JD Edwards Users Pondering Upgrade Options

June 18, 2012 Dan Burger

The Southern California JD Edwards user group (JDE SCUG) gathered last Wednesday for one of their quarterly collaboration sessions. It gave me an opportunity to talk with someone on the front lines working with a subset of customers that have the same or very similar IT dilemmas as everyone else, except that in this case, we’re talking about IBM i shops where the mix of Oracle and IBM can sometimes be volatile.

Steven Colgrove is the senior director of the west region for Denovo, an application and technology consulting company specializing in helping companies running JD Edwards ERP software. Denovo works with Oracle representatives to assist shops with JDE upgrades and in doing so provides JDE shops with IT and business assessments. The assessments not only review software options, but also hardware and infrastructure, and align business processes with current technology.

Colgrove was on a panel discussion and a roundtable discussion at the user group meeting, after which I sat down with him to discuss the JDE customers who run on the IBM i platform, or more accurately on IBM iSeries and AS/400 iron running on pre-6.1 versions of the operating system because there are many who have not upgraded in quite some time.

“A lot of people do things the way they have always done things,” Colgrove says describing the JDE installed base. “They don’t know why they do them. They are just following the past. So the methodology is 10 years old or older. There’s a general lack of ongoing training in many instances where upgrades are now on the horizon. This results in many situations where the use of the product, which was determined ten or more years ago, is no longer in alignment with how the business is run today. It still works, but it is more labor intensive than it needs to be. There are new tools that can boost efficiencies.”

Although those outside the IBM i community often deride the hardware and operating system as out of date, Colgrove disagrees. He’s been around JD Edwards software since the days when it ran exclusively on AS/400s and from his perspective, based on the assessments his company does, this is more of an issue with application software and tools that are going unused by companies that are stuck in the past. The platform is technologically contemporary, he says.

There are also the people who make Oracle the villain. That’s another easy target for anyone who doesn’t like Larry Ellison and the Oracle roadmap he trumpeted early on after he managed to nab the JDE business (a move that IBM should have and could have made). The Oracle control made a lot of OS/400 and IBM i customers nervous and Ellison’s comments that JDE, PeopleSoft, and Oracle eBusiness Suite would be folded into one platform, called Fusion, really stirred the pot. To Ellison, it made perfect economic sense. But it really angered the IBM faithful.

Despite the initially rocky road, Colgrove thinks Oracle has been more than fair.

“Oracle did a smart thing in my opinion,” he says. “They are putting together a great set of products in the Fusion applications, but continuing to put a lot of R&D into their existing ERP products. They are not forcing users to Fusion, but they are showing the benefits of moving to Fusion and make the migration easy.”

“I think they learned a lesson from the first backlash from talk of one platform for all and I think the company is more in tune with what the users are talking about than before. That’s not to say that in the long term Oracle doesn’t want everyone to move. But I think they are doing it in a better way.”

“If Oracle is truly listening to its JDE customers, it must be misinterpreting what they are saying,” Colgrove says. “Because I don’t think they are asking for higher maintenance costs. The success of third-party maintenance vendors in the JDE community attests to that. So does the number of companies that are managing to make their way without maintenance support, product upgrades, and enhanced tools. Highly customized software, which is common in the JDE community, is another reason that support is seen as expensive compared to the value it provides.”

But as Colgrove pointed out, “that maintenance money pays for the R&D that goes into the new releases of existing ERP products and keeps customers in the fold rather than driving them away. It also makes them more impervious to the SAPs and Microsofts that are trying to convert these customers.”

Still, that salve doesn’t take away the sting of 22 percent annual software maintenance fees for companies that have no loyalties toward Oracle. Oracle has taken the position that if companies drop maintenance and want to upgrade later than the re-licensing fees will make up for what the elimination of maintenance fees cost the company. That’s the old pay me now or pay me later plan.

“Some companies will stop writing checks, stay with the platform they like today, get third-party support to remain stable, save some money, and decide whether they want to go with Fusion after five years or 10 years,” Colgrove says. “At that point, either Fusion or another (non-JDE ERP) choice will be treated as a new implementation. Part of the decision that leads to not needing to pay maintenance is that this path is not going to make that migration easier.”

“Most companies take some time to consider whether there is enough benefit in the new upgrades to counter the increase in software license fees. Some of the tools and the work process efficiencies are keeping JDE customers on the upgrade path,” he says. “But there are those that are upgrading because they are forced to. They may be losing support for their out-of-date operating systems and hardware, which becomes the trigger for upgrading their old version of JDE. Not only does this add to the complexity of the upgrade, but it also instigates a hike in software licensing on the newer, more powerful iron.”

World A9.3, the latest release of the IBM i-centric software, requires an operating system jump to IBM i 7.1, the most current base release of what used to be called OS/400. Although some might say this is unfair, and that it forces the installed base to make an operating system upgrade perhaps prematurely. However, the reality is that it takes time for new versions of major software to take hold and i 7.1 is already two years old. By the time World A9.3 gains some sales momentum, i 7.1 will be a middle-aged operating system. And i 6.1 will be six years old. Can’t really blame Oracle for not worrying whether World A9.3 was supported by an OS that deep into its run by the time most customers were looking at the A9.3 upgrade.

Planning for the future, it was a better strategic move to build i 7.1 functionality into World, which is what Oracle did. For a detailed report on the added functionality offered in the latest version of World, along with a close examination of EnterpriseOne 9.1 (both released simultaneously two months ago, see the report in Four Hundred Stuff titled Oracle Revs JDE EnterpriseOne and World.

The other thing to remember is that i 7.1 gets Technology Refreshes, where IBM updates the microcode under the operating system to support new hardware without making changes to the OS level and therefore requiring customers to recertify their apps or pay upgrade fees.

“If it is an operating system problem that comes from losing support on the OS a company is running, or because new software would not be supported if the company stayed on its current OS, or that if the new hardware only runs IBM i 7.1, for instance, and the software you’d like to keep won’t run on i 7.1, you are caught in between,” Colgrove notes. “That’s one of the reasons these upgrades–hardware, software, and operating system–all occur at the same time.”

Colgrove cited an unnamed customer caught in the trap of needing an OS upgrade that required a software upgrade and the company was also off maintenance. You might think that Oracle took them to the wood shed on that occasion, but Colgrove says it was the opposite of what many would expect.

Oracle sold the company the upgraded software at a steeply discounted rate that was far less expensive than the maintenance costs the company would have paid if it had stayed on software maintenance. And Oracle did not require back maintenance to be paid, Colgrove says.

“I think this is a frequent occurance,” he says, “and I’ll tell you why. Some maintenance is better than none. Oracle gets them back on maintenance at 22 percent a year. Oracle is taking a risk because the company could go back off maintenance again after one year, but it is worth that risk.”