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This article is part of our Conference Coverage: Oracle OpenWorld 2018 news, trends and analysis

FedEx's Oracle hybrid cloud only a bridge to all-SaaS ERP

A logistics heavyweight is in year three of a five-year plan to consolidate PeopleSoft and SAP systems on Oracle ERP Cloud and Analytics Cloud and absorb corporate acquisitions.

SAN FRANCISCO -- This just in from the Oracle OpenWorld conference: Forget any notion of long-term cloud-legacy...

symbiosis in an Oracle hybrid cloud. Once an organization starts to move critical systems to the cloud, it's full steam ahead.

In a well-attended session on Oracle hybrid cloud integration at OpenWorld, a FedEx executive intimated that efforts to integrate cloud and on-premises applications can be placeholders that bridge companies to an all-cloud future. At least, that's how FedEx is approaching its yearslong transformation into a cloud-first company.

The Memphis, Tenn., logistics giant is in year three of a five-year effort to modernize its finance, accounting and supply chain systems, all of which are being consolidated on the Oracle ERP Cloud and Analytics Cloud. Seeing a future filled with robotics, automation and real-time analytics, FedEx is betting that cloud systems will give it a leg up in that world.

Adding to the urgency and complexity of the company's strategy is the fact that it's facing daunting integration demands, as it continues to absorb the impact of two of its largest acquisitions ever -- the $1.4 billion purchase in 2015 of reverse logistics provider GENCO, which specializes in product returns, and the $4.8 billion deal for Dutch package-delivery firm TNT Express in 2016.

Oracle hybrid cloud a bridge from PeopleSoft, SAP

Michael Dearen, managing director of FedEx's corporate administrative solutions team, told OpenWorld attendees that the company was drawn to Oracle ERP Cloud, the vendor's SaaS ERP offering, for its perceived business value, continuous improvement and robust suite of tools.

But even without those attractions, Dearen said the Oracle cloud's reporting and analytics capabilities alone would have provided sufficient justification to make the move.

"We find that it's often impossible to get data in a common and usable format," Dearen said. "We wanted to put data in a meaningful set of criteria so it could be used around the world."

Moving to the cloud meant FedEx would not only be jettisoning its investments in PeopleSoft and SAP, but it would also be replacing TNT's SAP environment. To make the transition easier and enable the company to meet an aggressive timeline, Dearen and his team will take information directly from legacy applications and translate it for exposure via the Oracle cloud. Eventually, those legacy applications and Oracle hybrid cloud architecture will cease to be, and the data will live permanently in FedEx's new Oracle cloud applications.

After selecting Oracle in early 2017, FedEx spent a good chunk of the rest of the year standardizing global business and financial processes in preparation for life in the cloud. Dearen stressed that taking the time to do this should take precedence over getting up and running in the cloud sooner.

"Everyone wants to reduce the cost of IT, but it's just as important to standardize your business processes that you're going to run in the cloud as it is to roll out new cloud software," Dearen said. Without this step, he added, "your cloud project will not be a success."

Having standardized processes, FedEx spent much of 2018 deciding on a global system design, and it just recently began a multiphase deployment that will focus on Singapore and five European nations over the next several months. The rollout to the rest of the world will unfold over the next three years, during which time Dearen said all of GENCO's and TNT's systems also would be migrated to the new FedEx platform.

Ultimately, FedEx expects its cloud transformation will position it to more readily embrace emerging technologies, drive more insight to the business, become more agile and optimize its future delivery services.

One thing is certain: There's no turning back now.

"FedEx is all in on the Oracle cloud," Dearen said. "We're not going to go back and do a PeopleSoft upgrade, and we're certainly not going to invest any more in SAP. There will be bumps along the road. The test is how you react to those bumps in the road."

A culture accustomed to change

One interesting aspect of Dearen's discussion of FedEx's Oracle hybrid cloud strategy was the surprisingly minimal mention of change management, which is typically a high priority in cloud migrations. Dearen said because of FedEx's strong leadership, he expects little issue in getting employees to embrace the cloud. In fact, he said he anticipates users to push IT to adopt whatever services will catapult the company forward. It's a culture that's clearly not about resting on one's laurels.

"At FedEx, it's constant change," Dearen said. "The business is going to continue to want to evolve, and our organization has wholeheartedly embraced that."

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Why is the Oracle hybrid cloud only a bridge to an all-SaaS architecture?
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