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Charles  Babcock, InformationWeek
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Oracle’s Customer Crusade

Company outlines ambitious program to develop a suite of merged software.

The struggle for the hearts, minds and business of PeopleSoft's vast installed base of customers is on.

Oracle, which acquired PeopleSoft earlier this month after a bitter 18-month takeover fight, last week outlined its Project Fusion to develop a suite of merged Oracle, PeopleSoft and J.D. Edwards software while continuing to develop and support those applications separately.

When Oracle CEO Larry Ellison debuted the blueprint for merging Oracle and PeopleSoft last week, he set as his top priority a target of retaining as much as 95 percent of PeopleSoft's customer base. That means getting to work right away on the software needed to keep them. "My biggest focus will be on Project Fusion [and] getting the teams together to build the next generation of enterprise apps in a way that's never been done before," Ellison said.

Oracle president Charles Phillips, in an interview with InformationWeek two days after the event, said Oracle is on a "mission" to address the concerns of PeopleSoft customers, which range from product obsolescence to price increases. It should feel like "business as usual" for users of PeopleSoft applications, Phillips said. Customers "don't have to wonder what's going on," he said. "If they have any doubts as to where things stand or if you have any questions, call us."

It doesn't feel like business as usual for business-technology executives like Rick Davidson, the global CIO for Manpower Inc., which is ready to buy a customer-relationship-management system. With a major investment in PeopleSoft financial, human-resources and service-procurement applications, PeopleSoft CRM was the clear choice. Today, he has a lot more issues to consider. "Now who do I buy it from? It's caused me to pause," Davidson says.

Oracle's rivals are doing everything they can to squeeze into those openings. One day after Oracle revealed its integration strategy, SAP, the market-share leader in the enterprise applications market, unveiled its own plan to convert PeopleSoft owners into SAP customers, including the acquisition of TomorrowNow Inc., a supplier of support services for PeopleSoft apps. Microsoft also is targeting midsize PeopleSoft customers with offers of discounts on its Great Plains and Navision applications. Oracle has moved quickly to integrate PeopleSoft's operations with its own since completing the acquisition Jan. 7. Oracle is laying off 5,000 workers -- most of them from PeopleSoft -- bringing its total employee roster to about 50,000.

Of greatest interest to IT managers are Oracle's aggressive product-development road map and the customer-support plans it laid out last week. Short term, people will judge Oracle on its support, which will depend heavily on its ability to keep PeopleSoft technical and support employees, Davidson says.

Manpower is in the midst of implementing PeopleSoft's services-procurement module and extending other PeopleSoft applications worldwide. "We have active projects around the world to convert to PeopleSoft, and we can't afford a hiccup in the services," Davidson says. In an InformationWeek Research survey of Oracle and PeopleSoft customers in December, service and support was cited more than any other factor as the one thing Oracle must get right for the acquisition to succeed.

Oracle has vowed to support PeopleSoft and J.D. Edwards applications (acquired by PeopleSoft in 2003) through 2013. The combined Oracle-PeopleSoft support staff will number 6,000 worldwide, with 1,000 coming from PeopleSoft. Oracle will operate 16 support centers; PeopleSoft had six.

"If they live up to their commitments, we'll be fine," says Carl Greene, executive director of the Philadelphia Housing Authority, which operates on a full complement of PeopleSoft financial, human-resources, and CRM software. Oracle's promises of support through 2013 means the housing agency will be able to recoup its investment in those applications, he says. If Oracle stumbles, the agency can turn to third-party service providers or move support in-house. John Wookey, an Oracle senior VP, will lead an application strategy team to align future releases of PeopleSoft Enterprise, J.D. Edwards EnterpriseOne and World, and Oracle's E-Business Suite on a common platform. Under the Project Fusion road map, Oracle will develop a single set of applications to replace current Oracle, PeopleSoft, and J.D. Edwards software. Individual applications from Project Fusion will be available starting in 2007, with a complete suite promised by 2008.

"We're trying to combine the functionality and the ideas, [but] we're not meshing actual code together," Phillips said. "We're looking at all the assets we have across all the products and saying, 'These are good ideas. Let's make sure these ideas show up in the Fusion products.'"

While Fusion is in the works, Oracle will continue developing the next releases of PeopleSoft and J.D. Edwards software, PeopleSoft Enterprise 9.0 and J.D. Edwards 8.12, for release next year. Development of version 12 of Oracle's E-Business Suite also will continue for a 2006 release.

Oracle's commitment to support older versions of J.D. Edwards' applications is an "olive branch" to J.D. Edwards customers, says Robert Robinson, business system supervisor at manufacturing equipment maker Durr Industries Inc. and VP of the Big 10 Users Group, a PeopleSoft and J.D. Edwards user group. However, SAP's moves intrigue Robinson, given that Durr Industries' German parent uses SAP and has urged its U.S. subsidiary to consider converting. "We have a lot to consider," Robinson says. "I'm in a quandary. It's like watching a game of chess between two grand masters." The TomorrowNow acquisition increases SAP's appeal, he adds.

Oracle faces the complexity of maintaining Oracle, PeopleSoft, and J.D. Edwards code bases while developing Fusion architecture, Wachovia Securities analyst Kash Rangan says. SAP already has begun its Project Vienna, targeted for 2007 to 2008, which also is expected to fully support a services-oriented architecture. "SAP has a two- to three-year headstart in the race to deliver the next-generation application suite," Rangan wrote in a report last week.

Oracle's moves could strengthen its relationship with IBM, particularly with its Global Services division, which implements Oracle and PeopleSoft apps.

Oracle sells its own infrastructure software, including its application server and database, the default underlying technology for all of its applications. But the company will continue certifying application compatibility with other leading platforms such as IBM's WebSphere, Phillips said. "I think the worry over vendor lock-in is overblown compared to the worry about the cost of integration," he said.

PeopleSoft had a lot of loyal customers like Manpower and the Philadelphia Housing Authority, and Oracle has its work cut out to keep them in the Oracle fold and convince them to migrate to Fusion when it's ready. Says the housing authority's Greene, "To get us to leave the PeopleSoft platform, Oracle is going to have to offer us something better."

Continue to the sidebar:

Safe Passage: SAP Aims To Sway PeopleSoft Users

Continue to the stories:

Oracle Aims To Reassure PeopleSoft Users

and The Man On The Hot Seat For Oracle-PeopleSoft

Article courtesy of InformationWeek, Jan. 24, 2005

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