Why You Should (Still) Pay Attention to the DOJ-Oracle Trial

 
 
By Lisa Vaas  |  Posted 2004-06-07
 
 
 

Why You Should (Still) Pay Attention to the DOJ-Oracle Trial


The Oracle-PeopleSoft-DOJ saga is similar to water torture. It just keeps dribbling on, only getting to trial in San Francisco federal court this week.

Every drip of news over the past 12 months has been of incremental interest to attorneys and to journalists, who are still driven to writing about every twitch in Judge Vaughn Walkers eyelids because we know that God is keeping score of how many words we write and wont let us into heaven if we miss something.

Enterprise customers, meanwhile, have been the recipients of the constant drip-drip-drip of news and the diverted attention of their software vendors.

As Renee Boucher Ferguson wrote in an article that sums up what will happen in court this week and how the industry has been affected so far by Oracles hostile takeover bid for PeopleSoft, customers are fed up with this dragging-out of the story.

For example, Mike TenEyck, manager of administrative information systems at Texas Christian University, in Fort Worth, has an attitude thats representative of a majority of enterprise customers.

TenEyck told Ferguson that this type of debacle is just a distraction that takes PeopleSoft "a lot of work, time and money" to fight off. Thats work, time and money that the company could be putting into making better products, of course.

Rouse yourself from the enervation caused by the Oracle-PeopleSoft saga, though, because were finally at the point where it really gets interesting.

Microsofts and SAPs admission Monday that Microsoft last year talked with SAP about a possible acquisition is just the first taste of the fascinating—and useful—insights into the acts of software giants well be gleaning during this trial.

Next page: The Microsoft-SAP deal is a harbinger of the market intelligence that will pour from the trial.

Market Intelligence


Microsofts coy denial of being interested in moving upmarket in the enterprise software market has always been comically implausible.

Back in March, the company provided the DOJ with a sworn statement to the effect that it has no plans to enter the enterprise market within the next two years.

Oh, puh-leaze. The disclosure about the SAP deal only confirms what most of us have always assumed: namely, that a company that goes out and buys two enterprise application companies (Great Plains and Navision) and which has pledged to invest the enormous sum of $10 billion in R&D into this space over the next five years has every intention of taking the enterprise software market by storm.

Click here to read more about Microsofts acquisition of Navision.

Oracle will put Microsofts Cindy Bates on the stand as its 18th witness out of 25 this week. Antitrust experts expect Oracle to paint Microsoft as a strong competitor in the enterprise market.

As Paul Friedman, a Washington, D.C.-based partner at law firm Dechert LLP, told me, "Oracle hopes to show that Microsoft has very ambitious plans to participate in that space and, frankly, has substantial business imperatives to be successful in that space."

Microsoft will likely contend that just because it was interested in SAP doesnt mean that it was interested in entering the high-end enterprise space.

As Friedman pointed out, theres more to SAP than high-end software. "It begs the question," Friedman said. "[Microsoft was trying] to enter which market?" Indeed, what would Microsoft have bought if it acquired SAP?

Next page: Microsoft needed SAP to cure its scalability and sales problems.

Fixing Problems


But SAPs high-end software just makes too much sense for a Microsoft acquisition to be about much else. Paul Hamerman, an analyst at Forrester, in Cambridge, Mass., said the Great Plains and Navision products that now fall under Microsofts Business Solutions, with the exception of ERP (enterprise resource planning) product Axapta, are unsuitable for the enterprise because they just dont scale—mainly because theyre client-server products that werent designed to scale to hundreds of users over a network.

"I think Microsoft is looking at the Axapta product and looking to make enhancements from a functional standpoint and improve the scalability of that product in hopes of winning business in the upper end of the market," Hamerman told me.

An SAP acquisition would have helped Microsoft solve the scalability and functionality deficits its MBS tools now suffer.

It also would have helped Microsoft leap another serious barrier to the high-end enterprise market: namely, the fact that its entire sales model is indirect and its products are sold through resellers and channel partners.

"That channels good for the midmarket, but they dont have a direct sales model," Hamerman told me. "The SAP merger would be a way to do it," he said, albeit an expensive one.

Microsoft has been fine-tuning its Microsoft Business Solutions products, of which Great Plains is now part. Click here to read more.

What does this all mean to you? It means that Microsoft is on track to offer you another option when it comes time to purchase or update financial or human resources software.

It means that at some point, you will have more sway with vendors during the purchasing process, because youll have one more competitor to hold over their heads. It means that you should pay attention to what Microsoft says when its on the witness stand.

Next page: Well glean good info on sales tactics, too.

Sales Insight


Hamerman had some other good suggestions for what we should pay attention to in the trial. In general, customers will be able to garner valuable insight into software sales tactics, which will be revealed to some extent in this trial.

For example, theres been a good amount of sales documentation gathered regarding Oracles habit of offering steep discounts to customers, particularly when those customers are favoring other vendors. That will certainly be of interest to customers who are in the process of buying software, Hamerman noted.

There also will be a slew of case studies offered during the trial. Also on the stand will be systems integrators. Theres bound to be loads of useful information about the experiences customers have had in selecting and deploying complex applications, Hamerman suggested.

In the end, will the trials outcome matter? If the DOJ wins, it wont eliminate industry consolidation. As eWEEKs Ferguson pointed out in the article I referenced earlier, damage has already been done in the form of PeopleSoft personnel whove been diverted so as to fight the lawsuit, as well as lost J.D. Edwards staffers.

But regardless of the outcome, the process, as were already witnessing, is going to provide us all with a wealth of information that you can put to use in purchasing decisions and sales negotiations. So, whatever you do, dont change that dial—stay tuned to the Oracle trial.

Please register for TalkBack below and tell me and other readers what you think, or write to me at lisa_vaas@comcast.net.

eWEEK.com Associate Editor Lisa Vaas has written about enterprise applications since 1997.

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