Thursday, June 20, 2024

PeopleSoft Users on the Fence: Report

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Companies that run PeopleSoft software are doing some serious
soul-searching these days, according to a report due this week from
Yankee Group.

The IT analyst group found 46 percent of the 193 PeopleSoft customers
(including JD Edwards users) surveyed are leaning toward swapping out
their current software applications, with 31 percent remaining
undecided. The report also found that a primary concern for many customers is service level agreements (SLAs), rather than product
functionality. Yankee Group did its survey in December and January,
before Oracle officially launched the January 18 merger.

At first glance, the report sounds like great news for Oracle rivals
SAP, Siebel and Microsoft . However, Yankee Group analyst and report author Philip
Fersht said when researchers actually look at preferred alternative
enterprise resource planning (ERP) products, Oracle is the number-one

“Oracle needs to operate a solid defensive strategy, and it can
prevail successfully against aggressive competition from SAP, Siebel,
Microsoft and others,” Fersht said in a statement. “Common trends after
a merger of this nature tend to show customers should become less likely
to switch their products as time progresses… We subsequently expect
the number of ‘undecided’ customers to revert to remaining with
PeopleSoft for the short-to-medium term.”

Oracle’s roadmap for PeopleSoft and JD Edwards is clear. The database
software vendor, now the world’s second-largest business-software
maker, said it plans to continue to build and support
PeopleSoft and J. D. Edwards major product lines until at least 2013.
Oracle said it will distribute PeopleSoft Enterprise version 8.9 in 2005
and version 9.0 in 2006. The company is set to update its Java-based
integration product called Project Fusion in the next few months.

“In most cases my clients are telling me that they will stay with the
most current version of PeopleSoft and will not migrate to another application just because Oracle has bought
PeopleSoft,” Derek Tomei, CEO of DMT Solutions, told DMT runs support sites
like, and “They feel they have invested too much time and
money to get their application to where it is today, and they would
rather just maintain what they have going forward.”

One golden nugget Yankee Group said it found in the merger has been
Oracle’s acquisition of 70 percent of the Fortune 1000’s human resource
Platforms; government contracts are another plus. Yankee’s survey found
this is the least likely area to suffer imminent upheaval, with only 17
percent of users declaring a strong likelihood to convert and almost 50
percent showing minor indecision.

“Organizations will not uproot their HR software unless there is
immense dissatisfaction with service levels, and Oracle will have to
make a complete mess of what is a gold-standard operation to suffer
major losses,” Fersht said.

SAP may have a window of opportunity in fighting PeopleSoft in the HR
area, especially if companies are looking at HR platforms within
outsourcing contracts. Fersht points out that SAP’s partnership with ADP
puts the German outfit in a strong position
internationally. SAP may already be taking advantage of
this weakness in Oracle’s armor, as it announced its intentions to
acquire retail software specialist Retek for $496
million Monday.

“With growing market trends toward the outsourcing of core business
services like HR, Finance and Accounting and Supply Chain, Oracle and
SAP need to focus heavily on securing stronger partnerships to push
future product,” Fersht said. “Companies like HP and IBM will need
appeasing in the BPO [Business Process Outsourcing] and services
domains. Moreover, if EDS can rebound its market position, its reliance
on SAP will come into question.”

When it comes to retaining satisfied PeopleSoft CRM
users, the Yankee Group survey reveals 23 percent are very unlikely to
replace PeopleSoft CRM, 17 percent are very likely and 30 percent are
somewhat likely to replace PeopleSoft now that Oracle has taken the

Another side effect of the merger, according to Fersht, is that
Oracle and IBM may be indicating that they want to start working
together more closely. The analyst’s point is that Oracle could clearly
benefit from developing closer ties with IBM as it works on fusing its
applications and middleware offerings.

“If the two companies continue to attack each other with offerings
that are not complimentary to enterprises, then this will further play
into the hands of competitors, most notably SAP, Microsoft, Lawson and
BEA,” Fersht said.

The most positive news for customers is that Oracle is evaluating
PeopleSoft’s cryptic pricing model. Oracle is considering offering a
pricing model based on a per-named-user basis, with published pricing
and licensing details on its Web site, Fersht said. PeopleSoft currently
does not publish prices for its products. Instead, PeopleSoft uses
value pricing based on esoteric variables such as annual revenue,
industry and number of employees.

“Depending on the prospect, prices could drop,” Fersht said.

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Similar articles

Get the Free Newsletter!

Subscribe to Data Insider for top news, trends & analysis

Latest Articles