PeopleSoft Hits Stride

But tough challenges still ahead

Since taking over the CEO position at PeopleSoft Inc. nearly two years ago, Craig Conway has remodeled the company in his own image—that of an intense, aggressive, no-nonsense businessman.

While the effort has paid off in some ways—last fall, the software developer completed a major overhaul of its flagship suite of enterprise resource planning applications and returned to profitability—PeopleSoft faces crucial tests in the coming months.

Primarily, PeopleSoft and Conway must persuade the companys installed base to upgrade to PeopleSoft 8, while at the same time expand its core offerings beyond human resources and financial applications. And it must do these things in a time of economic uncertainty.

"All of the metrics you use internally to measure your company are all at the highest point theyve ever been," Conway said. "From a dials point of view, on our dashboard everything looks good."

PeopleSoft is still holding its breath on how many customers will upgrade to PeopleSoft 8, which has a Web-based architecture as opposed to the client/server architecture of its past products. So far, nearly a quarter of the companys installed base of 4,000 customers have signed up to upgrade.

While Version 8 has been roundly applauded by industry observers for lowering the cost of managing clients, some PeopleSoft customers say it can be time-consuming.

In addition, users like Deborah Joseph arent ready to completely give up on client/server technology. Joseph, manager of client services programs for CyberCash Inc., in Reston, Va., is implementing PeopleSofts CRM (customer relationship management) module from Version 8.

"We have a Web-based view of our support application for our customers, but we like the client/server-based vs. the Web-based because you get a bit more functionality in the client," Joseph said.

Joseph, who overall is very happy with Version 8, said it is also easier to make changes with the editing and development tools in the client/server version than in the Web version.

"People coming from a client/server [background] will definitely notice something if they were a heads-down keyer since there is no code on the client," said Tim Stofka, co-founder and vice president of sales and marketing with systems integrator Oasis Software LLC.

"[A Web-based architecture] is definitely a different mind-set," said Stofka, a former systems engineer, in Nashville, Tenn. "You definitely have to go back to the server to resolve things, where before that code would already be cached on your client."

PeopleSoft, like its rivals, however, must also deal with the economy. Last week, Oracle, one of PeopleSofts prime competitors, blamed the slow economy for its decision to lay off 2 percent of its work force. Officials at PeopleSoft said they have no layoff plans.

Gene Johanson, project leader in the Human Resources division at Frank Russell Co., in Tacoma, Wash., cant wait to implement PeopleSoft 8. However, he may delay his planned June implementation if the economy is not strong.

"We will definitely do it, but we might have to wait for the market to rebound," Johanson said.

Conway is confident that companies will want to deploy software to improve customer relationships and automate purchasing. This year, PeopleSoft will put the bulk of its research and development efforts into CRM and supply chain management projects. "In supply chain management, I think we have a place at the table. It is our fastest-growing product line," Conway said.

To kick off the effort, PeopleSoft will announce this week its Accelerated Supply Chain Management suite, which links critical business practices for collaboration between buyers and suppliers in private and public exchanges. The company promises a 9-to-12-week implementation and is targeting the middle market.

The company also will announce this week its PeopleSoft MarketPay settlement platform for public and private exchanges. MarketPay, due in the first quarter of next year, provides services for purchasing, receiving, reconciling and paying for goods in a business-to-business exchange environment.

Conway also plans to divert more money to sales and marketing. Such a move is necessary, observers said.

"They do have issues in terms of getting their story out to the B2B market, particularly with supply chain management," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting, in Daly City, Calif.