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.

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