SAP Chips Away at Oracle Fusion Strategy

Oracles competitors are taking the long view when it comes to waiting for their chance to get PeopleSoft and J.D. Edwards to switch to their products.

The end-game plan is already in place: Oracle has launched its Project Fusion strategy, in which it will continue to support PeopleSoft and JDE products until the technology is fully integrated into an Oracle product line by 2013.

But SAP has already launched a guerrilla war aimed at capturing the hearts and minds of PeopleSofts 13,000 customers, who certainly realize that they will have plenty of time and potentially plenty of incentives to make a shift to non-Oracle products over the next eight years.

One of SAPs first acts after Oracle managed to close its $10.6 billion buyout of PeopleSoft was to make a small acquisition of its own. SAP bought TomorrowNow Inc., a 60-employee company based in Bryan, Texas that provides third-party support for PeopleSoft and JDE applications.

/zimages/3/28571.gifClick hereto read about Oracles own efforts to get SAP customers to move into the Oracle applications camp.

A majority of its employees are former PeopleSoft staff members and have experience supporting PeopleSoft or JDE ERP (enterprise resource planning) applications.

TomorrowNows CEO Andrew Nelson said his company can support these products for 50 percent less than Oracle typically charges and will support the products for a longer period of time—10 years from the current year as opposed to Oracles promised eight years based on its Project Fusion timetable.

The company is also offering to provide upgrades and fixes at the same level as customers would expect to get from the original software providers themselves. This includes major bug fixes along with required regulatory and tax code updates.

/zimages/3/28571.gifClick hereto read about a study, conducted shortly after the Oracle buyout, showing that many PeopleSoft customers were willing to consider shifting to other ERP software products.

TomorrowNow is hardly the only company offering third-party support or outsourcing services for PeopleSoft and JDE applications. There are scores of regional or national companies providing such services. But how many of them are wholly owned subsidiaries of SAP, Oracles arch competitor?

TomorrowNow contends that its service provides decisive cost and other advantages that make it a strong alternative to the service available through Oracle and its Project Fusion upgrade path.

Next Page: Keeping customers close.

Keeping Customers Close

But from SAPs perspective, one of the key advantages of owning a third-party PeopleSoft support service is that gives the company a chance to keep PeopleSoft customers from committing to the Project Fusion program.

Better yet, it gives SAP a captive audience that that it can offer SAP applications to when the support periods for PeopleSoft and JDE applications run out.

Naturally the first choice of most of these customers would have been to keep working with PeopleSoft and keep these applications running indefinitely, as long as they are working productively and delivering value for the maintenance costs.

If it isnt broken, why replace it. Customers may want to keep these applications running well past the eight or 10 year time frames projected by Project Fusion or even TomorrowNow.

/zimages/3/28571.gifTo read more about the Oracle Fusion middleware strategy,click here.

But there are going to be a lot of advances in software technology over the next 10 years. A lot of the future innovation is going to come in the areas of open-source and on-demand software applications.

Its possible that PeopleSoft customers will decide that these newer models provide viable alternatives to both Oracles and SAPs ERP applications. Microsoft, Lawson software, and some of the other smaller ERP software companies will all try to win over PeopleSoft, SAP and Oracle customers, especially those which are looking for ERP software that is the best fit for midsized companies.

In the meantime, the sniping and competitive maneuvering will continue between SAP and Oracle in theier struggle for the top of the market. The two companies have been noted for tit-for-tat press releases in which Oracle boasts of the success of a program to convert SAP customers to Oracle applications after SAP touts its own success in attracting PeopleSoft customers to its camp.

This all means that customer still have as much leverage as they ever did in the ERP market. Smart companies will play off one company against the other to get the best possible deal.

It also leaves open the possibility that customers will simply cry “a plague on both your houses” and go to a smaller, more nimble company that can undercut deals offered by these two lumbering software giants.

John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at john_pallatto@ziffdavis.com.

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