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Don't Fear 'OracleSoft' Say Analysts

UPDATE: Now that Oracle has worked out a deal to acquire PeopleSoft , companies are weighing the pros and cons of Oracle's J2EE database.

PeopleSoft and JD Edwards customers specifically have been concerned that their products would be tossed aside. Oracle CEO Larry Ellison promised last week that the company would go out of its way to "over support" PeopleSoft customers for the next 10 years.

Analysts who have been watching the deal for the last 18 months dispensed the following advice: "Don't panic."

"I think at this point PeopleSoft customers should sit tight and see what the promises of 'over support' from Oracle mean," Joshua Greenbaum, principal analyst with Enterprise Applications Consulting, told internetnews.com. "I certainly wouldn't advise a run for the exits. Oracle has the potential to be an excellent steward of this customer base as long as their execution meets the standards set by executives." "Oracle apps customers should breath a sigh of relief and look for to a better life for apps customers now that Oracle can shift the money it spent on lawyers over to apps products and apps marketing," Greenbaum added.

As part of the $10.3 billion deal, Oracle said it would extend support for PeopleSoft customers worldwide. The Redwood Shores, Calif., company will enhance PeopleSoft 8 and develop a PeopleSoft 9, as well as enhance JD Edwards 5 and develop a JD Edwards 6.

Paul Hamerman, analyst and vice president of enterprise applications with Forrester Research, suggests that now that Oracle has taken over the reigns, the first thing PeopleSoft customers should do is evaluate their IT strategy.

"CIOs should use this as an opportunity to drive an IT strategy that simplifies the IT environment and reduces the number of application vendors used within the enterprise," he said. "CIOs also must revisit the viability of all the technology vendors utilized within the technology architecture and establish plans for migrating away from weak vendors that will not survive the acceleration of the market shakeout that is sure to come."

Mike Dominy, senior analyst of business applications and commerce at The Yankee Group, told internetnews.com that Oracle's next step should be to make sure it does its homework and develops a well thought out acquisition plan and customer support program.

"The acquisition of PeopleSoft by Oracle should not have a negative impact on PeopleSoft customers," Dominy said. "Enterprises running PeopleSoft applications on Oracle should benefit as Oracle develops solutions that are more tightly integrated within the technology stack (application server, database and applications). PeopleSoft customers that currently run on IBM infrastructure should be leery.

Leery, indeed. Before his untimely exit, former PeopleSoft CEO Craig Conway finalized a $1 billion, five-year distribution deal with IBM that bundles WebSphere middleware in every future shipment of PeopleSoft products at no additional charge to PeopleSoft customers.

Philip Fersht, an analyst with Yankee Group, told internetnews.com the partnership with IBM should be a bit of a challenge for Oracle even though the company's middleware is much more of a clean-cut J2EE platform.

"Getting companies to transition from WebSphere to Oracle platform is difficult to do," Fersht said. "Most companies we find start from a database standpoint and then add in the application stage around a J2EE implication. Oracle now has a challenge to see if they can keep, convert and contain WebSphere customers."

As a short-term strategy (24 months to 36 months following the acquisition), Dominy suggests Oracle should develop a maintenance and support program that ensures adequate support for PeopleSoft customers that are IBM-centric. Oracle must also develop offerings that allow PeopleSoft customers running on IBM to migrate to an Oracle platform.

"These offerings must be offerings and not a requirement. It is imperative that Oracle manage PeopleSoft customers running on IBM (much of the legacy JD Edwards customer base) carefully to ensure continued maintenance revenue and/or the opportunity to realize additional new license and services revenue."