PeopleSoft Users Suffer From Takeover Tensions

 
 
By eweek  |  Posted 2004-08-01
 
 
 
The latest version of PeopleSofts supplier-relationship management tools is, in the words of one user, "damn good"; customers say the software provides access via a Web browser and is generally easier to use because it requires fewer clicks to place an order.

But never mind that: The sword hanging over PeopleSofts head is an unwanted takeover attempt by Oracle, which extended its $7.7 billion offer to PeopleSoft shareholders through the end of August. The U.S. Department of Justice is trying to block the deal in federal court; a decision in the case is expected in September. PeopleSoft customers are particularly spooked at the prospect that Oracle would cease development of the PeopleSoft applications, even though Oracle claims it would continue supporting them for at least 10 years.

Gwinnett County Public Schools is in the third year of a $40 million rollout of PeopleSoft financial, human-resources and supplier-relationship management software. "Weve made an investment, a huge investment, in the software and in implementing it," says Jeff Weiler, chief financial officer of the Georgia school district. He says his team already evaluated Oracles products and found them inferior. "We had a chance to go with Oracle, and wed rather not end up with them by default," he says.

Larry Bastianelli, fiscal systems manager at Beth Israel Deaconess Medical Center in Boston, says PeopleSoft provides better tools and support for customizing its software than offerings from competitors: "With PeopleSoft, its not like, Take it or leave it," he says. For example, the requisition-approval workflow in eProcurement provides only one level of approval. Bastianelli says the hospitals approval requirements are based on the dollar amount of the item being purchased and the buyers job role, and his team easily customized the software to fit that process.

However, some say PeopleSoft needs to stitch its software modules together more tightly. Northwestern Memorial Hospital runs PeopleSoft 8.0 financial, human-resources and supply chain applications. When it deployed eProcurement in late 2002, the hospital had to write its own interfaces to translate data with the other PeopleSoft applications, says Lara Latham, director of materials management. "Its not plug-and-play," she says. "PeopleSoft has some work to do."

Supplier Relationship Management

Peoplesoft
4460 Hacienda Dr.,
Pleasanton, CA 94588
(925) 225-3000
www.peoplesoft.com/srm

Ticker: PSFT (NADSAQ)

Employees: 11,461

Les Wyatt
VP & General Manager, EnterpriseOne
Former marketing chief at J.D. Edwards, acquired last year by PeopleSoft. He has also served in marketing roles at Harbinger and Texas Instruments.

Patrick Quirk
VP & General Manager, Supply Chain Management
Formerly vice president of strategic accounts at i2 Technologies. He joined i2 when it acquired Aspect Development, where he led the launch of that companys supplier-relationship management product.

Products
SRM modules include eProcurement, which provides a Web portal to let employees purchase products and handles workflow for approvals, and eSupplier Connection, which gives suppliers "self-service" access to pending orders and information about inventory needs.

Reference Checks

State of Connecticut
Jim Passier
Mgr., Procurement
(860) 713-5086
Project: State employees in 65 agencies can order items from 30 catalogs hosted in eProcurement.

Boise Cascade
Mike Giusti
Mgr., Procurement Enterprise Systems
michaelgiusti@bc.com
(208) 384-6329
Project: Paper and office-supplies company connects directly to 11 suppliers through eProcurement, which handles roughly 15% of all transactions to those suppliers.

AGCO
Jose Marrero
VP, CIO
jose.marrero@agcocorp.com
Project: Farm equipment maker uses eProcurement and eSupplier Connection at its Hesston, Kan., facility to submit orders to 200 suppliers, about 25% of its supply base in the Americas.

Northwestern Memorial Hospital
Lara Latham
Dir., Materials Management
llatham@nmh.org
Project: Chicago hospital allows 1,000 users to order routine items like office supplies and medical stents via eProcurement.

Beth Israel Deaconess Medical Center
Larry Bastianelli
Fiscal Systems Manager
lbastian@bidmc.harvard.edu
Project: Using eProcurement to link to five suppliers Web sites to let workers order medical supplies, computer equipment and other products.

Gwinnett County Public Schools
Jeff Weiler
CFO
jeff_weiler@gwinnett.k12.ga.us
Project: Georgia school district plans to connect to its top 15 suppliers through eSupplier Connection.
Executives listed here are all users of PeopleSofts products. Their willingness to talk has been confirmed by Baseline.

Peoplesoft Operating Results*

2004YTD20032002
Revenue$1.29B$2.27B$1.95B
Gross margin61.4%61.7%63.4 %
Operating profit$47.25M$116.59M$252.64M
Net profit$35.18M$85.04M$182.59M
Net margin2.7%3.8%9.4%
Earnings per share$0.10$0.25$0.59
R&D expenditure$265.31M$433.01M$341.19M

* Fiscal year ends Dec. 31; YTD reflects first six months
Source: coMpany reports

Other Financials**
Total assets - $4.31B
Stockholders equity - $2.98B
Cash and equivalents - $542.47M
Long-term debt - None
Shares outstanding - 368.52M
Market value as of 7/27 - $6.32B

** As of June 30, 2004, except as noted

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