innovation? A lot of enhancements are not innovations, but rather content that you use to do this work yourself.
What Is The Total Cost And ROI Of The Continuous Innovation Model?
The continuous innovation model does not come without cost, but how do you begin to quantify the cost? The first place to start is by asking yourself about the main purpose of the updates. Is it simply to remain eligible to receive support from Oracle or do the updates offer business impact?
If you can’t quantify the tangible impact of these updates, it’s time to rethink your strategy because you’re paying a lot for them. In fact, you could be paying just about as much as you did for full upgrades of the past, except now this is a continuous cost to the business versus a decision you would get to make every 3 to 5 years. Maintenance fees must be paid nonetheless, and Oracle is pushing essentially the same model as a forced upgrade. It is simply modified to be more of a continuous process versus a project one you choose to undertake every 3 to 5 years.
Minor releases of PeopleSoft 9.2 for example, which contain TL&R and fixes or minor user updates, are released roughly four times a year, and each release is roughly a 1 to 2 month project. Even if you opt not to apply these updates, it is recommended that you “true-up” to a golden copy of the latest image once a year, applying a cumulative update, which can take longer, requiring applying a major release.
Oracle estimates that applying major releases for PeopleSoft 9.2 is a five month project, and they offer 2 major releases per year, which can also include major new enhancements. Assuming customers apply a major release and a minor release just once a year, this amounts to six months of the year updating your PeopleSoft 9.2 environment.
Applying updates requires downloading and analyzing them, deciding what updates to apply then testing, validating and applying them to a non-production system before cutting over to production. This of course requires people and infrastructure on an ongoing basis and potentially outside consulting.
Continuous Innovation Or Continuous Cost?
Customers are still consuming maintenance and features as they did in the past under the forced full upgrade model, except now maintenance updates and features are bundled and delivered more frequently rather than every three to five years. The total cost can be nearly the same, and a portion of your IT teams and infrastructure are now consumed 50% of the time continuously managing this process. And, if your teams are working on implementing and stabilizing Oracle updates every six months, there is less time to work on other priorities.
The bottom line to consider is whether Oracle has in fact materially changed and improved their software support and delivery model compared to the major release upgrades of the past. Does this model truly offer continuous innovation or something more like continuous costs?