Oracle Town Hall Meeting Gets Personal

By Lisa Vaas  |  Posted 2003-07-17

Oracle Town Hall Meeting Gets Personal

It got downright personal.

It was Thursday, at the first of a series of online town hall meetings hosted by Oracle Corp. The intent was to persuade PeopleSoft customers of the database giants sincerity and lack of evil intent in its intended purchase of PeopleSoft. At a meeting attended by over 700 people—excluding Oracle employees, according to an Oracle spokeswoman—customers, journalists, financial analysts, and employees of PeopleSoft and J.D. Edwards & Co. asked Oracle Corp. Executive Vice President Chuck Phillips such things as, "Given that youve only been at Oracle a few months, how can you speak with confidence about what Oracle can or cannot do? Pretty good upgrades? We need a better answer than that."

Phillips kept his cool, though, in an exchange devoid of the catcalling that has characterized Oracles ongoing pursuit of PeopleSoft. "I was a user five years before they went public," Phillips said. "From my experience, and from the customers Ive talked to for the many, many years [Ive been involved with user groups and have known Oracle executives], Id have to say theres a reason theyve been successful. Theyve delivered."

As of Friday, July 11, 43.8 million PeopleSoft shares had been tendered. Thats about 13 percent of outstanding shares.

PeopleSoft customers peppered Phillips with questions about Oracles intent with regards to licensing; continued support, development and enhancement of PeopleSoft products; and Oracles plans to either maintain or jack up prices.

"How can you afford to offer enhanced support without actively selling PeopleSoft products to new customers?" was one such question. It was reiterated a few times.

The question reflects PeopleSoft customers confusion over conflicting remarks from Oracle CEO Larry Ellison, who earlier in the Oracle-PeopleSoft saga said that his company might not actively sell PeopleSoft products to new customers. Executives at the Redwood Shores, Calif., company later backed off that utterance and issued a statement outlining a list of promises regarding support, including that Oracle 1) will not shut down PeopleSoft products; 2) wont force customers to convert to its e-Business suite; 3) will provide high-quality support, including PeopleSoft specialists; 4) will extend support beyond what PeopleSoft has committed to, or for at least 10 years; 5) will take no action that will reduce functionality of PeopleSoft deployments; 6) will provide ongoing enhancements and PeopleSoft product developments; and 7) will provide free module-to-module upgrades.

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Phillips said the confusion about these apparently contradictory statements hinges on the phrase "actively selling." "Most software companies lose money selling new licenses," he said. "They make money on support and maintenance. If you look at PeopleSofts numbers for the first quarter, they had $81 million in licensing revenues, $21 million for sales and marketing. Thats not unusual. The expensive part of the business is trying to chase new customers. Servicing existing customers is where the profits are. Given where we are at this stage of maturity, there are few new customers [in the enterprise resource planning market].

"It appears that Larry Ellisons original comments may conflict [with later Oracle announcements regarding continued product sales]. Its about the focus on actively selling. It doesnt mean that were not supporting or enhancing [PeopleSoft products]," he said. "Existing customers shouldnt be concerned whether were losing money trying to land new customers. Theyll get more out of it because well focus on them."

Phillips also assured listeners that should PeopleSofts intended purchase of J.D. Edwards successfully close at midnight on Thursday, J.D. Edwards customers would be treated in the same manner as PeopleSoft customers.

Other customer concerns involved continued development effort on the next iteration of PeopleSoft, which would be called PeopleSoft 9 if no Oracle takeover were to take place. Phillips vowed to continue work on enhancements as required by customers but said that the next iteration could be called something other than Version 9.

When asked how well Oracle could support customers running PeopleSoft applications on non-Oracle databases such as IBMs DB2 or Informix, Microsoft Corp.s SQL Server, or Sybase Inc.s ASE, Phillips replied that Oracle is already involved in multivendor support environments every day. "We support virtually every application thats out there," he said. "Most of our customers run SAP, PeopleSoft, whatever. We have one of the largest support organizations in the world, and well also acquire PeopleSofts support organization as well."

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But how will Oracle retain the members of that support organization, given the limited future for PeopleSoft products, one e-mail correspondent inquired. "I wouldnt say theres a limited future for PeopleSoft products," Phillips said. "That 10 years [of promised support] sounds like job security for a long time to come. Weve guaranteed publicly a decade of support, from a company thats very profitable and can afford to do that. It seems it would be a good outcome for PeopleSoft support staff."

Other questions involved whether Oracle would honor current support contracts. Phillips replied that Oracle is legally bound to do so. Another question: Will you train my systems integrator for PeopleSoft-to-Oracle migrations? "Weve already gone out to integrators and given them things to think about," Phillips said. "Theyre eager to work with us now. Its likely well be a much bigger company in the applications business, with a much bigger footprint. Unlike other companies, weve been de-emphasizing the consulting business and letting others do that."

Another worry on customers minds: Will there be interruptions in service at any point in the product integration process between PeopleSoft and Oracle? "Weve done about 30 acquisitions," Phillips said. "Theyve gone pretty smoothly. We have a process in place. And given the timeframe this is taking and the elongated plan here—its taking longer than we like—it gives us time to plan these out."

Other tidbits Phillips delivered included that Oracle hasnt yet mapped out pricing for new products; that there is no cut-off time to access the free module-to-module upgrades; that ongoing installations and consulting work will be supported; that PeopleSoft customer forums would continue; that marketing will be toned down; that the PeopleSoft tool set would still be supported; and that no decision has been made on whether free consulting or incentives will be offered in the case of a customers decision to migrate to Oracle.

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