Reducing the costs of EBS to Oracle Cloud migration

Migrating from Oracle E-Business Suite (EBS) to Oracle Fusion Cloud is a complex process that demands meticulous planning and execution. This transition involves harmonising processes, managing change effectively and aligning teams to ensure a seamless shift. Key challenges include handling data migration, ensuring system compatibility, and maintaining security throughout the process. Additionally, organisations must address the costs associated with maintaining software in the on-premise environment, as both on-premise and cloud environments will need to coexist during the transition period.

Oracle aims to encourage E-Business Suite customers to adopt Oracle Fusion Cloud and is willing to make concessions to facilitate this transition. Some organisations have negotiated a so-called “Shelving Right” clause with Oracle to reduce costs. This clause allows end-users to stop paying support fees for on-premise Oracle ERP licences while transitioning to Oracle Fusion Cloud. End-users retain the right to continue to use the licensed on-premise software and benefits from support at no cost for a certain predefined period

This clause offers several advantages for end-user organisations using Oracle Fusion Cloud.

• Cost savings: By stopping support fees for on-premise Oracle ERP licences during the transition, organisations can significantly reduce their overall migration expenses. This financial relief allows for better allocation of resources towards other critical areas during the migration process. Ultimately, it helps in managing the budget more effectively.
• Flexibility: The clause provides the flexibility to operate both on-premises and cloud environments simultaneously during the transition. This coexistence period ensures that business operations continue smoothly without disruption. It also allows for a phased approach to migration, reducing the risk of potential issues.
• Support continuity: During the initial transition period, Oracle offers limited on-premise support at no additional cost. This support includes essential updates such as security patches, critical updates, and regulatory changes. This ensures that the on-premise system remains secure and compliant while transitioning to the cloud.
• Reduced financial burden: Shelving on-premise licences alleviates the financial strain of maintaining dual environments. Organisations can redirect these savings towards enhancing their cloud infrastructure and other strategic initiatives. This approach helps in achieving a more efficient and cost-effective migration process.

Considerations and best practices

• Shelved on-premise licences: The scope of this clause depends on the definition of Shelved On-Premise Licences. Oracle will list the specific products, product families, or CSI numbers. Ensure that all products affected by the transition are included in this list.
• Initial transition period: During the initial transition period, you can stop paying support fees for these licences while retaining its use rights. Additionally, you will receive limited on-premise support, which includes product support (such as logging service requests for product issues), security patch updates, critical patch updates, tax updates, and legal and regulatory updates. However, this support does not include major version upgrades. Typically, Oracle grants an initial transition period of one year.
• Extension of the transition period: Some migrations may require more time. In such cases, it is important to plan for possible extensions. Oracle may allow extensions in 12-month increments, provided you send a written notification at least 30 days before the end of the current term. Note that the extension will not include free limited support. You will need to pay the full support fees based on the most recent annual support renewal order.
• End of the transition period: If the period was extended, the end-user organisation may include a clause allowing for the termination of the transition period with prior notice to Oracle. This ensures that you only pay for the pro-rata portion of the year when support was available. Once the transition period ends, the on-premise licences no longer used can be shelved, and support fees for them will no longer be due.

Conclusion

Migrating from Oracle E-Business Suite (EBS) to Oracle Fusion Cloud is a complex process that requires careful planning and execution. The Shelving Rights Clause offers significant advantages, such as cost savings, flexibility, support continuity, and reduced financial burden, making the transition smoother and more efficient. However, the success of this migration also hinges on effective contract management.

From a contract management perspective, it is crucial to ensure that all terms and conditions are clearly defined, understood, and adhered to. This involves meticulous attention to detail, regular reviews, and proactive communication with all stakeholders. Effective contract management helps mitigate risks, ensures compliance, and maximises the benefits of the Shelving Rights Clause.

As organisations navigate the complexities of migration, robust contract management practices play a vital role in achieving strategic goals and maintaining operational efficiency. By managing contracts effectively, organisations can not only facilitate successful migrations but also enhance their overall financial health and operational performance.