The Enterprise Software Industry's Alamo: Remember PeopleSoft
By Tracey E. Schelmetic, Editorial Director, Customer Interaction Solutions
It's obvious that the news of the proposed merger of Oracle and Siebel will dominate this week. Coverage will range from the matter-of-fact to the "Do-you-want-tuna-with-that?" catty. I've heard from several companies operating in the same environment today, offering to weigh in on the acquisition. None of what they have had to say has been charitable.
In order to try to look into the future (suitable for a company called "Oracle") of this acquisition, should it be allowed to go ahead by governmental forces (which is another story, see Rich Tehrani's summation on this topic), let's consider Oracle's last high-profile acquisition.
Does anyone remember PeopleSoft? I know nine months is an eternity in the tech world, but search way back into your memories. PeopleSoft was a popular enterprise resource management solution with vertical versions aimed at human resources, education/student administration, CRM, project management and supply chain management, among others. When the $10.3 billion acquisition of PeopleSoft was finally announced in December 2004 after a long, drawn-out and sometimes ugly takeover bid, it was no secret that a large chunk of PeopleSoft customers were not pleased.
A survey conducted by analyst organization Yankee Group around the time of the acquisition polled 193 PeopleSoft customers for their reactions, both pre- and post-merger, found that about 46 percent of current users were "demonstrating a propensity toward switching away from their current applications, while 31 percent were undecided." There was speculation that the purchase was made for the sole reason of acquiring PeopleSoft's hefty customer list.
At the time of the acquisition, Larry Ellison stated firmly that Oracle would remain committed to both PeopleSoft and JD Edwards (which PeopleSoft acquired prior to its own acquisition by Oracle) product lines until 2013.
Earlier this year, John Wookey, VP of application development at Oracle, discussed "Project Fusion," or the effort to pull together the Oracle, PeopleSoft and JD Edwards product lines. He provided a "roadmap" of future releases: PeopleSoft 8.9 to be released this year; version 9.0 and JD Edwards' EnterpriseOne 8.12 to be released in 2006. The start of 2006 will, according to Wookey, also see the first components of "Project Fusion" data hubs and transaction bases. The first Project Fusion applications should be ready in 2007 and a full suite by 2008. Oracle is clearly hoping that PeopleSoft and JD Edwards customers will sit tight and buy into the project development roadmap.
A few versions of PeopleSoft 8.9 have rather quietly been released, most notably the ERP version (enterprise financial management) and the campus/educational solutions version.
It is the way of life that announcements such as these bring out the predators. Not long after the acquisition of PeopleSoft by Oracle, Microsoft began offering PeopleSoft customers an easy migration path from PeopleSoft to any of Microsoft's comparable products, such as Microsoft CRM (Great Plains). To make the bait more attractive, Microsoft even began offering 25 percent license discounts and support programs at reduced costs. Thus far, though, Microsoft's efforts seem to have been mostly in vain, as the business community has not really been able to get comfortable with Microsoft CRM for a host of reasons that are beyond the scope of this article.
SAP is another story. SAP began actively pursuing PeopleSoft customers before the ink was dry on the contracts. It began tempting the thousands of customers it had in common with PeopleSoft and JD Edwards to migrate to SAP. The German software behemoth also offered candy in the form of discounts and "trade-ins".
When asked about competition from SAP's NetWeaver product, Larry Ellison was quoted as saying, "NetWeaver is a very immature applications server…Suddenly they [SAP] came onto our turf. If they really want to have their NetWeaver compare to our Applications Server, I can't wait to play the game. That's what we do. We're the dominant middleware and applications server [vendor] on the planet."
But here we are, nine months later, and there is scarcely any mention of PeopleSoft or "Project Fusion" in the news. My question is, by the time PeopleSoft 9.0 comes out…will anyone still care? Considering the costs of these types of solutions, who would spend resources on a solution with an uncertain future?
And in the meantime, players other than Microsoft and SAP have been getting steadily stronger.
Marc Benioff, CEO of Salesforce.com, wasted no time in answering the question of Siebel customers sticking around. "Now, the same thing that happened to PeopleSoft will happen to Siebel, it will die. Customers will look for new solutions and new providers. Employees will look for new employers. Siebel on Demand, a joint venture between Siebel and IBM, will be the first to be buried. Siebel on Demand is written exclusively on DB2 and Websphere and runs in IBM data centers. Oracle will kill it. Oracle does not sell DB2.
For more information about this merger, read TMCnet Executive Editor Bob Liu's column here.
Tracey Schelmetic is editorial director for CUSTOMER INTER@CTION Solutions. For more articles by Tracey Schelmetic, please visit the archives.
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