Ellison: Partners Key to Merger Success

Oracle's outspoken CEO talks about customer support, and companies he wants to work with.

REDWOOD SHORES, Calif. -- Oracle CEO Larry Ellison said key partnerships will help make the acquisition of PeopleSoft a complete success.

During an event at its corporate headquarters here, the outspoken executive and his top executives introduced the newly merged company and discussed Oracle's product and global support plans for PeopleSoft and J.D. Edwards application software.

Oracle has committed itself to supporting the PeopleSoft Enterprise, JD Edwards EnterpriseOne and JD Edwards World product lines through at least 2013.

"Everyone loses customers," Ellison said during a press conference. "Oracle's [customer] retention rate is currently 95 percent and our 'worst case scenario' models show PeopleSoft's product retention rate is about 95 percent."

Ellison noted that major PeopleSoft customers such as General Motors and HP would more than likely keep their contracts in place. But he also said Oracle would prepare for worse case scenarios of 85 percent customer retention rates. If enough customers were to drop to such a rate, it would have triggered even more layoffs than the 5,000 that hit Oracle and PeopleSoft staff over the weekend, Ellison said.

He also said one of the biggest changes will be building Oracle's relationship with IBM and Accenture .

"The two largest players in the global services space are IBM Global Services and Accenture," Ellison said. "Though IBM has worked with us for a long time, they do a lot of implementations of Oracle and therefore our relationship becomes more important. We will also deepen our relationships with partners like Accenture."

Ellison said IBM and Accenture along with Oracle's channel partners and other global service providers have a unique opportunity to help sell three different product lines -- Oracle, PeopleSoft, JD Edwards -- all of which puts money in Oracle's pocket.

"The merger of PeopleSoft and JD Edwards is turning out to be a much more channel-operated company for us," Ellison said. "But ultimately, that means more channels selling Oracle."

So far, Oracle has reached out to more than 4,500 PeopleSoft and J.D. Edwards customers as a sign of support. Ellison said customers should be encouraged that Oracle is keeping 90 percent of the PeopleSoft development team and support services teams.

"The message is obviously to keep customers at all cost," Joshua Greenbaum, a principal analyst with Enterprise Applications Consulting, told internetnews.com. "What will be interesting to see now is how well they execute the contracts since everyone will have to review their contracts with Oracle."

Ellison also seemed unfazed by the magnitude of the task ahead for Oracle. Instead he cited the combined organization of Oracle and PeopleSoft consists of more than 6,000 support staff in 16 global support centers and more than 1,300 Oracle and PeopleSoft applications partners.

The partnerships are also important, said Ellison as Oracle readies itself to take on all comers in the enterprise application market including Microsoft and SAP .

"We're not that worried about Microsoft because its business services is aimed at the lower markets," Ellison said. "We're concerned with them in Europe more than in North America. They are not strong in manufacturing and they are not strong in HMRS."

Likewise, Ellison dismissed market leader SAP, who he noted is trying to build up its mid-market software based on its recently released NetWeaver software.

Ellison said Oracle has had success in U.S. in the mid-market against SAP, which has very good margins in Germany, Austria and Switzerland.

Additionally, to help disrupt the market, Ellison said that Oracle would publish PeopleSoft's previously hidden fee structures and either drop maintenance fees or at least keep them the same to lock in customers into their current contracts.

Ellison said Oracle would more than likely develop its own "software on demand" product in the same vein as Salesforce.com and NetSuite.

"If not a major portion of our future products, certainly it will be a huge portion of them," Ellison said.






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