Former J.D. Edwards & Co. customers, whove weathered a sometimes bumpy transition to becoming PeopleSoft Inc. customers, are now waiting to see if theyll have to go through the whole process again if Oracle Corp. succeeds in its hostile takeover bid for PeopleSoft.
And its the waiting thats the hardest part, as customers put new development plans on hold to see where theyll end up—remaining PeopleSoft customers, becoming Oracle customers or becoming customers of another software company, should Oracle choose to spin off the old J.D. Edwards business to a third party.
“I cant say that wed be looking forward to another change, but it would be better than the turmoil of the last few months, where we dont know where were going to end up,” said Fred Pond, director of IS for Schnitzer Steel Industries Inc., of Portland, Ore., a PeopleSoft EnterpriseOne, former J.D. Edwards OneWorld customer.
“We have to have a decision, whether were going to Oracle or not, and let it be final. Right now, were stuck in this middle ground,” Pond said.
Publicly, Oracle has committed to supporting all PeopleSoft applications, including the former J.D. Edwards product lines, for at least 10 years if it succeeds in acquiring PeopleSoft. An Oracle spokesperson maintained that position last week.
But since Oracle, of Redwood Shores, Calif., announced its plan to buy PeopleSoft, of Pleasanton, Calif., in June 2003, industry watchers have speculated that the former J.D. Edwards customer base, the majority of which is on IBMs DB2 database, could get spun off elsewhere. Previous media reports indicated that Chicago-based SSA Global Technologies Inc. is a likely suitor for the former J.D. Edwards business.
SSA has purchased nine companies since April 2001, including Computer Associates International Inc.s InterBiz product group; Infinium Software Inc.; Baan Co.; and, in July, Marcam Solutions Inc. An SSA spokesperson declined to comment on the companys interest in a side deal with Oracle, citing the quiet period SSA is in after recently filing an S-1 form for an initial public offering.
Pond said hed rather end up with Oracle, which he felt was more likely to provide a long-term migration path on top of the 10-year support the company has promised so far. “But if we could get that 10-year commitment from SSA, we could work that into our own plans,” he said. “Over a 10-year period, a million things are going to change.”
Spin Off or Sell
John Matelski, deputy CIO and chief security officer for the city of Orlando, Fla., also a PeopleSoft EnterpriseOne customer, said the AS/400-based World product line developed by J.D. Edwards was a likely candidate for a spinoff to another company.
“It is obviously a DB2-based solution, and it may be something they would prefer to spin off,” said Matelski. He and Pond both said, however, that World would bring in lucrative maintenance contracts to whoever bought the software.
“If Oracle pays $7.7 billion for PeopleSoft, they may be interested in spinning that product off for cash,” Pond said.
To be sure, the transition to PeopleSoft has been a rocky one for former J.D. Edwards customers. PeopleSofts licensing and support contracts are different, with an emphasis on enterprise, rather than per-user licensing, Pond said. But he said PeopleSoft, so far, hasnt forced his company to change.
Pond is president of Quest, the independent user group for PeopleSofts EnterpriseOne and World customers. PeopleSoft, however, has not supported the organization, which enjoyed a much closer relationship with J.D. Edwards, according to Pond.
Pond said he hasnt gotten any indication from Oracle that it would treat Quest differently, although Oracle Executive Vice President Chuck Phillips did speak at a Quest conference in March, during which he promised Oracles support for all PeopleSoft applications, in the same way that Oracle continues to support the Rdb database product it acquired from Digital Equipment Corp. in 1994.
Joshua Greenbaum, principal of Enterprise Applications Consulting, in Berkeley, Calif., said Oracle would likely want to keep the former J.D. Edwards customer base, with the hope of upselling those users to its database and application server technologies.
“They could find a partner who will do the maintenance of the product line in the iSeries [World] family; thats easy enough to do,” said Greenbaum. “In the meantime, they continue to own the customer base; they continue to upsell to them. Theyll have an inside track.”
Matelski, whose PeopleSoft applications run on DB2, said he would expect incentives from Oracle to migrate to its database long before any acquired product lines would be eliminated.
“Though I would be amenable to migrating over to Oracle—it would be with a certain level of trepidation,” Matelski said. “There are significant costs associated with the migration from DB2 to Oracle, and the associated licensing and maintenance costs would also be substantial. The pain and cost of converting from DB2 back to Oracle is not something that the city would look forward to.”
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