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Oracle claims it can cut ERP system migration costs by 30%

A migration can cost millions, but Oracle believes its new automation and integration tools can significantly reduce the cost of ERP system migrations to the cloud.

An ERP system migration is one of IT's most costly projects. One-time implementation costs can run into the millions. But Oracle claims it has developed tools that cut the time and cost of a migration by up to 30%.

The tools use automation and prebuilt integrations to software made by other vendors. Oracle also believes its cloud systems can replace many user-built ERP customizations.

"We've made it much easier for you to move from an on-premises ERP system to the cloud," said Larry Ellison, CTO and chairman of the board at Oracle. He unveiled the tools on Tuesday, dubbed "Oracle Soar to the Cloud," in a webcast.

Whether these new tools can deliver the promised ERP system migration savings remains to be seen. But the problem Oracle is trying to address is a big one. For example, in estimates released last fall, Atlanta put its first year, one-time cost of moving its on-premises Oracle ERP system to Oracle's cloud at $13.5 million. The city believed the cloud system was less costly in the long run and approved the migration.

Jonathan Gross, managing director of Pemeco Consulting, an ERP project management firm based in Toronto, has not seen the details of Oracle's new plan, but said he struggles to understand the Oracle ERP system migration savings claim, "given how much of an implementation project's cost relates to people, process design and testing, training [and] change management," among other processes.

Oracle automates migration functions

Larry Ellison, CTO and board chair of OracleLarry Ellison

Ellison, in his overview of the ERP system migration tools, said the first step is an "evaluator process" that scans the on-premises ERP system for customizations and integrations. It makes note of what's been added to E-Business Suite, then analyzes and scans for configurations, metadata, users, how much memory is being used, disk space and other functions. That information is collected by a configuration analyzer and is used to configure the cloud middleware and applications. The data is extracted from E-Business Suite and loaded into cloud applications.

The ERP system migration tools are available for Oracle E-Business Suite, PeopleSoft and Hyperion Planning customers who are moving to Oracle cloud systems.

This new tool set also has what Oracle calls an "integration accelerator" that uses a library of prebuilt integrations for users "going from one standard software product to another standard software product," Ellison said.

There are limits to what can be done 

We've made it much easier for you to move from an on-premises ERP system to the cloud.
Larry EllisonCTO and chairman of the board at Oracle

As an example, Oracle has prebuilt integrations to Salesforce's sales or service applications and SAP's ERP application. Oracle has more than 100 of these prebuilt integrations, Ellison said.

But for users with internal, custom-built integrations, "we're going to have to rebuild that integration," Ellison said.

With respect to customizations, Ellison said E-Business Suite does not have as many features as Oracle Fusion in the cloud -- its suite of ERP applications. But when a user makes the migration from an on-premises ERP system, a user can "drop" many of those customizations, "because a lot of those customizations are now standard features in Fusion ERP," Ellison said.

Charles King, an analyst at Pund-IT, said it's worth considering why Oracle is offering these tools now.

"It may well be that Ellison and company have thoroughly gotten cloud fever and are happily building out new and related business lines," King said. But it's "also possible that Oracle has discovered that customers are resistant to moving complex, data-rich applications out of their private data centers to Oracle Cloud."

The new offerings may include price breaks, with free to low-cost services "designed to nudge them in that direction," King said.

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