Whats Next for PeopleSoft Customers?

 
 
By Renee Boucher Ferguson  |  Posted 2004-11-01 Email Print this article Print
 
 
 
 
 
 
 

In the now-likely event of an Oracle takeover, PeopleSoft customers face a rocky road, according to customers, analysts and company insiders.

With two large anti-trust obstacles out of the way, an Oracle Corp. acquisition of PeopleSoft Inc. is rapidly shifting from a remote possibility to a likely reality. In the event of such a move, customers, analysts and company insiders are predicting a rocky road ahead for PeopleSoft customers.

With nearly 100 percent product overlap between Oracles E-Business Suite and PeopleSofts Enterprise and EnterpriseOne suites, polar-opposite views on supporting technologies, and classic cultural differences, Oracles challenges postmerger will be far more critical than its recent regulatory hurdles. But how the Redwood Shores, Calif., company resolves each could have a dramatic impact on the thousands of global companies relying on PeopleSofts enterprise software.

The European Commissions announcement last week that it will not block the proposed deal came on the heels of a similar decision in September by the Northern California U.S. District Court to allow the deal, after Oracles takeover attempt was challenged by the U.S. Department of Justice on antitrust concerns.

Now a ruling by Delaware Court of Chancery Judge Leo Strine, expected by months end, could remove yet another set of obstructions for Oracle: PeopleSofts controversial Customer Assurance Program and poison-pill anti-takeover measures that would cost Oracle billions more than its current $21 per share, or $7.7 billion, tender offer with a successful acquisition.

While shareholders may have the final say in whats become a fierce showdown between the two business software developers, it is PeopleSoft customers that should prepare for what many in and around the two companies are saying will be a painful integration.

Oracle has been relatively unambiguous about its product strategy should it acquire PeopleSoft, of Pleasanton, Calif. In a letter to PeopleSoft customers posted on Oracles Web site in September, Oracles co-president, Charles Phillips, said the company would continue to support PeopleSofts product lines for 10 years, with ongoing enhancements and product maintenance.

But to most industry watchers, "enhancements" translates into necessary and selective upgrades with very little innovation. "If youre running financials and theres a new tax law, thats going to get added," said David Yockelson, an analyst with Meta Group Inc., in Stamford, Conn.

Its also not clear if Oracles product support plans include PeopleSofts complete product line, including the former J.D. Edwards & Co.s OneWorld, now EnterpriseOne, and World, now PeopleSoft World, suites.

"Ive speculated that one of the actions that Oracle would take is to sell off the JDE organization," said Jim Shepherd, an analyst with AMR Research Inc., in Boston. "The good news is that simplifies the integration side. What Oracle said all along is they didnt have much interest in [the JDE] customer base—with the IBM customer base."

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