People power pushes client/server

PeopleSoft’s President and CEO Dave Duffield is a happy man. In the world of IT, giants are supposed to be killed by nimble newcomers who topple them with technology, rather than outsmarting them through slick service.

Much to the chagrin of SAP and Oracle, PeopleSoft – a company that didn’t exist until 1987 – is rapidly earning a reputation as a very effective giant-killer. Compared to SAP and Oracle’s sales revenues – $1,887m and $3,777m respectively – PeopleSoft’s 1995 sales of $235m are small beer.

But while SAP and Oracle’s growth rates are more pedestrian, PeopleSoft has been growing at 100% per year – resulting in it being listed by Fortune magazine as one of the fastest growing companies in the US. Duffield pulls no punches in explaining why he’s prospering at SAP and Oracle’s expense. ‘People buy our software because they feel that they’ll be able to adapt to change better than if they had bought from Oracle or SAP.’ In the US, the company’s 600 or so corporate customers include 25% of the Fortune 500.

In the UK, where the company formally arrived in 1994, customers include such heavyweight names as Abbey National, Christian Salvesen, KPMG and the Department of Transport.

While Duffield is quick to acknowledge the importance that functionality and other product-based features play in the company’s success, he insists that it is PeopleSoft’s corporate culture and service-oriented attitude that makes the difference. ‘Service is traditionally poor in the application-software business: for us, service is a strategic differentiator,’ he says.

So is the approach taken to product development. Every year, each corporate user is given a number of votes – known as PeopleDollars – according to the number of software licences that they possess. (Companies such as AT&T, Hewlett-Packard and Siemens have standardised on PeopleSoft globally, and have multiple licenses.) Priorities for proposed enhancements are based on the PeopleDollar votes that each enhancement receives.

Customer support and field sales personnel have a similar voting arrangement, and the results are then combined and ranked to construct the development programme. This kind of reactive and customer-sensitive approach is typical of the way in which Duffield is steering the company.

When setting up PeopleSoft, he vowed the company would avoid all the mistakes he’d seen in other companies.

‘Too many companies have too many people that have lost sight of the mission,’ he says, recalling bitter internal battles and corporate politicking.

‘We didn’t want fiefdoms to get in the way of serving customers.’

As a result, there are no secretaries, the organisation is ‘extremely flat’, and dress is casual. Duffield answers his own telephone and e-mail, and tries hard to lead from the front. Traditionally a one-person, one-office company, growth has forced it to acknowledge the inevitability of workplace cubicles – and Duffield is moving into the first one himself.

The company’s beginnings lie in the observation by Duffield and co-founder Ken Morris that client/server software looked like being the way to go – along with graphical user interfaces. If that seems blindingly obvious today, it wasn’t so clear-cut at the time.

Duffield’s colleagues in his previous company certainly didn’t share his vision, and so he left to set up PeopleSoft.

Aiming at a niche market in Windows-based client/server enterprise applications was one thing, finding the right application was quite another. In the end, risk minimisation won out: ‘Human resource software was what I knew, so that was where we started,’ says Duffield.

Accordingly, PeopleSoft was the first vendor to develop and deliver a client/server human resource application, bringing it to market in 1989.

Subsequently, the company has developed and marketed a range of integrated applications alongside this, which now includes modules for the accounting, manufacturing and distribution functions. ‘We were also the first into the market with a suite of client/server financial products,’ adds Duffield.

With a growing range, PeopleSoft’s competitors began to shift from being vendors of other human resource applications – generally in the traditional mainframe market – to more broadly based SAP and Oracle.

In keeping with this, the product range’s platform capability expanded, and now supports most major relational databases: DB2, Informix, Oracle, SQLBase, SQLServer and Sybase. The platform range has also expanded, and now includes IBM mainframes running MVS, Digital VAX/VMS, all the major Unix platforms and various PC networks – Microsoft LAN Manager, Novell NetWare and OS/2.

Technically, PeopleSoft’s positioning against SAP and Oracle is reasonably straightforward. SAP has moved into client/server relatively late – R/3 was launched in 1993; mainframe-based R/2 is still a major offering – and PeopleSoft sees the typical SAP user as ‘a company that prefers a “big bang” approach to computing, anticipating a major technology overhaul once every 10 to 15 years’.

Oracle, on the other hand, ‘would be suitable for organisations that have already invested in Oracle’s database technology, and may not plan to integrate software from other vendors’.

All of which is just fine with Duffield, who claims to regularly see cynical corporate IT managers dazzled by PeopleSoft’s commitment to ‘positively outrageous customer service’ and the company’s zany marketing.

‘If I hear that a customer has difficulties with our product, then I worry,’ says Duffield. Consequently, he explains, employees are empowered ‘to sort out the problem first and ask later’.

Nor, it seems, is this mere hyperbole: what office wall space is not given over to photographs of employees contains gushing letters of thanks from customers. If all this sounds too cosy, Duffield soon makes it clear that the company isn’t run in this way because of some deep-seated belief in industrial democracy. Instead, it is based on the bottom line. ‘It’s not important for a company like Microsoft to be like us, because they don’t have to be as close to their customers,’ he says. Microsoft feels employees ‘are expendable’, he adds – ‘as does Oracle’. ‘A company takes on the personality of its founder and CEO,’ he adds. ‘Larry Ellison (CEO of Oracle) isn’t a nice guy – but he’s very smart and so the company is successful.’

Applauded both for being a nice guy and a successful one, Duffield would seem to be sitting pretty. But should the company’s growth rate falter, he may yet find that being nice is not enough.

Malcolm Wheatley is a freelance journalist.