PeopleSoft Users Weigh Risks of Oracles Rapid Growth

 
 
By Renee Boucher Ferguson  |  Posted 2007-10-29
 
 
 

PeopleSoft Users Weigh Risks of Oracles Rapid Growth


 

PeopleSoft Users Weigh Risks


of Oracles Rapid Growth">

If Oracle is successful in its attempt to acquire BEA Systems, it will be the companys 37th acquisition since 2005, when it began its buying spree with the takeover of PeopleSoft. While Oracle isnt the most acquisitive company in the software pantheon—IBM and Infor have bought nearly as many companies in the same time frame—Oracle is by far the most tenacious in its approach. But outwardly it also takes a highly conciliatory approach to its acquired customer bases.

After early hints that it would acquire PeopleSofts customer base and then kill the software, Oracle had a lot of customer fears to quell. And quell it did with an offer for unlimited applications support for PeopleSoft and JD Edwards users. But some PeopleSoft customers are expressing concern about Oracles service quality. And this is raising questions about whether Oracle is as successful as it claims about integrating its many acquisitions. The situation with PeopleSoft could be a barometer for how BEA customers would fare under the Oracle aegis.

Read more here about Oracles efforts to buy BEA Systems for $17 per share.

"We feel like there is risk in moving forward with PeopleSoft and were trying to asses that risk," said George Muller, vice president and CIO at Imperial Sugar in Sugar Land, Texas, who is weighing an upgrade to PeopleSoft Enterprise 9 recently released by Oracle. "From my perspective there are a number of companies that have abandoned PeopleSoft and have gone in other directions."

An active member of a number of PeopleSoft (and now Oracle) applications user groups, Muller said that he has seen a drastic reduction in the number of companies represented by at least one organization, Distributors and Manufacturers Users Group, that bills itself as a "product-specific users group comprised of all PeopleSoft customers that have licensed a PeopleSoft Distribution, Manufacturing and/or Supply Chain Product," according to the groups Web site.

In April 2005, Muller said there were approximately 150 companies represented at DMUGs annual meeting in New Orleans. By October 2006, the group had dwindled to half, or about 75 companies represented. "In a year and a half what I witnessed was a 50 percent drop off in participation," said Muller. "Theyre either holding their own or they are going someplace else."

At the October 2006 meeting, Oracles PeopleSoft group made a pitch to the DMUG membership that amounted to "were back," according to Muller. "Why would you have to sell that to me if youre really back, rather than demonstrating to me that youre back by making phone calls to me, by reaching out proactively to me, by addressing issues when I call the help desk?" said Muller.

"When you step back and look at the acquisitions Oracle has made…how does any one organization absorb that much and still execute and service the customer?"

Steve Canter, CIO of Berlin Packaging and the current president of DMUG, said that while he has seen as good or in some areas improved customer service under Oracles watch of PeopleSoft applications, he believes the functionality upgrades are not what they used to be.

"One of the things we are seeing is in many of the applications lines there is not as much going on in terms of product feature enhancements as there once was," said Canter in Chicago.

"PeopleSoft had decided after the JD Edwards acquisition that they were going to put more marketing behind the JD Edwards line—for manufacturers—so as a result, if they were not going to be leading with PeopleSoft on their go-to-market strategy then there was not as much incentive to make enhancements," Canter said. Oracle appears to be continuing this trend with some of the other product lines, Canter said.

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PeopleSoft Users Weigh Risks


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While Canter is staying on PeopleSoft for the foreseeable future because he believes its too disruptive to move, he is seeing some disturbing trends at Oracle. For one, rather than integrating functionality that it acquires from other companies, as PeopleSoft would have done in the past, Oracle is pointing to its other product lines.

While the strategy to leverage other lines makes sense from a business standpoint, for a midmarket CIO its a tough pill to swallow. "We dont have the resources to support a lot of different stacks," said Canter. "And no matter how good application integration is, its better to have everything under a single umbrella; its one of the reasons we chose a single umbrella. But the world seems to be drifting away from that—led by Oracle."

Customers also point to resources being moved away from core application development to Fusion development as the source for at least some of the issues with PeopleSofts software. "I definitely have evidence to back this," said Canter. "A lot of strategy and development effort is going toward Fusion, and that cant help but take away from other product lines."

Oracles intended acquisition of BEA, which develops middleware, has brought Oracles Fusion efforts into question. The recent departure of John Wookey as head of application development for Fusion Applications has heightened concern about the middlewares prospects. Imperial Sugars Muller pointed out that after 30 years in the IT business, hes realized there is no perfect system, and Fusion Applications will be no exception to the rule.

Click here to read more about the departure of John Wookey as head of Fusion Application development.

"No matter how good your methodologies and processes are, putting something together and bundling something that massive is a huge undertaking and has R-I-S-K in capital letters written across the top."

As the underpinning for Oracles Fusion Applications, Fusion Middleware is a compilation of integration, business intelligence, business process management, development tools and other software that Oracle has said is its fastest growing product line. It has also pointed to growing market share over BEA given a superior technology stack.

But there are those that question Oracles tactics in seeking to acquire BEA. "I dont understand the whole BEA thing," said Canter. "If Fusion Middleware were as great as Oracle is saying, why yet another middleware [company]?"

Andrew Albarelle, principal executive officer of Remy Corp., a consulting and executive search company that serves PeopleSoft, Oracle, Lawson and other Human Capital Management users, said that he is thrilled with Oracles attempt to acquire BEA because it gives his company more continuity with its PeopleSoft implementation, which utilizes BEAs middleware (as do many other PeopleSoft implementations).

Oracles Fusion Middleware customers could also benefit from the BEA acquisition, according to Albarelle, given that Fusion Middlewares functionality isnt up to specs. "Everybody thats installed it hasnt used it yet," said Albarelle, referring to his customer base. "They didnt feel that it was up to speed for what they needed to do, so they didnt load it yet," said Albarelle.

While the acquisition of BEA might benefit Oracles bottom line by adding another technology stack and a blue chip customer roster, the PeopleSoft customer experiences naturally raise questions about how BEA customers will fare.

"For BEA customers its like going to a Halloween haunted house and every door you open theres PeopleSoft, Hyperion, Siebel—there are the skeletons, the cats, the jack-o-lanterns and the witches," Muller said. "As you walk through the haunted house theres the graveyard at the end with all the tombstones with the names of the customers with R.I.P on the tombstones," he said.

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