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CIOs Split on 'OracleSoft'

Chief Information Officers are divided when it comes to a merger between Oracle and PeopleSoft but are in favor of keeping the "poison pill," according to a survey out this week.

In reaction to the recent U.S. court ruling allowing Oracle to proceed with its hostile bid to acquire PeopleSoft , 44 percent say they agree while 43 percent disagree and 13 percent are unsure.

The survey, conducted by the CIO Executive Council, queried the group's collection of vertical industries. CIOs and CTOs from the Federal Trade Commission (FTC), DuPont, Raytheon, Citizens Financial Group, Con-Way Transportation, Abercrombie & Fitch, the American Red Cross, ACNielsen, Delphi and GE Real Estate were polled.

The field was a bit more divided when queried on the topic of Oracle's lawsuit to remove a so-called "poison pill" and a Customer Assurance Program (CAP) from PeopleSoft's charter.

The Executive Council found CIOs slightly favor PeopleSoft with 50 percent) believing the Delaware Chancery court should deny Oracle's plea to void PeopleSoft's anti-takeover provision. Some 29 percent of those polled favor Oracle's request.

Analysts polled by Reuters Friday suggest that the Delaware judge could render a decision in a couple of days. At the close of arguments, Judge Leo Strine Jr. declined to give a timeline for his ruling, but he did point out that Oracle should continue to negotiate with PeopleSoft.

PeopleSoft's trial scheduled for January also drew mixed reviews. Of those responding, 45 percent say the courts should rule that Oracle's bid was intended to destroy PeopleSoft's business, while 32 percent favor a ruling for Oracle.

The survey does not take into account last week's decision by European Union regulators to allow Oracle to proceed with its current $7.7 billion offer to merge the two companies.

Philip Fersht, analyst and Group Director with The Yankee Group, said he would be very surprised now if a so-called "OracleSoft" deal fails to go through, but worries that the combination of the No. 2 and No. 3 Enterprise Resource Planning (ERP) vendors would "severely unbalance" the enterprise software marketplace.

"This merger could encourage many enterprises to consider the merits of outsourcing more seriously," Fersht told internetnews.com. "Managing an IT infrastructure with certain products' futures under a cloud -- and seemingly constant turmoil -- is taking its toll on many CIOs, and turning towards an outsourced utility model will be ever more enticing.

"IBM may see a great play to win over beleaguered PeopleSoft customers with more on-demand offerings -- and this is clearly time for Microsoft to truly enter herself into the enterprise apps arena."

The so-called "OracleSoft" debate is just one concern by CIOs, according to the survey. Those polled also expressed great dismay with the IT vendor community, with one in five (20 percent) saying they've spent more than $500,000 on software patches in the past year alone. However, CIOs are divided as to what changes need to be made to improve their relationship with the IT vendor community.

When asked to name the first priority, CIOs cite improved customer service (26 percent), more licensing choices (24 percent), better products/services (22 percent) and better service contracts without hidden fees/costs (21 percent). Not surprisingly, zero percent of respondents say there is no need for improvement.

That kind of insecurity may be fueling a new trend toward third-party companies that supply long-term support software for PeopleSoft and Oracle customers.

Case in point is TomorrowNow Support Services program, which offers a replacement for PeopleSoft's own annual maintenance and support services. The Pleasanton, Calif.-based firm said its status as an independent support provider makes it immune from upheaval in the ERP and CRM software markets.

Likewise, Atlanta-based Glenridge Solutions and Quest Software have released a Sarbanes-Oxley compliance platform that supports both PeopleSoft and Oracle e-Business Suite applications.