PeopleSoft’s Cup of Woes

The largest ever “Connect” show, a customer meet organized by
PeopleSoft in the month of September 2004, at SanFrancisco, now seems to have a
lot of disconnects. What happened at PeopleSoft, the world’s second largest
enterprise applications vendor, in the last few days can only be termed
“drama at its best”. A few weeks ago, reacting to a district court’s
ruling in favor of Oracle on the later’s attempt at acquiring PeopleSoft,
Craig Conway, the then CEO of PeopleSoft, had vehemently said, “The ruling
does not mean that Oracle has acquired PeopleSoft”. This was cheered by a
huge gathering of customers, media persons and analysts at the sprawling
Mosecone Center, San Francisco, only for Conway to find himself standing outside
the boardroom a few days later. It appeared as if all through someone had been
“Conning his way”. Although the decision to sack him has been
justified as a decision based on leadership capabilities and business acumen,
many believe that the shareholders wanted someone who would fetch a good price
from Oracle than put up a stubborn fight. At the end of the day, surely it is
money that matters.

Peoplesoft, the second largest enterprise applications vendor after SAP of
Germany, had acquired JD Edwards a year back. JD Edwards is a strong player in
the mid market ERP space and has given PeopleSoft the ability to provide a wider
range of software and move beyond the large enterprises space where it has
traditionally been stronger. For Oracle it certainly makes sense to acquire
PeopleSoft and move up the ranking ladder to take on with the leader SAP.

The Connect show, which attracted a crowd of 15000 delegates, including more
than 11,000 customers, was billed as one of the biggest shows ever conducted by
PeopleSoft. Craig Conway, ex-CEO, talked about the three major initiatives taken
in the last one year: that of achieving success in enhancing the total ownership
experience of the customers; working out a successful integration with the JD
Edwards product line, and finally, new product releases, slated for the fourth
quarter in 2004 and the fifth quarter in 2005. The company boasts of numerous
enhancements in its existing product line, in fact to the extent that PeopleSoft
has made more enhancements to its product line in one year than JD Edwards
managed in the last five years.

Rick Bergquist, CTO, PeopleSoft emphasized the adaptable “business
process generations” of products, which would bring in the element of
flexibility and expandability as demanded by the business. These applications,
termed as “composite applications”, are an advancement on the current
generation of “transaction driven applications”. These will be based
on distinct layers of business processes, applications and infrastructure.
PeopleSoft clearly puts its bet on the first two, leaving the infrastructure bit
to the specialists. And related to this came the announcement of a joint product
development deal with IBM (see box).

Who’s Gaining from this Fight? 

Guess who is gaining from the fight between PeopleSoft and Oracle. It’s SAP, which, amongst others, is the number one enterprise applications company in the world. Conway is cited to have confirmed what many analysts already believe, he said during a tele-conferencing, “We have an extensive list of customers who went to SAP citing the Oracle threat”. 
And SAP isn’t the only company gaining from the takeover fight, there are others too. Companies like TommorowNow, a Texas start-up specializing in software maintenance services for PeopleSoft customers, have been getting good business.
In fact, that’s what is seen as the major reason behind PeopleSoft’s announcement of providing upgrades and software maintenance services free along with an offer of $100,000 line of credit toward the purchase of additional software. The freebies and other incentives are available to customers that use PeopleSoft’s computer services unit to perform the upgrade.

All that sounds good, puts on display the strengths PeopleSoft has as the
second largest enterprise application vendor after SAP of Germany. But there was
another theme at the conference, which not many people talked about but was felt
all through. And that was the “O” word, the threat looming from a
probable takeover by Oracle. The deal matters a lot too, as it could enable
Oracle to emerge as a contender in the growing enterprise applications market.
The threat gets serious with each passing day. First came the district court’s
ruling against an antitrust case filed by Department of Justice; then came
possibilities of the European Council ruling in favor of Oracle, and finally,
the shewing out of the man who has been seen as an adamant challenger. And it’s
not only Craig Conway who has gone: recent reports indicate that Ram Gupta, the
person behind integration of the JD Edwards and PeopleSoft range of products,
has also left.

Though PeopleSoft has been repeatedly showing confidence in its fight against
Oracle’s bid to acquire it, the bad dream does not seem to end. Analysts
believe that, eventually, the acquisition is going to happen; probably, the
activities in the company are now geared towards striking the right price.

Thumbs Up?

Though the mood a year ago after the JD Edwards acquisition was largely favorable, things might be different this time

As the fight intensifies, customers are surely watching carefully and losing
sleep over their sunk-in investments. It’s a known fact that enterprise
applications need a substantial investment and time for implementation before
business results could be realized; any hiccup in the process is surely the
thing most feared. With the acquisition looming large, customers are praying for
a smoother life. Though the mood a year ago, after the JD Edwards acquisition,
was largely favorable, things might be different this time.

Oracle Corporation, however, has been trying to comfort PeopleSoft customers
by claiming on their web site that “Oracle understands that each PeopleSoft
customer has made a significant investment in its current software applications,
and that it is critical these purchases retain their value and usefulness.”
Only time will tell what will happen if and when the acquisition takes place.
Till then, there is a lot of drama in store.

Kapil Dev Singh in San

PeopleSoft and IBM Join Forces

At its Connect 2004 user conference, PeopleSoft Inc. and IBM announced that
they would establish the most significant enterprise applications alliance in
the history of the two companies. As a part of the new alliance, PeopleSoft will
standardize its industry leading applications on the market-leading IBM
middleware platform, and both companies will market the joint solutions.
PeopleSoft and IBM also announced they would collaborate to deliver new,
pre-integrated industry solutions and establish the first business process
interoperability lab.

companies intend to execute a definitive agreement governing the alliance in Q4
2004 with a tentative investment plan of $1 bon over a period of five years.

The alliance combines the IBM Web Sphere platform, a widely installed, open
standards-based middleware platform, with PeopleSoft’s industry leading
applications. This is expected to benefit customers by providing a platform with
superior functionality and inherently more flexibility. The alliance will focus
on the multiple dimensions of joint product development, marketing newer
industry specific solutions and establishing a business process interoperability
lab to drive integration and customization.

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