R12 Project Estimate
Maricopa’s College Financial System (CFS) is based on Oracle’s eBusiness Suite (EBS) of enterprise applications. These applications have a life cycle that requires periodic upgrades; since the original installation of Oracle Financials in 1996, MCCCD has upgraded the application three times. The average upgrade cycle for Oracle products is every five to seven years.
As part of the 2004 Bond Election, $450,000 was allocated to upgrade the Oracle Financials system to what Oracle was then calling Fusion Apps; in the intervening years, Oracle has delayed Fusion but issued an intermediary version named Release 12 (R12). R12 was initially released in 2007 with major upgrades to the product, specifically in the financial modules. MCCCD is planning to upgrade to R12 as an interim step before migrating to the Fusion Apps version, primarily due to support issues from Oracle. Oracle will be ending the support on EBS 11.5.10.2 prior to the release of Fusion which would significantly increase the cost of application support.
Because of the perceived overlap between R12 and Fusion, and because of the significant changes to financial modules, industry acceptance and upgrades to R12 have been slow to materialize. Gartner released a white paper in February 2009, two years after the release of R12, warning users to approach the R12 upgrade with caution. The areas of concern that Gartner emphasizes are 1) the changes to the financial modules, specifically Accounts Payable (AP), have uncovered problems for some upgrades; 2)because of the changes to the general ledger, specifically the introduction of Sub Ledgers, have led some companies to re-implement rather than simply upgrade; and 3) because of these changes, organizations should allocate more technical resources to the project and provide ample training because of functionality and interface changes to the system.
Because the numbers of R12 upgrades is so low, it is difficult to find comparable cost estimates for such an upgrade project. Internet searches resulted in three R12 upgrade projects, with a minimum amount of $837,000, a maximum of $1,901,000, and an average of $1,344,381. These projects were primarily just budget lines on city appropriation documents, but one city (Burbank, CA; project budget $1,295,000) also presented a report of their upgrade project at OUAG in May 2009. Their primary message as to Lessons Learned were Test, Test, Test and to provide adequate training.
To assist MCCCD in trying to get a scope on the budget required for an R12 upgrade project, current system details were sent to two major IT consultancy companies with experience in R12 upgrades. The assumptions for the upgrade project were minimal customizations and an upgrade, not a re-implementation. The two estimates ranged from 1400 hours to 2700 hours with differing rates for engagement; the two monetary estimates were $245,000 and $328,000. However, neither of these estimates includes the detailed training recommended by Gartner and the City of Burbank.
Due to the complexity of estimating the project scope, MCCCD IT would like to perform an initial evaluation of the current state of CFS. This would evaluate the current system, its readiness to upgrade to R12, the functional state and uses, and determine whether or not MCCCD will need to re-implement or simply upgrade. The estimated cost of this project planning step is $41,000; this assessment will be performed separately from the project implementation stage and help define the remaining project parameters.
In 2006, after the upgrade to EBS 11i, MCCCD hired a company to provide specific, focused functional training for Business Services on the financials modules. Because of the strong recommendations for ample training, a similar training project should be included in the R12 upgrade project. Three years ago, the cost for providing such training – two days of preparation and ten days of actual training – was $39,000; the training costs today are about the same.
In addition to the functional training, the CFS developers will need to update their skills to provide support for the new system. Oracle provided a road map of required training and skill sets; the cost of that training is $45,000.
Finalizing the project scope is difficult because of the upgrade or re-implementation issue. Since we will not know that answer until the initial evaluation is performed, it is better to aim a little higher for the initial budget estimates to include the possibility of re-implementation if it should be the chosen course. This estimate is based on the higher of the two estimates provided by the above vendors with one caveat; the dollar amount provided is substantially lower due to a large number of development hours that would be produced offshore; this estimate flattens out the differing consultant rates and uses an industry average of $150 per hour.
R12 Project EstimateR12 Initial Evaluation / 41,000
R12 Upgrade Project
2700 hrs/$150 per hr / 405,000
R12 Technical Training / 45,000
R12 Functional Training / 39,000
Total / $530,000