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Federal Judge Rules Oracle can Bid for PeopleSoft
terrymaster69 writes "The NY Times reports (free reg, required) that Oracle may have the go ahead to continue its hostile bidding for PeopleSoft. The Justice Department had previously tried to paint the merger as anti-competitive in the corporate services software market. 'Judge Vaughn R. Walker of the Federal District Court in San Francisco rejected the government's definition of the market as too narrow, noting that the software business is particularly dynamic, with a host of current and emerging competitors in that area including Microsoft.'"
This was moderated 'Funny', but there are many taxpayers and students out there who will feel it should have been 'Informative'.
"3 major players"... but there are a ton of industry-specific ERP-ish systems out there for every industry you can think of ranging from office supply sellers to construction project managers. Also, there's plenty of business out there who skip over the full marketplace and hire a programmer to make their own resource tracking program using tools as simple as Microsoft Access which works great for a truely small business even though its scalablity is limited.
I agree with the judge here... the ERP software field is filled with players small and large. There's no monopoly risk in letting Oracle and PeopleSoft merge... just like there's far more places that sell hambugers than McDonald's and Burger King. Just because their two of the biggest, doesn't make a merger that creates a monopoly possible.
Microsoft have considered buying SAP have they? Don't make us all laugh now. SAP is as big, if not bigger, than Microsoft.
Dude, what have you been smoking? SAP has a market cap of about $46 billion and anual revenue of about $9 billion a year. Microsoft has a market cap of nearly $300 billion and revenues of around $37 billion a year. So I'm not really sure how you can claim SAP is as big as MS.
For comparison, Oracle has a market cap of $51 billion vs. Peoplesoft's market cap of $7 billion. Looking at it that way, the ratio in sizes between MS/SAP compared to Oracle/Peoplesoft is about the same.
Draw your own conclusions...
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Finally, an ERP is just such a damn big undertaking. AR/AP, human resources, CRM (which Oracle's product is laughable. Too bad I make a living off of it), inventory, purchasing, manufacturing, planning, sales - all need to be integrated.
While there are "standards" of how to implement all of these products, the teams tend to be distinct and insulated from one another, sometimes taking completely different approaches to how they implement the solutions, making a customization effort quite difficult.
One of the biggest gooches is also the nasty little relationship of ERP vendors and their own consulting firms. They're trying to make money by implementing these products, so the documentation tends to be shoddy and it tends to be very difficult to get real answers on how to do something or how a specific thing works. Hell, Oracle's J2EE architecture is bogus, with most industry standard functions having changed names, making a standard J2EE developer near useless. Well, until you decompile the whole stinking stack to trace back what you need.
And as an aside to the main topic, Oracle has a long history of acquiring firms and integrating their designs. This is nothing new, but it won't be an improvement on the peoplesoft product.
You better watch out, there may be dogs about . .
Baan was bought by SSA Global, which produces BPCS. SSA has been on a bit of a buying binge, having bought WMS (Warehouse Management System) vendor EXE as well.
Stop by my site where I write about ERP systems & more
I work for state HR (everyone here does the tech side of things). We use PeopleSoft and Oracle. Everyone here is also adamantly against the merger.
First, Oracle's ERP software sucks a lot. We worry PS will die (be swallowed) and be forced to use inferior tools.
Second, we have our choice of DBs right now. We may choose Oracle, but we could choose DB2 as well. If the conditions were to change (software price/quality/etc) we could change. We like having that freedom. I doubt PS post-Oracle would release a DB agnostic product.
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The judge isn't saying that. The Department of Justice filed an anti-trust case in court, saying that a combination of Oracle and PeopleSoft would be anti-competitive. In the opinion of the DOJ, such a combination would turn what is a three-company ERP software market (SAP, Oracle and PSoft) into a two-company market.
Oracle argued that there are other competitors that do get into the market occasionally. Lawson is one and MS is another.
The judge is saying that the DOJ is wrong and that Oracle is permitted to pursue the PeopleSoft takeover since there are other competitors beyond SAP.
Hostile bidding, as I understand it, is when an entity (Oracle, in this case) places a bid for a controlling interest in another company. If 50% + 1 share of PeopleSoft is publicly traded, it is susceptible to a hostile takeover as someone could simply buy up all the shares that are out there and thus own a controlling interest.
Now, some shares are not for sale, and when a company IPOs usually the owners keep a lot of their stock in their personal coffers (not for sale or waaay too expensive) so usually the target company's board is made an offer. Peoplesoft does not have enough of its' own shares to prevent Oracle from acquiring a majority, I guess.... hence the "if you won't accept my offer I'll buy you anyway, motherfucker!" hostility.
As I understand it, anyway.
Actually, you both are correct. PeopleSoft is an applications vendor, so we help companies keep track of their stuff (money, employees, customers, etc.) which is not easy to do when the company gets large (this is an admittedly very simplified explanation of what we do). On the surface, Oracle seeks to acquire Psoft, kill the product off (bug fixes only), and convert its customers over to Oracle applications on Oracle's database. For a very large segment of ERP customers world-wide, this will mean that they will need an Oracle database and support staff in house (expensive) ... and once they have one Oracle DB, others will follow. So, one reason they want to acquire Psoft, and there are many, is that they need some way to keep their DB market share from eroding (the database market is, I'm guessing, probably 70% of their revenue). Oracle's DB market share is and has been eroding (there is an IDC report on it here: http://searchoracle.techtarget.com/originalContent /0,289142,sid41_gci910853,00.html ) for some time and it will continue until Oracle lowers its prices to meet comparable products like DB2/UDB, MSSQL, and Sybase. In either case (lower prices or fewer units sold) they will be losing money as time rolls on ... and they know it. Acquiring Psoft and shutting it down will corral customers into running Oracle DB whether they like it or not and provide applications revenue assuming they don't go with SAP. Also, the victims, I mean customers, will be paying higher prices because they don't have a choice of going with PeopleSoft on DB2/Linux, or MSSQL/Windows, or whatever.
I hate to burst your bubble, but it will never happen. Monolithic systems are that way for a reason (to leverage all the information in all the various integrated pieces for some advantage) and they are not tied to Microsoft. These systems are the way that they are because that is what is necessary. As a user, you tend to loose sight of the scope of these systems because you see such a small part of them. I do support for PeopleSoft on Oracle for a large consulting company, so I have a little insight here.
The main reason these systems suck is because they are not custom written for your use. They are general tools written to be as flexible as possible to support as many functions as possible. Which means they are one huge pile of compromises all glued together. Even if you don't need all the functionality of all the parts, that doesn't stop those requirements from affecting the parts you use.
As a user, you see an interface that lets you enroll for classes or enter your hours worked. And as a techie, you could write something much better during your lunch hour...but that is because you haven't seen the true scope of the project and requirements. Let's consider the time entry bit.
Imagine writing a system to allow people to enter time. Well, you have to know who the valid people are who can enter time - add an employee list. That list has to be maintained - add an HR interface that covers all the necessary actions an HR department would do (don't forget all the legal requirements for every country while doing this). Once the time is entered you want to be able to do reporting on it - add a summarization and data warehouse and reporting suite to it. Someone might want to use that information to do billing of customers (like our consulting business) - add a billing system. If we are sending bills, we should track the income from them - add an accounts recievable system. And we might want to plan ahead, so add a budgeting system. Since we are doing this part of our financial system this way, might as well do the rest for simplicity sake (integration) - add the rest of the accounts payable and general accounting system. That time reporting is probably so the person can get paid - add a payroll system (again, remember all the complicated legal stuff for every country...especially tax laws). That time also would be good for project planning - add a project accounting system to track actual time against projections by project. Well, since the finanaces are here and so are the employees, we might as well put our assets here so we don't need another copy of the employee/financial information - add an asset management system. Some employees might travel and their time would relate to their travel expenses - add an expenses system. I could keep going and going, but I think you get the idea.
Now, take all of that mess that has to work together, with all the different rules and requirements and make it one big group of modular programming. Don't forget to make it support the major operating systems, databases, web servers, and any other middleware servers (Java, Tuxedo, what have you). And keep in mind people could use this anywhere in the world, so it better support all the major languages. And since not everyone is going to use all the features, come up with some kind of license management scheme and figure out how to get the modules to work independently as well as interface with 3rd party vendor applications (proprietary doesn't mean closed). And remember that everyone works differently, so your systems have to be flexible enough to handle whatever logic flow and/or customization they want to throw into the mix.
Now....does what you put together suck too? I thought so.
I thought this was some sort of forced-takeover issue.
You may have been confused because it's a hostile takeover.
That means that Oracle is trying to take over PeopleSoft, while PeopleSoft is resisting the takeover. Oracle simply tries to buy as many shares as it can until Oracle has a controlling share. The target firm (PeopleSoft) is resisting because they don't think it will ultimately be good for PeopleSoft, but if Oracle gets the controlling share then they can't do anything.
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