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
“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.”