The battle for Retek

Oracle's purchase is a sign of things to come in the ERP world

Retek, the target of the recent takeover tussle between Oracle and SAP, has few customers in New Zealand, but it does have a significant local connection — an expat New Zealander, John Buchanan, served as its chairman and chief executive for several years, from the late 1990s to 2001.

Considering the influence Buchanan has had on Retek, the lack of local users is a bit ironic, but while Retek doesn't have a large customer base here, SAP and Oracle certainly do and their struggle over Retek is a sign of things to come in the business applications space.

Oracle's buy of Retek for $US630 million (NZ$860 million) comes after an initial deal between SAP and Retek, which was followed by a higher bid from Oracle; then SAP upped the ante, to which Oracle responded with an even higher bid. Each offer involved a progressively greater premium on Retek's share price.

The fact that SAP and Oracle were prepared to dig down into their deep pockets and pay way above Retek's share price indicates how badly each wants to dominate the ERP scene.

SAP may have missed out on Retek — or, as it said in a statement, "exercised financial discipline" and dropped out of the bidding — but Retek isn't the only attempted acquisition it's made: in January it bought TomorrowNow, a third-party support provider for PeopleSoft and legacy JD Edwards customers.

At the time, SAP also announced a "Safe Passage" programme for PeopleSoft and JD Edwards users who want to switch to SAP.

Safe Passage involves giving these users access to NetWeaver, SAP's integration middleware platform, which, according to SAP, "includes connectors for JDE and PeopleSoft solutions".

There's also an offer of "substantial recognition for the value of PeopleSoft and JDE licences" — that is, a discount on the mySAP package being touted as a replacement.

SAP has identified 2,000 companies around the world which have substantial SAP systems and also run PeopleSoft and JDE apps. These organisations are no doubt getting plenty of calls from their SAP account managers at the moment, extolling the benefits of NetWeaver and going all-SAP. But how many are likely to take the SAP path remains to be seen.

Oracle has conceded it may lose a few customers to SAP. While visiting Australia earlier this month, Oracle's chairman, Jeff Henley, said: "We think we will lose some customers — customers that are very heavy SAP shops but [use PeopleSoft] for HR would be the likely cases where we would see some movement."

However, it's hard to see a mass migration, even by users with mainly SAP shops, as even one PeopleSoft or JDE system is a big investment. Boards and chief financial officers are unlikely to give the go-ahead to a rip-and-replace on the basis of, "Well, we don't like what Larry Ellison is doing."

SAP isn't the only vendor going after PeopleSoft and JDE customers. Microsoft has also offered incentives, in the form of discounts on its Axapta, Navision and Great Plains products, and also offers "migration planning guides to help customers evaluate applications and platforms".

Like SAP, Microsoft may snare a few converts, but it's hard to see a stampede of ex-PeopleSoft customers running into Redmond's arms.

New Zealand, with its preponderance of small companies, may be more fertile ground for Microsoft conversions, and there are precedents for a move away from other vendors to Microsoft, with Meridian Energy switching some of its PeopleSoft systems to Navision last year.

However, the majority of legacy PeopleSoft and JDE customers that Oracle has acquired are likely to stay with Oracle and participate in the ambitious undertaking that is Oracle's Project Fusion — the merging of the best of Oracle, PeopleSoft and JDE.

But don't expect too many greenfields sales of PeopleSoft and JDE between now and then: Oracle salespeople have been ordered to sell Oracle products rather than those Oracle acquired in December.

Watson is a Computerworld reporter. Contact him at david_watson@computerworld.co.nz

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