23
Sat, Nov
1 New Articles
  1. You are here:  
  2. Home
  3. MORE
  4. Commentary
  5. Analysis of News Events
  6. PeopleSoft Agrees to Oracle Takeover

PeopleSoft Agrees to Oracle Takeover

Analysis of News Events
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Last Monday, Oracle Corporation and PeopleSoft ended their 18-month takeover battle with an agreement that let both vendors declare themselves the victors. Under the agreement, PeopleSoft will be acquired by its rival at a price of $26.50 per share, a 10% premium over Oracle's former "best and final" offer of $24 per share. The agreement sets PeopleSoft's price tag at a hefty $10.3 billion, leaving Oracle with the considerable challenge of generating a return on its investment.

In a hastily arranged conference call with analysts, Oracle CEO Larry Ellison revealed that PeopleSoft had provided evidence that its maintenance revenues were higher and its operating expenses lower than Oracle had estimated. This enabled the two firms to agree to the higher acquisition price and close the deal in negotiations that took place during the weekend before the announcement. By acquiring PeopleSoft, Oracle will inherit more than 12,000 new customers, become the second largest enterprise software vendor in the world (next to SAP), and become North America's largest provider of core business solutions.

While Oracle may have won the acquisition war, it faces a new battle to squeeze every possible drop of value out of its $10.3 billion investment. That will require it to lay off thousands of employees and slash departmental budgets. While the company has not made definitive statements about workforce reductions, it could lay off at least half of PeopleSoft's employees over the coming year. Many of the cuts would likely come from PeopleSoft's marketing and sales teams, as Oracle does not intend to market the vendor's product lines to new customers.

At the same time, Oracle does intend to support and in some cases enhance PeopleSoft products. To do that, Oracle will try to keep many of PeopleSoft's senior software engineers and support managers on the payroll. It will also try to keep some PeopleSoft account managers on board to sell upgrades and additional modules to existing customers.

What the Future May Hold

Should Oracle successfully retain PeopleSoft's brightest developers, it will harness their talents to bring the two vendors' product lines together over a period of several years. While the actual details of the convergence are unclear, here is what Oracle is saying about its plans for PeopleSoft's application suites.

  • PeopleSoft Enterprise, the flagship product for large companies, may receive many or most of the enhancements that PeopleSoft had planned for it. Oracle has stated that it will roll out a new version of the product--PeopleSoft Enterprise 9--in one to two years. Once that occurs, Oracle intends to build a new version of its own ERP product--E-Business Suite--that is a superset of that product and the most valuable features of PeopleSoft Enterprise 9. This would become the "convergence platform" for the two product lines.
  • PeopleSoft EnterpriseOne, the former J.D. Edwards solution known as J.D. Edwards 5, could get much the same treatment as PeopleSoft Enterprise. Oracle has said that it will make targeted improvements to EnterpriseOne over the next one to two years and release a new version that Ellison calls "J.D. Edwards 6" during that time frame. Oracle would then incorporate the best features of this new version into the next release of its E-Business Suite and designate it as the migration path for EnterpriseOne users.
  • For the thousands of PeopleSoft World customers who rely on IBM's iSeries, the future remains unclear. In recent weeks, Oracle has stressed that it will support the product. However, the vendor admitted that its ability to deliver support would depend on the cooperation it receives from IBM. Oracle has experience supporting customers on many non-Oracle products, including customers that use IBM's DB2 database. However, it is doubtful that Oracle has ever supported the iSeries version of DB2, upon which World relies. As such, IBM's assistance will be critical to Oracle and its newly acquired World customers.

It is difficult to predict how IBM will respond to the PeopleSoft acquisition because its relationship with Oracle has historically been marked more by competition than cooperation. While IBM's Global Services Division installs and integrates millions of dollars of Oracle products every year, Oracle is also one of IBM's greatest software rivals. This rivalry could make it difficult for some IBM groups to assist Oracle in supporting World customers. However, if IBM fails to provide adequate assistance, it could create a poor support environment for World customers as well as for the many EnterpriseOne customers who rely on IBM software and the iSeries. That could lead many of those customers to migrate to alternative enterprise applications over time, and many of those alternatives may not run on the iSeries.

In short, the PeopleSoft acquisition poses serious challenges for IBM, Oracle, and the iSeries customers that are caught between the two vendors. To protect its interests with PeopleSoft's iSeries customers, IBM will have to cooperate with a vendor that it largely distrusts. While Oracle may want to wean PeopleSoft customers off IBM's middleware over the long term, it must ironically cooperate with Big Blue in the short term to support PeopleSoft's customers on that middleware and the iSeries. If it fails to do so, it could lose those customers and a big chunk of the maintenance revenues that it needs to recoup its $10.3 billion investment.

It is far too early in the game to say how the two industry giants will handle these challenges. However, there are some steps that PeopleSoft's iSeries customers can take to protect their own interests and, in the process, influence the behavior of both Oracle and IBM. I'll talk about those steps in future issues, so stay tuned.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

LEE KROON
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.
BLOG COMMENTS POWERED BY DISQUS

LATEST COMMENTS

Support MC Press Online

$

Book Reviews

Resource Center

  • SB Profound WC 5536 Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application. You can find Part 1 here. In Part 2 of our free Node.js Webinar Series, Brian May teaches you the different tooling options available for writing code, debugging, and using Git for version control. Brian will briefly discuss the different tools available, and demonstrate his preferred setup for Node development on IBM i or any platform. Attend this webinar to learn:

  • SB Profound WP 5539More than ever, there is a demand for IT to deliver innovation. Your IBM i has been an essential part of your business operations for years. However, your organization may struggle to maintain the current system and implement new projects. The thousands of customers we've worked with and surveyed state that expectations regarding the digital footprint and vision of the company are not aligned with the current IT environment.

  • SB HelpSystems ROBOT Generic IBM announced the E1080 servers using the latest Power10 processor in September 2021. The most powerful processor from IBM to date, Power10 is designed to handle the demands of doing business in today’s high-tech atmosphere, including running cloud applications, supporting big data, and managing AI workloads. But what does Power10 mean for your data center? In this recorded webinar, IBMers Dan Sundt and Dylan Boday join IBM Power Champion Tom Huntington for a discussion on why Power10 technology is the right strategic investment if you run IBM i, AIX, or Linux. In this action-packed hour, Tom will share trends from the IBM i and AIX user communities while Dan and Dylan dive into the tech specs for key hardware, including:

  • Magic MarkTRY the one package that solves all your document design and printing challenges on all your platforms. Produce bar code labels, electronic forms, ad hoc reports, and RFID tags – without programming! MarkMagic is the only document design and print solution that combines report writing, WYSIWYG label and forms design, and conditional printing in one integrated product. Make sure your data survives when catastrophe hits. Request your trial now!  Request Now.

  • SB HelpSystems ROBOT GenericForms of ransomware has been around for over 30 years, and with more and more organizations suffering attacks each year, it continues to endure. What has made ransomware such a durable threat and what is the best way to combat it? In order to prevent ransomware, organizations must first understand how it works.

  • SB HelpSystems ROBOT GenericIT security is a top priority for businesses around the world, but most IBM i pros don’t know where to begin—and most cybersecurity experts don’t know IBM i. In this session, Robin Tatam explores the business impact of lax IBM i security, the top vulnerabilities putting IBM i at risk, and the steps you can take to protect your organization. If you’re looking to avoid unexpected downtime or corrupted data, you don’t want to miss this session.

  • SB HelpSystems ROBOT GenericCan you trust all of your users all of the time? A typical end user receives 16 malicious emails each month, but only 17 percent of these phishing campaigns are reported to IT. Once an attack is underway, most organizations won’t discover the breach until six months later. A staggering amount of damage can occur in that time. Despite these risks, 93 percent of organizations are leaving their IBM i systems vulnerable to cybercrime. In this on-demand webinar, IBM i security experts Robin Tatam and Sandi Moore will reveal:

  • FORTRA Disaster protection is vital to every business. Yet, it often consists of patched together procedures that are prone to error. From automatic backups to data encryption to media management, Robot automates the routine (yet often complex) tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:

  • FORTRAManaging messages on your IBM i can be more than a full-time job if you have to do it manually. Messages need a response and resources must be monitored—often over multiple systems and across platforms. How can you be sure you won’t miss important system events? Automate your message center with the Robot Message Management Solution. Key features include:

  • FORTRAThe thought of printing, distributing, and storing iSeries reports manually may reduce you to tears. Paper and labor costs associated with report generation can spiral out of control. Mountains of paper threaten to swamp your files. Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing. Manage your reports with the Robot Report Management Solution. Key features include:

  • FORTRAFor over 30 years, Robot has been a leader in systems management for IBM i. With batch job creation and scheduling at its core, the Robot Job Scheduling Solution reduces the opportunity for human error and helps you maintain service levels, automating even the biggest, most complex runbooks. Manage your job schedule with the Robot Job Scheduling Solution. Key features include:

  • LANSA Business users want new applications now. Market and regulatory pressures require faster application updates and delivery into production. Your IBM i developers may be approaching retirement, and you see no sure way to fill their positions with experienced developers. In addition, you may be caught between maintaining your existing applications and the uncertainty of moving to something new.

  • LANSAWhen it comes to creating your business applications, there are hundreds of coding platforms and programming languages to choose from. These options range from very complex traditional programming languages to Low-Code platforms where sometimes no traditional coding experience is needed. Download our whitepaper, The Power of Writing Code in a Low-Code Solution, and:

  • LANSASupply Chain is becoming increasingly complex and unpredictable. From raw materials for manufacturing to food supply chains, the journey from source to production to delivery to consumers is marred with inefficiencies, manual processes, shortages, recalls, counterfeits, and scandals. In this webinar, we discuss how:

  • The MC Resource Centers bring you the widest selection of white papers, trial software, and on-demand webcasts for you to choose from. >> Review the list of White Papers, Trial Software or On-Demand Webcast at the MC Press Resource Center. >> Add the items to yru Cart and complet he checkout process and submit

  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: