Takeover Battle Takes Its

By Renee Boucher Ferguson  |  Posted 2004-06-04 Print this article Print

Toll on Companies, Industry"> Whether the merger happens or not, some observers say they think that the competitive landscape has already changed since Oracle made its offer for PeopleSoft and that the distraction of the ongoing haggling has hurt the two companies.

Outside observers estimated that upward of one-third of the sales staff from J.D. Edwards & Co., which PeopleSoft acquired last summer, have left for SAP and other software companies, and PeopleSoft has had to shuttle discretionary spending for employee incentives to the Oracle legal defense fund, according to Bruce Richardson, an analyst with Boston-based AMR Research Inc.

PeopleSoft spokesperson Steve Swasey said his company is in the process of cutting 750 to 1,000 jobs as a result of the J.D. Edwards acquisition, although most will not come from sales positions.

"PeopleSoft has had to spend $55 million in defending the company against Oracles unsolicited tender offer," Swasey said. "We did not ask for this and would much rather have spent that money in other ways."

At the same time, both companies have missed some opportunities to further their message around future software development, while SAP, of Walldorf, Germany, has refined its road map, which centers on an SOA (service- oriented architecture). Microsoft, too, is making a multibillion-dollar investment rewriting its four midmarket software suites to create a single code base that is aligned with .Net.

"Its very important for [PeopleSoft, Oracle and SAP] to match each other in marketing," said AMRs Richardson. "PeopleSoft has the capabilities [for integrating outside applications], but they just didnt brand it. Oracle will argue that they have always had it, but the challenge there is they havent told a very open story."

Oracle and PeopleSoft have not been ignoring the evolution of the enterprise software market. Conway last month outlined PeopleSofts vision for building composite applications based on a Web SOA. Oracle has spelled out an integration plan that leans heavily on its 10g Application Server.

While customers of all three of the top enterprise software companies agree that applications need to integrate with one another, whether through an SOA or other technologies, some dont want integration of applications to mean integration of vendors.

"Im sitting here at a $4.5 billion organization, and I will never get to the point that I will have one vendor, and [I] dont know that I ever want to," said the city of Chicagos OBrien. "I want a minimal number of vendors that are all playing their part [in moving me toward an SOA environment], but I want a bit of diversity in my portfolio.

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