Oracle to PeopleSoft Customers: We’ll Support You

Oracle Executive Vice President Chuck Phillips placed
himself on the hot seat Thursday in the first of what the company said will
be series of “town hall” meetings in which PeopleSoft
customers can drill various Oracle executives about its intentions when and
if it succeeds in acquiring its enterprise applications rival.

If the inaugural town hall meeting was any indication, the proceedings will
be as repetitive as they are brutal and precise, with Phillips fielding
myriad questions via e-mail about his company’s plans for supporting
PeopleSoft products should the purchase clear regulatory opposition and find

Little new information was unearthed, but the session, propelled by a
smattering of prepared and real-time queries, allowed customers to address
nuances that have cropped up since Oracle began issuing statements about its
intentions last month.

Phillips was asked if Oracle would continue to support PeopleSoft platforms
7, 8 and 9. The answer was “yes” to all, and the executive also pledged
enhancements to those products if they are needed, noting that the evolution
of the software market often requires frequent product upgrades in order for
vendors to keep up with competitors on various arcs of innovation.

Oracle will continue to sell all PeopleSoft products, he said, although the
manner in which it sells them will be different than the way PeopleSoft
currently attacks the market. Phillips said the greatest difference is that
Oracle will not spend money on marketing the PeopleSoft products it makes.

For example, it will not go on tour with PeopleSoft products and hold
seminars to woo new customers. Rather, Oracle plans to focus more on serving
the existing PeopleSoft customers it would inherit through an acquisition.
Will it accept new license requests from prospective PeopleSoft customers?
You bet.

“Oracle tends to like it when people give us money,” said Phillips, dryly.
He further noted that Oracle will focus on serving existing customers, and
said support and maintenance, rather than new license fees, is where the
real money is made in selling software.

The executive, who left Morgan Stanley in May to join Oracle after bullishly
advising investors on its potential, stressed that his Redwood Shores,
Calif.-based company will honor any and all contracts PeopleSoft is bound to
regarding customers and partners — no matter how complicated or difficult
they might prove.

About the only thing missing from a nearly-hour long litany of promises to
skeptical customers were specifics. For instance, Phillips couldn’t answer
what features or functionality might be migrated from PeopleSoft platforms
to Oracle’s own E-Business Suite of software.

One of the more interesting issues posed to Phillips was this: PeopleSoft
applications are scripted to support other databases. Will Oracle continue
to support those? Though a dicey question for an executive at the largest
database software company in the world, Phillips said Oracle supports
numerous competing products and said he “doesn’t think that is” an issue
Oracle is concerned about.

Perhaps the most general questions had to do with the notion of why should
Oracle buy PeopleSoft and what good would it do customers. Phillips
reiterated his company’s position that an Oracle acquisition of PeopleSoft
will be good for customers because they will have choice of applications,
5,000 global support representatives to choose from and because it makes
more sense than going with the flow of PeopleSoft’s planned merger with J.D.
Edwards , which he said will yield 4 separate product

Asked why Oracle thought such an acquisition, nearly impossible in the
software space, would work, Phillips said Oracle had tried unsuccessfully to
acquire software companies in the past, but that this would work because
Oracle plans to keep the code streams of both businesses separate.

“Acquisitions are so tough in software,” Phillips said. “There are unique
requirements… When you decide to take two pieces of codes and merge them
together with different models, tool sets, different languages, and
different architects, it doesn’t work. That’s why we’re keeping it in
separate code streams and separate organizations. Contrast that with what
PeopleSoft is trying to do. They’ve got 4 product lines with an
acquisition of J.D. Edwards. It’s hard to integrate competing product lines.
Good luck.”

Perhaps the biggest theme of the day in addition to pledges of continued
support for PeopleSoft software for 10 years after acquiring the Pleasanton,
Calif. company, was credibility. Phillips thinks Oracle’s forthrightness
counts for something to customers concerned with any upheaval or distress
caused by an Oracle/PeopleSoft purchase.

“It’s very rare for a 10-year commitment in software,” Phillips said. “You
won’t find companies that do that. To make a public commitment and take out
full-page ads in the Wall Street Journal and New York Times is a great
insurance policy for you. It is made very visible for competitors and
regulators to see and it keeps us on the hook. An we’re glad to be on the
hook anyway.”

While Oracle took the brunt of questions from concerned skeptics wondering
if they’re investments would be preserved in the event of a successful
acquisition, Phillips himself did not get away unscathed.

One inquisitor
asked that, seeing as how Phillips has only been with the company a few
months, how could he state with confidence that the level of PeopleSoft
support would be appropriate? “Pretty good support?” the customer wrote. “That’s not good enough.”

Phillips indicated that he followed enterprise software since 1986 and that
there are many reasons why Oracle has 250,000 customers. Bottom line, he
said, the public commitment should be good enough reason for customers to
trust Oracle.

“We are putting the brand and the company at risk,” he said.

Phillips also promised that Oracle would honor J.D. Edwards customers’
contracts should PeopleSoft succeed in acquiring the Denver-based mid-market
applications provider by the end of Thursday.

To wit, the inaugural “PeopleSoft Town Hall” meeting came a day after
PeopleSoft unveiled the exchange ratio it plans to use to complete its
proposed acquisition of J.D. Edwards. PeopleSoft will give each J.D. Edwards
shareholder $14.74 in cash, 0.8243 of a PeopleSoft common share or a
combination of the two, as requested by each shareholder.

That’s an improvement over the original exchange ratio of $14.10, and raises
the value of the proposed merger from its last revised figure of $1.75
billion to a round $1.8 billion. PeopleSoft’s exchange offer expires at
midnight EDT on July 17.

Separately, Oracle this week bid two long-term executives adieu this week,
as top guns Mark Jarvis, a 14-year Oracle veteran who last served as chief
marketing officer, and George Roberts, a 13-year veteran who helped lay the
foundation for Oracle’s sales model.

The departures were announced in an e-mail Ellison sent to Oracle staffers.
Oracle’s Phillips will take over control of the marketing department for
Jarvis, who has not said what he plans to do next.

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