In one of its most serious moves to combat rival SAP AG, PeopleSoft Inc. this week acquired midmarket competitor J.D. Edwards & Co. for $1.7 billion. The acquisition is only the latest by the Pleasanton, Calif., enterprise resource planning software developer, but according to PeopleSoft President and CEO Craig Conway, it is one of the most critical, as it firmly establishes the company as the No. 2 ERP player, ahead of Oracle Corp. Conway spoke with eWEEK Department Editor John S. McCright about the impact Denver-based J.D. Edwards will have on his company and customers. He pointed to PeopleSofts 1999 purchase of CRM developer Vantive Corp. as an example of how the company can digest an acquisition without alienating that companys existing customer base.
Why is this acquisition good for customers, and what does J.D. Edwards bring that will enable PeopleSoft to expand its market share beyond simply adding the two customer bases together?
This is one of the most compelling mergers in technology history. The reason I say that is because most of these mergers are motivated by a single advantage or a single dimensional advantage and this was motivated by three dimensional advantages: One was market distribution—J.D. Edwards is a leader in the midmarket, PeopleSoft is a leader in the large enterprise market. The second dimension is product. PeopleSoft could pull up into its large enterprise distribution J.D. Edwards manufacturing and distribution expertise; likewise, J.D. Edwards could pull down into the midmarket PeopleSofts HR expertise.
Weve already become the second-largest enterprise application company in the world,and weve done it mostly on service industries—financial service, health care, telecom, government, education. J.D. Edwards has become almost a billion-dollar company based on asset businesses—manufacturing, construction, life sciences, real estate. …
You have a resulting company with a broad family of products going to the broadest distribution and the most number of industries. Customers will get more products and stronger products, more hardware platforms, more databases, more application servers, more Web servers, more infrastructure choices, better service, more geographies. A company that can concentrate its R&D budgets on a common competitor, which is SAP.
More infrastructure parts could be a development drain for PeopleSoft. Arent the synergies less apparent when you have that broad of a development?
It does take extra units of energy, no doubt about it. When you are going to support four databases it takes more energy. It doesnt cost four times as much to support four databases. We have a development tool set that has been built around this heterogeneous technology stack.
The value proposition of PeopleSoft is we allow customers choice. We are the pro-choice enterprise application company. If you are an AS/400 shop and want to become a Unix shop, or if you are and Oracle database customer and you acquire a company that runs on [IBMs] DB2 [database], you dont have to change. That reduction of risk is a competitive advantage that helps people choose PeopleSoft.