PeopleSoft-JDE should be good

Almost on cue, PeopleSoft has declared its intention to consume JD Edwards. According to the predictions of analyst Gartner over the past couple of years, the merger of the two enterprise software companies will be just one of many such amalgamations over the next 12 months or so.

Almost on cue, PeopleSoft has declared its intention to consume JD Edwards. According to the predictions of analyst Gartner over the past couple of years, the merger of the two enterprise software companies will be just one of many such amalgamations over the next 12 months or so.

And according to rival analyst IDC, this particular deal, if it comes off, should be of benefit to New Zealand organisations.

Naturally enough, that’s what the two parties are also saying in this somewhat quiet period before all regulatory hurdles ahead of the acquisition have been passed. That process takes 120 days, suggesting a late third-quarter or early fourth for the completion of the deal (which will cost $US1.7 billion in stock).

It’s amazing how quickly people adjust to a new reality. Before PeopleSoft showed its hand, the two companies were competitors. The day after the announcement, they had become complementary. In truth, that’s probably a fair enough claim. JDE tends to sell to industrial and manufacturing organisations, whereas PeopleSoft’s focus is service organisations. Users of the two companies’ software will be reassured by the initial statement from the pair that they are committed to their existing product lines.

Nonetheless, they have competed directly from time to time. JDE’s New Zealand boss, John Speed, thinks the honours have been pretty evently split when they have come up against each other. JDE’s main product is the OneWorld ERP suite (a past version of which has triggered an arbitration effort by eight US customers unhappy with their deployments). But JDE is increasingly active in the CRM market, in 2001 buying CRM software maker YouCentric. At the start of this year JDE released updated CRM software that it had been working to integrate with its ERP and supply chain products.

PeopleSoft, for its part, has been less of an ERP contender and more of an HR, CRM and supply chain specialist. It has tended to deal with large organisations -- Air New Zealand is a recent major new customer -- but, like other enterprise software companies, has been making a play for the mid-market with the release of a batch of new products early this year. (For US "mid-market", read New Zealand "enterprise customer".) The new releases included Financial Management, which automates the process of recording, transforming, closing and measuring financial data; Resource and Project Management, for planning and executing projects; Recruit Workforce, for recruiting, evaluating and hiring new employees; and AppConnect, for integrating PeopleSoft software with third-party applications.

PeopleSoft is not the only enterprise software company that’s starting to pay attention to smaller organisations, and this is the point which IDC thinks could benefit New Zealand outfits. The challenge when implementing enterprise systems is getting them to fit your particular requirements. This is where many projects come unstuck (as JDE has experienced not just in the US, but here as well).

IDC Auckland analyst Mark Cribbens thinks if PeopleSoft and rivals such as Oracle and SAP are reaching down, and Microsoft -- through its acquisitions of Great Plains and Navision -- is reaching up, New Zealand-size organisations stand an improving chance of having their needs met.

That would be a happy outcome of a deal which, needless to say, is not made with particular reference to the New Zealand market. Along with the rest of the enterprise software providers, the greatest market potential is seen below the top tier of organisations, where sales are drying up. PeopleSoft and JDE are being driven together by a desire to oust Oracle as second biggest business software provider, behind German company SAP. If the deal succeeds, PeopleSoft, with JDE as a separate division, will have sales of about $US2.8 billion and 13,000 staff.

Footnote: That was before Oracle boss Larry Ellison set out to spoil the party. At the end of last week Ellison made an unwelcome bid for PeopleSoft, apparently confirming the speculation of some analysts that Oracle stands to lose most from PeopleSoft and JDE joining forces. Ellison says if his bid succeeds, he'll cease to sell PeopleSoft apps (although he'll continue to support them) and will put the JDE acquisition on hold. Typical Oracle FUD, say his detractors.

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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More about Air New ZealandGartnerGreat PlainsIDC AustraliaJD EdwardsMicrosoftOneWorldOraclePeopleSoftSAP AustraliaSpeed

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