First let us see what is the difference between an upgrade and re-implement.

An R12 upgrade involves running the scripts on a database to transform it into R12 structure. During the upgrade all the data will be moved to the respective  tables in R12.

A re-implementation involves creating a completely new oracle applications installation, doing all the set-ups from scratch and moving the data using data conversions to the new R12 database.

Let us see the advantages and disadvantages of an upgrade and re-implement

Upgrade:

The major advantages of an upgrade process are:

1. The upgrade process has become easy as the technology, tools and the upgrade scripts are significantly improved
2. There will be no effort of data conversions and testing, as the data will be moved during the upgrade process
3. Not many customizations are needed
4. No changes in the functional setups
5. Upgrade is often cheaper as it involves significantly less work for setting up the applications

But an upgrade process requires very significant effort technically and is more challenging. In comparison with re-implementation process an upgrade is risky in technical perspective.

Re-implement:

The main advantage with Re-implementation process is that the technical risk is low when compared with an upgrade.

Disadvantages:

1. Re-implementation process is very extensive as the data conversions and testing is involved.
2. Lot of effort is needed for application configuration.

Organizations generally go for following considerations before going for the re-implementation.

1. There are major changes in the Organization structure or business processes, and the existing application configuration doesn’t fit for the business
2. There are lot of customizations that can be avoided with the new features and functionality
3. The original implementation has disturbed and unusable.
4. There is lot of bad data exists.