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Oracle Corp. executives met with shareholders of PeopleSoft Inc. this week to convince them to buy into Oracles $6.3 billion takeover bid for PeopleSoft. Now the executives are meeting with the press to better explain the rationale behind the plan.
Two Oracle executive vice presidents are giving assurances that PeopleSoft customers would never be forced to migrate to Oracles applications should Oracle succeed in acquiring PeopleSoft.
Oracle Executive Vice President Chuck Phillips gave assurances Friday that PeopleSoft customers would never be forced to migrate to Oracles applications should Oracle succeed in acquiring PeopleSoft.
“No [PeopleSoft] customers will be required to migrate [to Oracles applications],” Phillips said during a conference call with reporters. He went on to say that Oracle, of Redwood Shores, Calif., would support PeopleSofts existing products for longer than PeopleSofts own support commitments currently run and would make enhancements to those products as well.
“If and only if a customer elects to move to Oracle, they will be moved to Oracle,” Phillips said. “If they choose to stay put, they can stay put for years to come. Therell be no requirement to move.”
In an interview with eWEEK Online, Mike Rocha, executive vice president of Oracle Support Services, acknowledged that a migration from PeopleSoft applications to Oracles E-Business Suite was not a trivial matter. But he said that with access to PeopleSofts software code Oracle will be able to develop ways to make that migration easier.
“We will take PeopleSoft developers and tools and figure out how to take some of the best PeopleSoft ideas into the Oracle suite so there is a reason [for PeopleSoft users] to migrate” to E-Business Suite, Rocha said. “We are after the customers and we want to make them happy; forcing migration to Oracle isnt going to make them happy.”
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Rocha said that Oracle already provides some support for 80 percent of PeopleSoft customers because those users have an Oracle database. Many of the 400,000 tools and articles in the Oracle support knowledge base cover PeopleSoft applications, he said. Like Phillips, Rocha pointed out that Oracle has a much bigger support organization than PeopleSoft.
“We have 4,000 global engineers, 1,500 in the field for product support and customer care,” he said. “Well bring PeopleSoft customers” under that umbrella. “
If the deal goes through, Oracle would also bring many PeopleSoft support staff into his organization, Rocha said.
Phillips compared PeopleSoft customers to customers of Digital Equipment Corp.s RDB database, when Oracle bought the product from DEC eight and a half years ago. While most of those customers over time migrated to Oracles own database product, Oracle continues to support and enhance RDB, Phillips said.
“We still have several thousand [customers] running it with mission-critical systems,” he said.
Phillips noted that had those customers stayed with DEC, they would have gone through two acquisitions by now (Compaq Computer Corp. bought DEC and Hewlett-Packard Co. bought Compaq) and would be worse off than they are with Oracle. He predicted that long-term, PeopleSoft customers would be better off under Oracle and would get better support from Oracle, than under PeopleSoft.
“PeopleSoft will have three product lines [apps for the enterprise, apps for the mid-market, and iSeries apps], an R&D budget a fraction of ours and they are saying their support will continue forever,” Phillips said.
One PeopleSoft customer who is a month away from completing a migration to the PeopleSoft applications from GEAC software said that switch enterprise apps is not a small job.
“Its a big deal,” said Randy Senn, CIO of Scana Corp., in Columbia, S.C.
Senn finished the GEAC implementation not long ago, but after a merger his company decided to standardize on PeopleSoft.
“We had done a lot of process engineering and documentation with the GEAC implementation and I figured it would be” easier to do the PeopleSoft implementation because of that, Senn said. “What we found out is that previous work is probably not going to minimize the work of going to the second set of applications, thats a wrong assumption.
“Thats why this whole issue with Oracle has us concerned,” Senn said.
Rocha said that many users of PeopleSoft 7 are also struggling with migration to PeopleSoft 8 because they have to figure out how to make the software fit their business processes. The pitch with Oracles E-Business Suite is that once a customer is using the software there would be less customization required for future upgrades.
“That monkeying with the software is a very expensive proposition,” Rocha said.
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Rocha and Phillips both pointed out that Oracle would provide free E-Business Suite software to PeopleSoft users wanting to migrate, if the deal goes through.
“The fact that Oracle would give you [free software], there is not a lot of value in that,” Senn said. “The software cost is a fraction of the cost of a project like that.”
He said the cost of training is substantial.
Phillips also said during the interview that Oracle arrived at its revised $19.50 per share offer price after consultations with PeopleSoft shareholders, most of whom told Oracle they would have to offer between $19 and $20 per share to win their approval. He saw no reason why Oracle should raise the bid any higher.
“Theres no one to bid against, no white knight, so no reason to raise the price. This is the price the owners of the company told us wed have to pay,” Phillips said.
Phillips cautioned that PeopleSoft still has in place a “poison pill,” a corporate bylaw that would make a hostile acquisition cost prohibitive.
” With the poison pill still in place the deal will not happen,” Phillips said.
Phillips has emerged as Oracles point man on the acquisition after joining the company in mid-May, just weeks before Oracles bid for PeopleSoft was announced June 6. He had spent the previous nine years covering the enterprise software industry for Morgan Stanleys Institutional Securities Division.
He deflected questions about his role, denying that he was hired specifically to help Oracle consolidate the enterprise software business. J.D. Edwards & Co. has named Phillips as a co-defendant in its lawsuit against Oracle.
“I was just put on this when I got here,” said Phillips. “I didnt even have a job description yet.”