BusinessCompany NewsPeopleSoft customers will lose out

PeopleSoft customers will lose out

Oracle's proposed $5.1bn (£3.1bn) all-cash acquisition of human resources giant PeopleSoft will create market 'chaos' and play into the hands of German rival SAP, according to industry experts.

The biggest losers from the drama will undoubtedly be PeopleSoft customers, especially those who have moved to the newly released PeopleSoft 8. Oracle proposes to discontinue the PeopleSoft product, although support and maintenance will be continued.

‘If I was a PeopleSoft 8 user, I would be furious,’ said Keith Rodgers, director of industry analyst Webster Buchanan, before describing the debacle as a ‘messy drama’.

One such PeopleSoft customer is computer hardware giant HP. It uses PeopleSoft 8 to communicate with 145,000 employees across 160 countries. Any serious disruption to support could lead it to consider alternative technologies, such as SAP.

Craig Conway, president and chief executive of PeopleSoft, came out fighting last week when he accused Oracle CEO Larry Ellison of ‘atrociously bad behaviour’. He said: ‘It is a transparent attempt to disrupt the acquisition of J D Edwards.’

Market-watcher AMR Research agreed with Conway and issued a statement saying as much. ‘Scepticism is warranted,’ it read. ‘It’s a deal that has all the signs of a political move designed to derail PeopleSoft’s plans to buy J D Edwards.’

However, a more likely motive behind Oracle’s bid is to protect its database cash cow. The decline in its applications market means it is losing the power to persuade customers to stick with or migrate to Oracle server and database platforms over IBM.

If PeopleSoft is successful in its acquisition of J D Edwards, the combined group would have greater leverage than Oracle, with more than $2.8bn (£1.7bn) in revenue.

Industry analyst Gartner believes that both PeopleSoft and J D Edwards will be hurt by the publicity surrounding the offer, even if it is rejected.

Gartner is advising prospective customers to wait for firm news before signing fresh contracts.

‘Oracle will have a lot of work to do to persuade PeopleSoft users to stick around after the dust settles, particularly after showing them so much disdain during the bid,’ said John Bermudez of AMR Research.

Smaller suppliers may also benefit from the saga. Jeremy Roche, CEO of financial software company CODA, said the acquisition would cause ‘chaos’ and play into his hands. ‘It leaves us very thankful and creates opportunities,’ he said.

Webster Buchanan’s Keith Rodgers added: ‘SAP probably thinks Christmas has come early.’

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