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).

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

Fransisco

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.

The

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.