Sagas, scandals and even some software

2004 In Review: Enterprise Software

Just as it dominated the second half of last year, Oracle's attempted takeover of PeopleSoft was the number one newsmaker in the enterprise software space this year.

The ongoing saga has generated a huge amount of interest and speculation, but the most important event relating to it was the decision by Judge Vaughan Walker in the US to give Oracle permission to go after PeopleSoft. The US Justice Department went to court in an attempt to block Oracle, alleging that if the merger went ahead, it would reduce competition in the market for HR and financials systems among big organisations.

The judge didn't buy the department's arguments and, in a 160-page decision, gave Oracle the green light.

European regulatory authorities followed suit and Oracle got another boost when it achieved a 61% response to a $US24 share tender that it touted as its final offer.

Oracle had vowed that if it received less than a 50% response, it would end its bid.

In what could also be seen as a positive for Oracle, the number-one opponent of its bid, former PeopleSoft chief executive Craig Conway, was fired at the beginning of October. However, his replacement, Dave Duffield, also pledged not to accept Oracle's final bid.

The takeover bid is still up in the air, pending decisions by another US judge, Leo Strine of the Delaware Chancery Court, who is presiding over a lawsuit by Oracle seeking to remove the "poison pill" provision in PeopleSoft's constitution that would see PeopleSoft's shares split and diluted if a hostile bid was made.

Strine is also to rule on a suit by some PeopleSoft shareholders alleging that a customer assurance programme put in place by PeopleSoft after Oracle's bid was announced is an unfair barrier to a possible takeover.

Last month, Strine rejected a proposed settlement of the suit, meaning it and the poison pill suit are unlikely to be ruled on before next year.

The saga may not reach a conclusion until PeopleSoft's next shareholder meeting, scheduled for some time between March and May, when shareholders may vote in board members more amenable to a takeover. Oracle has already nominated some candidates for the board.

The takeover bid stole the lion's share of media coverage of PeopleSoft and Oracle, but both companies continued to release new products and updated versions. Oracle pushed its 10g grid-based database, which is achieving uptake on RedHat Linux. The NZX was one of New Zealand's first customers of that package.

PeopleSoft continued integrating the former JD Edwards product line into its offerings, but PeopleSoft's Ram Gupta, who had been in charge of the integration, left the company shortly after Conway was fired.

The integration path has been endorsed by some former JD Edwards customers, but others remain undecided on its merits and some say they're noticing the difference in culture between the two companies, with PeopleSoft more sales-oriented.

The integration caused controversy when PeopleSoft decided not to support the Quest JD Edwards user conference, preferring to put resources into its own Connect user event. Quest continues to run without PeopleSoft's input, but for how long remains uncertain.

Another major event in the world of business applications was the accounting scandal that engulfed Computer Associates.

A US government probe revealed that CA had operated a "35-day month" scheme in which revenue continued to be booked after the end of certain months so as to boost quarterly sales figures.

Several former executives pleaded guilty in April to securities fraud and conspiracy charges, but the scale of the alleged fraud went all the way to the top in September when former CA chief executive Sanjay Kumar was charged with securities fraud conspiracy and obstruction of justice.

Also facing charges was New Zealand-born former CA global sales head Stephen Richards, who, along with Kumar, pleaded not guilty. The case is ongoing.

Kumar had already left CA by the time the case reached course, having resigned as chief executive in April and, following a brief stint as CA's chief software architect, left the company altogether in June.

Kenneth Cron was appointed interim chief executive and was recently replaced by former IBM software sales head John Swainson.

There was some suggestion CA's 2005 CA World user conference wouldn't go ahead, but Swainson has confirmed it will.

Meanwhile, CA continued to develop products and make acquisitions, an example of the latter being its $US430 million buy in October of Netegrity, whose products it will integrate into its eTrust identity and access management product set.

CA also revamped its storage management product line into BrightStor version 11.1, a more integrated set than the previous offerings of point products.

Microsoft continued to make inroads into the enterprise software space, upgrading its Great Plains product and releasing Microsoft CRM in New Zealand, which was released earlier in the US.

Microsoft CRM is the first business application to be built from scratch by Microsoft, as opposed to being acquired — like its Great Plains, Navision and Axapta products.

However, the most mind-blowing news from Redmond this year was revealed during the discovery process in the Oracle-PeopleSoft US Justice Department case, when it was revealed that Microsoft had sat down and talked with SAP about buying SAP.

The two software giants decided such a mega-merger wasn't on the cards, due to integration issues, but that they even got as far as talking about it raised some eyebrows in the industry.

SAP continued to develop its middleware platform, NetWeaver, aggressively pushed its SMB products Business One and MySAP All-In-One and encouraged users of its flagship R/3 product to upgrade to the next version, mySAP ERP, announcing that maintenance for R/3 will end by 2009.

SSA Global Technologies consolidated its 2003 acquisition of Baan and released SSA ERP LN 6.1, a web services-based suite which incorporates some of the features of the Baan product.

SSA made several acquisitions this year, including Ironside, Exe and Marcam.

I2 Technologies had a difficult year, being forced to pay the US Securities and Exchange Commission US$10 million and shareholders $85 million in legal actions related to alleged mis-stating of licence revenues.

However, i2 received a boost when an investor pumped $100 million into it and at its user conference in November outlined its vision of "the closed loop supply chain," on which its supply chain operating services framework will be based.

Incorporating web services, the technology will enable master data management and data synchronisation, chief executive Sanjiv Sidhu told the conference.

All in all, it was an eventful year and with the Oracle-PeopleSoft saga set to carry on into next year, 2005 looks set to be as interesting as 2004 was.

Watson is an Auckland reporter for Computerworld

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