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Thursday, December 30, 2004

Oracle takes control of PeopleSoft

Oracle announced yesterday that PeopleSoft shareholders have tendered about 75% of outstanding shares and that Oracle has designated four new PeopleSoft board members to replace four that have resigned.

Oracle takes control of PeopleSoftThis gives Oracle effective control of PeopleSoft.

Oracle has issued a press release with more details. But I think the visual impact of the tweaked PeopleSoft web site says it all.

Update, Dec. 31. Looks like Oracle can't wait to get started. According to an SEC filing by Oracle, four PeopleSoft executives are out the door: co-president and CFO Kevin Parker, co-president Phillip Wilmington, chief marketing officer Nanci Caldwell, and general counsel James Shaughnessy. Taking their places are four executives from Oracle: Safra Catz and Charles Phillips as co-presidents, Harry You as CFO, and Daniel Cooperman as general counsel.

Related posts
PeopleSoft CEO Duffield resigns

by Frank Scavo, 12/30/2004 07:28:00 AM | permalink | e-mail this!

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Wednesday, December 29, 2004

Hugh Hewitt's new book on blogs

Hugh Hewitt has written a new book, Blog, and I ordered a copy earlier this week. Hugh lately has been promoting the concept of "open source journalism," by which he refers to informal networks of weblogs that provide an independent alternative and counterweight to the mainstream media.

Although many people think of blogs mainly as forums for political commentary, blogs also have significant implications for the business world. I wrote earlier this month that, just as open source journalism is becoming an alternative to the mainstream media, so also "open source research" is becoming an alternative to the paid research firms such as Gartner Group and Forrester. Of course, the research firms have a different view: see the related posts below.

I may have more to say on the subject after I read the book. In the meantime, you can order a copy direct from Amazon. Or, read Glenn Reynold's (Instapundit) review of the book.

Related posts
Research firms face threat of "open source research"
Death of IT research firms greatly exaggerated

by Frank Scavo, 12/29/2004 09:49:00 AM | permalink | e-mail this!

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Tuesday, December 28, 2004

PeopleSoft CEO Duffield resigns

PeopleSoft today made known, via an SEC filing, that founder and CEO David Duffield resigned his position last Tuesday, Dec. 21. The move was expected, since Oracle had already indicated that none of PeopleSoft's board members would have a role in the company once the Oracle's acquisition of PeopleSoft was complete in early January.

There does not appear to be a press release on Duffield's resignation, but here's a short Reuters report.

Related posts
Oracle, IBM, Microsoft battle for technology infrastructure of PeopleSoft customers
IBM is a loser in Oracle/PeopleSoft deal
Oracle reaches out to JDE user group
Oracle: no plan to spin off JDE product lines
Ellison outlines direction for PeopleSoft and JDE product lines
PeopleSoft's final gift to customers
Oracle/PeopleSoft: deal is done

by Frank Scavo, 12/28/2004 06:07:00 PM | permalink | e-mail this!

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Monday, December 27, 2004

Gartner buying Meta Group

As further evidence of a consolidation trend in the IT research industry, Gartner today announced that it is buying competitor Meta Group. The offer price of $10 per share values Meta at about $162M and is more than 54% above Meta's closing stock price last Thursday. In 2003, Meta had $122M while Gartner had $858M.

In my opinion, part of the reason for the consolidation trend is the increasing quantity and quality of analysis available through what I call "open source research." Read the related posts below for more details.

Related posts
Research firms face threat of "open source research"
Death of IT research firms greatly exaggerated

by Frank Scavo, 12/27/2004 01:03:00 PM | permalink | e-mail this!

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Friday, December 24, 2004

Sterling Commerce moving into supply chain apps by acquiring Yantra

Sterling Commerce, one of the biggest names in e-commerce and EDI infrastructure, is acquiring Yantra Corp., a move that expands Sterling's reach into the supply chain execution space.

So, who is Yantra? It's a supplier of distributed order management and supply chain fulfillment applications involving multiple trading partners. In other words, Yantra is a good solution for companies that take orders in one location and then fulfill them dynamically from a choice of multiple fulfillment centers, channel partners, and carriers, either within the same organization or from outside trading partners. Yantra has some big name customers in the retail, wholesale distribution, logistics and manufacturing verticals, such as Best Buy, Circuit City, DHL, Dixons, FedEx, Motorola, SYSCO, Target, and Texas Instruments.

Sterling's acquisition of Yantra gives it a big jump on its strategy to move into the applications space. Sterling will incorporate Yantra as a component in its recently announced Multi-Enterprise Services Architecture (MESA), a service-oriented architecture (SOA) that allows composite applicators to be built from various solutions. According to Sterling, Yantra's products work well as components of MESA. Sterling plans to sell the combined solution under both a traditional software license and as a hosted service.

ARC Advisory Group, as usual, has good insight:
While Yantra is an applications company, Sterling Commerce has been an Infrastructure supplier offering integration, EDI, and Data Synchronization solutions. One risk to Sterling is that if traditional supply chain application suppliers see them as a competitor in the Supply Chain Application space, then the partnerships with existing Supply Chain application partners could wither. That is a risk worth taking. The larger infrastructure suppliers have built out their offerings into complete technology platforms with EAI, B2B, Portals, Data management, etc. capabilities over the last few years leaving little room for the specialists in those areas. This has forced companies like Sterling Commerce, SeeBeyond and Vitria to either expand their technology footprint (a risky strategy), or move into some form of applications area. One of the difficulties of the application strategy is in acquiring enough domain specific knowledge to compete (create product, market, sell, and support) with the application suppliers who have supply chain processes embedded within their products. Sterling Commerce has taken a wiser approach and moved strongly into the application space.
The fact that the Yantra acquisition is key to Sterling's strategy is seen in the price it was willing to pay: $170M in an all cash deal, about four times Yantra's annual revenue, a pretty fat price tag. Furthermore, Sterling may not be finished yet. ARC Advisory thinks that Sterling will be soon doing other acquisitions to fill out its composite applications more fully.

Related posts
With hype gone, spending on supply chain connectivity is trending back up
Wal-mart still pushing its suppliers to Internet EDI

by Frank Scavo, 12/24/2004 04:32:00 PM | permalink | e-mail this!

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Wednesday, December 22, 2004

Oracle, IBM, Microsoft battle for technology infrastructure of PeopleSoft customers

Now that Oracle has won the battle for PeopleSoft, the battlefield is shifting toward who will own the technology infrastructure that underlies PeopleSoft software applications.

In one corner is IBM, which has a significant number of PeopleSoft customers, most of which are the former J.D. Edwards customers. These are all of the customers running World (JDE's older iSeries host-based product) and some of the customers running EnterpriseOne (formerly OneWorld, JDE's network-based product). Although EnterpriseOne runs on a variety of operating systems and databases, many of them are former World customers and therefore still prefer IBM's technology. IBM would like to keep these as customers, of course.

In the second corner is Microsoft, which has a significant number of PeopleSoft users of its operating systems (Windows 2000/NT) and database (MS SQL Server). Microsoft would like to keep these customers, and it also wants PeopleSoft customers running other operating systems and databases to migrate to Microsoft's own applications or those of its partners that use Microsoft technology. Microsoft VP Bill Veghte last week wrote a letter to PeopleSoft customers making exactly these points.

"Migration to another ERP solution, including Microsoft Business Solutions, SAP and other partner ERP solutions on the Microsoft platform, are additional options available to PeopleSoft customers seeking greater clarity around technology direction and platform alignment," Veghte said. "The Microsoft platform continues to gain momentum as the platform of choice for industry-leading ERP vendors."

A good part of Veghte's letter Wednesday focused on getting PeopleSoft customers to consider migrating from IBM AS/400 and mainframe systems to Windows-based servers. Earlier this week, Microsoft launched a marketing initiative with several partners that aims to win over business from customers using AS/400 and IBM iSeries servers.

In particular, Microsoft also talked about the benefits of switching to Windows for customers that use Oracle's database software on Unix systems.
And in the third corner is Oracle, which has the advantage of course, because they just bought the entire PeopleSoft customer base. Not that Oracle is taking these customers for granted. For the short term, Oracle has promised to continue support for those PeopleSoft customers on IBM and Microsoft platforms. But it is also making it clear that it intends to offer lots of incentives for those same customers to move to Oracle's database. Last week Oracle sent a letter to PeopleSoft customer groups making these points. Note especially the tepid language employed regarding support for non-Oracle technology, as reported in this article from CNET.

Oracle will ensure that customers experience very little disruption as a result of the merger; Oracle will work with database rivals IBM and Microsoft to provide support to PeopleSoft customers "as long as working relationships can be maintained"; and Oracle will make upgrades to next-generation products "as straightforward as possible."

In the memo, Oracle also said PeopleSoft customers that wish to migrate to Oracle's applications and database products can do so free of licensing charges. "This will also include the equivalent underlying database licenses that are required to run the product, if the customer was using an alternative database for the PeopleSoft applications," Oracle said in the memo.

That offer is making IBM and Microsoft, who sell databases and other technical infrastructure to many PeopleSoft customers, more than a little nervous.
Historically, PeopleSoft and JDE products have been more platform independent than Oracle's. PeopleSoft and JDE let you choose different hardware, operating systems, and databases. But if you are currently considering purchase of PeopleSoft or JDE products and believe that this platform independence is going to continue, you are mistaken. Oracle will continue to support the various platforms that PeopleSoft customers are currently running--for the time being. But over the long term, it is going to standardize all its products on Oracle's database. I have no doubt about this. That's why it fought so hard to acquire PeopleSoft. In fact, it would not surprise me if, soon after the PeopleSoft acquisition is complete, Oracle refuses to sell any new PeopleSoft deals on anything but Oracle's database.

Related posts
IBM is a loser in Oracle/PeopleSoft deal
Oracle reaches out to JDE user group
Oracle: no plan to spin off JDE product lines
Ellison outlines direction for PeopleSoft and JDE product lines
PeopleSoft's final gift to customers
Oracle/PeopleSoft: deal is done

by Frank Scavo, 12/22/2004 10:15:00 PM | permalink | e-mail this!

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Tuesday, December 21, 2004

2005 looks good for IT spending

Forrester's 2005 IT spending survey is out, and the signs are good for corporate IT spending. Specifically, Forrester finds that application software will be the big winner, with 59% of decision-makers surveyed identifying deployment or upgrade of major packaged applications as a priority, replacing security as the top priority from the past year. Some key priorities for decision makers surveyed include:
  • Regulatory compliance. 38% percent consider support for governance, such as Sarbanes-Oxley, a critical priority, while 65 percent said it was a priority.

  • Business intelligence and financial apps. Demand for BI applications is projected to increase 9%. Regulatory concerns and an increasing quantity of data caused BI to retain the top spot in planned purchases. Demand for financial applications also stayed on top in 2005 with 4% growth.

  • Content management could be the next "killer app." Purchase plans for content management increased 15 percentage points from last year, as firms adopt enterprise-wide strategies for managing Web content, documents, records, and digital assets.

  • IT consulting. 69% of companies that identified application upgrade as a priority will purchase consulting help for those projects. Overall, the demand for systems integration services increased 10 percentage points this year, from 34% planning to purchase in 2004 to 44% for 2005.

  • IT outsourcing. Application outsourcing is fueling Forrester's forecasted growth of 9% for the category, with outsourcing for applications maintenance growing 27% in 2005.
It's not a return to the go-go years of the late 1990s, but it's a positive trend for software and services providers nevertheless.

Additional details are in Forrester's press release.

Related posts
Software buyers turn cheap
High tech job market perking up
Corporate IT spending picking up for outside services
IT budgets: spending less but getting more
Word on the street: IT spending is up, but not across the board
Yet more light at the end of the tunnel

by Frank Scavo, 12/21/2004 06:01:00 AM | permalink | e-mail this!

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Monday, December 20, 2004

PeopleSoft's final gift to customers

It just occurred to me that PeopleSoft may have given one last gift to its customers by throwing in the towel to Oracle before the Delaware court could rule on the legality of its Customer Assurance Program.

Christine Hurt, law professor at Marquette, notes that Oracle and PeopleSoft came to an agreement just days before a judge in Delaware was to rule on PeopleSoft's poison pill defense. Hurt puts together some hints that the judge may have been inclined to rule against PeopleSoft's poison pill. She's disappointed that we won't have a chance to find out if poison pills might be in trouble more generally.

But from a customer perspective, the more interesting angle is, how was the judge going to rule concerning PeopleSoft's Customer Assurance Program? Customers aren't so much interested in the poison pill per se; but they would have been very interested in preserving the Customer Assurance Program, which promised huge rebates to recent customers if Oracle reduced support for PeopleSoft products.

I'm speculating here that perhaps PeopleSoft felt that the judge was going to rule against PeopleSoft's Customer Assurance program. It's pretty clear now that PeopleSoft realized that an Oracle takeover was inevitable and that the only question was price. If so, PeopleSoft would naturally have been motivated to throw in the towel before the judge ruled rather than after, thereby increasing its negotiating leverage and also ensuring that its Customer Assurance Program remained intact.

Whether it was intended or not, the Customer Assurance program remaining in place is a gift to all PeopleSoft customers. The reason is that it raises the cost to Oracle of reducing support for PeopleSoft products. Oracle has already announced that it is going to develop one or two more versions of PeopleSoft and JDE products, after which it will migrate all of its products to a new unified product line. The presence of the Customer Assurance Program, however, just ensures that down the road Oracle won't short change PeopleSoft customers in the process.

Related posts
IBM is a loser in Oracle/PeopleSoft deal
Oracle reaches out to JDE user group
Oracle: no plan to spin off JDE product lines
Ellison outlines direction for PeopleSoft and JDE product lines
Oracle/PeopleSoft: deal is done
PeopleSoft trying to shout above Oracle takeover "noise"

by Frank Scavo, 12/20/2004 08:18:00 AM | permalink | e-mail this!

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Thursday, December 16, 2004

IBM is a loser in Oracle/PeopleSoft deal

One aspect of the Oracle/PeopleSoft acquisition that is not getting enough press is the effect this deal will have on IBM. On one level, the acquisition was about competition in the enterprise applications space: Oracle gaining ground on market leader SAP and growing contender Microsoft.

But on another, and perhaps more significant level, the acquisition is about pulling through Oracle's database, middleware, and tools, which are a greater part of Oracle's revenue than its applications business. Oracle and IBM are fierce competitors in that segment. And, in September, PeopleSoft aligned itself more strongly with IBM, signing a five year billion dollar deal to incorporate Websphere, IBM's middleware and tools offerings, in sales of its applications, and treating IBM's DB2 as its preferred database.

Now, with Oracle's takeover of PeopleSoft, the IBM relationship appears to be a dead letter. According to Computerworld, Oracle co-President Charles Phillips said as much in a conference call with reporters yesterday,
"We don't have a lot of details on the IBM contract," said Phillips. "We're not that interested in adding more IBM to the stack. It's unclear what's been done. We have to take a look at that. Obviously, we have a strong application server we think is better. If [customers] need [J2EE-enabled technology], they can use the Oracle Application Server. With the database, it's hard to say. I would surmise at some point there would be customers who perhaps are using PeopleSoft on DB2, and they'll end up with the Oracle product and database as well."
According to an article in Internet News, Phillips also said that "he was not privy to the details of the agreement but added he is skeptical that a contract was ever actually signed [with IBM]."

Phillips' comments yesterday are further indication that over the long run, a key Oracle objective in the PeopleSoft deal is to move both the PeopleSoft and JDE product lines to Oracle technology. It won't happen in the next few years, inasmuch as Oracle has committed to enhance those product lines in the near term. But expect Oracle to begin laying the groundwork to transition them all to Oracle technology by the time the successor product to the lines (Oracle, PeopleSoft, and JDE) is developed, starting in the next three to five years.

This deal is largely about who will win the war of the technology stack. IBM just lost an important battle.

Related posts
Oracle reaches out to JDE user group
Oracle: no plan to spin off JDE product lines
Ellison outlines direction for PeopleSoft and JDE product lines
Oracle/PeopleSoft: deal is done
PeopleSoft trying to shout above Oracle takeover "noise"

by Frank Scavo, 12/16/2004 09:16:00 AM | permalink | e-mail this!

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Tuesday, December 14, 2004

Oracle reaches out to JDE user group

Here's an interesting twist. Oracle appears to be making welcoming noises toward Quest, the JDE user group that was shuttled aside by PeopleSoft when PeopleSoft acquired JDE.

According to an e-mail passed on to me by a reader, Fredrick Pond, Quest President, yesterday wrote in a message to JDE users,
Early this morning, Oracle contacted the Quest Board of Directors and indicated an eagerness to work with Quest as the unified voice of EnterpriseOne and World users. In a conference call that followed, the Quest board pledged to work with Oracle to ensure that your voice is heard as product and support decisions are made. We will share information about Oracle's direction as specifics are provided, as openly and quickly as possible.
Reaching out to the Quest group, which PeopleSoft slighted, is a smart move by Oracle. Suddenly Oracle looks like the good guys.

Related posts
Oracle: no plan to spin off JDE product lines
Ellison outlines direction for PeopleSoft and JDE product lines
Oracle/PeopleSoft: deal is done

by Frank Scavo, 12/14/2004 09:32:00 AM | permalink | e-mail this!

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Lawson shows the door to another 75 employees

Lawson Software announced the second half of a two part cost reduction effort last week, with 75 employees following the 100 that were terminated in September. The latest cuts add another 4% to the 6% laid off earlier. Most of the cuts are in Lawson's implementation services group.

The St. Paul Pioneer Press, Lawson's hometown paper, has the details.

Separately, Lawson says that business should pick up now that the Oracle/PeopleSoft drama has ended. Quoted in the Minneapolis Star Tribune,
"The news [of the Oracle-PeopleSoft deal] does remove the uncertainty we feel has been hampering overall purchasing behavior in the market," Lawson spokesman Terry Blake said. "And we also believe it is good news for Lawson, because it essentially knocks out our No. 1 competitor."
I never quite understood the connection between Lawson's performance and the Oracle/PeopleSoft battle. Neither do most industry analysts. Either way, Lawson now has one less excuse for its poor performance.

Interestingly, however, Lawson is refusing to say whether Lawson itself could be the target of an acquisition.
"We're not commenting on whether we want to remain independent," Blake said. "And I can't comment on whether Lawson is actively negotiating a merger."
The full story is on the Star Tribune's web site.

Related posts
Lawson fires 100, blames Oracle
Lawson joins earnings disappointment club

by Frank Scavo, 12/14/2004 09:16:00 AM | permalink | e-mail this!

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Monday, December 13, 2004

Oracle: no plan to spin off JDE product lines

An alert reader pointed me to comments made last week by Oracle President Safra Catz regarding the JDE product line in particular. An article on CRN quotes her comments from a news conference at Oracle OpenWorld in San Francisco last week.
"We have no intention of spinning off Enterprise One or any of the products," Catz said. "We will bring them in, evaluate the state of the code and bring it, ultimately into a converged product line. We have no intention of spinning them off."
Catz also emphasized the need to retain the JDE development staff. She said,
"One reason we've been in a hurry is we've been concerned about the state of the J.D. Edwards intellectual properties," Catz told a packed room of journalists, partners and customers. "We are hearing about a lot of J.D. Edwards resumes on the street -- people being let go by PeopleSoft. And we want to maintain as many folks as we can. Our big worry is the intellectual property and development organization at JDEC, and our hope is it is still in a position where we can maintain it."
Based on these comments, along with consistent remarks from Larry Ellison in the conference call this morning, I withdraw my speculation about Oracle wanting to spin off the JDE product lines.

Related posts
Ellison outlines direction for PeopleSoft and JDE product lines
Oracle/PeopleSoft: deal is done
Possible outcomes of Oracle's takeover bid for PeopleSoft

by Frank Scavo, 12/13/2004 02:56:00 PM | permalink | e-mail this!

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Ellison outlines direction for PeopleSoft and JDE product lines

The transcript of Oracle CEO Larry Ellison's analyst call is now available, and there's more definition around the direction that Ellison intends for the PeopleSoft (Enterprise) and JDE (Enterprise One and World) product lines. Because this is a major source of concern for customers and prospects of PeopleSoft/JDE, so I'm going to quote extensively from the transcript.

First, Ellison indicated that Oracle will develop a "new" version of PeopleSoft and a "new" version of JDE. It appears that these new versions will be an intermediate step toward creation of a future product that merges the three product lines into one. Here's what he said,
We intend to enhance PeopleSoft 8 and development [sic] a all new version of the PeopleSoft product, PeopleSoft 9. We intend to enhance J. D. Edwards five and develop an all new version of the J. D. Edwards product line, J. D. Edwards 6. We also intend to design and merge PeopleSoft/J. D. Edwards/Oracle application suite with the features necessary to enable easy migration from whatever product you are currently running.
In his opening comments, Oracle President Charles Phillips indicated that Oracle will continue to support PeopleSoft and JDE customers, whatever technologies they are using. "We will continue to develop the PeopleSoft products," said Phillips. "We will support their existing environments including other database products."

During the Q&A period, Ellison went into more detail about where expense and headcount cuts would occur and directions for the PeopleSoft and JDE product lines.
Harry mentioned...approximately $150 million reduction in R&D. Keep in mind that will be split between Oracle and PeopleSoft. So that's not coming out of the PeopleSoft exclusively by any means. That's split, not quite equally but close enough to equally between Oracle and PeopleSoft. On the sales and marketing side, our marketing budgets won't go up very much but however our applications sales force will increase the capacity of our dedicated applications sales force worldwide by approximately 50% and you can conclude what you will about our expectations in our models in terms of how much additional applications we expect to sell. But those things -- those two numbers are rather important. Again, marketing flattish, G&A flattish, sales -- sales force increasing capacity by 50%. And in terms of development we are going to keep the PeopleSoft and J.D. Edwards development teams separate from the Oracle development team for some time to come. They will be working on enhancements, product enhancements to PeopleSoft eight and J.D. Edwards five and they will be developing an all new version of the PeopleSoft product, PeopleSoft nine, and an all new version of the J.D. Edwards products, J.D. Edwards 6. Simultaneously with that we will take some of the very senior designers from J.D. Edwards, PeopleSoft and Oracle and we will be designing a moderate -- a next generation version that merges the features of all three of those suites of products, J.D. Edwards, PeopleSoft and Oracle. But again that product is some ways away and PeopleSoft customers should expect an upgrade from eight to nine before they entertain the idea of moving to the merged products.
Ellison also gave more details on the timeframe for the new PeopleSoft and JDE versions:
I think PeopleSoft nine will be coming out -- again, keep in mind we are still at the guessing stages here but it would come out approximately the same time PeopleSoft was going to release PeopleSoft nine. There should be no impact on schedules as to the availability to PeopleSoft nine to PeopleSoft customers or J.D. Edwards six. I'm not even sure there was going [to be] a J.D. Edwards 6 planned by PeopleSoft. So those products will come out, let's say, 18 months from now, approximately -- you know, 12 to 24 months is a safer range. I don't know exactly. And then the subsequent release, if you will, PeopleSoft ten, will likely be the merged product. But we will evaluate if we do -- you know, we are going to be talking to customers, we are going to evaluate doing a PeopleSoft 10 as well. But we are committing to improving PeopleSoft eight, delivering a PeopleSoft nine, and then going through the design process of that merged product. As of right now we would think if the PeopleSoft nine product is in the 12-24 month time frame, the merged product would be, let's say, no earlier than, let's say, 30-36 months out.
After reading the entire transcript, one point is clear: Oracle is giving no indication at all that it wants to shed the JDE product line, as I speculated earlier. This does remove some uncertainty for the JDE installed base and is enough reason to keep JDE on the short list for companies that are currently shopping for software.

Related posts
Oracle/PeopleSoft: deal is done
Possible outcomes of Oracle's takeover bid for PeopleSoft

by Frank Scavo, 12/13/2004 09:52:00 AM | permalink | e-mail this!

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Oracle/PeopleSoft: deal is done

The drama is over. This morning Oracle announced that PeopleSoft has agreed to the take-over. Oracle had to sweeten the deal, however, to get PeopleSoft to throw in the towel, raising its offer price to $26.40 per share from the $24 that PeopleSoft had rejected as inadequate.

Today was a good day for Oracle, not only in winning its bid for PeopleSoft, but also in announcing improved quarterly earnings of $815M, which is 32% above the same quarter last year and two cents above Wall Street estimates for the current quarter. Revenue is $2.76B, up 10% from the same quarter last year.

As a result, Oracle shares are up 9.5% as of this writing.

Oracle CEO Larry Ellison was on CNBC just now, obviously happy, talking about the boost that the deal will give to Oracle's ability to compete with SAP. He indicated that, yes, there will be layoffs, because there is no need for two CEOs, two CFOs, etc., but that there would be layoffs among Oracle employees as well as PeopleSoft's. At the same time, however, he emphasized that Oracle will be increasing support for PeopleSoft customers.

Oracle has said that it intends to continue its acquisition program, regardless of whether it was successful in acquiring PeopleSoft. In a conference call earlier today, Ellison indicated that further acquisitions would not be undertaken until PeopleSoft is fully digested.

What does all this mean for customers and prospects of PeopleSoft? Over the short term, not much. As I have written previously, Oracle is aggressive but it's not stupid. It won't do anything to risk loss of PeopleSoft customers at this point, who are the whole reason that Oracle wanted PeopleSoft in the first place. And, as far as I can tell, there is still the matter of PeopleSoft's Customer Assurance Program, which promises recent clients a massive rebate if Oracle cuts support for PeopleSoft products.

However, for the long run, Oracle has got to be looking at making changes to PeopleSoft products to align them more firmly toward Oracle's database and tools. Oracle has always viewed the applications business as pulling through its database and middleware products. If I were a PeopleSoft customer and not running Oracle underneath it, I would keep a close eye on Oracle's actions. Again, I don't think there will be any issues short term, but I would factor this concern into my long term plans.

I would also watch Oracle's actions relative to the former J.D. Edwards product lines (Enterprise One, and World). These products have less of an alignment to Oracle's technology platforms than the main PeopleSoft products (Enterprise) do. I think there is a good chance that Oracle will look to sell the JDE products off in the near future. This would simplify the digestion of PeopleSoft and would offset some of the cost of the acquisition, freeing cash for other deals. But as I have written previously, there are not many parties that would be viable owners for the JDE product lines, except perhaps SSA Global.

Related posts
Flash: PeopleSoft shareholders tender majority of shares to Oracle
Possible outcomes of Oracle's takeover bid for PeopleSoft

by Frank Scavo, 12/13/2004 08:26:00 AM | permalink | e-mail this!

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Saturday, December 11, 2004

Death of IT research firms greatly exaggerated

Last month I wrote about the threat that IT research firms face from what I called "open source research." But Mark McManus, VP at Computer Economics, an IT research firm, wrote to me with a different view.

Frank, I have to comment on your post regarding paid research versus "free" Internet research.

I agree with some of your points, but there is a whole research world regarding IT that cannot be easily found on the Internet. For instance, take our annual Information System Spending study. This is a four-month project and involves interviewing hundreds of senior IT and business executives. It is very expensive to produce and involves a significant amount of analysis. How could that be duplicated for free? I've seen statistics that claim to represent this data, but much of the time this is a self-serving process by the individual or organization that has produced the data. The buyer should beware.

While there are many good sources of free research data (such as The Enterprise System Spectator), I do not expect that senior IT and business executives will ever consider information retrieved via an Internet search as an alternative to paid, targeted research performed by a reputable (and independent) IT research firm-- especially when major competitive and financial decisions are on the line.

Another issue your commentary does not clearly address is the analysis capability of major research organizations. More often than not the main reason that end user organizations will go to Gartner or Forrester is not to get statistics, but rather to get their analysis and recommendations. IT managers performing their own research will find many sources to choose from--and many varying points of view. Do you think these extremely busy individuals will really have the time to wade through the page after page of information and do the required analysis they need to make hard technical and business decisions? Maybe in some cases, but I think that is unlikely in most.

Additionally, our own experience is that companies are using our research capabilities more in the past several months than in the past two to three years. So, even though the Globe article may be correct that "major" research firms are having a difficult time, I think that there other business issues that may be creating their hardship, such as over-extending their research capabilities and areas of expertise. In fact, our research on spending trends indicates that in 2004 more IT organizations increased their research budgets than in 2003 or 2002. The "Googlization of America" may be a minor contributing factor to IT research firm woes, but it is probably not the leading factor.
The value of aggregating and filtering information
I've known Mark for several years and appreciate his feedback. In follow up correspondence, I pointed out that in my original post I indicated that in-depth research, such as Computer Economics IT spending studies, or IDC's market share studies, that require significant resources and expense, are impossible to reproduce by individual experts contributing to message boards or writing technology blogs. I also recognize the value that paid research firms provide in filtering and aggregating information so that business and IT executives don't have to wade through it themselves. I pointed out, however, that technology blogs and group blogs (blogs authored by multiple experts) might be able to provide this aggregation/filtering service in a richer way, much like blogs such as Instapundit or Command Post do for news and current events.

The question of bias
In follow up correspondence, Mark replied,
I agree that tech and group blogs can do some filtering, but there is still an issue with bias. How can you (as the recipient) trust the underlying motives of someone who is posting free research and advice? There are certainly unbiased blogs out there, but many are built as a sounding board to support a particular position. Not that research firms haven't shown bias, but generally speaking you can usually get recommendations from an independent research firm that are not heavily tilted to a particular bias.
Again, Mark brings up a good point, which is the issue of bias. Individual technology experts do have their biases, based on what they've experienced or what technologies and vendors they are familiar with. But I would point out that the paid research firms have their own problems with bias as well. An obvious example is research firms that accept money from technology vendors to produce specific research. I wrote about one such example two years ago: IDC's report on Windows 2000, which was sponsored by Microsoft, which concluded that Windows 2000 had a lower cost of ownership than Linux. Although the report was not totally one-sided, the conclusions of the report, and Microsoft's press release on it, were clearly slanted in Microsoft's favor.

But a more subtle form of bias is seen in the fact that many of the research firms have technology vendors as major subscribers. This limits how directly critical the research firms can be in their assessment of those vendors. It also influences how effusive the praise is for certain vendors. A blatant example is an Aberdeen report in 2001 that concluded that Linux is less secure than Microsoft Windows. I tore apart Aberdeen's report in a post two years ago, called, Aberdeen: new poster child for sloppy research. Unfortunately, Aberdeen' original report is no longer online, but follow the link in the preceding sentence and see if you agree with me.

Now, on the whole, I have a great deal of respect for individual research analysts at the major research firms. I've met some of them and find them to be smart, insightful, and hard working. I do not mean to imply that they would deliberately slant their findings in favor of those vendors that are subscribers. But as a whole, because vendors are their clients, you are more likely to find positive or neutral assessments of vendors rather than hard-hitting criticism.

I heard one vendor refer to the subscription fees that he was paying to the major research firms as "protection." Think about that for a minute. If that's true, it's hard to avoid the conclusion that the coverage of the IT research firms is influenced by which vendors are subscribers to their research services.

It's similar to the situation with the Wall Street analyst firms. Because many of the investment analyst firms derive revenue from the companies that they research, it's rare to see a sell recommendation from them. In the same way, it's easier for IT research firms to write positive reviews of technology vendors, and to soften critical research to the point that it doesn't offend anyone.

The gravy train is over
But back to the big picture. I think that the research firms have to face the fact that there is a great deal of free information available on the Web today that was not as readily available 3-5 years ago. Furthermore, it's a lot easier for business executives today to locate individual technology experts when they need them. Yes, it is still more convenient to call up Gartner or Forrester as a one-stop-shop for all your IT research questions. But it's also expensive. Few companies, except the largest, will continue to shell out tens or hundreds of thousands of dollars every year just to have access to research and analysts.

The trend to open source research is just beginning, but I think it will develop. Technology blogs and Web-based message forums are not going to put IT research firms out of business. There will always be a need for firms like IDC, Gartner, and Forrester that have the resources and the scale to do difficult original research. But the gravy train is over.

Related posts
Research firms face threat of "open source research"
Microsoft-sponsored study on Win2K vs Linux is NOT all good news for Microsoft
Aberdeen: new poster child for sloppy research
Memo to Forrester

by Frank Scavo, 12/11/2004 05:07:00 PM | permalink | e-mail this!

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Friday, December 10, 2004

JDA employees sent packing

JDA Software group is laying off 167 employees, or 13% of its workforce. Although the cutback might be interpreted as a sign of trouble, it appears that JDA is simply taking the next logical step in consolidating its multiple product lines into its integrated offering (its PortfolioEnabled suite). The cutback hits the development group and consulting services.

JDA is one of the leading application software vendors focused on retail applications. It's been around since the 1970s, and has been acquiring a number of smaller firms in the retail space over the past six years, including Timera (workforce management), Engage and Zapotec(advertising, marketing, and promotions), Vista (collaborative commerce), J-Commerce (point-of-sale), E3 (inventory optimization), Neovista (data mining), Intactix (retail space management), and Arthur Retail (advanced planning and allocation). With so many disparate products, the company no doubt needs to continue to harmonize its offerings.

JDA partners with PeopleSoft to fill out its retail offerings with a complete set of ERP applications, such as financials and HR. The company is expected to finish the year at about $210M in revenue, and 0.22 per share earnings. JDA trades on Nasdaq under the ticker JDAS.

by Frank Scavo, 12/10/2004 07:44:00 PM | permalink | e-mail this!

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Friday, December 03, 2004

Welcome 2004 Weblog Award visitors

If you're new to this site, be sure to check out the post, About the Enterprise System Spectator, for a summary of what this blog is all about, including links to some of the best posts from the past.

by Frank Scavo, 12/03/2004 08:57:00 AM | permalink | e-mail this!

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Thursday, December 02, 2004

I need your vote, again

The Spectator has been nominated for another award, the 2004 Weblog Awards: Best Tech Blog. (Okay, I'll admit it, I nominated myself).

If you would like to vote for me for this new award, just hop over to the Best Tech Blog voting site, and vote for The Enterprise System Spectator.

The rules actually allow you to vote multiple times, as long as it is only once a day. So, if you'd really like to help out, go back every day from now until December 12, when the poll closes.

Thanks in advance.

by Frank Scavo, 12/02/2004 10:56:00 AM | permalink | e-mail this!

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(c) 2002-2014, Frank Scavo.

Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

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