A Financial Services Case Study
When making the decision to upgrade to PeopleSoft 9.2 or move to Oracle Fusion Cloud it is vital that companies think in terms of more than just cost saving. Each implementation is a unique case study in which either option could provide more value for shareholders, users, and the company as a whole. In order to illustrate this point, we will walk through a unique case study of a Financial Services company faced with this very choice. We will first review the company and its essential requirements, and walk through questions that help determine which choice should be made.
This company is an international Financial Services firm with offices around the world, including a corporate office in a major US city. They are a Fortune 500 company, providing a wide array of products, but very little “hard” goods such as computers. Due to their presence in multiple countries, each branch has its own set of rules and regulations that it must follow.
Millions of transactions are interfaced on a daily basis from a legacy transaction system and assigned a price. Each customer has a unique pricing model along with a set list of products that they can use each month based upon a contract. However, the contract is often amended and products are added ad hoc by the sales team. On the 26th of the month, transactions are loaded onto invoices, posted, and sent to Accounts Receivable. Additionally, invoicing data is extracted and sent to a third party print vendor who generates and distributes the invoices to the customer. Payments are loaded via bank statements and the new system will need to accommodate the requirements of multiple, international banks each with their own file layout. The company also performed a PeopleSoft upgrade to 9.1 in 2012.
In this case there are a number of specific must have requirements that need to be reviewed when comparing PeopleSoft 9.2 to the Cloud:
1. Total Cost of Ownership – Because a cloud implementation does not require any purchase or installation of a new technology stack and enhancements can be installed quickly, the cost of maintaining and upgrading the system are low. However, PeopleSoft 9.2 offers new PeopleSoft Update Manager functionality, which allows for more frequent, smaller upgrades and gives companies the ability to pick and choose which functionality they want. In this case, the company is already on PeopleSoft 9.1 and has the support infrastructure and knowledge base in place to continue to use the system. Therefore the cost saving benefits of Cloud versus PeopleSoft 9.2 are not as relevant in this scenario.
2. Payment Application – On a daily basis payments are loaded via bank statements and include customer level reference information. However, the customer number provided often contains additional characters that are not a part of the customer ID. A custom process exists in 9.1 to decode reference values if they contain a valid customer number. PeopleSoft 9.2 will require the same custom process. However, Oracle Fusion provides a delivered spreadsheet that allows users to edit and correct reference information before payments are applied. In this case, it is clear that Oracle Fusion would allow the client to remove a custom process in favor of a delivered, and tested piece of functionality.
3. Volume-Based Revenue Recognition – The client defers revenue across future accounting periods for most of their products. As the customer uses the product each month, they require the ability to recognize revenue based upon the volume used for the month. A customization does exist in PeopleSoft 9.1 that recognizes revenue in this way. Going forward, neither PeopleSoft 9.2 nor Oracle Fusion provides the ability to recognize revenue based on volume in a delivered fashion. Because this is a must have requirement for the client, the custom process must be a part of any upgrade or move to Oracle Fusion.
By taking a step back we can now examine the Financial Services firm, review the key must-have requirements outlined above, and determine whether PeopleSoft 9.2 or Oracle Fusion Cloud is the right choice.
Below are a few key questions that need to be addressed before any type of decision can be made:
Is the company already on PeopleSoft 9.1?
Yes, they upgraded to PeopleSoft 9.1 in 2012. PeopleSoft 9.2 provides many upgrades and enhancements and the value add of Oracle Fusion Cloud must be compared with the cost of switching to a brand new system.
Is the business of this company minimally complex?
The Financial Services firm offers an array of products and each customer has its own contract and pricing structure, making it an extremely complex business. Additionally, there are inbound and outbound interfaces across each step of the order to cash life cycle. Since this is a complex business, moving to Oracle Fusion presents a number of risks because it will require quite a bit of customization as well as a full consideration of many different factors.
Is the company open to standardization of their business processes?
As you can see above, the client has a number of must have requirements that require custom code. Neither PeopleSoft nor Oracle Fusion is equipped to handle such requirements without customization. Oracle Fusion strongly emphasizes configuration over customization. An upgrade to PeopleSoft 9.2 presents a lower risk option that will allow the custom processes to remain in place.
The first and most important step for the client when considering a choice between PeopleSoft 9.2 and Oracle Fusion is to understand the holistic view of their own business model to understand the risks and rewards of both options. A complex business such as this presents a number of high risks in switching software platforms. To be worth the risk, there must be an ample reward in additional functionality. Second, they must understand their own business requirements.
Careful classification of requirements as “must have” vs “nice to have” is vital. In this case, each choice presents its own set of pros and cons. Oracle Fusion provides lower total cost of ownership, ensures streamlined and regulated business processes, however it presents a higher risk. PeopleSoft 9.2 allows the company to keep existing, must-have customizations while at the same allowing for a lower risk.
We at Emtec can help you through the process of assessing the current state, defining the desired end state, gap identification, prioritizing the findings, and finally creating a roadmap and justification for the decision made.