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

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