PeopleSoft 9.2 Hosted Solution – Does it make cents?

OK, bad pun; but what are the costs and benefits associated with a hosted PS 9.2 solution?  A great time to explore whether or not this makes sense for your organization is during your overall PS upgrade evaluation. By outsourcing the management and maintenance of their PeopleSoft systems, many clients can realize financial and operational advantages and gain advanced functionality that might not otherwise be affordable.

Costs & Benefits of a Hosted Solution

A typical monthly hosting bill covers all the software (SW) that supports PS, all the hardware (HW), and many of the tasks required to keep PS performing optimally, like: applying patches, running backups, tuning, unit testing, and more.  Some agreements include a “bucket of hours” that can be used for general PS development that you define, such as new reports or integrations. (Note that you’d still be responsible for acceptance testing of anything that is moved to a production environment and for interacting with your endhost_benefit users for configuration or design of a modification.)  I have clients who’ve realized substantial benefits through no longer needing to manage and maintain their previous PS infrastructure, hardware and software, and who are pleased with the depth of services – including support from a team of seasoned PeopleSoft consultants with years of diverse PS experience – as well as the reduction of operational risk such a solution can provide.

Calculating the comparative cost of a hosted to in-house solution is actually a pretty simple task. I start with requesting bids for hosting the system: Prod, Test, Train, Demo environments.  Your cost will depend on the number of environments, the PS applications, and database size. Next, I document in-house costs: the HW, SW1, infrastructure, and applicable support staff.  While you may not want to eliminate headcount, you will be able to redeploy staff to other areas.  In addition, you may eliminate new hires, avoid training and consulting dollars for some technical as well as functional staff.  It becomes clear pretty quickly whether or not a hosting option makes “cents”.

Hosting Concerns

The three  concerns I hear most when system hosting is first discussed are:

  1. How well will my system work when I don’t have physical control of it?
  2. Will the system performance meet my expectations?  and
  3. Is my data secure?

All successful organizations have high standards for up-time, responsiveness (of the system and those who support it) and data security.  When considering a hosted solution, make sure you have written guarantees from a proven hosting provider for up-time (i.e., unscheduled down time of less than ~90 minutes in a 30 day month), performance metrics for both on-line and batch performance, and security, i.e., how do they protect your data (SSAE 162). If there is a breach, what is their action plan – notifications, return of fees, other? Bridging all three is application disaster recovery; regain the functionality of your system within 2-3 hours. I find that hosting vendors that offer a port back guarantee (putting you back to where you came from) make me feel comfortable. These vendors are confident that their service will meet or exceed their terms of service including performance, availability and security – the three areas of concern.

From the viewpoint of those who use PS every day, there is no difference between an on premise solutions vs. a hosted solution. Users get the same quick access to PS from anywhere they have an internet connection.

Compare to SaaS

With all talk about SaaS leaping tall buildings and flying faster than …  well, I wanted to share this thought. How different is running PS in a hosted environment than running a SaaS solution? From a fiscal view, when you host your system, then you have two expenditures: PS maintenance costs plus your hosting cost; I started to include detailed analysis here, but this subject really deserves an entire blog. I’ll discuss the fiscal side of hosting and the TCO in a future blog.

Let me focus on an operational comparison, your system support and the ability to rapidly change system size (scale) are available in both a SaaS model and a hosted model. I think your upgrade efforts are really comparable and possibly more favorable for PS 9.2 versus SaaS on a going forward basis – with this assumption.  If you run a vanilla PS system, then the effort to move to the next release is similar to SaaS.  You need to test and accept any system prior to a move to production. (Your experience with a big effort with an upgrade was likely the result of too many modifications, infrequent patching, and big changes in technology). Updating your SaaS or PS system both require organizational change management (OCM) activities and time from your staff to test, adapt and train users on any application deltas.  If you accept any new functionality from either, then your OCM activities will be more pronounced and costs increased because of the likely requirement of additional consulting to setup and implement the new module(s)/functionality. The big difference between upgrade processes operationally is that in a SaaS model you are forced to accept a new system three or four times per year.  With PS, you control your patch and upgrade cycles aligning them to your business and project schedule.

So what are the big differences between a PS hosted vs. SaaS solution?

  • You schedule patches and upgrades, this is under your control with a hosted PS solution
  • Regarding the issues of performance, availability, and security? I think this is a draw with a good hosting partner and agreement; the same is true for a SaaS solution
  • Regarding the cost question, I’ll dig into this in a later blog and look at a 3-5 year time frame.

Summary:

I think that when you’re considering an upgrade (whether it’s for PS, your servers, or your infrastructure), you should investigate a hosted solution, you may be able to improve performance while reducing cost/risk.

This URL provides information on how cloud services can save money.  http://www.computerworld.com/article/2496098/cloud-computing/cloud-services-can-save-you-money—-if-you-re-careful.html

Next week I’ll point out some of my favorite attributes of the new HCM system – things I believe improve the value of PeopleSoft.

As always, feel free to contact me at PS9.2@Sierra-Cedar.com if you have comments or questions.

1 – Software costs which are the same in hosted and non-hosted solutions include the software required to run PeopleSoft with the exception of the software licensing and annual Oracle maintenance fees for PeopleSoft application software. Hosting eliminates the requirement to purchase software other than the PeopleSoft application software.

2 – Two brief reviews of SSAE 16 and how it compares of SAS 70 are show here http://www.ssae16.org/white-papers/ssae-16-vs-sas-70-what-you-need-to-know-and-why.html and here http://www.colocationamerica.com/data-center-certifications/sas70-compliance.htm.

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