What to expect from two ERP leaders.
Comparing PeopleSoft to SAP might be like assessing two prize fighters from different weight classes, with SAP, the Walldorf Warrior, weighing in at more than three times the revenue of the Pleasanton Pugilist.
Nonetheless, we recently sat down with the executive teams from both companies at their respective user conferences: Sapphire on 11-13 May, and the PeopleSoft Leadership Forum on 18-19 May.
Last year, both companies pledged to reduce the total cost of ownership for their customers. PeopleSoft went one step further by branding its efforts as the total ownership experience.
The chief executives of both companies proudly proclaimed the success of their programmes during their opening keynotes. PeopleSoft went into a bit more detail on the results achieved through customer case studies and testimonials.
The service-orientated future
SAP chief executive Henning Kagermann used the last part of his keynote to outline a three-year roadmap to fulfil the promise of the enterprise services architecture (ESA).
This has been described as the convergence of the Netweaver technology platform with a new application platform currently being designed as part of "Project Vienna".
SAP was very vague in terms of the timing of actual deliverables and the benefits of ESA. The architecture was described as consisting of multiple layers, including composite business scenarios, components and an enterprise services platform. Intriguing, yes; detailed, no.
Meanwhile, Rick Bergquist, PeopleSoft's chief technology officer, outlined a similar vision but without the branding. He also described his company's version of Netweaver, but without drawing a comparison with SAP's technology stack.
Bergquist divided the world into the service-orientated architecture (SOA), which provides the services, and the composites that consume these services. The composites consist of process integration, analytics, portal access, unstructured content, collaboration and multi-channel.
He used Amazon as an example. Ordering a book is only 5% of the customer experience and can be handled by an enterprise resource planning (ERP) system. Based on the customer's preferences or selections, Amazon recommends other products that site visitors with similar interests have purchased.
No ERP system can manage the other 95% of the experience, hence the need for composite applications. Bergquist also noted that PeopleSoft has been delivering composite applications since March 2002, with the release of enterprise service automation (the industry's other ESA, as he pointed out). This was followed by the December 2002 release of PeopleSoft CRM 8.8 and the December 2003 release of PeopleSoft SRM 8.8.
Core competency trends
AMR Research has recently noted that SAP appeared to be gaining momentum in the non-manufacturing verticals, particularly in public services, banking and insurance, and that the supplier was determined to become a factor in retail via a new partnership with IBM. PeopleSoft took the opposite approach by stressing its new initiative for "demand-driven manufacturing".
This consists of lean procurement, demand flow manufacturing, support for radio frequency identification (RFID), buyer workspace, demand schedule execution, configurable order promising and advanced forecast modelling.
Do not misread this as PeopleSoft moving away from the services sector, as that has been the company's strongest customer base. After the conference, PeopleSoft hosted a series of industry strategy councils for markets such as healthcare, higher education and government.
Although many manufacturers use PeopleSoft's financial and human capital management applications, only a handful deploy its manufacturing applications. One of the reasons for last year's purchase of JD Edwards was to get access to thousands of manufacturing customers.
SAP has the current advantage in that it is the non-manufacturing verticals that are spending money again. PeopleSoft hopes to stimulate manufacturers through a series of roadshows.
Shoot-out at the SME corral
Both companies are extolling the virtues of their products for small and medium-sized enterprises. A few weeks ago, PeopleSoft and IBM unveiled PeopleSoft World Express, a bundle of PeopleSoft applications and IBM hardware and software targeted at companies with revenue less than £55m; the goal being to have a nearly shrink-wrapped product priced below £55,000. PeopleSoft and IBM also unveiled other joint initiatives, including plans to pursue tier 2 and tier 3 automotive suppliers.
Prior to the JD Edwards acquisition, the SME market represented about a quarter of PeopleSoft's revenues; now that figure is a third. PeopleSoft thinks this segment could account for half of its business.
Dealing with distractions
One advantage that SAP has is that it has not had to deal with a hostile takeover bid from a larger competitor while enduring the stress of acquiring a company half its size.
Funding the ongoing legal fight against Oracle has diverted some cash that may have gone to employee compensation. Likewise, the absorption of JD Edwards' personnel into the PeopleSoft culture has proven a bit more difficult than planned. Ideally, both sets of distractions will be resolved in the next six months.
Bruce Richardson us senior vice-president at AMR Research
What to expect from two ERP leaders.