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Microsoft Woos PeopleSoft Customers

PeopleSoft customers leery of Oracle now have a way out, Microsoft announced Monday.

As part of a specially designed migration program, Microsoft said businesses that use PeopleSoft World (formerly from J.D. Edwards), PeopleSoft EnterpriseOne (formerly from J.D. Edwards) and PeopleSoft Enterprise can get 25 percent off Microsoft Business Solutions (MBS) software and services. Microsoft said it has a migration technology available for its own partners as well.

For the last 18 months, PeopleSoft had been the subject of hostile takeover attempts by its rival, until Oracle finally declared victory last week. The acquisition makes Oracle the world's second-largest vendor of ERP software, behind market leader SAP .

For customers leery of Oracle's ability or willingness to support them, Microsoft recommends that PeopleSoft World and PeopleSoft EnterpriseOne customers consider its Axapta platform, while PeopleSoft Enterprise customers in the United States and Canada move to Microsoft Great Plains. The company said potential customers also could take advantage of the program to move to its Navision or Solomon software.

Analysts scoffed at Microsoft's offer.

"This represents a lot of wishful thinking on Microsoft's part," said Joshua Greenbaum, head of the consulting firm Enterprise Applications Consulting. "The mix of products they offer says it all. They don't have a single product that could replace in particular the PeopleSoft Enterprise product. In order for Microsoft to make an offer to PeopleSoft's customer base, they have to offer the usual confusing mess of Microsoft Business Solutions."

But switching costs could be quite significant, said Forrester Research analyst Paul Hamerman, and it could take months to change out the Enterprise Resource Planning (ERP) system.

"Their target for this program will be the former JD Edwards customers more than PeopleSoft enterprise," said Hamerman, with businesses that use the older World product being the likeliest candidates. "There may be a few customers they can pick off that feel their maintenance costs are too high and the system is too complex," he added.

"Businesses that use PeopleSoft technology are facing some difficult choices today, and we're committed to providing them with the best options for moving forward," Doug Burgum, senior vice president at Microsoft, said in a statement promising a smooth, cost-effective transition.

Greenbaum pointed out that it would be Microsoft partners that need to do the migration work. "To have Microsoft do this is a very nice thing, but you would have to go to the partners and say, 'What is your experience base of migrating customers to the MBS platform?'" he said.

Dan Duffy, president of ePartners, a services firm focused on MBS, said his company has helped some twenty customers make the switch. The best prospects, he said, are those who were oversold. He said tier-one products tend to be several times more complex and costly to own that MBS products.

For customers who have more robust ERP packages than they really need, Duffy said, "We're typically able to convert them and get them live in half the time it takes to implement [PeopleSoft], and they are operating those systems at a fraction of the cost."

Microsoft has been trying to push MBS products up-market, even as the top enterprise players inched their way down in an attempt to keep growing. In the U.S. Department of Justice hearings into Oracle's acquisition of PeopleSoft it was revealed that Microsoft considered merging with SAP AG .

German-owned SAP may be having some success, according to a study to be released by Yankee Group next week.

The Yankee Brand Monitor Study surveyed companies considering PeopleSoft software. Of these potential PeopleSoft customers, 52 percent also would consider Oracle; 36 percent would consider SAP; 17 percent might use Microsoft's Great Plains; and 12 percent would be open to Navision.

"It's very encouraging news for Microsoft that brand perception and awareness in the ERP space has picked up considerably," said Yankee analyst Philip Fersht. He said the bump in prestige is due to increased investment in MBS and marketing from Microsoft.

He added, "Great Plains and Navision are becoming viable alternatives on the ERP level for many users of PeopleSoft."