Tuesday, January 11, 2005

Microsoft wants PeopleSoft customers but doesn't have much to offer

The ink is barely dry on the Oracle/PeopleSoft acquisition, and Microsoft is already trying to get PeopleSoft customers to jump ship. Microsoft is offering a 25% discount on its application software to PeopleSoft customers who convert.

Unfortunately, Microsoft doesn't have much to offer. It is pointing users of PeopleSoft's Enterprise (the original PeopleSoft product line) to Microsoft's Great Plains product, and it is urging users of PeopleSoft's Enterprise One and World products (the former JDE products) to consider Microsoft's Axapta product.

Anyone who has evaluated these products knows that there are significant functionality gaps between the PeopleSoft and Microsoft offerings. For example, the last time I looked, none of the Microsoft applications offer true multi-site functionality (i.e. the ability to plan and manage multiple separate inventory and production facilities on the same system instance). So this offer is a non-starter for many PeopleSoft customers.

So, why is Microsoft even making this offer? As I've pointed out in the past, the battle between Oracle, PeopleSoft, Microsoft, SAP, and IBM is not really about applications. It is about the technology stack that lies beneath the applications. Currently, many or most of the PeopleSoft Enterprise One customers are running over Microsoft infrastructure technology (MS SQL Server, over Windows NT/2000), and there is little doubt that Oracle would like to move those customers, ultimately, to its own technology stack (Oracle database and tools, over Unix or Linux). So, Microsoft has to do something, but only has its small and mid-tier applications to offer.

The battle for the infrastructure stack explains why, after Oracle made its initial bid for PeopleSoft, Microsoft approached SAP for a merger. Microsoft knew that it didn't have a product to compete with Oracle/PeopleSoft. The deal with SAP never materialized, so now Microsoft is stuck with this empty offer.

There's additional analysis in a CNET article. My favorite part is a quote at the end from AMR's Jim Shepherd, who says that the Microsoft offer "is barely worth the paper the press release was written on."

Related posts
Oracle, IBM, Microsoft battle for technology infrastructure of PeopleSoft customers
IBM is a loser in Oracle/PeopleSoft deal
Microsoft and SAP: the merger that didn't happen
What exactly is the market for enterprise systems?
First look at Microsoft's Axapta

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