After three years of drought, including two years of pandemic-induced economic disruption, Namoi Cotton, Australia’s largest cotton processor, is back to ginning up new business, making a compelling case for cloud migration. 

The company has adopted Oracle’s OCI technology to help ramp up production and meet growing demand. 

Following drought and pandemic-induced economic disruption, cotton growers have ramped up production, pushing to near capacity Namoi Cotton’s 10 ginning facilities and three warehouses across New South Wales and Queensland.

Namoi Cotton is aiming to gin 1.1 million to 1.2 million bales in 2022, 40% above its sustainable average volume.

Prices for lint cotton—the raw fibre from the cotton plant after the ginning process removes the seeds and other unwanted material—are at their highest levels in years due to pent-up demand and the continued supply chain challenges stemming from the global pandemic.

Namoi Cotton’s business, including its marketing and logistics joint ventures, is on the upswing, with the company reporting positive EBITDA (earnings before interest, taxes, depreciation, and amortization) last year.

“We are in a good position at the moment…you don’t often see high prices and high volumes at the same time,” said Neil Johns, Namoi Cotton’s executive general manager of strategy and business development, on the company’s earnings call in late April.

‘Technical debt’

With Namoi Cotton’s business on the rise, so are the demands on its IT systems. Throughout the drought and into the pandemic, however, Namoi Cotton accumulated “technical debt”—systems it hadn’t upgraded in years because finances were tight. 

Exhibit A was the company’s core applications for managing accounts receivable, accounts payable, and spare-parts inventory. Those on-premises applications, part of the Oracle JD Edwards EnterpriseOne 9.1 suite, were past their end of life and thus were expensive to maintain and no longer eligible for security patches, bug fixes, and other important updates. 

The company’s new manager of IT, Jim Tolson, proposed to senior management that Namoi Cotton upgrade those outdated applications, running on outdated hardware, and host them in a public cloud. But Tolson needed to make a compelling case for the cloud migration, keeping costs to a minimum. 

After evaluating cloud infrastructure offerings from Oracle, Microsoft, and Amazon Web Services, Tolson and team decided to move the company’s Oracle JDE applications to Oracle Cloud Infrastructure (OCI), upgrading them to the 9.2 version in the process.

Initially, after giving Amazon “a quick look,” Tolson and team were leaning toward Microsoft Azure, having already moved most of Namoi Cotton’s server infrastructure to Azure. “But once we got the Oracle crew to show us the OCI platform properly, the conversation changed very quickly,” Tolson says. For starters, tests showed that Oracle JDE applications perform better on OCI than they do on third-party cloud infrastructure, he notes.

Price concerns

Still, a gating factor was the price of the cloud migration. Namoi Cotton’s senior management considered the initial quotes from all three cloud providers to be too high.

Tolson subsequently connected Namoi Cotton’s Melbourne-based systems integrator, Fusion5 Business Solutions, with the Oracle Cloud Lift Services team, who figured out a way to slash the price of the implementation. “At that point, the executive team were happy to go ahead with it,” he says.

The price tag for migrating Namoi Cotton’s on-premises Oracle JDE applications to OCI, including the upgrade to JDE 9.2, came in at about A$120,000, a savings of more than 60% compared with the original quotes.

Furthermore, the company’s move to Oracle Cloud reduces its ongoing system maintenance costs, while mitigating the security and downtime risks—and associated costs—of running end-of-life applications on outdated hardware. Oracle has committed to supporting JDE 9.2 until 2033.

The company has embarked on its 4PP Strategy to increase gin capacity and explore opportunities to expand its footprint into Northern Australia. Moving the applications to the Oracle Cloud makes it easier for Namoi Cotton’s five-person IT team to scale capacity to service this growth. 

“The medium-term outlook for Australian cotton production is excellent, with good water availability and strong prices,” says Namoi Cotton CEO John Stevenson. “Namoi Cotton is excited to be at the forefront of these opportunities and is focused on delivering increased earnings and cashflow in the coming years.”

It’s always difficult to anticipate the next major weather event or economic headwind, but at least Namoi Cotton is positioning itself to navigate those events using a more sophisticated and efficient IT stack.

“As Australia’s leading cotton organisation, Namoi Cotton is a timely example of just how important robust and integrated IT systems are to meet the rising demands of agricultural production,” says Cherie Ryan, vice president and regional managing director for Oracle ANZ.

“We’re excited to support Namoi Cotton’s digital transformation to not only increase its current ginning capacity, but also future-proof its business to make way for further expansion and growth.”