Customers Switch to Oracle Cloud Apps From Aging Legacy Systems

Market forces, user demands prompt enterprises to remap software strategies

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Oracle is turning up the heat on the digital transformation race among customers by showing them the benefits of switching to its Cloud applications at a pivotal moment when many companies find themselves struggling to adapt to a changed world with antiquated systems.

With its fiscal 2022 in full swing, Oracle kicks off an onslaught of events to showcase the magnitude of change among customers that are no longer sitting on the sidelines, but rather going live with Oracle Fusion Cloud Applications in order to improve business processes that in some cases have been left largely untouched since the Y2K switchover.

TTX CFO Vicki Dudley, 2 – Bridget Klare of Kroger, 3 – Rob Owen of Mondelez, 4 – Steve Miranda of Oracle, 5 – Customer Profiles from ARTW Buyer Insight Master Database

During the July virtual event, Steve Miranda, executive vice president of applications product development at Oracle, cited dozens of companies that have recently switched to Oracle Cloud Applications after years of running on-premise systems from Oracle and/or its competitors.

Based on our Buyer Insight Master Database, the average age of the enterprise-wide back-office and customer-facing systems – mostly on-premise software – being purchased by the 28 references from Oracle is 16.4 years, compared with the average of 23.2 years for the more than 125,000+ entities(out of a total of over 350,000) with more than $100 million in annual revenues in our customer repository. That suggests that many of these enterprise systems could still be extended for another five to 10 years, but the race to replace them appears to be accelerating especially in the minds of decision makers at these 28 organizations.

Miranda showcased recently go-lives from customers who have moved to Oracle from SAP on-premises applications including railcar provider TTX, which replaced on-premise and SaaS SAP applications with Oracle Cloud ERP, EPM, HCM, and SCM; grocer Kroger that replaced 15 different legacy HR systems including SAP with Oracle Cloud HCM; and snack maker Mondelez International that moved its Transportation Management system from SAP to Oracle Cloud SCM.

Bridget Klare, senior advanced manager of HR software engineering at Kroger, said the catalyst to retire the legacy HR applications including a host of mainframe and AS/400 systems and replace them with Oracle Cloud HCM is to deliver a seamless associate experience for its 465,000 employees, a particularly important attribute given its size and the critical role Kroger’s frontline workers have played during the pandemic.

Robert Owen, North America Lead Transportation Network Optimization at Mondelēz, said the advantages of running an Oracle Cloud-based supply chain management – coupled with other financial planning tools from Oracle – stem from the desire to achieve logistics excellence and process optimization through simulation and iterative improvement.

After going live with Oracle Cloud Applications for finance, supply chain, and HR in early 2020, Vicki Dudley, Chief financial officer of TTX, was able to close its financial reporting for the full year with better results than expected as it took the initiative to refrain from operating in silos, which were common in the past when TTX was running customized SAP applications.

Dudley added that monthly updates from Oracle Cloud EPM for new budgeting and planning also benefit TTX by helping it quickly address changing market conditions and mitigate any unpredictable risks by factoring in what-if scenario modeling.

All three companies run a mix of Oracle and other applications to automate their disparate operations with a recurring theme validating the new trend – changing one’s applications landscape is no longer considered an insurmountable obstacle, but rather a necessity in uncertain times like 2021, a year that promises to deliver more upheavals with mounting inflationary pressures and pandemic lockdowns still not easing in many countries.

These organizations are investing in Cloud innovation because of its intuitive user interface, always-on availability, as well as continuous updates and enhancements to the fullest extent at a time when speed, agility, and the ability to harness data and insights matter more than ever.

One key aspect about this spate of new Cloud investments has more to do with their impressive performance, rather than cost savings typically cited as one of the biggest reasons that justify many IT projects.

During another Oracle Live online event in June, Peter Jazowick, Head of Global Technology(CIO) of Specialized Bicycles, said this year his CFO was able to complete the fastest quarterly close in its history after migrating its Oracle E-Business Suite to the Oracle Cloud Infrastructure to take advantage of 150 integrations into data warehousing and transaction processing tools all readily available on OCI.

Specialized Bicycles, which has experienced booming sales over the past 18 months with a flood of orders for new bikes, saw a 50x transaction improvement by running its EBS applications on OCI, Jazowick added.

Oracle has also documented its own transition to Oracle Cloud ERP, which has resulted in shaving 4.5 days off its financial close period, enabling it to close its books the fastest among the S&P 500. Similarly, recruiting company TrueBlue – another Oracle Cloud ERP customer – reduced its financial close from nine days to five.

“We used to have 20 different on-premise systems, which have now been consolidated onto one system with Oracle Cloud ERP,” said Derrek Gafford, CFO at TrueBlue. “Instead of people transferring data from one system to Excel and then to another system, we now have one source of data for all our information. This helps improve accuracy and efficiency and significantly reduces manual effort.”

Such results are consistent with current software buying preferences that zero in on process improvement above anything else when demand for one’s goods and services could suddenly swing from trough to peak, prompting companies to activate real-time responses to production and distribution requests, something that could not have been achieved with an outdated system.

The goal is not to invest in a cost reduction tool, but best in class Cloud applications that generate tangible business benefits, according to a CIO who was recently interviewed in one of our monthly Buyer Insight studies.

Another notable characteristic about such user sentiments is that 2021 may turn out to be the banner year for talent search, a far cry from 2020 when layoffs were common. As a result, running modern Cloud-based systems with easy access to data and insights along with native support for mobile devices may in fact be the impetus that prevents companies from slipping into anachronism, especially from an operational standpoint. “By modernizing its toolset, Kroger is able to attract and maintain the right talent,’’ Klare said.