Oracle's latest version of its E-Business Suite (EBS) is a significant release. Current users need to determine if and when this upgrade will be appropriate, if they have not already done so. New users of Oracle applications need to ensure that Release 12 is the appropriate release to implement.

• Release 12 will be the default release for most new EBS users.
• Most users will start upgrading to Release 12 in 2008 or thereafter. However, users with more-current EBS releases may hold off upgrading until the delivery of Fusion applications becomes clearer.
• Users undertaking aggressive upgrades will be going live during the remainder of 2007. Because R12 is still early in its life cycle, these users may face some challenges resulting from a lack of skills in the Oracle community.

• Assess several decision criteria to determine the most appropriate timeline when planning an upgrade from earlier releases of EBS.
• Consider the key decision factors outlined in this research.

E-Business Suite Release 12, which originally became available in January 2007, is still in the early stages of adoption. As a result, there is currently a lack of real-world experience about release quality and a shortage of knowledge in the Oracle community about the issues likely to be encountered and the best practices when upgrading. Although we expect to see an increasing number of customers go live before the end of 2007, most of these will be new installations. This means upgrade skills and knowledge will remain in short supply for the remainder of 2007. We expect that most users will not plan to start their upgrades from earlier versions until 2008 or later, as the skills base expands and potential quality issues are addressed. Users planning an upgrade to Release 12 should analyze several key decision criteria to identify the most appropriate time scales for their projects.

Oracle's EBS R12 is a major release with a large number of functional enhancements across the entire suite, new modules (such as Manufacturing Execution System for discrete manufacturing) and several significant changes to the architecture and technology. Oracle describes R12 as "the global business release," and much of the focus has been on improving the ability of EBS to better manage complex global businesses, especially where organizations are centralizing their applications into a shared service environment. R12 also makes increased use of Fusion Middleware.

The functional enhancements are too wide ranging to detail here, but the major changes in R12 are described in the sections that follow.

Much of the EBS remains in Oracle Forms technology, and Oracle has worked with its customers to redesign the Forms-based interface in EBS to give it a "cleaner" look. Many workflows have been redesigned and streamlined, and the steps required to perform some key tasks have been reduced. These are all positive enhancements, but they will require training to familiarize users with the changes, which will lengthen large upgrade projects. Also, the new user interface is based on Forms 10, while 11i10 used Forms 6. This may present some issues when upgrading custom Forms from previous releases.

There have been significant changes in Financials to support global operations and, in particular, shared services. In prior releases, operating units and sets of books somewhat constrained the flexibility of deployment: Users could only be assigned to a single operating unit, and sets of books were self-contained and managed by users assigned to the set of books. In R12, users can be assigned to multiple operating units, and processes and transactions can span operating units. Sets of books no longer exist as a concept. Instead, entities now have "ledgers" that can be combined into ledger sets for all processing. This enables multiple ledgers to be updated from a single posting event, providing better support for environments using multiple generally accepted accounting practices (GAAP). It is also an improvement for industries that have to report regulated activities in a specific manner.

Another major change is the introduction of a single accounting engine to manage all posting activities into the general ledger. Previously, modules such as Accounts Payable and Accounts Receivable contained their own rules for posting accounting events to the general ledger. The new subledger accounting module greatly simplifies this process by storing accounting entries in subledger tables that are standard across all products. It also provides flexibility to the user in how the level of detail is posted to the general ledger.

In previous releases, there were separate inventory systems for process manufacturing and discrete manufacturing. These have been converged into a single inventory system with a common data model, which will give a single source of inventory data across products for mixed-mode manufacturers and provide functional inventory enhancements for process industry users (such as improved physical and cycle counting methods and vendor-managed and consigned inventory). This means that Oracle Process Manufacturing users will face significant data model changes as part of the upgrade to R12.

R12 requires the Oracle 10gR2 database, which will mean an upgrade for most users. It also makes more use of Fusion Middleware. For example, BI Publisher is now widely used throughout EBS, and new functionalities, such as subledger accounting, have been developed using JDeveloper. Although this is a distinct benefit for users that want to leverage Fusion Middleware, it creates more requirements for user retraining. For example, a user drilling from a general ledger inquiry to the detail in the subsidiary modules will access the detail via subledger accounting. This means users start in a Forms-based inquiry, navigate to an Application Developer Framework-based inquiry in subledger accounting and then return to a Forms-based inquiry in the subsidiary module. Early adopters said users found this disconcerting when they first encountered it.

Oracle announced general availability of EBS R12 on 31 January 2007. However, although R12 was available to new customers form this date, it does not mean that established customers have been through the full upgrade cycle at the time of general availability. This is because Oracle does not perform beta testing on its applications in the traditional sense. Instead, it has two early release programs, the Early Implementer Program (EIP) and the Strategic Implementation Program (SIP). The EIP starts approximately six months prior to expected general availability of a release, while the SIP begins after general availability.

EIP customers work closely with Oracle development to set up sandboxes for testing functionality and planning the upgrade process. Oracle worked with three customers during the EIP, and two of them are in the process of performing the full production upgrade; however, neither will be live until the fourth quarter of 2007.

Customers get involved in the SIP after general availability. These are customers that want to upgrade aggressively — in the case of R12, in less than 12 months from general availability. In this program, Oracle dedicates a cross-functional support team to assist the customer, but does not participate in the actual upgrade. Oracle typically works with between five and 10 customers in the SIP, although Oracle has stated that more than 80 companies outside the SIP are in varying stages of early adoption.

Gartner has spoken with a SIP participant that was upgrading HR, financials and purchasing from 11i7 and planned to be live before the end of 2007. Although the organization was reasonably happy with its progress so far, it had encountered some issues, primarily with one of the upgrade scripts not working. Despite some short-term concerns, the organization remains confident it can achieve go-live status by the end of the year.

There is currently only limited real-world experience of R12 in a live environment. At the time of writing, there were six customers live on R12 (five new installations and one upgrade). The upgrade customer upgraded financials from 11i10 and will next implement the Customer Data Hub, some CRM components and HR on R12. Oracle planned to be live on R12 in the July 2007 time frame, but this has been delayed due to the recent acquisition of Hyperion Solutions. Consequently, it is too early to assess the quality of R12 compared with other releases.

Nonetheless, there is significant interest in R12. Oracle has stated that, in addition to the 80 early adopters, more than 2,800 customers have downloaded or ordered R12. This means that R12 skills among Oracle staff and service providers are likely to be in relatively short supply and high demand through mid-2008. For example, the full set of R12 training courses will not be available through Oracle University until the fourth quarter of 2007; therefore, user training will have to be conducted by Oracle consultants or trained end-user staff.

Based on the current status of R12, Gartner advises new EBS customers to assume that R12 will be the starting point for their implementations. Oracle has stated this is its policy, and it is encouraging new customers to take R12, although there have been exceptions. Ensure you talk to at least one live R12 reference that is using the same modules you will be implementing in your geography to assess the quality of the release and the level and availability of R12 skills in your region. If you can't talk to references using a similar product set, realize that this lack of knowledge will require you to have appropriate Oracle R12 application and technical skills in your organization, as well as a strong relationship with Oracle support. For this reason, highly risk-averse organizations with limited IT capabilities should evaluate implementing 11i10, rather than R12, through the second half of 2007.

R12 has several important new capabilities, but this doesn't mean all customers should start planning an upgrade now. Existing customers should use the decision framework in Table 1 to plan if and when they should consider moving to R12. This framework involves various decision criteria and identifies whether an aggressive (before year-end 2007), early majority (1H08) or majority (2H08 onward) upgrade timeline is appropriate. Users should rank their situation against each of the criteria to determine whether they clearly fall in one of the time scales. Where no time scale is the clear choice, users should conduct more-detailed assessments to weigh the benefits of each time scale against possible risks.

Users need to consider the impact of Oracle's support policy for their current releases. Premier support for 11i8 ends in November 2007 (although Sustaining support is available for 11i7 and 11i8 at a premium), so 11i8 users (and earlier) should consider upgrading prior to the end of 2007 to retain Premier support. Premier support for 11i9 ends in June 2008, so upgrading to R12 prior to that date will remove the need to pay the premium for Sustaining support.

Users with 11i10 have less pressure to upgrade, because Premier support for this release continues until November 2009. Users of 11i10 should also monitor the delivery of Fusion Applications, as it may be feasible to move directly to that release without moving to R12. However, Fusion Applications aren't currently available, so it's impossible to develop clear advice at this point.

The level of Oracle application configuration and technical skills in your organization is an important consideration, because they are likely to be in short supply for R12 during the next six to 12 months. Users with a good complement of Oracle skills could consider an aggressive upgrade timeline, although they will have to invest in training these personnel in R12 functionality and technology.

User organizations will also need Fusion Middleware skills, because R12 makes greater use of Fusion Middleware, and it requires the latest release, 10gR3, which is still early in its life cycle. Organizations that rely on external sources for their Oracle skills should consider a more conservative upgrade timeline to allow a critical mass of these skills to develop.

In the short term, most R12 skills are likely to be concentrated in the U.S. and Western Europe. Consequently, organizations with implementations focused in these areas will face fewer challenges in obtaining skilled R12 resources than those with most of their operations in other geographies. We anticipate that, by mid-2008, there will be a wider range of R12 skills available in all geographies, meaning that large global upgrades would be more practical after this date.

The more wide-ranging the modules implemented, the higher the risk of an aggressive upgrade schedule. There are significant changes across the entire product suite; therefore, the more modules deployed, the more complex the upgrade will be. Also, the changes to the user interface mean all users will need retraining — the more users, the bigger the training burden.

Users that are upgrading financials and process manufacturing face the greatest combination of functionality and data model changes. In addition, any reconfiguration of the implementation and consolidation of instances will add more complexity and risk, although there will be attendant benefits from the instance consolidation itself. Users upgrading their current EBS implementation on a "like for like" basis (for example, same instance structure with no chart of accounts changes) face the least risk in the short term.

Because of the use of Forms 10, Forms-based customization may need some rework as part of the upgrade process. R12 also uses Reports 10, so custom reports may need some rework. Oracle's experience indicates that 10% of Forms and 1% of Reports would need some rework, but each user should perform an assessment.

Customizations made using the "mod_plsql" technique need to be reimplemented in R12 using OA Framework, although this primarily affects users on versions prior to 11i10. Consequently, users with extensive customization should consider a more conservative upgrade timeline to allow for the necessary rework. Alternatively, organizations should use the upgrade to R12 to eliminate as much customization as possible, enabling them to adopt a more aggressive upgrade timeline.

R12 makes more use of Fusion Middleware than 11i10. Consequently, organizations planning to use Fusion Middleware as part of their service-oriented architecture (SOA) strategies can expect to realize early benefits from the combination of Fusion Middleware and R12.

Highly risk-averse organizations are likely to adopt a conservative approach to upgrading to R12. This may be the overriding factor for many organizations that do not see potential benefits from adopting R12 ahead of most EBS users.

Overall, Gartner anticipates that a small number of users (somewhere between 50 and 100) will have upgraded by the end of 2007. The early majority completing the upgrade by mid-2008 will still be a relatively small percentage of the EBS user base (likely no more than 5%).