IBM to PeopleSofts Rescue?

WebSphere gives apps maker better integration story.

Customers of PeopleSoft Inc. last week said the companys sweeping $1 billion, multiyear partnership with IBM gives the embattled software developer a much-needed application integration component as well as a strong partner.

The deal, announced last week at PeopleSofts Connect user conference here, will eventually enable PeopleSoft customers to create composite applications using IBM middleware. Such applications, which combine business logic from multiple vendors software using Web services, are already embraced by PeopleSofts major competitor—SAP AG—and will strengthen the companys product portfolio.

"[This] is the most ambitious, aggressive announcement from PeopleSoft and IBM ever," said PeopleSoft CEO Craig Conway during a press and analyst briefing at Connect. "It may be the most aggressive announcement in the industry."

PeopleSoft, of Pleasanton, Calif., and IBM, of Armonk, N.Y., will spend a combined $1 billion over five years to develop a composite-application integration platform, dubbed informally by PeopleSoft as the Adaptable Business Architecture. The platform will see IBMs WebSphere middleware stack embedded in PeopleSofts applications.

At the same time, the companies will jointly develop vertically oriented composite applications. In addition, PeopleSoft will port its PeopleTools developer kit to Eclipse, the open- standards developer framework spearheaded by IBM and used by SAP and Oracle Corp. in their development environments. PeopleSoft and IBM expect to have some sort of combined offering in the marketplace within 90 days. However, it will be 12 to 18 months before either company releases a composite application.

The Adaptable Business Architecture will enable PeopleSoft customers to model, manage, execute and integrate business processes. While this is critical to the survival of business application companies, PeopleSoft is decidedly late to the game.

SAP, which announced composite applications two years ago and rolled out its NetWeaver framework last year, is already working on the second generation of its xApps. Those composite applications will use analytic capabilities to provide strategy or recommendations to users based on a specific business process, said officials at SAP, of Walldorf, Germany. While not specifying a timeline, the company is expected to provide more details at its TechEd user conference next week.

In addition to technology assistance, IBM will provide implementation, marketing and sales help to PeopleSoft.

PeopleSoft customer Steve Canter, CIO at Berlin Packaging, has no plans to use composite applications or Eclipse in the near future. But Canter said the IBM relationship could allow him to consolidate his IT infrastructure on IBM products.

"The IBM alliance gives us the opportunity, should we desire to go down that route, for a more homogeneous environment," said Canter in Chicago. "Should we replace BEA [Systems Inc. middleware] with WebSphere? Or at the end of life with our existing [Hewlett-Packard Co.] servers, [should] we look to go to IBM? Its nothing we would change just for the sake of change, but when we are considering an upgrade or change, it certainly makes IBM more attractive."

The legitimacy that IBM brings to PeopleSoft didnt come too soon. The company is fighting a $7.7 billion hostile takeover bid from Oracle and said its business has been damaged as a result. While officials said that IBM was not going to buy PeopleSoft itself, IBMs presence is reassuring to customers like Betty Hoile, who said she is moving ahead with a PeopleSoft upgrade.

"Its always good to have a big brother," said Hoile, staff engineer with Honda of America Manufacturing Inc., in Marysville, Ohio.


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