In one of its most serious moves to combat rival SAP AG, PeopleSoft Inc. last week acquired midmarket competitor J.D. Edwards & Co. for $1.7 billion. The acquisition would firmly establish the Pleasanton, Calif., company as the No. 2 ERP player, according to PeopleSoft President and CEO Craig Conway. Prior to Oracle Corp.s surprising acquisition bid Friday, Conway spoke with eWEEK Department Editor John S. McCright last week about the impact J.D. Edwards will have on his company and customers. The following is an excerpt. For the full interview, go to www.eWEEK.com/interviews.
Why is this acquisition good for customers, and what does J.D. Edwards bring that will enable PeopleSoft to expand its market share beyond simply adding the two customer bases together?
This is one of the most compelling mergers in technology history … because most of these mergers are motivated by a single advantage or a single- dimensional advantage, and this was motivated by three-dimensional advantages. One was market distribution—J.D. Edwards is a leader in the midmarket, PeopleSoft is a leader in the large-enterprise market. The second dimension is product. PeopleSoft could pull up into its large-enterprise distribution J.D. Edwards manufacturing and distribution expertise; J.D. Edwards could pull down into the midmarket PeopleSofts HR expertise.
Weve become the second-largest enterprise application company, and weve done it mostly on service industries—financial services, health care, telecommunications, government, education. J.D. Edwards [business is] based on asset businesses—manufacturing, construction, life sciences, real estate. You have a resulting company with a broad family of products going to the broadest distribution and the most number of industries.
More infrastructure parts could be a development drain for PeopleSoft. Arent the synergies less apparent when you have that broad of a development?
It does take extra units of energy, no doubt about it. When you are going to support four databases, it takes more energy.
Do you expect the technologies from the two companies to be integrated so that you will sell fewer total products, or will you sell two separate product lines?
They will integrate way better. Whether we have a single architecture or two or three, we will maintain the customers investment. The AS/400 customers have no interest, probably, in changing.
How much of the technology can be transferred from one to the other without transforming the PeopleSoft architecture?
Theres a lot less dead ends in architectures than people think. When we used the Vantive [Corp.] architecture blueprint, we took it over to PeopleSoft in four months. Talented developers only need to see the idea.
If you keep three different architectures, do you expect the opportunities for cross-selling to be diminished?
No, because you can take advantage of domain expertise without forcing somebody to change architectures.
Can we expect to see more acquisitions in the coming year?
Yes, you will see more acquisitions, but not of this size.
You still have a long ways to go against SAP.
Yeah, I ended my voice mail to my company by saying with J.D. Edwards we still compete with companies many times our size. But PeopleSoft has become the only credible challenger for SAP.