Waiting game for users as ERP dust settles

The ERP market is seeing a major shake-up with Baan's takeover by SSA GT and PeopleSoft swallowing up JD Edwards, but how will...

The ERP market is seeing a major shake-up with Baan's takeover by SSA GT and PeopleSoft swallowing up JD Edwards, but how will users be affected?

The £1bn acquisition of JD Edwards by PeopleSoft and the absorption of Baan by SSA GT have brought about a massive shake-up in the ERP market place.

The merger of PeopleSoft and JD Edwards will push them, together, into the number two slot in the ERP top five giving it more than 11,000 customers in 150 countries. But the effect on users will take some time to emerge.

While PeopleSoft has said the merger will bring $80m (£49m) of savings a year, analysts have raised fears that the benefits to users could be some years away and that product and support rationalisation may negatively affect users' investment.

At the same time JD Edwards users are keeping a close eye on developments.

PeopleSoft is predominantly an enterprise supplier with a strong base in services and the financial sector. JD Edwards - with a greater presence in the mid-market and manufacturing - looks like it is the junior partner and the future of its product roadmap is now unclear.

UK users of JD Edwards products include Shell, BP, WS Atkins, Kimberly Clark, Energis, Calor Gas, Tupperware UK, BMW, Suzuki GB, Dexion and Aggregate Industries.

Graham Stirling, IT director of Miller Construction which uses JD Edwards software, said he will be keeping a sharp eye on the combined business. "It sounds like it could be good for both suppliers but will also be very complex with some rationalisation of both products. We track the fortunes of our tier-one suppliers as a matter of course.

"PeopleSoft does not have a presence in our sector so we feel there is not a risk there for our investment," Stirling said.

"With the deal going through in the final quarter this year, we will be looking for an impact in mid-2004: the possible rationalisation of sales forces and other operational efficiencies. We'll be happy as long there's no impact on the investment we've made."

An IT director at an industrial company which recently went through a "painful" implementation of JD Edwards modules, said he hoped that there would no effect on his investment. "To be honest it is likely both companies will take their eye off the marketplace for a while and at some point go through a process of product rationalisation. That's when I would worry.

"I will be keeping an eye on future support and looking for roadmaps of its intentions.

"We finished an implementation this year and it was not a nice one. Having gone through that pain we want to ensure we don't have more to endure too soon."

What the analysts think of the JD Edwards sale       

Julian Hewett, principal analyst at Ovum, said migrating the two products to a common platform would take years, and may never be worth the misery. So "the benefit to customers of the two product suites being under one roof will be limited".  

"Users need to be sure the JD Edwards products will evolve in the way they have when JD Edwards was independent," he said. And PeopleSoft users might need reassuring that the enterprise strengths of the company will not be diluted as it focuses on the mid-market. 

Gartner analysts Lee Geishecker and Jeff Comport are confident PeopleSoft would support JD Edwards AS/400 users until at least mid-2007 since it recognised the value of the JD Edwards AS/400 customer base.  

They warned that product rationalisation is likely to cause some evolution and displacement of products, strategies, technology and people.  

In particular both PeopleSoft and JD Edwards have their own CRM packages. Last year PeopleSoft acquired CRM supplier Vantive and JD Edwards bought Youcentric. Gartner believes users are unlikely to feel an impact from this acquisition until at least mid-2004.

Read more on Business applications