Tuesday, September 21, 2004

PeopleSoft trying to shout above Oracle takeover "noise"

I'm attending the PeopleSoft Connect conference this week in San Francisco. Here are some of my impressions from CEO Craig Conway's keynote presentation this morning, and a PeopleSoft press conference that I was able to attend.

Much of the press in attendance has been waiting for some reaction from Conway to the U.S. Federal court's ruling that it would not block Oracle's hostile takeover bid. If so, they were disappointed when Conway indicated that, per instructions from PeopleSoft legal counsel, he could not say anything more on the subject than is in the firm's SEC filings. Conway's only comments relative to Oracle's hostile bid were that the past year has been "like a bad dream that will not seem to end," and that the court's ruling means that the bad dream will continue for now.

Conway, along with other PeopleSoft executives that I spoke to this morning, seem genuinely frustrated that what they see as major accomplishments has been drowned out by what Conway calls "noise" and "static" surrounding Oracle's takeover bid. Too many reporters seem overly focused on the takeover, as evidenced by one reporter who said he expected this week to be more like a funeral than a user conference. PeopleSoft's challenge is to focus on the positive.

In that theme, Conway pointed to several accomplishments that PeopleSoft has made in the past year:
  1. Improving the total ownership experience (TOE). PeopleSoft's vision is to bring innovation not just to product functionality, but to ease of use and cost of maintenance as well. Conway claims that under its TOE initiative, it now takes 25% less time to install the application, 20% less time for implementation and 80% fewer steps to apply application updates. If true, these are significant improvements.

  2. Successfully integrating the JDE acquisition. Conway looks at the J.D. Edwards acquisition not as a consolidation but as an addition, and points to the subject matter expertise in asset-intensive industries and manufacturing along with JDE's major presence in the mid-market as positives for PeopleSoft. Conway pointed to new functionality for Enterprise One (the JDE One World product), such as RFID, kanban support, incorporation of lean technology through the acquisition of JCIT, and integration with PeopleSoft CRM and supplier relationship management (SRM) products). He also claims to have significantly improved service to JDE World (the JDE host-based product) customers, including roll out of a web front end and 140 enhancements to functionality.

    On the other hand, Conway admitted that they fumbled the ball, somewhat, in offering enterprise-based pricing to JDE customers. Many customers interpreted that the new pricing scheme meant that they would no longer be able to pay for the product based on number of users and that it most likely would mean higher maintenance fees. Conway claimed that was never PeopleSoft's intention, but it appears the firm lost some good will with the JDE installed base, at least temporarily, in how this was communicated.

  3. New products. Conway pointed to PeopleSoft's offering for Sarbanes-Oxley (SOX) compliance, dubbed "The Enforcer," as well as new functionality for enterprise learning management, CRM, and HR, as evidence that the company is moving forward in a positive way in spite of the threat of the Oracle takeover.

  4. Service oriented architecture (SOA). A significant part of Conway's keynote address, as well as the press conference, was devoted to discussion around PeopleSoft's move to a service oriented architecture, which in principle should make it possible to build composite applications from a combination of PeopleSoft software components, third party components, and internally developed components, using open standards such as web services. Several analysts after the keynote, however, pointed out that much of the software industry is already moving in this direction, such as SAP with its Netweaver initiative, and, as I pointed out, even smaller vendors, such as IFS, which has been working on such an SOA for at least a year now.
The big news so far in the conference, however, is the announcement of a new joint PeopleSoft/IBM alliance that goes beyond anything the two firms have done together in partnership in the past. PeopleSoft will standardize its applications on IBM middleware, and the two firms will collaborate on several new industry solutions, while working together to ensure interoperability of PeopleSoft's products with other vendor solutions based on open standards. There was some degree of skepticism expressed in the press conference as to whether this alliance was much different than what IBM has done with other application vendors, such as Siebel, Intentia, QAD, and even JDE in the past. But Conway, along with IBM representatives, indicated that the letter of intent spells out specific commitments that the two firms are making to each other in terms of budget and headcount to deliver solutions under this agreement. A figure of $1 billion was mentioned a couple of times, which got the attention of the financial analysts in the room.

Many of the analysts and users were looking to IBM as a possible "white knight" for PeopleSoft, in light of Oracle's takeover attempt. But as one analyst remarked in the hallway, before the press conference, if that was going to happen, IBM would have announced it was submitting its own tender offer this morning, not that it was doing an "alliance." IBM, which has built its entire strategy around open standards, has a lot to lose if PeopleSoft gets swallowed up by Oracle, a fierce IBM competitor for databases and tools. But it's not clear that IBM's alliance will do much in the way of frustrating Oracle's intentions, unless there is something more to the story than I realize.

Update, Sep. 23: Application Development Trends magazine has a good summary of the PeopleSoft/IBM alliance, and includes a quote from yours truly.

Update, Sep. 27: Sarah Lacy at Business Week is skeptical that the IBM/PeopleSoft alliance really means much.

Related posts
Flash: Court refuses to block Oracle takeover of PeopleSoft
Some analysts fail to see Conway's elephant
PeopleSoft breathes new life into JDE World product
Good news and bad news for PeopleSoft in survey of JDE customers

No comments: