Most of the 250 customers that have licensed Oracle's recently launched Fusion Applications so far have chosen a SaaS deployment model instead of running it on-premises, a senior executive said this week during the Collaborate user group conference in Las Vegas.
And they are doing so "in a coexistence fashion," running Fusion alongside their existing Oracle business software, such as E-Business Suite, and looking to add more Fusion modules over time, said Chris Leone, senior vice president of applications development, during a keynote address.
Fusion Applications were Oracle's first to be designed specifically for cloud-based delivery, not only to give customers the option but to help Oracle itself run a SaaS (software-as-a-service) business profitably and more easily, Leone said.
For one, Fusion Applications have an extensibility layer that allows "upgrade-safe" tweaks to the user interface and process flows, a crucial component for any SaaS vendor, since major updates are applied to many customers at once, allowing for substantial cost savings.
Oracle is giving customers on its older ERP (enterprise resource planning) product lines software license credits for "like-to-like" functionality when they switch to Fusion Applications, Leone said after the keynote. Customers can also work with Oracle to factor and credit money they're now spending on annual maintenance payments into the cost of SaaS subscriptions for Fusion Applications, he said.
An IT professional who has worked with Fusion Applications said SaaS is the way to go, at least for now, given the headaches of running it on-premises.
"If you wanted to run Fusion Applications in your company, for the next two years, the only way I would do it is with Oracle hosting," said Michael Brown, technical manager at consulting firm Colibri Limited, during a presentation this week.
Brown's talk covered the complex task of installing Fusion Applications on-premises, which requires a multilayered identity management framework along with a sheaf of other Oracle middleware, as well as servers with large amounts of main memory.
"These are not cheap servers when they are configured this big, and most of us don't have them lying around" for testing and configuration purposes, Brown said. "If you are running a small E-Business Suite system, which a lot of customers are, you don't have enough headroom for Fusion [Applications]."
Global systems integrator and E-Business Suite customer IT Convergence is one early Fusion Applications adopter. It began its implementation of Fusion HCM (human capital management) software in March, while simultaneously participating in a beta program for E-Business Suite 12.2, said CTO Gustavo Gonzalez during a presentation at Collaborate.
Fusion's features, such as the embedded BI (business intelligence), are very appealing to IT Convergence, Gonzalez said. "Things that were taking a long time for us in terms of reporting were covered inside the Fusion product."
However, the complex underlying technology stack for Fusion Applications presented a two-fold issue, serving as "a challenge for our resources and an opportunity for our business to connect with other systems," he said.
Prerequisites for Fusion Applications include SOA Suite, WebCenter Portal for Oracle Applications, BI Foundation Suite, Oracle's identity and access management software, GoldenGate, Fusion Transactional Business Intelligence and WebLogic Server, according to Gonzalez's presentation.
Stitching all of that together has been a tall order, Gonzalez said.
By going to SaaS for Fusion, "you're still going to be purchasing [the technology] in some hidden way, but you're removing the installation challenges," he said.
In an interview after his talk, Gonzalez said that IT Convergence decided to take on the burden of an on-premises deployment in part because it plans to develop a consulting practice around Fusion Applications and wanted to give staffers a chance to gain the needed expertise.
One prospective Fusion Applications customer said her only interest is in the SaaS deployment model, given the hassles of running Fusion in-house.
The latter option is "out of the question," said Albina Shekhtman, director of business application services and programs at Abt Associates, a public policy and business consulting company, in an interview. "Our direction is: Let somebody else have the headaches."
For example, Abt Associates currently has an E-Business Suite implementation that lacks high-availability functions, she said. "In the cloud, I don't have this issue."
The sole initial reason Shekhtman began looking into Fusion was because she heard it was an online offering, she said.
Shekhtman is hoping to first roll out Fusion HCM software for recruitment, applicant tracking and employee onboarding, if she's able to convince Abt's human resources officials that it's the right move.
Right now, Abt Associates' HR department has "a very complicated situation" with its software portfolio involving E-Business Suite "and a lot of bolt-ons," which has resulted in many inaccuracies and inefficiencies, she said.
"My dream is, we're going to start going to Fusion," Shekhtman said. "They just need to see that the functionality will meet their needs."
That notion echoes IT Convergence's plans for Fusion Applications. While it committed to E-Business Suite for the immediate future, the hope is to move entirely to Fusion Applications within two years, depending on whether the software becomes mature enough, Gonzalez said.
Right now, for example, Fusion Applications' financials component doesn't yet support taxes for key countries such as Brazil, he said. "That is huge," he said. "That's why you don't hear a lot about financials on Fusion. The product, for a global organization, would not fit."
Oracle has rolled out several new releases of the version-one suite since its initial rollout, delivering bug fixes as well as some 300 customer-requested enhancements, Leone said during his keynote. "We've put a huge foot forward to make sure early adopters are successful."
The vendor plans to issue a number of additional updates to the first wave of Fusion software in the run-up to its OpenWorld conference later this year, according to a slide Leone briefly displayed on a presentation screen. It also expects to have made some 1,000 customer-driven enhancements by OpenWorld, according to the slide.
Leone declined to say how many more licensed Fusion Applications customers Oracle expects to have by the event.
However, this year could see more Oracle users in general take a serious look at buying into Fusion, simply due to timing, said Mark Clark, president of the Oracle Applications Users Group, one of the organizations putting on the Collaborate show.
Oracle had run a restricted early adopter program for Fusion Applications, and by the time the software became generally available, many other customers were "well into their budgeting for 2012," Clark said in an interview. "So this year, I think you'll see a lot of people look at and perhaps budget for a [Fusion] project next year."
Overall, customers should start "as small as possible" with Fusion Applications, Gonzalez said during his talk.
And those looking to exchange older software for new Fusion licenses and subscriptions should gird themselves for battle, despite Oracle's "like-for-like" pledge, he added
"If you have an HR license, you're going to get that license for Fusion," he said. "[But] if there's any feature you don't have in the core HR, you'll have to acquire it. That's where it becomes tricky. You have to be careful on that negotiation."
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com
This story, "Most Initial Oracle Fusion Applications Customers Going with Cloud Deployment" was originally published by IDG News Service Boston Bureau.