Cloud Sourcing Drives Innovation, Increases Efficiency and Reduces Cost | Article

Take Two and Oracle accepting 2013 Outsourcing Excellence Award2013 Outsourcing Excellence Awards Winner BEST CLOUD: Take Two Interactive and Oracle

“Oracle actually spends time understanding our business and our needs. They really listen, which means they bring things to the table that are meaningful to us.”

John Hinkle, Chief Information Officer, Take-Two Interactive Software, Inc.

When Take-Two Interactive Software’s ERP system could no longer keep pace with the escalating demand for the company’s products, its CIO made the strategic decision to outsource.

In 2007, Take-Two Interactive Software, Inc., a leading developer, marketer and publisher of interactive entertainment, was experiencing burgeoning growth. That year, John Hinkle joined the 20-year-old company, which has about 2,300 employees, at its NYC headquarters in the role of CIO.

Shortly thereafter, Hinkle spearheaded an initiative to migrate their core business ERP applications to a privately managed cloud. Recalling that Take-Two did not have a massive IT organization or back office in place at that time—most of its staff was dedicated to product development—Hinkle notes that managing the system internally had simply ceased to be the most economical or efficient approach. “We weren’t doing a great job with availability or keeping the system running by ourselves,” he explains, “so this was a move that just made sense for us.”

As Hinkle and his team explored the potential of running Take-Two’s ERP system in the cloud, they concluded that this approach would improve the system’s stability and performance. It would also eliminate the costs associated with recruiting and retaining people with the diverse skills to support the infrastructure behind an ERP.

Once the decision was made to cloud source, Take-Two initiated a competitive bidding process and conducted an “apples-to-apples” comparison of service providers. Hinkle says, “We wanted someone with a consistently successful track record, and only Oracle and IBM offered hosting and application-specific operational services in a private cloud, in addition to application support.”

Technology Expertise + Over-the-Top Teamwork

Take-Two ultimately selected Oracle for its total value proposition, one-stop-shop convenience and willingness to work in nontraditional ways. “Previously we ran our ERP system internally, within our own data center, whereas now we’ve moved it all to the cloud —platform, hardware, monitoring, applications—to Oracle, while we still control the functionality.” Hinkle notes that, as Take-Two transitioned its own data center out, the company did not replace operational employees who left; instead, it retooled the organization to include more business analysts that focus exclusively on key business priorities that increase efficiency and drive innovation. “So ultimately, this move has completely transformed our team, while trimming costs and giving us access to the best technology skills out there,” Hinkle adds.

After a successful first year of having Take Two’s ERP applications deployed in the cloud and the upcoming closing of the company’s own data center, Hinkle considered migrating other key business applications to their private Oracle cloud.

Oracle submitted a proposal and Hinkle saw that Take-Two could migrate its Hyperion Financial Management platform to Oracle for roughly the same cost required to relocate it to another internal data center, so he decided to expand the relationship. “It was at that point that Oracle Managed Cloud Services ceased being a solution to a specific problem and instead became a core part of our IT delivery strategy,” Hinkle declares.

Overcoming Turbulence in Moving To the Cloud

Hinkle also salutes Oracle’s ability to tackle the inevitable challenges that arise in a technology implementation. “With an  initial go-live of an ERP system, there are always some hiccups,” Hinkle recalls.  “For example, when stress-testing the system at  75 percent of expected volumes things were great, but then at 90% we experienced stability challenges.  What made this experience different from other ERP implementations was the partnership and expertise we were able to rely on by having our Oracle system deployed in a private cloud and managed by Oracle. The power of having access to thousands of global Oracle experts working around the clock to help us diagnose and rapidly resolve any issues helped give my team peace of mind”.

Also, with the benefit of hindsight, Hinkle had some best practices and learnings to share with other companies looking to move to the cloud.  For one, he thinks Take-Two should have invested more time documenting and cleaning up its’ internal implementation prior to engaging with a cloud provider.  “Many of the complications we initially encountered were due to a lack of complete understanding on our part of all of the interconnections between what was going to the cloud provider, what was not,” he admits.  This is a general lesson in cloud sourcing:  be certain you fully understand what you intend to have managed by a 3rd party.

Powering the Partnership With Collaboration

Hinkle attributes the success of its cloud sourcing engagement with Oracle to trust. He acknowledges that “absolutely nobody can be flawless, so it’s the responsiveness to issues, how quickly they’re escalated when required, the attentiveness from our account teams, and the active participation from senior executives that are all key to our success.” Hinkle adds that the relationship has definitely helped the company achieve its goals of bringing efficiency and stability to more traditional, back-office functions.

Thanks to the shift in staff population from operational employees to business analysts, IT is now able to deliver a significantly higher quantity and quality in business-driven projects for the same spend, and this is enabling the company to operate more efficiently and have access to much more granular and accurate metrics around business performance. “If we use this new information properly, we’ll be able to make better decisions about how to best market and sell our products,” Hinkle affirms.

Hinkle acknowledges that while cost reduction was not a material factor in Take-Two’s decision to cloud source, it has been a most welcome side effect. The relationship with Oracle has resulted in an internal reduction of operating costs in the range of 11 to 20 percent.

Take-Two originally signed its contract with Oracle in 2008, and it will be up for renewal in November of 2015. However, in 2012, the companies renegotiated certain contractual terms, with Take Two adding more services and receiving a better volume discount. Since the initial contract signing, Take-Two has moved additional applications to the Oracle Managed Cloud Service  agreement, including a second instance of its ERP system, Hyperion Financial Management (HFM) and Planning, and a large business intelligence project running on Oracle Business Intelligence Enterprise Edition (OBIEE).

Take-Two wanted a strategic cloud partner —not simply a vendor or supplier.  Hinkle declares, “This is exactly the relationship we have with Oracle.  Internally, this program was never considered or pitched as outsourcing; it was always viewed as a strategic move to improve how we operate. In many cloud source arrangements, services are provided in the cloud, but customer management originates with the cloud, as well.” He adds, “This is not the case with Oracle. We have regular, in-person interaction with senior Oracle personnel and a very open channel of communication.”

Take-Two’s IT team believes that Oracle deserves the Outsourcing Center’s Outsourcing Excellence Award because of its collaborative working style, as much as its technical expertise, pointing to Oracle’s Customer Advisory Board, in which Take-Two has representation. “The Advisory Board meets 2-3 times a year where Senior Oracle Managed Cloud Services executives review past performance and future plans with a small group of their customers,” Hinkle says. The board actively solicits feedback on what is working well and areas where improvement is needed, while simultaneously reviewing the strategic plans for the upcoming year to ensure that Oracle will continue to bring value to its customers.

Oracle has clearly earned the trust of the team at Take-Two. Hinkle declares, “Across my IT organization at Take-Two, Oracle Managed Cloud Services is viewed and accepted as an extension of the team. Their knowledge and expertise are key to the success of everything my IT team delivers to our business.”

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