Oracle Fusion - Enterprise Solutions Reloaded – Part 2

Dears,

The second part of our article has some more interesting facts about Oracle Fusion, Hold on to your cockpit and enjoys the ride.

Oracle states that it has designed Oracle Fusion Applications on the principle of modular independence. The promise of this design principle is that users will be able to deploy modules of Oracle Fusion Applications with fewer dependencies than in a conventional application or ERP suite. For example, in Oracle E-Business Suite, if users want to deploy Warehouse Management, they would have to have inventory management set up first because of the data and functional dependencies.

In a more modularly independent suite, one might be able to deploy Warehouse Management without the dependencies. The task is to enable modular independence while maintaining process integrity across the suite. For example, best-of-breed software modules are necessarily modularly independent, because they aren't part of a suite. As Oracle Fusion Applications have yet to be generally released, we have not had an opportunity to evaluate fully the degree to which modular independence has been carried out.

Modular independence is important because it affects the degree to which users will be able to replace or deploy modules of Oracle Fusion Applications into their existing applications. If there is a high degree of modularity, then replacement and deployment will likely be high. However, the issue that users will need to deal with is whether they can cope with the level of integration work that likely will be necessary to maintain process integrity if they employ more than one to two uses of Oracle Fusion Applications as point solutions. While service-oriented architecture (SOA) will help here, We estimate that the integration effort may not be small. There may be modular independence, but there may not be integrations built for the permutation of modules plus Oracle Applications Unlimited applications that a particular user will want to use. We believes that at some point, this will likely tip users from using Oracle Fusion Applications as an augmentation strategy to Oracle Fusion Applications as a core ERP or applications strategy, because the cost for transitioning the core will be less than maintaining the integrations between the add-on modules.

Initial demonstrations of Oracle Fusion Applications that we have seen indicate that the product has been designed as a model-driven packaged application with embedded analytics, including social networking and collaboration, embedded business intelligence, and a multichannel user interface. If the product lives up to these design principles and becomes functionally robust, then it will have a breakthrough position in the market. These design principles enable substantially greater process agility and a more sophisticated execution of Pattern-Based Strategies by users employing these applications.

We will continue to investigate these capabilities to ascertain if the product will deliver on this promise. From what We have seen, a true augmentation strategy will be available for a certain number of modules — for example, Compensation Management, Talent Management, Payroll, Sourcing Distributed Order Management, Marketing & Territory Management, Incentive Compensation, and Financial Governance . These modules can work in conjunction with existing Oracle products and, in general, provide new functionality. As Oracle Fusion Applications modules become available that mirror existing products, then Oracle Fusion Applications will be a replacement and not an augmentation.

Early adopters of Oracle Fusion Applications will likely be users operating modules in a coexistence mode. Oracle reports some users are implementing Incentive Compensation, Sourcing and Projects in coexistence scenarios. Oracle has spent time in the laboratory improving the user interface for Oracle Fusion Applications. User feedback has enabled Oracle to reduce the number of user interventions in any given workflow, and therefore reduce the time it takes to process tasks. In addition, the user interface has been designed to incorporate analytics as part of that workflow design.

Oracle Fusion Applications – Preview

Oracle Fusion Administrative ERP

We expect that in the initial release for the ERP module of Oracle Fusion Applications, the focus will be on finance, human capital management and procurement — i.e., administrative ERP. There is limited support for core order management, distribution, logistics or manufacturing that is required for most operational ERP strategies. Another aspect of the ERP module is whether there will be support for industry-specific functionality outside of manufacturing and distribution. It is early in the development cycle for Oracle Fusion Applications, and some of the functionality being developed could be considered core to some of these vertical-specific applications that have long been stated as central to Oracle's applications strategy. Organizations that want to use Oracle Fusion Applications to augment their operational ERP strategies will likely be able to use some augmentation components; however, they should not assume that integrations provided by AIA will be of value to them. Rather, Oracle's upgrade tools and Oracle Fusion Middleware likely will be the mainstay of integrations. Additionally, as users adopt more than two to three augmentation components from Oracle Fusion Applications, they will likely want to consider making a transition to Oracle Fusion Applications for core ERP functionality, as the cost of maintaining integrations may outstrip the cost of a change in the core application. The first release of Oracle Fusion Applications has some functionality to support administrative ERP footprints, but is not suitable for most operational ERP installations.

Oracle Fusion Human Capital Management Applications



The first release of Oracle Fusion Applications Human Capital Management includes three broad product areas:

• Workforce Deployment — Human Resources, Global Payroll, and Workforce Lifecycle Manager (used for on boarding, for example)

• Workforce Development — Profile Management, Network at Work (Social Software features are included leveraging the Oracle WebCenter platform), Performance & Goal Management, and Talent Review

• Workforce Rewards — Compensation Management, Incentive Management, and Benefits Management

There are also some innovations that are not found in the Oracle PeopleSoft and Oracle E-Business Suite product lines — for example, Workforce Predictions (predictive workforce analytics that provide a different way of looking at Human Capital Management data), Network at Work, and Talent Review. Recruiting and Learning, Labor Scheduling, Time and Attendance, and Leave Management are absent from the initial release of Oracle Fusion Applications Human Capital Management. However, previews of Profile Management, Talent Review, and Compensation Management show solid functionality and a good user interface for an initial release.

We expect Oracle to position Oracle Fusion Applications Human Capital Management for new customers who want a Human Capital Management application built from the ground up using SOA. In addition, we expect Oracle to use this as a competitive block versus SaaS solutions. Specifically, we believe Oracle will offer the full Human Capital Management solution via the SaaS model as an alternative to existing Oracle PeopleSoft customers considering alternatives such as Workday and Ultimate Software. In addition, we believe Oracle will offer the Talent Management applications stand-alone as a SaaS offering for existing Oracle PeopleSoft customers considering alternatives such as SuccessFactors.



Oracle Fusion Core Financial Management Applications

The first release of Oracle Fusion Applications Financials covers general ledger, accounts payable, accounts receivable and collection management, fixed assets, cash management and employee expenses. There will be no support for encumbrance and commitment accounting in the first release, so this module will not be suitable for most public-sector organizations. There will not be support for treasury management functionality, apart from cash management. Oracle Imaging and Process Management provides an integrated document management capability to support accounts payable invoice automations.

Some of the fundamental architectural concepts come from a combination of Oracle E-Business Suite and Oracle PeopleSoft. The general ledger (GL) coding structure and ledger architecture is the same as Oracle E-Business Suite, with an Accounting Flexfield of 30 segments each of 25 characters, while the subledger accounting concept from Release 12 of Oracle E-Business Suite is also used. Tree structures and effective dates are carried over from Oracle PeopleSoft. However, the most significant innovation is the use of the Oracle Essbase multidimensional database to hold aggregate GL balances. This is a major architectural development that overcomes the inherent difficulty of creating hierarchical financial aggregations in a relational database, and is a significant first for Oracle. Performance of such a hybrid architecture will be a concern, but Oracle does not perceive this to be an issue. Incremental updates are performed to the Oracle Essbase aggregates whenever a journal is posted, and Oracle claims that performance of these updates is better than updating summary GL balances in the relational environment.

While the underlying architecture is a significant innovation, its use in the applications is underwhelming. Oracle had the opportunity to introduce the kind of visualization of financial balances that its users have been dreaming of since the initial release of Oracle E-Business Suite in 1989. Based on what we have seen so far, it is possible to drill down through the hierarchy levels in an easy way, but the visualization is not new (unlike other functional areas, such as HR). Oracle may have missed an opportunity to introduce functionality that would create clear differentiation for Oracle Fusion Applications Financials.

Oracle Fusion Extended Financial Management Applications

In addition to Core Financial Management applications, the first release of Oracle Fusion Applications includes Project Portfolio Management (PPM) and Procurement.

PPM covers project costing, project billing, project control, performance reporting and integration with project management systems (the first integration will be Primavera). There is two-way synchronization with Microsoft Project Server. The functionality appears comprehensive, with a focus on the financial aspects of PPM. There is also integration with Oracle Fusion Applications Enterprise Contract Management for contract-related data. Future releases may feature integration with Hyperion Planning to hold plan data. Oracle has leveraged the underlying Oracle Fusion Middleware to provide collaboration capabilities along project inquiries and dashboards (which have excellent visualization). PPM makes good use of the multidimensional capabilities provided by the inclusion of Oracle Essbase.



Oracle Fusion Procurement

This covers the entire procurement process (focusing on indirect procurement), providing purchasing, self-service procurement, sourcing, procurement contracts, and supplier portal and spend analysis. The data model is primarily from Oracle E-Business Suite, but with some significant changes — for example, the introduction of center-driven procurement, which supports centralized and local centers of category expertise. Spend analysis leverages Oracle Essbase to provide multidimensional and what-if analysis.

The first release of Oracle Fusion Financials has fairly comprehensive functionality, a highly innovative architecture and some interesting new features. Although it is primarily aimed at new Oracle customers, midsize E-Business Suite Financials users could consider becoming early adopters if they have an Oracle-centric technology strategy. Oracle PeopleSoft and Oracle JD Edwards users should wait until Oracle Fusion Applications become more of a known quantity in the market.


Oracle Fusion CRM -Sales & Marketing

The first release of Oracle Fusion CRM Application will support Sales & Marketing functionality — for example, Sales Opportunity Management, Lead Management, Campaign Marketing, Customer Hub, Sales Prospecting, Territory Management, Incentive Compensation, and Quota Management. We do not expect to see deployment of Oracle Fusion Applications aimed at Customer Service Contact Centers, Web Customer Service or Field Service until 2012.

Oracle has confirmed that it plans to deliver all Oracle Fusion Applications as multitenant SaaS, on-demand/hosted and on-premises offerings. We have yet to see a technology provider do this successfully, due to the inherent conflicts between supporting two delivery models with the same product targeted at the same user. As yet, we have not had sufficient details on whether Oracle plans to promise clients a migration between the two as needed.Oracle cites that is will continue to support its current SaaS offering, Oracle CRM On Demand, beyond Release 18 — i.e., to 19 and 20 version releases. This means that it will have two SaaS offerings targeted at the same market. Oracle will have four sales force automation (SFA) offerings targeted at the same user base. We believe that some rationalization is inevitable. Furthermore, we have not received conclusive information about migration tools from Oracle CRM On Demand to the new SaaS Oracle Fusion Applications Sales & Marketing offerings.Clients should plan for a reimplementation in moving from Oracle Fusion Applications Sales & Marketing On-Premise to Oracle Fusion Applications Sales & Marketing SaaS. There may be some savings due to some consistency in data model and tools.

Oracle Fusion Applications: Supply Chain Management

Oracle has a component of Oracle Fusion Applications that is called Supply Chain Management (SCM). At this time, the only component in the SCM portfolio is what We has called "distributed order management," which is targeted to be sold to Oracle and non-Oracle customers. This distributed order management component, along with Oracle's SCM framework, which contains data structures for product management, global order processing, logistics and cost management, will form the basis for Oracle's future SCM products in Oracle Fusion Applications. While the product suite is not a full SCM suite, this initial component is an interesting piece of stand-alone functionality that could be used to augment existing ERP or other order-execution environments.

There are two basic kinds of distributed order management: order capture and supply chain-oriented. Oracle is focused on the latter with the initial release of Oracle Fusion Applications. Supply chain-oriented Distributed Order Management emerged in the middle of the dot-com era to manage drop-ship orders that had to be executed across multiple fulfillment entities. That is, an organization might have had one order with three order lines, each line being fulfilled by a different vendor.

The reason a new category of order management systems is needed is because traditional ERP-based views of order management assume that the application manages both the orchestration of the order as well as the execution of the order. These systems basically take order orchestration and management (such as status information and promising information) and enable that to run against multiple execution environments.



Oracle breaks its order management platform into:

• Capture

• Decomposition

• Orchestration

• Task Layer Services

• External Interface Layer

• Global Order Promising

• Fulfill



This is a robust vision of overall order management, but Oracle has not built out mature functionality within each of these layers. Decomposition and orchestration appear to be the most-robust components, along with the external interface layer, at this point. This functionality supports the scenarios for usage that Oracle envisions with this product.

This product is not intended to perform significant order-capture functions or to perform pricing. Additionally, the product relies on the Oracle Fusion Applications Product Data model that can be populated through product master solutions or through service calls. As such, this product cannot replace an existing order management environment, but it can overlay existing environments to provide basic order orchestration components. Oracle states that it has worked with customers in high-tech, manufacturing, retail, communications, media and financial services industries to validate functionality.

The use of a Gantt chart to manage overall order execution and to perform "jeopardy management" is a promising model; however, significant work on how to populate the lead-time data into this system is required. The system will need a more sophisticated model than simple linear lead time flows to be useful in the real world. The ability to manage costs within the system is also promising, but there are only high-level examples of how this would be used so far. Finally, the capability to have a resource-based view of fulfillment resources could help Oracle's Distributed Order Management solve more-complex problems than other order-management environments have been able to tackle.

The major functionality gap in the initial release of Oracle Fusion Applications is that the Oracle Distributed Order Management product does not use a graphical user interface to define the orchestrations of processes/orders this reduces the usefulness of a product whose main value to users will be to enable agile business process flows via such orchestration. However, we expect Oracle to address this issue as the product matures, particularly since Oracle Distributed Order Management doesn't appear to have fundamental architectural limitations in the area of fulfillment.

Oracle Fusion Applications and AIA

Oracle's stated long-term strategy has been to create the Oracle Fusion Applications, bringing the functionality of its various products to a common platform built on Oracle Fusion Middleware. Although its next-generation product is an engineered suite, the new product will have to coexist with the existing applications for many years, until all the functionality needed by a customer has migrated to the new platform. Oracle envisions a "pillar" strategy, where companies replace older applications on a piece-by-piece basis with Oracle Fusion Applications as they reach critical mass for a customer's needs.

AIA and the PIPs were supposed to make this transition easier, as Oracle Fusion Applications core objects are consistent with the canonicals in AIA. While Oracle Fusion Applications incorporate attractive user interface, analytic and social networking capabilities, it may be many years before they attain functional parity with what they replace in certain product families. Oracle believes it can use the simpler techniques to integrate the pillars. Customization for each customer, however, will add to the cost of adopting a pillar approach, further reducing business justification for using the product.


Migration to Oracle Fusion Applications

With the initial release of Oracle Fusion Applications likely focused on point solutions, most users will be concerned with how to integrate Oracle Fusion Applications into their core applications. This will be a substantially easier effort than migrating the entire core functionality.

At this point, there is not enough functionality in Oracle Fusion Applications for most users to consider a full migration of their existing Oracle products to Oracle Fusion Applications, unless organizations have purely financial management usage of their applications' core. However, as Oracle fills out the functional footprint of Oracle Fusion Applications, full migration will become a real choice for more users.

Based on demonstrations that Oracle provided,we see Oracle Fusion Applications as having a substantially different process and data model from other Oracle Applications Unlimited applications. While there are carryover elements from some of the Oracle Applications Unlimited products, there is no Oracle Applications Unlimited product family that looks substantially like what is in most of Oracle Fusion Applications. Additionally, there is some complexity in the use of embedded analytics and model-driven packaged applications that are not present in Oracle Applications Unlimited products.
Oracle has stated that it will provide data migration "automated upgrade tools" for this. While we expect the tools to be of high quality, data migration is not a significant portion of the effort in migrating from a legacy environment to a new process model, especially with the new technologies embedded in Oracle Fusion Applications. For replacement or augmented modules(s), the implementation effort will vary widely, with costs similar to reimplementation levels for replacement modules. This will be highly dependent on the Oracle product family, level of customizations, degree of latest release versions installed, and the availability of migration tools.

Many organization & users will need new skills, such as BPM and process governance, to manage an Oracle Fusion Applications implementation. Organizations will need to assess the level of skills available to them prior to moving to Oracle Fusion Applications.

Overall Fusion is a innovation and Interesting recipe from Oracle for the new IT economy but the real success of Fusion relies on how well it fuses with existing IT infrastructure and help companies to enhance efficiencies and cost effectiveness of IT operation.

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