PeopleSoft signs joint agreement with IBM

23 Sep 2004

PeopleSoft has announced a strategic alliance with IBM less than two weeks after a US court decision freed the way for a possible takeover of the company by Oracle. Adding intrigue to the deal, Oracle and IBM are rivals of long standing, although IBM has denied that the newly signed agreement represents a bid to steal PeopleSoft from under the nose of its competitor.

The technology and marketing agreement will see PeopleSoft bundle its future business applications with IBM’s middleware – infrastructure software that allows separate applications to work together. The two companies will also work to optimise PeopleSoft’s applications to run on IBM’s DB2 database and migrate PeopleSoft’s development tools to the IBM-backed Eclipse open-source development tool program.

PeopleSoft claimed that by integrating its enterprise applications with IBM middleware, customers would benefit from a platform with better functionality and more flexibility than competing platforms. The alternative, it said, was that organisations would be forced into adopting a separate, proprietary middleware stack that limits flexibility and choice of suppliers.

The company also said that customers that combined the IBM WebSphere platform with PeopleSoft’s applications could better use their existing IT assets without having to “rip and replace” current systems.

Commenting on the deal, Philip Carnelley of the analyst firm Ovum, said that the agreement would be “a lot of work” for PeopleSoft, but many of its customers, particularly those already using Websphere with PeopleSoft, “should be pleased with a well-integrated platform/application combination”.

Carnelley pointed out that PeopleSoft’s arch-competitors SAP and Oracle already offer their applications on their own middleware, should customers want it, “so this is in some sense a catch-up”. Joint marketing and an endorsement from IBM would help PeopleSoft, he added, especially right now when it is under enormous pressure over the Oracle bid.

“For IBM the benefits are perhaps more general,” Carnelley said. “This will help to keep Oracle at bay – the last thing either company wants is for companies to use PeopleSoft apps on Oracle’s platform. And of course it this will directly drive [IBM] Websphere sales. What IBM’s other key partners like SAP and Siebel will think we’re not sure, but they probably won’t be too worried. They too want to see more pressure on Oracle at least. If IBM did acquire PeopleSoft that would be a different matter entirely.”

By Gordon Smith