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The appointment of former PeopleSoft CEO Craig Conway as a Salesforce.com board of directors member is surprising, and a bit dismaying, considering that he was fired by his previous employer when it was in the midst its tenacious legal battle to avoid a hostile buyout by Oracle.
The firing, of course, didnt necessarily mean he wasnt a skilled corporate manager. But it was certainly the result of the fact that he used less than stellar judgment as he waged the ultimately futile campaign to keep PeopleSoft out of Oracles clutches.
There may have been no force on earth that could have prevented Oracle from buying out PeopleSoft once Oracle decided that the ERP (enterprise resource planning) software company was an inviting buyout target.
Clear evidence of this is that Oracle ultimately paid a very hefty price to achieve its goal. The final $10.3 billion price was double Oracles original bid.
But it was apparently Conway himself who revealed that PeopleSoft might be open to a merger with the database giant.
Testimony by Oracle CEO Larry Ellison in the 2004 Federal antitrust lawsuit that unsuccessfully tried to block the buyout showed that it was Conway who initiated talks on a possible PeopleSoft-Oracle merger as a way for the companies to build an ERP software business that would be more competitive with SAP AG.
Ellison said those talks failed because Conway insisted on being chief executive of the merged applications business, a condition, he testified, that Oracle could not accept because it would be the majority owner of the combined businesses.
The PeopleSoft board fired Conway after it learned that Conway had made misleading statements to market analysts that Oracles hostile buyout bid wouldnt cut into sales, when the company already knew that it would.
In publicly announcing the firing in October 2004, the board cited a “loss of confidence” in Conways ability to run the company.
So why would Salesforce.com decide to place a discredited former CEO on its board of directors? He is certainly experienced in building an ERP software business. He knows the software industry as well as anyone in Silicon Valley.
Conway certainly departed from PeopleSoft a wealthy man, one who stood to make even more money when he cashed in his stock after Oracle closed the buyout.
As a result he would be a good ally to have on the board as Salesforce.com pursues ambitious plans to turn its on-demand CRM (customer relationship management) system into a general-purpose application development platform for independent software vendors.
Next Page: ERP competition is heating up.
ERP Competition Is Heating
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Salesforce.com CEO Marc Benioff has made it clear that he has big ambitions for his company and that he intends to make it grow as rapidly as it can. In fact, he would like it to grow as big as Oracle, where he worked for most of the 1990s, and where he was mentored and befriended by Ellison himself.
That friendship has cooled since Benioff went off to build his own company, and now Salesforce.com is a small but vigorous competitor to Oracles own CRM business.
Salesforce.coms decision to add Conway to its board is another sign that the competition is going to keep heating up. The Silicon Valley software industry is a surprisingly close-knit community, where executives have worked together at the same companies as they climbed the management ladder and worked in various entrepreneurial ventures.
Conway is himself an Oracle alumnus, and that is another factor that will add a personal element to the competition as Salesforce.com carries out its growth plans. Since the bruising fight with Oracle, there is certainly no love lost between Conway and Ellison.
Benioff certainly knows that bringing on Conway is like waving a red cape at a bull. Its almost as if Benioff is thumbing his nose at his former mentor at Oracle.
But why should Oracle care? Oracles CRM business alone was far larger than Salesforce.coms even before it announced its proposed buyout of CRM specialist Siebel Systems Inc. It will take years for Salesforce.com to build up a software business that can rival even a significant portion of Oracles applications business.
In the meantime, Salesforce.com could itself become a buyout target for Oracle or some other competitor if it isnt simply pushed to the wayside by the effort to keep up with business juggernauts like Oracle.
Many corporate boards of directors are set up mainly to rubber-stamp the CEOs decisions. Good board members apply their knowledge and experience and the success they have had building other businesses to help new companies achieve their goals.
What remains to be seen is whether Conways addition to the board is just a symbolic gesture, or whether he can provide the judgment and advice an ambitious young company needs to achieve success.
His track record doesnt lend a lot of confidence that he will be a positive factor that will take Salesforce.com to the top of the industry.
John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at [email protected].