Commentary: Congrats, Larry

By Larry Dignan  |  Posted 2004-12-13 Email Print this article Print

Now Oracle gets what it really wanted—PeopleSoft's 12,500 customers and the support and maintenance revenue they represent. But the fun is really just beginning. PeopleSoft customers are a wary bunch.

Congratulations, Larry Ellison. You finally got your prize in PeopleSoft. And it only took you 553 days and $10.3 billion. Consider it an early Christmas for Oracle.

The PeopleSoft takeover saga became a foregone conclusion over the weekend, when the prey finally caved. After all, PeopleSoft's arguments—antitrust regulators won't approve it, the price tag wasn't high enough, and we just don't like Oracle—fell away gradually. Especially when you raised the bid to $26.50 a share, from $24.

Now Oracle gets what it really wanted—PeopleSoft's 12,500 customers and the support and maintenance revenue they represent. But the fun is really just beginning. PeopleSoft customers are a wary bunch, and many are making alternative plans just to be safe. Among the customers you will need to win over:

  • David Smith, chief executive officer of PSS World Medical, who installed J.D. Edwards enterprise planning software four years ago at the Jacksonville-based medical products distributor. Since PeopleSoft bought J.D. Edwards, service has improved, according to Smith; PeopleSoft was just more responsive. Now that Oracle has PeopleSoft in the loop, however, he doesn't want the software his company depends on to become an afterthought. "I'm afraid," Smith says.

    Why the worry? Maybe it was the June 2003 press release from Oracle blasting PeopleSoft's J.D. Edwards acquisition as a tactic just to fend off Ellison & Co.

  • Arnold Testa, chief information officer of the Electric Power Research Institute, a nonprofit center for public-interest energy and environmental research. His firm has standardized on PeopleSoft software, and Testa says an Oracle takeover could be a disaster. Why? He doesn't want another implementation to suck up time and costs, and he has IBM as his database provider. No matter how Testa slices the deal, it's likely to be more work for him.

  • John Moon, chief information officer at pharmaceutical company Baxter International, whose company is both a PeopleSoft and J.D. Edwards customer. When asked about a potential Oracle takeover at SIMposium Chicago in September, Moon said he was formulating undisclosed plans to deal with the event.

  • John Webster, PeopleSoft programs director at Dakota State University in Madison, S.D. "Had Larry Ellison made a different case, it might be different. But his first approach to [PeopleSoft] obviously scared me. And first impressions are what counts," Webster said at PeopleSoft Connect in September.

    Oracle will have to win that foursome over, and thousands of other technology executives (read: Oracle customers-to-be) with the same concerns.

    Rest assured, these executives are plotting their next move, pondering switches to rivals such as SAP and anxiously awaiting phone calls from their Oracle and PeopleSoft contacts. Maybe you can keep them happy initially, but you'll have to work hard to migrate them to Oracle applications and upgrade accordingly. Their technology road maps will be amended starting today to include escape hatches and possible jumps to other suppliers. Your job: Keep them happy or they'll leave.

    You wouldn't want to waste $10.3 billion.


    Business Editor
    Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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