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Working with Welch’s, the Massachusetts–based maker of grape juice and jelly, Rimini Street helped squeeze more value out of an Oracle EBS enterprise resource planning system.
Finding a more cost-effective alternative source of enterprise software support was important to Welch’s CIO Dave Jackson. “The Oracle maintenance contract had grown to be the biggest single item in the IT budget, excluding salaries, so dropping it made a huge difference,” he says.
As an agricultural cooperative that represents grape farmers, Welch’s is continuously looking at new markets to sell into and new products it can make from grapes. Since the goal of the cooperative is to produce profits for the farmers, the central organization needs to stay lean. The IT team is very much in the mode of finding ways to do more with less – and has been for several years.
“The year we made this change, IT cuts accounted for at least a quarter of the company’s net income,” Jackson says. “That year our net income was only $4 million. We cut over $1 million out of the IT budget, and a lot of that was IT maintenance and DBA support.” The total IT budget is only about $8.5 million – compared with about $20 million when Jackson joined eight years ago – so finding new ways to make ever dollar stretch is critical.
Doing More With Less
Besides charging twice the cost of a Rimini Street support contract, an Oracle maintenance contract mandates that customers regularly upgrade to remain supported. A big part of the savings Welch’s achieved came from getting off that upgrade treadmill, since implementation and testing costs can outweigh the marginal benefit of new releases.
Given that Welch’s runs a fully integrated suite of Oracle software – 35 to 40 modules, including financials, payroll, order management and process manufacturing – Jackson estimates the total cost of upgrading to the latest release of EBS was at least $4 million to $5 million.
Jackson doesn’t have a bad word to say about the quality of Oracle EBS, which brought new efficiencies when the company began implementing it in the early 2000s. He just hasn’t found a business case for the upgrade path Oracle prescribes, either in his own data center or in the cloud.
For now, Welch’s current EBS implementation meets its needs. In five to seven years, Jackson figures Welch’s may make a big change. “By then, if we do need to buy the software again or we decide we need to upgrade to the latest and greatest version of EBS at that time – we’ll have saved enough money that we could have bought it twice,” he says.
Cloud First – But Not for ERP, Not Yet
In general, Jackson’s strategy on IT innovation is “cloud first” – wherever cloud makes sense. That means giving preference to Software as a Service models whenever he is in the market for new software.
Replacing existing enterprise software is a different story. Oracle’s Software as a Service ERP is too immature to support Welch’s business and would not save money, Jackson says. He estimates even just moving to the Oracle HCM Cloud, the human capital management piece, would have a systems conversion price tag of about $500,000.
Given that most of the innovation in cloud native software is coming from companies that were born in the cloud, it makes sense to “innovate around the edges” by adopting novel capabilities they offer and integrating them with the core ERP system, Jackson says.
An alternate way of taking advantage of the cloud is with Infrastructure as a Service, or IaaS – taking advantage of hosting on cloud products like Amazon Web Services, Microsoft Azure, or Velocity to lower the operational cost of an ERP or other traditionally licensed software. However, so far Jackson hasn’t found a cloud host that would save money for his operating environment, which is based on AIX.
“If it makes operational sense to move to the cloud, we will do it,” he says. “But we run a pretty frugal and efficient data center, so we haven’t found much that’s economical to move to the cloud.”
Support for the Business of IT
Even on the tightest of budgets, enterprise systems in general and ERP in particular must grow and change to support new business requirements. At Welch’s, that means that if demand for its traditional products is weak, it needs to find new ways “to reinvigorate grape demand in the marketplace,” Jackson says. Welch’s is looking to branch out into selling grape juice as an ingredient for wine, which may require the development of new grape processing techniques.
Although Oracle EBS requires all the base capabilities Welch’s could ever need, sometimes it is necessary to layer customizations on top. One example of a new process that required in-house development was supporting new co-manufacturing arrangements, including drop ship logistics where Welch’s takes the order but a partner is responsible for shipping.
Meanwhile, technology standards like operating systems, middleware, web browsers, and other elements of the IT environment are always evolving. So are security threats. One way Jackson is reinvesting his savings with Rimini Street is by hiring a security analyst and adding security software to “reduce the risk profile of the company.”
Staying ahead of these challenges is one reason enterprise software support is so necessary, even for an organization like Welch’s that is basically happy with the ERP it has in place today.
Having dedicated and tenured support from Rimini Street gives Jackson and his staff someone to rely on to solve problems and, better yet, anticipate issues before they arise. Rimini Street helps the Welch’s IT team keep EBS stable and secure, as well as assisting with integrations with other software and cloud services. Rimini Street’s support is much broader than what Oracle provided, including customizations to EBS that Oracle considers outside the bounds of its maintenance contract, Jackson says. “It’s hard to compare the two because what Rimini Street does is truly premium support without the premium fees/costs.”
Meanwhile, Welch’s has continued to add to its Oracle platform where it makes sense to do so. “If Oracle had a solution we needed, particularly a cloud solution, we would certainly consider that, Jackson says. “We try to keep the relationship as positive as possible.” While the vendor would prefer that Welch’s had kept its maintenance contract, working with Rimini Street “has not prevented us from moving forward in any way, shape, or form,” Jackson says.