Why your next upgrade may present the best opportunity to move to the cloud
by Minda Zetlin
Your enterprise app is nearing end of life. Or, you need functionality not available in the current version. Or, you’re completing a merger, and you don’t want to train your new IT personnel on your current system, only to train them all over again on an upgraded system eight months from now.
Whatever the reason, the time is right to upgrade a major system. It’s also the perfect moment to look seriously at a move to the cloud.
While it may seem daunting to undertake a major system upgrade and a move to the cloud at the same time, there are in fact serious advantages to combining the two projects. “An upgrade is an opportune time for a cloud migration,” says Alejandro Trujillo, director at PwC. “The cloud offers an opportunity to minimize the complexities around building a secondary environment that can be tested before it’s used for production.”
There are many good arguments for making your next upgrade a cloud deployment, beginning with cost. While software licenses for upgraded enterprise apps typically cost the same whether installed at your data center or at a cloud facility, there are likely to be substantial project savings, explains Mike Hutchinson, vice president for service delivery management at Oracle. “When a company does a major upgrade, it typically has to invest in additional hardware to support the upgrade project,” he says. “In a cloud services environment, additional project environments can be set up quickly on an as-needed basis.” This allows customers flexibility in managing their project expenses.
And, he notes, costs are spread over time, becoming part of the company’s operating expenses, rather than the large capital investments required to acquire new data center hardware. “That allows you to use your capital dollars for investments to support your business initiatives.”
Chances are there will be savings associated with IT personnel as well. These two factors combined to substantially bring down costs when Michael Baker Corporation (Baker), an engineering design, planning, and construction services firm based near Pittsburgh, Pennsylvania, upgraded from Oracle E-Business Suite 11.5.10 to Oracle E-Business Suite 12. “It was a six-figure or more savings,” reports Jeremy Gill, CIO at Baker.
Then there’s reduced risk—perhaps the only thing more important to CFOs and CEOs than reduced cost. Upgrading to the cloud removes some of the risk of an onsite upgrade, particularly working with a cloud provider that has substantial in-house expertise.
For example, Andrew Tsui, senior director at PMI Mortgage Insurance Company, describes a circumstance where two Oracle Cloud Services staffers had to leave his project. Both losses were unavoidable—one staffer left to get married and the other due to illness. “If that had happened to our internal staff, there is no way we would have been able to recover,” Tsui says. “Completing the project on time would have been difficult or impossible. But Oracle has a great resource pool and was able to replace them.”
of surveyed executives see upgrades as an opportunity to improve operational efficiency. (Source: KPMG)
Upgrade expertise comes not only through staff depth but also experience. “Most customers do a major upgrade perhaps twice in the lifetime of a major enterprise application,” Hutchinson says. “We literally have one going every weekend. We understand the upgrade process, and we have developed best practices to complete the upgrades.”
The fact that a cloud provider controls all the elements of the deployment serves to further minimize risk. “It’s a very integrated group of technologies that you’re upgrading,” Tsui notes, giving a nod to the purpose-built platforms common to cloud services providers. “The infrastructure and the operating system are standardized, and even the hardware they are working with is a consistent set.”
One of the biggest benefits of moving to the cloud is higher availability. Rarely can even a very well-run data center match the uptime of a major cloud provider. During an upgrade, this benefit is magnified, because upgrading to the cloud can dramatically reduce the amount of downtime needed to switch from the old version to the new one.
For instance, at PMI, using Oracle Cloud Services shaved a day off the downtime for an upgrade of its Oracle’s PeopleSoft Financials and PeopleSoft Human Capital Management applications. “We were able to do it over a normal weekend as opposed to a three-day weekend,” Tsui says.
One reason cloud upgrades can be so much quicker is that, with the flexible provisioning cloud facilities offer, it’s easy to have two separate instances of an enterprise application running in two separate environments. “Instead of trying to do an in-place upgrade, we stood up a new environment with an updated database for Oracle E-Business Suite 12,” says Russell Hemwall, director of enterprise resource planning at Baker. “Then we migrated to the new version, and we had the old one as a fail-safe in case we encountered any problems.”
For many companies, resistance to a “public” or offsite cloud vendor is driven by the assumption that only a company can guarantee the security and integrity of its own data, especially in the face of regulatory requirements. But when a vendor has highly secure practices and a solid history of providing governance and compliance information, moving to the cloud can take the hassle out of regulatory reporting.
“One advantage of moving to Oracle Cloud Services was to better deal with reporting required by Sarbanes-Oxley,” Gill says. “With Oracle’s rigorous structure, we can rely on its reporting, which is based on SAS 70 [Statement on Auditing Standards No. 70 from the American Institute of Certified Public Accountants]. Oracle provides that information to us, and our auditors can depend on those findings. That takes away a large set of control concerns and allows us to focus on the functional side of things.”
Although upgrading to the cloud offers significant advantages, not every company is ready to undertake such a project. Before embarking on an upgrade to the cloud, experts advise, your own environment for the enterprise application in question should be highly virtualized.
“Even the biggest companies in some industries are very much behind the curve in terms of technology,” notes Shriram Natarajan, head of Persistent Systems’ cloud practice. Persistent Systems, a global software development company with headquarters in Pune, India, and San Jose, California, has developed a tool to help companies assess which applications can be migrated to the cloud. “They may not have adopted virtualization at all. We tell them to make sure they can walk before they run, so they need to be virtualization-ready before certain applications can move to the cloud. Virtualization within their own data centers is an important first step.”
“You should think about virtualizing your data center, because that’s what will allow it to behave as a private cloud,” adds Jon Toor, vice president of marketing at San Jose–based Xsigo Systems, which creates network equipment for virtualized data centers. “That puts you in the right position to run those applications anywhere, even in someone else’s data center.”
Also, as part of a cloud upgrade, it’s wise to eliminate as many customizations as possible from an enterprise application. “The fewer customizations you have, the less risk you have when doing an upgrade in the cloud,” Gill says. “We tried to keep the system as ‘vanilla’ as we could.”
In Baker’s case, he adds, some customizations were rendered unnecessary by upgrading to the newer release, because some of the customizations are addressed by functionality that is now built into the system. Most of the customizations that remain are used simply to integrate the software with the company’s reporting and workflow systems.
of surveyed executives believe the cloud will make their organizations more agile and competitive. (Source: KPMG)
For Oracle Applications, Gill adds, any customizations that can’t be eliminated should use the Configurations, Extensions, Modifications, Localizations, and Integrations Framework, created by Oracle to minimize customization-related problems. “It enables as much portability as possible when you do an upgrade to the cloud,” he says.
Getting enterprise data in shape poses one of the biggest challenges to moving to cloud-based applications. “Most companies in the future may end up in a hybrid state, with some data and functions in the cloud and others in their own data centers,” PwC’s Trujillo predicts. “So the biggest challenge is integration. How do you combine outside information with inside information to create an integrated service that appears seamless? Some companies are starting to face that challenge and now have a data model that goes beyond their own enterprise.”
One potential solution is Oracle Fusion Middleware, Trujillo says. “Oracle Fusion Middleware is a tool for getting data in and out of the cloud,” he notes. “Use of an open framework when implementing Oracle Fusion Middleware makes possible a framework that all the big vendors in the marketplace can work with. Oracle Fusion Middleware helps business users orchestrate and confirm new applications with less involvement from IT. Since moving to the cloud may mean having less IT in house, that’s a benefit. And the less involvement your IT staff has with day-to-day activities, the easier it is to live in the cloud.
“Companies may wish to consider creating a data warehouse if they don’t already have one, so that they have a handle on all their data and can extract it into a single set,” he says. Doing this helps address one persistent objection to moving to the cloud: the fear that once a company begins allowing a cloud provider to store its data, it will be unable to move it elsewhere if the need ever arises. “Most business leaders now understand that the best cloud providers have more security and better infrastructure than their corporate data centers do,” Trujillo says. “But that basic concern remains: ‘If I’m in their cloud, how do I get out?’”
The best way to address that fear is by planning an exit strategy as part of a cloud upgrade project, says Trujillo. “Part of cloud planning should be an annual review about exiting from your vendor.”
One of the best aspects of upgrading to the cloud is how much easier everything will be the next time. “The beauty of it is that, if you’re doing a cloud-to-cloud upgrade, you’ve already solved all the issues around moving to the cloud,” Trujillo says. “On premises to cloud is harder.”
“Many projects are focused on just getting to a go-live date,” Hutchinson notes. “But our focus is beyond go-live. We want to make sure customers have a highly available, scalable environment that will support their business needs for many years. The move to the Oracle cloud is the first step. As we then work with the customer on change management, release management, and capacity plans, the benefits of our model become obvious. It is important to think beyond that first step of a go-live.”
Minda Zetlin is coauthor of The Geek Gap: Why Business and Technology Professionals Don’t Understand Each Other and Why They Need Each Other to Survive (Prometheus Books, 2006).
Helping IT Staff Cope with a Cloud Upgrade
One of the biggest challenges in a cloud upgrade is dealing with IT staff. Whether the move to the cloud means reducing their numbers or not, it will inevitably bring a huge shift in the roles they play.
“Part of that transition is helping IT people understand how to manage change at both a departmental and personal level,” says Alejandro Trujillo, director at PwC. “Instead of telling people ‘Your job is gone,’ you help them prepare for the change and tell them what they will be doing in the future. Let’s say you have a terrific networking specialist. With enterprise functions handled in the cloud, networking work will now be minimized. One option would be changing that job to a security specialist, or to someone who monitors network performance.”
“Our customers are definitely running more applications on fewer servers,” adds Jon Toor, vice president of marketing for Xsigo Systems. “While they are obviously making their IT operation more efficient, the services they’re delivering have actually become more diverse. So we’re seeing companies use their staff in different ways, providing new applications and device support to end users. For instance, we have a number of law firms among our customers, and every one of them has told me that the business of IT inside a law firm has gotten enormously complicated, with e-discovery and clients asking for more access to information. As the physical side becomes simpler, the service side becomes more complex.”
“Many IT people who do the work today feel that if they’re not tangibly doing a technical configuration like setting up servers, they’re not contributing,” Trujillo adds. “We need to show them that setting up a server is becoming a commodity like many others that will be handled in the cloud. At the same time, there will now be a series of new management activities ensuring that the company’s performance expectations are being met by vendors and the company will need specialists who understand service delivery, service-level agreements, regulatory and compliance requirements, and day-to-day vendor performance management.”
“Additionally, in-house IT staff can be freed to research innovation and emerging technologies that can provide real value and competitive advantage to their organizations,” he says. “So their jobs may not be going away, but they are certainly going to change.”