Case Study: How to Find the Funds to Invest in Hybrid IT
The business and the IT group want to invest precious resources in technology that will drive and support new products and services that are key to future success. But it’s often difficult to come up with the funds for new investments when companies are spending so much money just to “keep the lights on.” But Enterprise Times has an interesting tale of how BrightSource Energy came up with funding for a new hybrid IT architecture, which mixes on-premises with cloud-based solutions.
A global company headquartered in Oakland, Calif., BrightSource Energy designs, develops, and deploys solar thermal technology to produce high-value steam for electric power, petroleum, and industrial-process markets. BrightSource Energy funded its new hybrid IT landscape with savings derived by switching to third-party support for its Oracle E-Business Suite (EBS), Database, Fusion Middleware, and Agile PLM products.
Reallocating dollars to transformation
“We initially engaged with Rimini Street in Israel for support of our Oracle EBS and technology products,” said Shimi Ben Baruch, global vice president, information officer of BrightSource Energy. “Our collaboration with Rimini Street has enabled us to improve our business efficiencies and reallocate our dollars to digital transformation initiatives that help our business grow and compete.”
BrightSource Energy was also able to replace an HR solution and transition to a private cloud, allowing access to HR applications and data downloads from anywhere in the world. This new model also enabled BrightSource Energy’s employees to be more efficient across all their IT operations, including infrastructure and support.
“Every year, enterprises spend millions on Oracle support,” writes Forbes contributing columnist Dan Woods. “It’s the source of about 50% of Oracle’s revenue. But more and more these days, companies are asking what they’re really getting for all that money, and whether they should consider alternatives.”
Oracle support value diminishes over time
Woods points out that with software systems that are very stable, most support issues involve custom configurations or custom code not covered under standard Oracle support contracts.
In addition, many companies need to upgrade to the next version of their ERP software just to ensure continued support, potentially spending millions of dollars. They’re also tying up their best and brightest on projects that don’t advance the business need for innovation.
Woods has this to say to the “forced upgrades” or “mandatory evolution” issue:
“Eventually, Oracle significantly diminishes the support available or completely stops supporting older versions of its software, and enterprises are forced to upgrade or to look elsewhere for needed support,” he writes. “Or customers become frustrated with how much they are paying and how little they are getting and look for ways to cut support costs.”
According to Computer Weekly, “Businesses pay 22% of the original software purchase price for Oracle support, and as older products move to extended support, costs increase. Companies can easily pay Oracle multiples of the original purchase price to maintain products in the long term.”
Peace of mind
Computer Weekly reports that UK retailer House of Fraser, after using Rimini Street to support its Oracle EBS, then decided to also switch to Rimini for support of its standard Oracle databases.
“We have peace of mind knowing that our payroll update requirements, software customizations, and database products are all supported, and at a fraction of what we were paying Oracle in annual support fees,” says Neal Johnson, director of IT service and operations at House of Fraser.
As Woods writes in Forbes, third-party support companies such as Rimini Street “are enabling organizations to reduce costs, obtain improved support, and position themselves for new initiatives.”
That’s a recipe for future success.