PeopleSoft Is Making a Vision Reality

Interview: PeopleSoft CEO Craig Conway says the company's real-time enterprise gamble is paying off.

Craig Conway, President and CEO of PeopleSoft Inc., in Pleasanton, Calif., has a lot of company these days. When he made a bet in 1999 to embrace the concept of the real-time enterprise—using the Internet as a companys business underpinning—he was nearly alone among vendor executives. Now, you cant find a vendor that isnt talking about Web services, the integrated enterprise and, most recently from IBM, "On Demand"computing. At the end of an extended day of meetings with a wide variety of customers in New York late last month, Conway sat down for an hour-long interview with eWeek Editor in Chief Eric Lundquist.

eWeek: The real-time enterprise—what is it?

Conway: The real-time enterprise is created when a company moves its business processes online, onto the Internet—and extends them directly out to their customers and their suppliers. The end result is that the business processes become immediate because there are no intermediaries.

eWeek: Why are so many vendors now championing the concept?

Conway: The reason this is resonating in this market more than others is that this is not an expansionary market, this is a market where it is difficult to achieve your desired financial results through top-line revenue growth. The companies that are able to exceed their financial results credit it to improved operating efficiency rather than higher revenue.

eWeek: You placed your bet on the real-time enterprise two years ago. Is that bet now paying off?

Conway: Two years ago, the real-time enterprise was a vision. Today, it is not a vision, it is reality. This is no longer an evangelist sell; this is helping companies go online with their core business processes. Every company wants to do that.

eWeek: Whats the next step?

Conway: The challenge of putting your business processes online is well under way. The next big step is connecting them all together.

eWeek: When you talk about putting companies online and connecting them all together, I hear reverberations of [Microsoft Corp.s] Bill Gates talking about .Net, as well as the claims from IBM and others. Are you suddenly in a very crowded market?

Conway: First of all, we were the first company to [embrace] the Internet architecture. Certainly, SAP [AG] and Oracle [Corp.] today dont have an Internet architecture. PeopleSoft is the only enterprise application company with a pure Internet architecture. When you mention Bill Gates, it almost makes me smile. Microsoft is perpetually the last guest to arrive at the party, and still .Net is a largely unproven approach. However, we are all in the same business of promoting the Internet as a business tool.

eWeek: Tom Siebel recently endorsed .Net and Java. Can you really live in both camps?

Conway: I cant speak for Tom. Clearly, Siebel [Systems Inc.] is under tremendous pressure for a variety of issues they have had in the enterprise space. They seem to be looking for some way to claim a fresh direction.

eWeek: So is .Net viable in the enterprise?

Conway: Clearly, the premise behind .Net is enormously self-serving for Microsoft. I think there is no traction whatsoever in the market for .Net. But that doesnt mean that Microsoft cant, through tremendous determination, years of patience and an unlimited marketing budget, make it successful.

eWeek: You just spent a day talking to customers and potential customers about enterprise integration. In this period of tight budgets, is this message resonating?

Conway: The data says technology spending is down. But what technology spending are you talking about? The fact is, technology spending is under scrutiny like all capital budgets. But if you look at where dollars are being spent, significantly more dollars are being spent in enterprise software than any other category. Real-time enterprise software is being viewed as part of the solution, not part of the problem.

eWeek: Whats been the biggest benefit to PeopleSoft from implementing the concept of the real-time enterprise within your own company?

Conway: The short answer is $157 million. We have spent in the first nine months of this year $157 million less than we spent last year without ever laying off a single person. We moved our own company online, and costs just came flooding out. For a $2 billion company to save $157 million in the first nine months of the year without having to lay off is a huge validation of the concept.

eWeek: Marc Benioff of [Inc.] says the real next wave of software is no software at all. He claims software will become subscription-based services.

Conway: I dont think subscription-based software has a chance of being successful for a number of crucial reasons. First, trusting core enterprise applications to a small online software company is a frightening proposition to any company. Two, when you subscribe to an online application, there is no possibility of integrating it to any application in your company. The third reason is that the business model will never work. The proof of that concept is, which has 30,000 customers and is still not profitable. How many more do you need? What the world has learned since 1999 is that things that are not profitable have terminal diseases. They will die.