Oracle's PeopleSoft bid spells trouble for users

PeopleSoft chief executive officer Craig Conway has called Oracle's $5.1bn offer for his company "atrociously bad behaviour from...

PeopleSoft chief executive officer Craig Conway has called Oracle's $5.1bn offer for his company "atrociously bad behaviour from a company with a history of atrociously bad behaviour".

Industry analysts, while using less dramatic language, are almost universally agreed that if the bid goes through, PeopleSoft users will be in for a rough transition.

Gartner analyst Ted Kempf said a merger would be bad for PeopleSoft's customers.

"I don't think [Oracle is] interested in developing the products. They just want the support revenue. If you're a diehard PeopleSoft client, you'd have to migrate to Oracle or something else."

A Gartner First Take paper on the merger warned PeopleSoft users that "recently decided to upgrade to version 8 should reconsider since Oracle will likely provide only minimal enhancements to version 8".

Analyst group Ovum was quick to warn PeopleSoft users that have not yet upgraded to version 8 to "do nothing until the dust settles".

"Oracle's offer to extend the maintenance period on PeopleSoft 7 beyond the year-end deadline offered by PeopleSoft itself gives them a welcome breathing space to examine their options.

"Obviously it would not make sense to upgrade to PeopleSoft 8 if the merger succeeds, but it would not be obvious for these [or PeopleSoft 8 users] to migrate to Oracle eBusiness."

According to Forrester analyst Laurie Orlov, PeopleSoft customers would face a forced migration if the Oracle bid succeeds. "Larry Ellison was clear that the move was about acquiring a new customer base for Oracle's E-business Suite," she wrote.

"He announced they intent to assign PeopleSoft top developers to creating migration tools and inserting PeopleSoft features into Oracle E-Business Suite."

Orlov warned that PeopleSoft customers would pay heavily for the process. "Oracle will need to fund all of the R&D required to migrate the PeopleSoft base to the Oracle suite - and the best funding source will be maintenance revenues. Customers will be given little choice but to pay, given a shrinking pool of enterprise app vendors."

IDC analyst Albert Pang thought Oracle would be sensitive to the needs of PeopleSoft's customers. "They're not going to abandon more than 4,000 of these blue-chip customers," he said.

Oracle chief financial officer Jeff Henley was at pains to reassure PeopleSoft users. "We would support the PeopleSoft development for a long period of time," he said. "We'll work to incorporate some of their features into our products, so that as customers migrate to our products over the years, they would have everything there, plus more, in the Oracle product."

The president of the US-based Oracle Applications Users Group also backed the deal.

"Oracle's offer to purchase PeopleSoft would have a positive long-term impact on Oracle applications users," said Arthur Hunt, through a spokesman. "We would expect the purchase to expand Oracle's ability to produce new applications (and) improve existing ones."

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