PeopleSoft Bucks Downward Spiral

It appears PeopleSoft Inc.s move to Web-enable its business applications is finally paying dividends for itself and its customers.

The Pleasanton, Calif., enterprise resource planning software vendor last week defied the downward-spiraling economy with a strong second-quarter earnings report, posting revenues of $533 million, up 27 percent from the same period a year ago, as it turned a $46 million profit.

"Certainly, they are the leaders in Web technology and self-service applications. Everybodys looking for products like that today," said Sheila Charif, vice president of enterprise applications for Raytheon Co., of Lexington, Mass., which is planning to go live with a PeopleSoft 8 rollout by October. "It cuts down on a lot of paperwork and workflow and saves the company time and money.

"It feels good that they did so well [in the second quarter]," Charif said. "Theyll be able to put a lot more into supporting their products, extending the features and functions, and developing new products."

Officials said the big reason for PeopleSofts success is companies increasing interest in building collaborative enterprise applications and finding that PeopleSoft—with its CRM (customer relationship management), supply chain management and human relations management applications—is the best fit.

CEO Craig Conway attributed the success to the companys PeopleSoft 8 Web-based application suite, released last September, and its PeopleSoft 8 CRM suite, released late in the quarter, which took a foothold as well.

"Companies are trying to reduce the number of vendors they deal with and have a consistent system in a common architecture," Conway said. "Thats just the way the world is working today. With the Internet, enterprises have become dependent on real-time collaboration. You just cant afford to try that exercise with 10 different vendors."

Conway fired back at Siebel Systems Inc. CEO Tom Siebel, who the previous week during his own companys earnings call accused PeopleSoft and other companies of deep discounting to win deals during the quarter. Unlike PeopleSoft, Siebel, of San Mateo, Calif., enjoyed most of its revenue increase in the quarter from services rather than license revenues.

Aberdeen Group Inc. Managing Director for CRM Christopher Fletcher said PeopleSoft has turned the corner. "A lot of people had written them off a year, two years ago. But theyre in a very strong position now with a compelling offering," said Fletcher, in Boston.