LONDON: The hostile attempt to take over PeopleSoft is part of a fundamental change in Oracle strategy and it’s only just the beginning, according to executive vice president Chuck Phillips. Speaking at AppsWorld, Phillips pointed to a slowdown in the ERP sector as the prime motivator for the switch in company policy.
“The industry has become more mature, growth has slowed and there needs to be some rationalisation,” said Phillips. “Investors think it’s overdue; prices have come down and the natural thing that has happened in other industries is consolidation. And if the industry is going to consolidate, we’d rather drive it.”
In the past, CEO Larry Ellison has argued the case for a single controlled architecture that was developed internally as opposed to achieving growth through acquisition and merger. Phillips, who has been working closely with Ellison as a principle architect of the move, gave an insight into the bid. “PeopleSoft had been monitored for some time. It is an attractive company with good qualities and good engineers,” he said. Oracle finally made its move when the company announced its proposed acquisition of JD Edwards.
“We had to move before it closed the deal. SAP has a substantial lead in the market and we need to close the gap and get there much more quickly,” explained Phillips.
The complex power struggle that ensued has seen Oracle increase its share offer while JD Edwards set about suing Oracle, claiming that it has illegally interfered in its proposed merger with PeopleSoft. In turn, PeopleSoft’s CEO, Craig Conway, rejected Oracle’s offer, claiming it was “a transparent attempt to disrupt the acquisition of JD Edwards by PeopleSoft”.
PeopleSoft has also claimed the proposed buyout is anticompetitive and contravenes US antitrust laws. “We think there are plenty of competitors out there,” argues Phillips. “SAP is still gaining over us and PeopleSoft. Even if you combined the companies, there would still be a significant gap. And Microsoft is increasingly coming into the space.”
He went on to make the converse argument: “It increases rather than decreases competitiveness. It gives SAP a run for their money!”
Yesterday, Larry Ellison refuted suggestions that Oracle would kill the PeopleSoft product in the event of a successful takeover. He pledged to support existing customers for at least a decade though he also made it clear that Oracle wouldn’t actively promote it in the future.