Sunday, October 31, 2004

The Spectator makes it to the TechWeb Top Ten

Thanks to your votes, the Spectator has make it into the top ten for the First Annual TechWeb Network Best Independent Tech Blog Readers Choice Awards. To all of you who voted for me last week, thank you very much!Finalist: TechWeb Best Independent Tech Blog Readers Choise Award

The next step is a run-off of votes for the top blog. So, if you'd like to help me win $500 of Starbucks coffee and some free publicity, please return to the TechWeb site once more and cast your vote for The Enterprise System Spectator.

Thanks again.

Tuesday, October 26, 2004

Oracle's bid for PeopleSoft cleared by European Commission

In a decision largely expected, European antitrust regulators today ruled that Oracle can go ahead with its hostile bid for PeopleSoft. That's one more hurdle out of the way for Oracle.

The remaining hurdles include take down of PeopleSoft's poison pill takeover defense, removal of PeopleSoft's so-called customer assurance program (which gives large payments to recent PeopleSoft customers if Oracle suspends support for PeopleSoft products), and PeopleSoft board approvel (which will probably come down to a matter of price).

It's not a done deal yet, but it looks a lot more likely than it did three months ago.

ZDNet has an article on the European ruling.

Related posts
Duffield: PeopleSoft not for sale
Rumor: Duffield in no mood to give in to Oracle
Another PeopleSoft executive exits
Oracle confidential information released by court
Why PeopleSoft fired CEO Conway

Monday, October 25, 2004

Build/buy pendulum swinging back toward build

Ten years ago, many of us thought that the days of companies writing their own software would soon be over. Commercial packages such as SAP and Oracle would become more and more comprehensive and flexible, eliminating the need for much custom code.

But like so many trends in business, the build/buy decision is a pendulum, and Erik Keller at AMR says that, for many companies, the pendulum is swinging back toward the middle.

Keller points out three factors that are working in favor the build option:
  1. Open source, which gives companies a cost-effective platform and a cheap starting point for their own application development efforts. Examples include open source content management packages such as Zope, Red Hat, and OpenCms, and ERP/CRM packages such as Compiere, Ohioedge, and Anteil.

  2. Offshore development, which lowers development costs, at least for program coding. I've pointed out in the past that when considering to offshore development, companies need to consider the hidden costs and the risks of offshoring as well as the labor savings.

  3. Web services, which allow custom applications to be more easily integrated with existing systems and commercial packages. Although web services have been touted for several years as the wave of the future, the promise is only beginning to be realized.
I agree with Keller's general direction. However, I believe that the most companies, especially small and mid-size businesses, would be best served by exhausting the search for commercial software before taking the plunge into custom development. This is especially true with major enterprise level functionality. Custom development has its own set of issues and risks, and unless a firm has a competent internal development organization, or has the in-house expertise to manage a third party developer, it's better not to start down that path.

Read Keller's whole analysis on AMR's web site.

Related posts
Risks of offshore outsourcing
Productivity risks in offshore outsourcing
Companies mum on savings from IT offshore outsourcing
Software buyers turn cheap
Open source ERP
Buzzword alert: "open source"

Sunday, October 24, 2004

IT wages set to rise

If you're an IT professional, finally, there's some good news. A Meta Group report forecasts that IT salaries will rise 10-15% by 2007. General economic growth is behind the increase.

But whether you benefit depends on whether you have the skills in highest demand. Leading the way are training and experience in program management, application development, and networking. Internet skills and Java are also high on the list.

The demand for application development skills is particularly intriguing, seeing that conventional wisdom views those jobs as moving offshore.

The stats pertaining to application development are particularly surprising considering the number of those jobs that are being outsourced and offshored to save company's money. Outsourcing is picking up in practice and general acceptance and some of the first jobs to go are those in call centers and those in application development. Many analysts have been loudly warning workers that they need to acquire new skills if application development is all they have on their resumes.

[Maria] Schafer [of Meta Group] says not so.

"I think the outsourcing issue has gotten a huge amount of attention, but the reality is that it's a difficult thing to do and to do well," she says. "Clearly, outsourcing has begun to happen and it will increase over time. But fewer companies are doing that than most people believe or that the mass media would have you think."
Back in March I predicted that the trend to offshore software development would actually result in an increase in related jobs in the U.S.

Datamation has an article on the Meta study.

Related posts
The supply-side argument for offshore software development
Offshore outsourcing driving down US IT salaries

Saturday, October 23, 2004

Infor aquires Lilly Software: vendor consolidation continues

Infor Global Solutions (formerly Agilisys) has just acquired Lilly Software, the latest in its series of acquisitions in the Tier II and Tier III ERP marketplace.

Just last week I interviewed representatives from Lilly at the APICS International Conference, and I was quite impressed with Lilly's support for constraint-based manufacturing (drum-buffer-rope) and lean manufacturing. But there was no hint in our discussion that privately-held Lilly was about to be acquired. Business must still be tough out there.

If other vendors have not been paying attention to Infor, they should be. Infor is obviously on a roll, snatching up a series of mid-market vendors almost too numerous to mention. Whether Infor can consolidate these many offerings or rationalize the portfolio is another question. SSA Global and Epicor have adopted similar strategies, SSA larger and somewhat more successfully, Epicor less so.

I'm waiting for Infor to give some indication of what its strategy is for rationalizing its many offerings.

Update, Oct. 31. Interestingly, John Moore at ARC Advisory Group appears to have exactly the same perspective on Infor as I do.
The addition of Lilly, who has struggled recently, should fit nicely within the discrete solution product suite Infor Global offers, in particular, its Lean Manufacturing solution. Unlike fellow mid-market consolidator SSA-Global though, Infor does not appear to have a coherent strategy for bringing its products together, which over time could create a growing cost burden and compromise future R&D and support for its customers.
Related posts
Infor acquires process ERP vendor, IncoDev
Agilisys changes name to Infor Global Solutions
Agilisys acquires Infor
Agilisys continues acquisition binge
Rumor confirmed: Agilisys is acquiring daly.commerce

Friday, October 22, 2004

Vote for me!

TechWeb is running a competition for "Best Independent Tech Blog Readers Choice Awards," and I've entered this blog into the competition. The ten finalists will get six month's of free publicity, and the winner gets a year's supply of coffee (don't ask me why).

To vote for me, just hop over to, then enter:

Title: The Enterprise System Spectator
Covers: select "Software"
I'm Frank Scavo and I approve this message.

Thursday, October 21, 2004

Duffield: PeopleSoft not for sale

PeopleSoft posted quarterly results today that were better than expected. In Q3, PeopleSoft reported record revenue of $699 million, an increase of 8% from the previous quarter and up 12% from the same quarter last year.

Separately, it looks like the rumor I reported regarding Duffield has turned out to be true.

PeopleSoft officials also confirmed that Duffield circulated a memo to employees asserting that he "didn't come back here to sell to Oracle."

"Rather, I'm here to beat Oracle in the marketplace, increase our revenues, re-energize our employees, and deliver greater long-term value to our shareholders," the memo said.
There's more detail on eWeek.

Related posts
Rumor: Duffield in no mood to give in to Oracle

Tuesday, October 19, 2004

How not to buy software

A software salesperson wrote to me today, with an interesting question. This sales rep, who works for a major Tier I vendor that will remain unnamed, is trying sell to a prospect that is, let's say, acting a bit aggressive toward potential vendors.

Frank, I would like your input on what you think about a potential client. This prospect first ran software suppliers through an extensive custom demonstration, detailed RFP response, and sales presentations. The prospect then made some first-round cuts to get to a short list and is now going into a reverse auction process in which they are introducing some new suppliers. This is a major multi billion dollar company.

Mind you--we have been respecting the prospect’s process and rules, and now they pull this. It makes me wonder how the software industry will ever stay in business.

This prospect has also stated how important it is to build a strategic relationship. Also, the software solution isn't a simple straightforward application that anyone can do. In other words, it's not a commodity.

Your thoughts? Have you run into companies buying software like this lately?
To be honest, I've never seen a company attempt to buy software like this. But let's turn it around and ask readers. If you're a software buyer, would you use a process like this? If you're a software vendor, what would you do in this situation? Click on the Read/Post Comment link below, or send me an email with your thoughts.

Related posts
The dark side of reverse auctions

Monday, October 18, 2004

Another PeopleSoft executive exits

Two weeks after the firing of CEO Craig Conway, PeopleSoft announces the departure of Ram Gupta, VP of Products and Technology. PeopleSoft is not revealing whether the exit is voluntary.

When Conway was fired, PeopleSoft announced the return of founder David Duffield as CEO and Aneel Bhusri as vice chairman, to oversee "product strategy." At the time, I noted some confusing comments from Duffield about "a technology vision that's been absent for a period of time." The departure of Gupta, whether voluntary or forced, would be consistent with that.

Computerworld has more, with speculation by various analysts.

Related posts
Rumor: Duffield in no mood to give in to Oracle
Why PeopleSoft fired CEO Conway
Why are executives leaving PeopleSoft?

Sunday, October 17, 2004

Retire your apps

CIOs spend a lot of time thinking about how to implement new applications. Maybe they should spend more time thinking about how to get rid of some of them.

Larry Dignan, writing for Baseline, talks about the trend for companies to save money and simplify IT operations by reducing the number of software applications.

Companies are increasingly getting the message.
  • General Motors has cut its mission-critical applications—systems that would hinder GM if they went down—from 7,000 in 1996 to just over 3,000 today. The company doesn't break out direct savings from the consolidation, but it's no coincidence that GM's information-technology budget has been driven down, from $4 billion to $3 billion over the same period.

  • Hewlett-Packard intends to slash its enterprise resource planning systems from 21 to four. HP reckons it can cut total applications from 3,500 to 1,500. The consolidation effort is part of a plan to save $1 billion a year in overall operating costs.

  • Boeing went from 4,500 applications in 2000 to 3,500 today, and its official target is 500. Chief information officer Scott Griffin says fewer programs will raise productivity, helping the company launch new products and services faster.
At 3M, Jerry Erickson, vice president for applications, says he expects his company's effort to clean house will reduce an incalculable number of applications in use "by a factor of 5.'' If successful, 3M's cost of sales will decline by 1 percent or more. That's $92.8 million out of the company's current $9.3 billion in cost of sales. Add it up, and 3M could potentially boost its net income of $2.40 billion by 3.9 percent.
Dignan also points out the obstacles that CIOs face in eliminating, or consolidating, applications.

Call it system elimination, consolidation, decommissioning, or retirement. Whatever the name, CIOs are finding that less can be better.

Thursday, October 14, 2004

ERP rollout: better the second time around

Here's some encouraging news. Two years ago, I wrote regarding problems in the City of Los Angeles in the initial implementation of a $22M PeopleSoft procurement and ERP implementation.

Now, two years later the city is doing a major upgrade to PeopleSoft v8.8, and it appears that everyone has taken to heart some lessons learned two years ago.
"Change is a lot easier when people trust that you are not doing anything that will hurt them," said Robert Jensen, assistant general manager in the L.A. municipal government's department of general services.
One of the keys to success that the general services department will be applying is that it will spend money upfront for change management -- a hard lesson learned from the initial rollout. Good change management requires a communication plan that identifies everyone whose role will change during the implementation.

"The plan needs to identify champions, owners, stakeholders and users and what and when you will communicate with them and the media used for that communication," Jensen explained. "The other part is how to self-motivate these folks to want to spread the word that the change is good and should be supported."
Change is possible. Computerworld has more on the story.

Related posts
Large system implementations require organizational discipline

Tuesday, October 12, 2004

APICS returns to its roots

At its international conference today, APICS has formally announced its new name: "APICS The Association for Operations Management."

To understand the significance of this, a review of APICS' long history is in order. APICS was founded in 1957 as The American Production and Inventory Control Society, but since that name was a bit lengthy, the society has always been referred to as APICS. (APICS is pronounced AYE-PICKS. If you say the name by spelling out the letters, A-P-I-C-S, you are clearly an outsider).

APICS has made major contributions to industry in its nearly 40 years:
  • APICS, and its fathers such as George Plossl and Ollie Wight, made a huge contribution by upgrading the production planner's job to a true profession. Much of the professionalism of production and inventory management came from the APICS certification program, the CPIM (Certified in Production and Inventory Management), which became almost a universal prerequisite for promotion.

  • In the early 1970s, the organization launched what it called an "MRP Crusade" to promote the new (at the time) concept of material requirements planning as a superior way to manage inventory, in contrast to the traditional order point systems. Ultimately, the Wall Street Journal credited APICS for the widespread adoption of MRP, which has contributed to the softening of so-called "inventory recessions."

  • In the 1980s and early 1990s, APICS was at the forefront of the Just-in-Time approach to manufacturing, which is now generally referred to as lean manufacturing.

  • In the early 1990s, the society also embraced the theory of constraints, as set forth by Eli Goldratt in "The Goal," and has been one of its main promoters.
I've been an APICS member continuously since 1978, I've been certified as an APICS Fellow since 1981, and I've spoken at many APICS meetings and conferences. So I've witnessed much of this first hand.

In the early 1990s, APICS became dissatisfied with its narrow focus on production and inventory management, and decided to take a more generalist approach. The rubric would now be "resource management," that is, helping companies (not just manufacturing companies) plan, manage, and control all of the resources (people, machines, material, etc.) that they needed to deliver goods and services to customers. APICS launched a second certification program, the CIRM (Certified in Resource Management), which would focus broadly on all of the functional areas of an organization and their interrelationships. If that sounds vague, it is. I was one of the first APICS members certified as CIRM in addition to my CFPIM.

In my opinion, APICS started to wander during this time. It dropped "Production and Inventory Management" from its name, in favor of "APICS--The Educational Society for Resource Management." When people would ask us, "What does APICS stand for?" we had a hard time answering, since the letters no longer stood for anything. We were just "APICS."

That was well over 10 years ago. Since that time, attendance at APICS events around the country have been flat, at best. I recall in the late 1970s, Orange County APICS monthly dinner meetings with over 300 in attendance. These days, it's 40 to 50. APICS points to the steady decline in manufacturing industry employment over the past 20 years, the move to offshore manufacturing, the thinning of management ranks (leaving managers with less time for outside professional groups), and general cutbacks in corporate training budgets as reasons for the decline in membership and attendance. As evidence, they point to other similar professional societies, such as ISM (formerly National Association of Purchasing Managers, NAPM), that have had somewhat similar declines.

But still, I can't help but feel that APICS lost something by trying to broaden its focus instead of sharpening it. In the 1970s and 1980s, APICS literally defined the body of knowledge for production and inventory management. It now needs to continue to expand and strengthen that body of knowledge with new learning and new technologies.

The new name, "APICS The Association for Operations Management," recognizes that APICS is truly an organization focused on the operations function. That's broader than production and inventory management, but still narrow enough to appeal to the professionals that APICS wants as members. However, if it's just a name change, it won't mean much. The name change needs to be the first step in a renewed focus on the things that give APICS its proud legacy.

Monday, October 11, 2004

Rumor: Duffield in no mood to give in to Oracle

I was at the APICS International Conference in San Diego today, and I heard an interesting bit of gossip regarding Oracle's hostile bid for PeopleSoft. This source, who is outside of PeopleSoft but has connections inside PeopleSoft, said that David Duffield, founder and newly reappointed CEO of PeopleSoft has been indicating to employees that he is adamantly opposed to Oracle's hostile bid.

If this is true, then all the Wall Street analysts that took Duffield's appointment as a sign that PeopleSoft was about to cave in to Oracle are wrong. It also confirms my interpretation of events last week.

Separately, Oracle co-President Safra Catz said today in court that Oracle might drop its offering price for PeopleSoft by one-third to one-fourth. This follows Oracle CEO Larry Ellison's testimony last week that basically said the same thing.

In my opinion, this is a transparent attempt by Oracle to drive down the current share price of PeopleSoft, making Oracle's offer more attractive. It's right in line with Oracle's attempt to create fear, uncertainty, and doubt (FUD) by launching its hostile bid originally, as indicated in Oracle internal e-mails that the court mistakenly released in unredacted form last week.

Here's a shot I snapped of PeopleSoft's booth at the APICS conference today. A nice booth, in a prime spot next to the main entrance, adjacent to Microsoft's.

PeopleSoft booth at APICS 10-10-2004

Related posts
Oracle confidential information released by court
Why PeopleSoft fired CEO Conway
Huh? PeopleSoft fires Craig Conway

Thursday, October 07, 2004

Siebel enters Chapter 2

No, not Chapter 11. Chapter 2 is Siebel's new strategy, as presented by CEO Mike Lawrie at Siebel's user conference this week, to move beyond selling packaged software and hosted services to offering more customized solutions. The strategy is enabled by the trend to component architecture by many vendors, which makes it easier to build composite solutions.

In this regard, Siebel appears to be aligning with the approach of other major vendors, such as SAP and PeopleSoft.

Personally, I feel that composite applications, which appears to be what Siebel is promoting, are particularly well suited for the CRM space. In my experiences, companies are most likely to develop custom software for customer-facing processes than any other area of the company. If Siebel is successful in this strategy, it could propel Siebel back into a leading position among business application vendors. Siebel has had a tough last few years, and I hope they are successful.

For some reason, I'm having trouble finding an official Siebel press release on Chapter 2. But Computerworld has a short summary of the initiative, as well as a follow up article.

Related posts
Has Siebel turned the corner?
Siebel loses $59M and responds by going on a shopping spree
Siebel makes strategic bet on Microsoft

Wednesday, October 06, 2004

Oracle confidential information released by court

PeopleSoft Craig Conway is testifying today, and most of the press is focusing on his colorful characterization of Oracle CEO Larry Ellison as "Genghis Khan."

But the real news, in my opinion, is some Oracle correspondence that was released by the court in an unredacted form, that is, without some confidential portions omitted. The memos in question can be interpreted as Oracle's attempt to use the takeover bid in an attempt to sow fear, uncertainty, and doubt (FUD) among PeopleSoft prospects, thus hurting PeopleSoft in the marketplace.

According to CNET,
Mark Jarvis, Oracle's chief marketing officer, suggested in an internal June 3, 2003, e-mail that the company "use this news in order to create FUD with prospects and customers alike." FUD is a common term in the computer industry that describes a campaign to spread misinformation or exaggerations.
Another excerpt included in the PeopleSoft interrogatory and Oracle's reply was an e-mail message sent by Keven Blake to Oracle President Charles Phillips and others on Sept. 10, 2003. It said that "(we) have successfully spread enough FUD along with our own capabilities to have a good average shot at winning."
Read the whole CNET article for more excerpts.

Checklist for Sarbanes-Oxley compliance

Here's a simple one-page checklist for a self-assessment of Sarbanes-Oxley (SOX) compliance readiness. To download it, you'll need to do a one-time free registration with Baseline.

Related posts
Sarbanes-Oxley spotlights need for controls in IT
Cost of compliance with Sarbanes-Oxley isn't mainly in new systems
Is Sarbanes-Oxley the new Y2K?

Microsoft counters SAP with Axapta price cut

A few months ago, Microsoft and SAP were talking about a merger. This month, they are fighting each other for market share. It appears that SAP, with its SAP Business One and All-in-One program targeted at small and mid-size companies respectively, has had some success in taking deals in Germany away from Microsoft, specifically those involving its higher end Axapta ERP offering. (Unlike in the U.S., Axapta has always had a strong presence in the European market and has been competing with SAP there for years.)

Quoted in an AFX News article, Michael Kleinemeier, head of SAP's German operation said,
"We have increased our total number of clients in this space by 40 to 50 percent," Kleinemeier said. He said that about 500 small businesses now use SAP's Business One software package and 2,000 mid-sized businesses use its All-in-One program. As a result, SAP is out in front of rival Microsoft and its "Microsoft Business Solutions" product.
In response, Microsoft is reportedly cutting the price of Axapta by 12% in order to hold ground against SAP.

It would not surprise me to see Microsoft make similar price cuts in the U.S., if it hasn't done so already. Microsoft can certainly afford to do it, and it would put pressure on all the major players, including SAP, Oracle, and PeopleSoft, at a time when they are trying to hold the line on revenue and earnings numbers.

A price war would be good news for buyers.

Related posts
Big three vendors target small companies
Microsoft and SAP: the merger that didn't happen
Microsoft: selling enterprise software is a "humbling experience"
SAP plugs hole in Business One
Clash of the titans
Pass the Kleenex
SAP aims to cover all market tiers

Tuesday, October 05, 2004

PeopleSoft execs sighted at Oracle HQ?

Reuters is now reporting that the new PeopleSoft executives paid a visit to Oracle headquarters last week, increasing speculation that PeopleSoft may be softening its stance against Oracle.
"Our sources indicate to us that the new PeopleSoft management team visited the Oracle campus last week. This indicates to us that (they are) more willing to engage in a dialogue with Oracle to discuss its options," said Prudential Equity Group analyst Brent Thrill in a note to clients.
Further evidence that PeopleSoft's position may be softening came from Steven Goldby's second day on the stand in Oracle's lawsuit to overturn PeopleSoft's poison pill.
The PeopleSoft Inc. director who has been leading the defense of the software company's antitakeover measures said Tuesday the company's board is willing to talk about a deal with rival Oracle Corp.

On the stand for the second day in a Delaware court trial, PeopleSoft director Steven Goldby said German software company SAP AG was the chief beneficiary of the long-running takeover fight between the two companies.

PeopleSoft's board would be willing to talk about an Oracle acquisition now if the price was right and there was a "high certainty" that a deal could close quickly, Goldby said.

An AP article has more details.

Update: Woops. Brent Thill is now backing off his reporting of a meeting between the new PeopleSoft executives and Oracle.
"There's been no management team meeting with Oracle," said PeopleSoft (PSFT) spokesman Steve Swasey.

He responded to questions following a report from analyst Brent Thill with Prudential Equity Group that stated such a meeting did happen. Thill cited "sources" that informed him PeopleSoft's new management team visited the Oracle (ORCL) campus last week. In a follow-up research note issued Tuesday afternoon, Thill said a PeopleSoft senior executive confirmed that no senior management members met with Oracle.
Looks like it was just a rumor.

Monday, October 04, 2004

Why PeopleSoft fired CEO Conway

Today was the start of a lawsuit by Oracle to overturn PeopleSoft's poison pill anti-takeover defense, and already there are some insights into the firing of PeopleSoft CEO Craig Conway.

According to a CNET article, PeopleSoft board member Steven Goldby testified today that Conway "was fired in large part because of his reckless exaggeration to Wall Street analysts when informing them last year [September 2003] that Oracle's offer to buy the company was no longer a disruptive influence." At the time, the board was so uncomfortable with Conway's representation that they amended an SEC filing that included a transcript of Conway's remarks.

I remember how Conway was talking around this time, because I wrote a blog post based on Conway's attitude, entitled "All over except for the shouting."

It also appears that the board just discovered two weeks ago that Conway had made quite a concession to Oracle's lawyers during a deposition for this trial.
Oracle's lawyers played a five-minute videotape of the deposition, in which Conway acknowledged being less than honest during the conversation with analysts in September 2003. At the end of the video, after repeated questioning, Conway admitted that his remarks "weren't true."
So this would explain why PeopleSoft only moved last week to fire Conway, a year after his "less than honest" remarks to analysts. Knowing that Conway's admission of his untruthfulness would come out in court this week probably forced PeopleSoft's hand.

This does help explain things. If this picture is accurate, then there's no relevance to PeopleSoft founder and new CEO David Duffield's comment last week about a technology vision being lacking.

Also, in the trial today, Goldby seemed to indicate that PeopleSoft's board had been simply waiting for the right time to fire Conway:
Goldby said that last week was not the first time that the board had considered firing Conway, saying "it really goes back further than that." But the board waited to terminate Conway until it had good news to deliver as well, he said.
I find that excuse pretty weak, since there have been other points since September 2003 when PeopleSoft had better-than-expected quarterly results and could have taken action against Conway.

CNET has more.

I would also add that if my interpretation is correct, then the consensus of Wall Street analysts is wrong. Market analysts have been reading too much into the firing of Conway, thinking that PeopleSoft fired Conway because they wanted to deal with Oracle and Conway was an obstacle. I think that Goldby's testimony today indicates that PeopleSoft's board wants to fight and that because Conway's deposition was not helpful in that fight, they fired him.

Update, Oct. 4. There was more interesting testimony from Goldby today, as reported by the Wall Street Journal:
Mr. Goldby, the PeopleSoft director, said the board had become increasingly concerned about Mr. Conway's "micromanagement," which made him unable to work well with the rest of PeopleSoft's senior executives. Three key executives were "terribly, terribly unhappy and likely to quit," he said.
Back in March, I wrote a short post entitled, "Why are executives leaving PeopleSoft?," but didn't see that it might be a sign of dissatisfaction with Conway.

There's more to come. Craig Conway is being called as a witness on Wednesday. CFO Kevin Parker and EVP Phil Wilmington, who replaced Conway as president, are also expected to testify. Expect more interesting stuff to come out then. A Forbes article has more details.

John Palatto, writing for eWeek, thinks that Conway overstated the significance of the PeopleSoft/IBM alliance, and that also contributed to the board's dissatisfaction with Conway. But I don't buy it.

Quoted in Computerworld, Charles Di Bona, an analyst at Sanford C. Bernstein & Co. thinks that problems with the JDE acquisition are also a factor:
Charles Di Bona ... said he sees continued problems at PeopleSoft – ones that go deeper than the confusion created by Oracle's bid. He noted that the $150 million in software revenue is 9% lower than last year's third-quarter sales figure.

"I think a large part of the loss of confidence [in Conway] really is more around the J.D. Edwards situation than Oracle," Di Bona said, referring to PeopleSoft's problematic integration of former rival J.D. Edwards & Co., which it acquired last year. "This is not a growing company; this is an ailing company."
Might be a bit overstated. But on the other hand Di Bona follows PeopleSoft pretty closely.

Update, Oct. 6. It appears that the three executives that threatened to quit were sales EVP Phil Wilmington, CFO Kevin Parker, and chief marketing office, Nancy Caldwell. This is according to Steve Goldby's testimony in the Oracle lawsuit yesterday. With Conway now gone, Wilmington and Parker are now co-presidents.

Related posts
Huh? PeopleSoft fires Craig Conway
Why are executives leaving PeopleSoft?

Sunday, October 03, 2004

SSA grows, but don't get no respect

I wasn't able to attend the SSA Global client forum in Philadelphia. But John Moore from the ARC Advisory Group has a pretty good report, summarizing strategic direction for SSA in the coming year.

Moore points out that SSA's approach to standardize on IBM Websphere technology across its multiple products is similar to that of PeopleSoft, but SSA was taking this approach prior to PeopleSoft's recent announcement of the same.

With its strategy of buying software products and customers from distressed vendors, SSA doesn't get a lot of respect from consultants. But SSA's strategy has propelled it to the position of number four among enterprise system vendor, behind SAP, PeopleSoft, and Oracle. And, if Oracle gobbles up PeopleSoft, SSA will be number three.

Related posts
SSA delivers long awaited next generation version of Baan
SSA promotes extended enterprise apps, files for IPO
SSA's strategy: acquire customers and technology on the cheap
SSA's obituary was a bit premature

Saturday, October 02, 2004

Lawson fires 100, blames Oracle

Lawson Software is laying off 100 employees in a cost cutting move, following its most recent earnings disappointment.

What I find hilarious is the new excuse that Lawson has come up with for why its sales are lagging: it is blaming Oracle!
Since earlier this year, Lawson has said its business is being hurt by the ongoing efforts of competitor Oracle Corp. to buy another competitor, PeopleSoft, in an unfriendly takeover. The U.S. Department of Justice opposed the Oracle takeover of PeopleSoft on antitrust grounds, but Oracle won the case earlier this month and continued its takeover bid. As a result, some ERP customers have decided to wait out the battle to see which suppliers remain, Lawson said.
As I recall, back in April during Oracle's anti-trust trial, Lawson took out two full page ads in the Wall Street Journal thanking Oracle for positioning Lawson as a top competitor!

But now, somehow, Oracle is to blame for Lawson's problems. I can see how PeopleSoft might make that claim. But Lawson?

Maybe next quarter they can blame the hurricanes in Florida.

Lawson's hometown paper, the Minneapolis Star Tribune, has the details.

Related posts
Lawson joins earnings disappointment club

Friday, October 01, 2004

Huh? PeopleSoft fires Craig Conway

I'm seeing this just now on CNBC. PeopleSoft's board has just fired CEO Craig Conway, effective immediately, citing "loss of confidence in Mr. Conway's ability to continue to lead the Company."

The CNBC commentators are as baffled as I am about this. They are speculating about "personality problems." I don't think so. As the CNBC commentators finally conclude, the move makes no sense. The press release indicates that the decision received the unanimous vote of the independent directors, so there must be something else going on here.

The press release leads with the news that Dave Duffield, PeopleSoft's founder, is now back as CEO. Kevin Parker (CFO) and Phil Wilmington (EVP Americas) are being promoted as co-presidents. Aneel Bhusri has been appointed Vice Chairman, focusing on product and technology strategy

You can read the press release on the PeopleSoft web site. Hopefully there will be more light shed on this development in the coming hours and days.

Update: less than an hour into trading, and PeopleSoft shares are up over 8% to $21.44, which is actually above Oracle's tender offer. The market apparently thinks that Conway's departure increases the chance of Oracle's takeover being successful. PeopleSoft is hosting a conference call shortly, so hopefully there will be more clarification.

Update: S&P analysts feel that Conway's departure does increase the likelihood of a deal, and that Oracle will need to raise its tender offer to at least $23. But in a PeopleSoft conference call just now, new CEO David Duffield said, "There has been no position that the transaction committee has taken with Oracle that was at odds with where Craig was." He says that the departure of Conway has nothing to do with the Oracle bid. On the other hand, he didn't say why they "lost confidence" in him.


Update: Here are some more analyst reactions, as noted by CBS Marketwatch.

From Stephen Trotta at Technology Business Research:
What this tells me is that the board is in favor of throwing in the towel and, clearly, Conway was not ready to do so. This certainly clears the path for PeopleSoft to be acquired. ... One of the greatest obstacles in this battle has been Conway's ego and the emotional stake he has vested in attempting to out smart Larry Ellison. The removal of Conway eliminates the emotional factor from the process and clears the way for the founder of PeopleSoft, David Duffield, to come back and have the final say.
Art Hogan, of Jefferies & Co says, "The obvious interpretation is that this makes the deal more doable."

Patrick Snell, of Robert Baird, thinks that firing Conway was "a move to restore credibility in the eyes of the investment community and customers/prospects, which may have suffered in part due to Conway's very public [and] personal attacks on Oracle's [CEO] Larry Ellison."

Update: separate but related news just in: the DoJ now says that it will not appeal the court's ruling to let Oracle proceed with its hostile bid for PeopleSoft.

Update, Oct. 2. The New York Times (free registration required) has gathered some additional insight into what might be going on:
Executives close to PeopleSoft said that while Mr. Conway's aggressive approach to the Oracle offer was a consideration in his removal, frustration with his handling of strategic business issues was also part of his undoing. Most notably, PeopleSoft's acquisition of J. D. Edwards in 2003, a project that Mr. Conway led, is largely considered a failure. The company has also been slow to give customers a clear plan for the future, the executives said.
Tad W. Piper, an analyst with Piper Jaffray, said the ouster of Mr. Conway could smooth the way for an acquisition by Oracle, but noted it was not the only reason for the board's decision. Problems with the company's product strategy were apparent at PeopleSoft's annual customer conference last week, he said, which might account for the timing of the board's announcement.

Other analysts said that the appointment of Mr. Duffield, the company's founder, as chief executive might indicate that the board, though unhappy with Mr. Conway, remained opposed to an Oracle takeover.
Mr. Duffield told analysts on Friday that he planned to "put together a technology vision that's been absent for a period of time."
Although the NY Times insights are helpful, I am still perplexed by several things. First, the contention that the JDE acquisition has been a failure is surely a debatable point. Second, I was at PeopleSoft Connect press conference last week and did not hear any great skepticism voiced by these same analysts about PeopleSoft's product strategy. Finally, Duffield's comment about putting together a technology vision is really baffling--especially after PeopleSoft just signed a $1B agreement with IBM that addresses this very issue. What exactly would Duffield do in addition to, or differently from, what PeopleSoft just stated as a technology direction? Does Duffield disagree with the IBM alliance? If anything, Duffield's comment would make me more concerned about PeopleSoft's direction, not less concerned.

Update, Oct. 2. John Moore of the ARC Advisory Group has the same reaction as I expressed in the preceding paragraph.
There is another interesting twist to this story and that is the appointment of former PeopleSoft employee, Aneel Bhusri, as Vice Chairman to lead the company's product and technology direction. In the conference call Duffield stated that he thought the technology vision at PeopleSoft was "lacking as of late," which brings into question what part of that vision was suspect. At Connect, the company announced a major partnership with IBM and touted the success of their Total Ownership Experience (TOE) initiative, which is getting significant traction among the customer base. Thus it is hard to determine where the company may be faltering - could it be the slow progress in integrating JD Edwards?
Update, Oct 4. There's better information now emerging. See my post on Oct. 4, Why PeopleSoft fired CEO Conway.

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