The story so far: following its acquisition of JD Edwards in September, PeopleSoft claims to have become the world’s second largest business applications software maker after SAP with 11,000 employees and forecast revenues of US$2.8bn next year. Meanwhile, Oracle has thrown its hat into the ring by tabling a US$7.25bn hostile bid for PeopleSoft – a bid whose competitive implications are currently being examined by the US Department of Justice and the European Commission.
While publicly at least Oracle’s mercurial CEO, Larry Ellison, is confident of victory, PeopleSoft is just as confident that the bid has failed.
Visiting Ireland last week, Crosbie Burns, vice-president and managing director of PeopleSoft UK and Ireland, was emphatic that the deal was, as he put it, “dead in the water”. He cited a number of reasons for this, including the fact that Oracle’s offer price was below PeopleSoft’s current share price; the huge regulatory hurdles faced by Oracle; and PeopleSoft’s strong performance in the last two quarters. He also pointed out that Oracle has troubles of its own. “If you look at Oracle’s own performance, well you can see why they want to buy PeopleSoft,” he said mockingly.
While the bid process limps along, PeopleSoft is busy implementing the integration programme with JD Edwards. It began on 2 September and is scheduled to last six months. Key steps that have already been taken include the integration of three production facilities in the UK into a single unit and the merger of the two UK salesforces. The JD Edwards Dublin-based European software distribution centre is unaffected.
Product integration is also well under way. This has been a relatively straightforward affair because of the minimal overlap between the two ranges: the PeopleSoft product line covers human resource, customer relationship management and supply chain management, whereas JD Edwards’ focuses mainly on the property, manufacturing, construction and distribution sectors. For this reason, the company decided to retain both ranges and simply rebrand them. So the old PeopleSoft 8.0 suite has become PeopleSoft Enterprise and JD Edwards 5.0 is now called PeopleSoft Enterprise One. A third product line is also being retained: JD Edwards Worldsoft, a suite developed to run on IBM iSeries platform, has been renamed Enterprise World.
In the UK, JD Edwards and PeopleSoft are of similar size in terms of both revenue and headcount. In Ireland it is a different story: PeopleSoft’s business was always much smaller. Sales were handled direct from the UK with implementations done by KPMG as a local partner. In contrast, JD Edwards has had a strong presence in Ireland for a dozen years through its business partner, Software Resources, which has built up a portfolio of clients that includes An Post, the Department of Finance, Element Six (a De Beers division) and Organon, and which had a turnover of approximately €6m in 2002.
Burns has a simple explanation for why JD Edwards’ Irish business was much bigger. “The old PeopleSoft was very much suited to large enterprise, whereas the JD Edwards portfolio was much better suited to mid-sized enterprise. Since the Irish market is very much a mid-enterprise market JD Edwards historically was more successful here.”
The merger has happened at a particularly difficult time for the Irish enterprise resource planning software market, which has got tighter in the last two years as corporate budgets have been cut and internal IT departments become more aggressive in contract negotiations. At the same time competition has intensified with the entry of Microsoft, an aggressive new challenger through its newly acquired Great Plains and Navision product lines.
Joe Gorman, managing director of Software Resources, points out that the industry’s troubles are partly of its own making. “The whole industry got away with murder for years in terms of projects running over and so on … and industry credibility suffered. Value for money is evident again in the marketplace,” he observed.
As with any merger, the big question is whether the new PeopleSoft will be more effective than the two individual companies put together. Gorman had no doubts that it would. Although it is too early to see concrete results, he saw opportunities aplenty to sell PeopleSoft products to his installed base of JD Edwards users and to target larger businesses with the combined portfolio. “Once people realise that it’s a much bigger organisation they are dealing with and see the expanded product line, it will help us a lot,” he claimed.
On the subject of Oracle, Gorman shared Burns’ deep hostility to the move. “An Oracle takeover would be a disaster for the Irish market as far as I’m concerned. I certainly wouldn’t be telling our customers it was good news.”
By Brian Skelly
Pictured from left: Tiernan Quinn, sales director, Software Resources; Crosbie Burns, vice president with PeopleSoft and Joe Gorman, managing director of Software Resources