Analysts: Project Fusion Is the Death Knell for PeopleSoft Apps

By Lisa Vaas  |  Posted 2005-01-19

Analysts: Project Fusion Is the Death Knell for PeopleSoft Apps

During Oracle Corp.s heartfelt and lengthy launch of the combined Oracle-PeopleSoft Inc. company on Tuesday, CEO Larry Ellison posed the upcoming Project Fusion as the product suite that will melt all the goodness from all the combined suites into one Internet standards-based Java platform that should make SAP AG shake in its collective pants.

"We think Project Fusion is what [SAP] should start thinking about," Ellison said during a press conference that followed 4 hours of official presentations. "Its process-oriented, using Internet standards [such as Java]. Thats not what they do. NetWeaver is a very immature applications server. … Suddenly they came onto our turf. If they really want to have their NetWeaver compare to our Applications Server, I cant wait to play the game. Thats what we do. Were the dominant middleware and applications server [vendor] on the planet."

Click here to read more about Project Fusion.

Perhaps, said one analyst; or perhaps Project Fusion is a large sign that customers should interpret as reading "Rethink that PeopleSoft application choice."

"One highlight [from the launch] is the focus on Fusion that says that the PeopleSoft customers have a big decision point around 2008 as to what they do with their product strategy, because, clearly, PeopleSoft 9 is a dead end," said Joshua Greenbaum, a principal at Enterprise Applications Consulting, in Berkeley, Calif.

"That isnt where you want to go, thats not where you end up," he said. "Youre going to want to be on a product base that has a real future. And by 2008, when the Fusion product is available, most customers are going to want to have a strategy for that time frame: what theyre going to want to do."

Paul Hamerman, vice president of enterprise applications for Forrester Research Inc., agreed that Oracle sent mixed signals on product support. "While they say these products will be supported until 2013, they also said theyll continue to follow the existing PeopleSoft support schedule, with some modifications," he said. "That means customers cant stay on current releases indefinitely. Various releases over time will be desupported, so customers will have to continue to upgrade applications periodically in order to be supported. Eventually, theyll be encouraged to migrate to the next-generation product."

Oracles road map includes completing PeopleSoft Enterprise 8.9 in 2005. The year after will see Oracle deliver Oracle E-Business Suite Version 12, PeopleSoft Enterprise 9 and EnterpriseOne 8.12, with continuing enhancements to be delivered "continuously," according to John Wookey, Oracles new executive vice president of application development.

In 2006, Oracle will also deliver the first Project Fusion components, including data hubs, which Oracle announced at Oracle OpenWorld in December. Project Fusion applications will follow in 2007, with the entire suite to be ready by 2008. Jeurgan Rottler, the new executive vice president of global product support, pledged support through 2013, along with extended support for JDE Enterprise XE and 8.0. PeopleSoft originally had been slated to cease support on Feb. 28.

In spite of Project Fusions sounding of the inevitable death knell for PeopleSoft applications, Oracle received high marks for its continued support of JDE applications. "They pushed it forward two years," Greenbaum said. "Theyre going to exceed the PeopleSoft support stand for XE. They made good on the promise they made at OpenWorld to err on the side of over-supporting. That made a lot of sense. Thats going to be very well-received."

Indeed, Greenbaum said, the extended JDE support could be seen as a positive bellwether as to interpreting what Oracle will do in coming years with JDE and PeopleSoft products.

Next Page: A lot of positive messages.

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He wasnt the only optimistic observer. Hamerman took away "a lot of positive messages" from the launch, particularly around product road maps. "I think theyve made some important organizational changes to manage this integration process," Hamerman said.

One of those organizational changes was to put Wookey in charge of applications, which signals a strong if unsurprising signal that Oracle is going to put much more emphasis on applications as a core product line, Hamerman said. "Historically, applications have been more of a sideline—20 percent of [Oracles] business," he said. "Now, having spent $10 billion on this acquisition, applications are now a very important part of business for Oracle."

Thats evidenced by other announced executive roles, he said, including Cliff Godwin being put in charge of technical strategy as the product lines are merged and Joel Summers, from the Oracle Human Resources Management Systems group, being put in charge of developing PeopleSoft applications.

"These are important management changes, and they put out a good road map," Hamerman said.

Are PeopleSoft customers bearing the brunt of the merger? Click here to read more.

Oracle also received high marks for retaining 90 percent of the support and service organizations. However, it remains to be seen how much of this talent the company retains, Greenbaum said. "They said they retained 90 percent of support and service, so I think theyre certainly in a position to deliver a certain level of support," he said. "I dont think 10 percent attrition translates to 10 percent less support. My question is, How many of these people jumped ship before the acquisition was finalized? Were they staffed up to full strength? Are they read to just jump in there and continue doing their jobs?"

One question Oracle did not address during the launch was how it will provide support for PeopleSoft applications that are run on Microsoft Corp.s SQL Server or IBMs DB2 databases. But, from a practical standpoint, database problems are a "secondary support level" from the application itself, Greenbaum said.

"Certainly Oracle can handle that first level of application support," he said. "When things wind up being a SQL Server or DB2 issue, theyll have to find those resources. But IBM has made numerous statements from the software side that they want to support these new Oracle customers from a technology standpoint, and it makes sense they would do that, so I have no doubt IBM will lend resources, as they do to all ISV partners—even big competitors."

Editors Note: This story was updated to correct a misidentification of Cliff Godwin.

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