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    Study: Many PeopleSoft Users Inclined to Ditch Software Post-Merger

    Written by

    Lisa Vaas
    Published March 4, 2005
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      Post-merger, Oracle Corp. has PeopleSoft customers in the palm of its hand—or does it?

      Recent research from The Yankee Group shows that a sizable portion of PeopleSoft organizations report that theyre inclined to bail on the software following the merger—particularly those who use CRM (customer relationship management) products from PeopleSoft.

      Out of 162 PeopleSoft customers surveyed in December and in January following Oracles announcement that the deal was a go, 46 percent reported a propensity to switch off their current applications, with another 30 percent remaining undecided.

      Product functionality is not whats worrying PeopleSoft customers. Survey respondents reported above-average levels of satisfaction with, for one, their supply chain software functionality, for example. SLAs (service-level agreements), however, are a primary concern. “Oracle could seriously mess up if they dont do well in keeping customers happy in the short term with SLAs,” said Sheryl Kingstone, one of the Yankee Group analysts who authored the report.

      The surveys findings may strike Oracle competitors SAP AG, Siebel Systems Inc. and Microsoft Corp. as being good tidings. Indeed, the Yankee Group stressed in its report, “What the Future Holds for PeopleSoft Organizations,” that Oracle must work hard to assure its new customers that it will nurture, support and develop PeopleSoft technology—particularly J.D. Edwards applications.

      At the same time, Oracle itself is far and away PeopleSoft users No. 1 alternative brand, with 52 percent of respondents reporting that they would consider Oracle to be their foremost option were they to switch. SAP came in with 36 percent, Siebel at 22 percent, Microsoft Great Plains at 17, Microsoft Navision at 12, Lawson Software Inc. at 9, Sage/Best Software Inc. at 7, Geac Computer Corp. Ltd. at 6 and SSA Global Technologies Inc. (BPCS)/Baan at 5.

      Still, CRM is a major concern for Oracle, the Yankee Group found. Thirty percent of PeopleSoft CRM customers said they would be somewhat likely to switch their software, and 17 percent said they would be very likely. Only 23 percent of PeopleSoft CRM users said they were very unlikely to switch, while the balance reported that they were still undecided.

      A sizable chunk of PeopleSoft HR customers were likewise spooked by the turn of events, with 29 percent reporting they were somewhat likely to bail following the merger, 17 percent saying they were very likely, and only 31 percent reporting that they would stay put.

      When it came to users of the entire PeopleSoft ERP (enterprise resource planning) suite, 25 percent reported being somewhat likely to change software. Eighteen percent said they were very likely, and 25 percent were very unlikely.

      Right now, Oracle is focusing on the Project Fusion architecture, for which it promises it will cherry-pick and integrate the best of all its newly acquired technology. Oracle is working to base the resulting technology platform on Java and open standards, which is a “great foundation,” Keystone said. Still, much of the application layer will have to be rewritten to bring about the desired end result. In the meantime, functionality thats near and dear to customers hearts may well end up on the cutting-room floor.

      Next Page: Customer Data Hubs will be a crucial underpinning of Project Fusion.

      Study: Many PeopleSoft Users Inclined to Ditch Software Post-Merger – Page 2


      “Theres a lot of customers that are very happy [with the latest version of PeopleSofts CRM application],” Kingstone said. “[It] has significant customer interface improvements. You want to make sure Oracle pays attention to the benefit that application brings to the table.”

      /zimages/1/28571.gifClick here to read analysts take on Project Fusion being the death knell for PeopleSoft applications.

      Where Oracle is going with its newly introduced Customer Data Hub technology is another major concern, Kingstone said, as its a “huge foundational element” for the Fusion product set. At least one analyst, Aaron Zornes, of The CDI (Customer Data Integration) Institute, has charged that Oracles hub architecture is immature and that the only referenceable customers Oracle has are actually running on highly customized versions of an early incarnation of Customer Data Hub technology, Oracle Customers Online.

      “Its a very complex issue, when youre talking about CDI,” Kingstone said. “Youre talking about bringing it to the next level of embedded business processes: customer hierarchy. Its not an easy problem to solve or an easy product to package. Oracle has to pay attention here.”

      Of all PeopleSoft customers, those running J.D. Edwards applications, particularly those who run on IBM AS/400 and arent interested in switching to an Oracle-centric platform, are particularly “in a tough spot,” the report found, as rising maintenance costs and dwindling service levels remain “a distinct possibility.”

      The Yankee Group recommends that viable options for such customers are either to move to an Oracle infrastructure, implement an ERP solution that runs well on an IBM platform—such as SAP, QAD Inc. or Lawson Software Inc., for example—or remain on their current J.D. Edwards applications and continue to evaluate support options, including paying Oracle for maintenance, choosing a partner or abandoning maintenance altogether.

      /zimages/1/28571.gif

      Sources say Oracle executives are preparing to implement a 2 percent increase in annual maintenance fees for PeopleSoft and J.D. Edwards customers. Read more here.

      Kingstone said that she has no concerns that Oracle will fail to live up to its oft-repeated promises of continuing support, but that doing so will require a diligent amount of customer research to find out what functionality it cant afford to lose as it ramps up Project Fusion. “Theyre very serious” about keeping customers satisfied, Kingstone said. “I have no concerns theyre not going to live up to that. But you want to keep the pressure on.”

      /zimages/1/28571.gifCheck out eWEEK.coms for the latest database news, reviews and analysis.

      Lisa Vaas
      Lisa Vaas
      Lisa Vaas is News Editor/Operations for eWEEK.com and also serves as editor of the Database topic center. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on eWEEK.com, and in the startup IT magazine PC Connection.

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