PeopleSoft Goes To Oracle

codecool writes "It is final. Peoplesoft's Board of directors finally relented and agreed to let Oracle have them for $26.50 per share. Finally, it all comes to an end." Closing date is set for mid-January timeframe.

Comments

Refunds???

[the-matt-mobile]

So, I wonder if PeopleSoft customers can take advantage of the full refunds on their software licenses that were being offered if Oracle succeeded. The article's a little short on details.

Re:Refunds???

[Sein]

Probably not - that was just a "Poison Pill" to make the takeover/buyout completely unprofitable for Oracle and their stockholders.

Poison pills are almost never in the stockholder's best interest - they're mainly used by entrenched boards and management who see their jobs threathened by any takeover, be it "hostile" or "friendly".

Since Oracle launched a lawsuit challenging that particular little gem, I think it's unlikely that anyone can take advantage of it before Oracle gains operational control and cancels the offer.

Re:Refunds???

[Duhavid]

Interesting.

So, poison pills are OK, but labor unions are not.
Guess it depends on whos job is threatened.

Re:Refunds???

[rcs1000]

That's simply not true. I have been intimately involved with the PeopleSoft/Oracle bid, and I can tell you had PeopleSoft not put the customer protection plan in place, it's sales would have collapsed following the bid.

When Oracle first announced it was to acquire PeopleSoft, it said it would close it down. Big corporate customers literally could not buy PeopleSoft software with the sword of "no support" hanging over them. With the product roadmap taken away, they delayed purchasing or went to SAP.

PeopleSoft was left with a dilemma, offer some reassurance to customers who wanted to buy its software or watch sales wither. (In which case, Oracle would probably have withdrawn its bid having seen a competitor's sales collapse.)

We may not like the way PeopleSoft tried to evade Oracle's clutches, but - as far as customer assurance went - it really had no choice, either for its shareholders or its customers.

Disclaimer: up until August '04, I was a stock analyst advising fund managers on the software industry.

Re:Refunds???

[Hangtime]

The refund agreement was not a "Poison Pill." A poison pill simply states that if another acquiring firm purchases more then x percent of a target company's shares then the target company has the right to issue more shares making it prohibitively expensive for the acquiring company to do a takeover without the consent of the targeted firm.

Re:Refunds???

[aralin]

When Oracle first announced it was to acquire PeopleSoft, it said it would close it down.

This is one of the widely curculated lies about the whole case. At no time did Oracle say that it will do that. What happened is that right after the bid, so called journalists started to speculate that Oracle would do that and portrayed these speculations as something Oracle said. Right the next week these were refuted by a reiteration from Oracle that the company would continue development of PeopleSoft products and support them for at least a period of 10 years. But the PR damage was already done.

You were pretty bad stock analyst when you still spread around these half truths. I knew there was a reason I generally don't trust "analysts". But there are still people who will mod you informative, even when spreading half truths.

Re:Refunds???

[aralin]

Of course, that allowed him to justify all the fighting and exactly for this type of lies he has been sacked as CEO of PeopleSoft.

many mergers/acquistions in the news today

[theskeptic]

The top 4 out of 5 stories in the wsj.com site an hour back were-
Peoplesoft-Oracle.
JnJ- Guidant
Sprint-Nextel
Honeywell-Novar
London Stock Exchange- Deutsche Boerse

Lots of mergers/acquistions going on. Good for companies who want less competition. Bad for consumers.

Re:many mergers/acquistions in the news today

[mordors9]

But you're forgetting, they are doing it for innovation and synergy not for profits and eliminating competition..... silly rabbit.

This is going to be painful

[Amiga Trombone]

My shop is running a massive PeopleSoft implementation. Now what? Since Oracle wants to discontinue the line I wonder how much longer they'll be offering support for it. I also have to wonder what our alternatives are going to be to replace it.

This is going to suck big time.

What about existing PeopleSoft customers?

[lucabrasi999]

I checked Oracle's web site. It appears that existing PeopleSoft customers have some good news out of this. After having invested millions of dollars on PeopleSoft, they won't have to immediately migrate to another ERP system:

We intend to enhance PeopleSoft 8 and develop a PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.

Of course, whether or not PeopleSoft version 9 is an improvement over PeopleSoft version 8 depends on how much you love your existing ERP system. Of course, I don't see anything on whether or not the new PeopleSoft version 9 will run on DB2 or SQL Server.

Re:What about existing PeopleSoft customers?

[bungo]

PeopleSoft, they won't have to immediately migrate to another ERP system:

My guess is that Oracle will do to PeopleSoft the same thing they did (are doing) to RDB.

For those who are too young to remember, once upon a time, there was a company known as DEC, and they had a database which ran on their VAX hardware called RDB, and it was way ahead of everyone esle in terms of being a multi-dimensional database - much the same way their clustering technology was so advanced that others are only now catching up.

Oracle bought RDB from DEC, and slowly, over the last 10 years, took all of the good features and technology and added it to their rdbms. Now with Oracle 10G, there's hardly any reason why anyone but a old-time hard core VAX-running customer would ever consider RDB.

The RDB product line isn't dead, but with all of the features now available elsewhere, it might as well be.

Oracle will probably get everyone to migrate over a 10-15 year period before they kill PeopleSoft.

Competition

[millahtime]

Oracle may be a giant but competition does many things. Keeps prices down, drives innovation to be better than the alternative, etc. With peoplesoft not the competition, who will be Oracles competition? If there is no other big dog out there then the customer will loose.

Without competition, then there is no reason to get better and what sets the price.

Re:Competition

[lucabrasi999]

who will be Oracles competition?

SAP is the major competition in the ERP market. If I remember correctly, SAP has a larger customer base than Oracle and PeopleSoft combined.

Re:Competition

[lucabrasi999]

I'm mixing up different products.

You are. Oracle doesn't just make database software. Peoplesoft, SAP and Oracle make applications that run the back-office of many corporations (HR, Payroll, Accouting, Purchasing, etc.) This merger between Oracle and PeopleSoft impacts that applications. There are PeopleSoft applications that run on DB2, Oracle, Sybase and SQL Server. My guess is that at some point, Oracle will probably try to migrate all of the DB2, Sybase and SQL server customers to Oracle databases.

incorrect economic analysis.

[Leonig Mig]

if a merger is vertical it tends to lower costs and is thus good for the consumer. arguably oracle/peoplesoft is vertical.

you are thinking of horizontal mergers. with the exception of JnJ- Guidant, and Sprint-Nextel (which i know little about), none of those listed are horizontal.

Re:incorrect economic analysis.

[mforbes]

A horizontal merger is one in which both companies compete for the same market. For instance, if MS were to buy out Oracle's database platform and services, that would be a horizontal merger, since MS already has SQL Server.

A vertical merger is one in which, for instance, one company uses a product of the other company in order to build and sell their own product. An example of this would be if a cellular service provider were to buy a cell phone manufacturer. (I don't know of any real-world instances of this; it's only a theoretical example.)

Hope that helps :)

Re:incorrect economic analysis.

[Epistax]

Both are bad for consumers, except when the industry is in so much trouble it will otherwise no longer exist. The problem with vertical monopolies is that the competition cannot compete on any level and is forced to quit. For instance if company A makes a product which company B, C and D uses, and either B, C or D buys A, the other two companies will usually die. On the other hand if any of B, C and D buys another, the other one will usually die, except the have a bit more of a fighting chance. To continue to use this example of B buys C, then BC can now buy the products from A cheaper than D can, so BC can charge less for its products or put more into research to end D.

Re:incorrect economic analysis.

[burns210]

Dell buying the Chinese factories that build their computers.

Re:Total value...

[jchawk]

Considering that Oracle made 10.30B last year alone, I think this is probably a wise investment for them. PeopleSoft's software fits nicely within the framework that Oracle is already able to build and offer to it's customers. This move will surely broaden the markets with which Oracle can move into and deploy their products...

Make that 5 out of 5

[woodsrunner]

And don't forget the most important one: Molson's and Coor's .... this is far scarrier than Peoplesoft and Oracle!!!!

Indeed...

[cybrthng]

Infact they make much more then that. ERP is lucrative business - believe me. I've been working on these systems for 6+ years now.

When i worked for Oracle - even the most basic project was a 2-5 million dollar project and that was before montly/yearly support plans and extended consulting fees.

There is money to be made, but also technology to be learned from. Peoplesoft has its HR roots and JD Edwards has its MRP/Manufacturing roots that oracle could learn tons from.

What about the poison pill?

[TheRealFixer]

Since Oracle's stated goal was to simply buy PeopleSoft to destroy their product line (something which I still can't believe the judge is letting them get away with), wasn't there a poison pill that if Oracle discontinued their product they'd be liable to refund every customer in full? What happened to that?

Re:What about the poison pill?

[mclearn]

As long as the board agrees to the merger, the PP (well, actually, this is the CAP part of the PP agreement. The PP itself was a stock flood, as is per normal of poison pills) is null and void. The PP was designed to halt a *hostile* takeover attempt. This is no longer hostile. Also, Ellison has stated that they will continue to offer excellent (yeah, yeah, it's subjective) support to PSFT customers for the next 10 years or so.

Re:What about the poison pill?

[pcardno]

My company uses Peoplesoft a hell of a lot for accounts, HR and so on. A refund would be utterly useless, as the cost of the software itself is nothing compared to the cost associated with implementing and integrating a brand new general ledger, HR system and so on..

open source

[jeif1k]

After you have gone through a few of those, you'll come to realize the value of open source. People didn't use to think this was possible for OS'es or GUIs, but it turned out it was. They said open source wasn't reliable enough or secure enough or whatever, but they were wrong. And, yes, it is possible for the kinds of products PeopleSoft used to make as well.

Maybe your company and a bunch of other companies should get together and start working on an open source version of PeopleSoft's software. The good thing is that you don't have any legacy headaches and that you have great tools to work with.

Re:open source

[Wudbaer]

Now show me the great Open Source product being able to replace SAP, PeopleSoft and the like and everything will be jolly good.

Oh, I forgot, I'm supposed to write it myself. My stupid.

Re:open source

[durdur]

Large corporate applications like PeopleSoft are complex - it is not something a couple of guys can knock out in a year. Some apps are tightly tailored to particular industries, but even so, purchasers need a lot of customization to make the software work for them.
So it's not a "write it once, use everywhere" piece of software like the Linux kernel. Plus, a lot of companies who buy this stuff are not software experts - that's not what their business does. So writing their own solution is not an attractive option. They want to sell more widgets, which is what they know about, not set up a software development shop and compete with the likes of Oracle and PeopleSoft.

Re:open source

[hanssprudel]

. If company A hires me to write some software for them that gives them a competitive advantage why would they want to release it as open source? Company A footed the bill for development, so they reap the rewards. What is the arugment for releasing the software as open source so that competitors B, C, etc... get to use the software for free?

The point is that you are in the business of maximizing the returns for your stockholders, not trying to punish the stockholders of your competitors. If you can increase the profitability of the entire sector by 20%, you have done a better job then if you increase your market share by 10%.

So yes, your competitors get reap the rewards of your work, but because you released it under the GPL, you will get paid back by reaping the rewards of their additions, modifications, and bugfixes. As has been seen by many companies, the advantage of having the in-house knowledge and the software developed around your needs, more than compensates you for the extra expense of having the started it.

That everybody else benefits as well does not dilute your benefit. Stockholders are not paid in percentage points!

Re:open source

[jacobcaz]

• Hiring a couple of in-house programmers for a year to do development is probably not much more expensive (perhaps even cheaper) than paying the proprietary software to begin with, espessailly once you get customizations done.

Hiring a couple of in-house programmers for a year will get you jack squat progress towards a full-blown home-rolled ERP system.

I will wager you could pull off something like a inventory management package or order management interface that would work in a small company, but there is no way a "couple of in-house programmers" could produce anything close to an Oracle/PeopleSoft/Great Plains/SAP type system.

The system flexability, business knowledge requirements, legal issues, tax issues, GAAP requirements, Sarbanes-Oxley requirements, etc. would overwhelm any small team. Couple that with the need for on-going support and upgrades, regulatory updated (taxes, SoX, etc.) and you've got a team of hundreds working on the project.

"But it's open-source!" you cry, "We'll give it to the community and let them extend and build it!" Without a in-stone development plan you would just have a ton of people all working on various bits and it would be difficult if not impossible because you would have a hard time determining where someone would fit into the project based on their desire to contribute and their skills/background.

If you could manage to pull all this off - you would have to offer some type of 24x7 support if you wanted anyone else to use your software. No company that would need an ERP solution would touch one without serious support backing it up. So you setup a division to charge for and provide 24x7 technical support (and don't forget you'll need to provide functional support too).

Guess what; you just re-built an SAP or a PeopleSoft.

Re:open source

[IdleTime]

Writing an OS is easy, writing Oracle Apps, SAP or Peoplesoft is much more complicated. Why? Simply because it has to be adapted to local laws in all countries it will be sold in, differences in accounting practices etc. You need patches for every country and every minor change in laws. You need support 24/7 since it is a vital product for most companies, withouit it running, you have no idea who owes you money and vice versa etc.

Re:open source

[bungo]

Hiring a couple of in-house programmers for a year will get you jack squat progress towards a full-blown home-rolled ERP system.

If I had mod points, I'd give you a +1 insightful.

As for an example, where I'm currently working uses Oracle's E-Business suit. There are 4 full-time DBA's, and about 20 full-time developers.

What do these people do? Create new wizz-bang system? No. Everyone is either involved in keeping things running, or making minor modifications or additions to the existing system. (Some of us have been here for more than 7 years, just keeping things ticking over.)

If we wanted to produce even a small fraction of Oracle's E-Business suit, we'd need 100 times more people.

Oracle's E-Business suit is vast, and should not be under estimated.

Re:open source

[jacobcaz]

• With one key difference - If this new hypothetical company goes belly-up, they don't take the software with them.

  If they get bought out and the shut down, they don't take the software with them.

  If their top talent starts feeling that corporate management is taking development in the wrong direction - they can quit and start their own company to go in the right direction.

Well, sorta... It's possible a few interprising folks could take the software from the defunct "company" and start over. It's possible that the software would exist without "the company" around to support it. It's possible talent would leave and do their own thing.

But you still pretty much described PeopleSoft, almost. The top talent in PeopleSoft doesn't stay around for long. The really good consultants I've met are independant. They rely on their skills and reputation to get work. They may work for PeopleSoft for a few years to build those skills and contacts, but unless they get into executive management they pretty much all leave for greener consulting pastures.

The thing is, as soon as the back-end support is gone the customer will flee. A small shop cannot keep a system like PeopleSoft or Oracle up and running on just a few people. We are a 60 employee company with 1 full time PeopleSoft person (me) and 2 other techs who split their time between PeopleSoft and systems and we're woefully understaffed. If the support structure (such as it is) went away, even if it were just for a few weeks while those who wanted to rebuild the defunct "company" got back on their feet we would be in a world of hurt.

A bigger company wouldn't even play that game, they would be on to the next package so fast your head would spin. You have to have that support structure to be successful. A small band of rogue employees would be able to start a successful consulting company, but only if the mother company were there to provide that re-assuing umbrella of overall support that customers want.

A Tier 1 ERP package is complex. I mean really, fantastically, mind-bogglingly complex. Building an operating system is peanuts compared to building an ERP package, and building a working, functional OS is really...damn...impressive.

A handful of employees and their friend "Earl" are not going to be able to just open an office and seriously compete with any Tier 1 (or even Tier 2) package out there. They don't have the support structure to back them up.

If it were announced that support for PeopleSoft were ending tomorrow, but we could keep using the software as long as we like (afterall we have full access to the code, all customers do) we would only use PeopleSoft for as long as it took us to research and move to another solution.

It would be far, far to expensive to try to maintain it ourselves. I would argue that for any company where building an ERP package wasn't their core comptenency it would be far to expensive to maintain alone. That includes the big boys, Ford, WalMart, GM, etc.

Do you know how many code lines are out there just for PeopleSoft? Do you know how many patches come out each week? It makes patching Microsoft look like a freaking day at the beach. It's all we can do to keep on top of the critical patches and fixes, let alone the ones that would be nice to get into place. And we're not unique. Everyone who uses PeopleSoft I've ever spoken with has expressed similar concerns of frustrations.

I still maintain that no matter how hard you tried, you couldn't do a Tier 1 FOSS ERP package and not end up creating another SAP, Oracle or PeopleSoft.

So, what happens to the Peoplesoft-IBM Alliance?

[Cletus the yokel]

Peoplesoft and IBM recently penned a strategic alliance to resell and promote each others' products. So I guess this will begoing the way of the dodo. Or will it? Will the contract language leave Oracle in the embarrassing position of promoting DB2 as the preferred database platform for Peoplesoft and JD Edwards?

I'm also wondering, long-term, about support from Oracle for Peoplsoft on platforms other than Oracle. Will Oracle support Peoplesoft on Oracle, Oracle, and Oracle? My understanding that most Peoplesoft implementations were historically SQL Server with the new preferred platform being DB2. if that changes again it'd be BIG headaches for DB2 customers...

Great!

[stateofmind]

Our company has been eagerly waiting for this merger. We completed a merger ourselves, last year.

It gave us the benefit of having both Oracle and PeopleSoft experts/consultants.

How many people work in a shop, that primarily uses Oracle? We use Oracle for the database, JDeveloper for the IDE (working on getting us to switch to Eclipse), Oracle Forms and now Oracle Portal.

I'm in charge of getting our Java environment up and running and moving us from PHP web application development, to Java. PHP may still be used for smaller applications, but Java will take over for the larger projects we now have coming in.

A few people want to use JDeveloper for the IDE, Oracle App Server for the Java server, and ADF for the architecture, and then of course Oracle for the db. Which I'm in total disagreement with, as it's putting to many of our eggs in one basket.

I'm fine with Oracle as our database (we also use postgreSQL). And can live with using JDeveloper for our IDE. (as I said, trying to get Eclipse). But I would much rather use JBoss or Tomcat for the app server and no way am I using ADF for the architecture. Spring Framework, all the way. :)

Josh

Re:Total value...

[slyckshoes]

Correct me if I'm wrong, but I was under the impression that Oracle had little interest in PeopleSoft's products and more interest in removing a competitor. PeopleSoft and IBM are tight (PeopleSoft's products can be deployed on WebSphere, I believe) and purchasing PeopleSoft (and stopping development on their products) would not only remove a competitor, it would also be detrimental to IBM. That's why PeopleSoft created the poison pill, they feared that Oracle would buy them and then stop supporting their customers and instead foist their own solutions on them. If you've already got PeopleSoft + WebSphere, it's not so difficult to go with DB2 over Oracle, but if you have Oracle already, you'll buy their DB too.

you can't get away!

[MyDixieWrecked]

I have a friend who used to work for oracle, but quit because she didn't like it and now works for peoplesoft. She can't get away! ahhh!

Re:Not final?

[jdigital]

Shareholders approved the deal at $24. Please note that almost 70% of PSFT's shareholders are currently institutional investors who have seen value in Oracle's offer for a long time. The analysts concensus is that PSFT is worth around $21/per share. So $24/share assumed some synergies. At $30/Share, ORCL could still afford the deal, but it would no longer be accretive (increase ORCL's EPS post-merger). So PSFT knew they could get away with asking for 26.50.

Just another MBA student passing through.

Re:So, what happens to the Peoplesoft-IBM Alliance

[Software]

>Will the contract language leave Oracle in the embarrassing position of promoting DB2 as the preferred database platform for Peoplesoft and JD Edwards?

The press release says nothing about PSFT (now ORCL) having to promote DB2. It's IBM that's promoting DB2 as the database of choice for PSFT. I highly doubt that the contract says anything about PSFT promoting DB2. At best, it might specify that PSFT has to remain compatible with DB2 for a specified period of time, but even that's unlikely. I'd bet that 90% of the contract is about how to divvy up the revenue from joint sales.

These types of "strategic alliances" are ordinary in the enterprise software industry and mean very little. Companies typically have them with just about every other company in the space except for direct competitors. This one will go the way of the dodo eventually, but it wasn't much to begin with.

Whoops, forgot

[TychoCelchuuu]

In Korea, only old people acquire Peoplesoft :D Contrary to a bunch of the people here, I think it's nice that we can get more consolidation. The sooner we get it down to 2 or 3 gigantic competitors, the sooner more small people can start up and fill the gaps. Assuming they aren't stifled by the big people already in place. Oh well. Good luck, new startup companies! If there are any. I'm sure there'll be at least one.

Damn shame.

[rscrawford]

From the Computer World article: "After careful consideration, PeopleSoft's board decided that Oracle's latest offer provides good value for PeopleSoft's stockholders, the company said. The agreement ends a long, emotional struggle, it said."

I hate it when execs say things like this, because they don't mean a word of it. What they really mean is, "After careful consideration, PeopleSoft's board decided that they would make a hell of a lot of money, and screw the little guys -- like customers, employees, etc."

Oracle wants nothing with PeopleSoft except to destroy it utterly. They don't want any competition in the marketplace, and PeopleSoft is their only competition. Ellison, the madman, said so himself way back at the beginning of this fiasco.

My father-in-law and a very good friend of mine are both software consultants for PeopleSoft. They may get to keep their jobs, since Oracle doesn't currently have a CRM product, but I expect they're both going to be looking for work before 2005 is done with.

Simply more proof that the world is going to hell.

Couldn't be any worse

[bigbigbison]

Indiana University switched over to a peoplesoft solution this year and it is the biggest steaming pile of crap I've ever seen. registering for classes is an arcane practice at best now. When it was first rolled out you couldn't look up a class by it's name or the department it was in but an obscure numerical code that had no relationship to the course number. I and several other people were on a waitlist to get into a course and only by accident a week before classes started one of us noticed there were spaces in the class, and yet we were all still on the waitlist and none of us had been notified.

There have also been cases where students didn't get their loan checks and I have experienced numerous times when the system, even when not under heavy load, has said i am not logged in right in the middle of doing something or said i didn't have permission to access something even though it is my records and the classes I am teaching as a grad student.

To top it all off, it is a web portal with a million links and buttons and tabs just like the web portals back in '99 that were really cool and then crashed and burned.

I can't imagine that Oracle could make things any worse.

Remember PepsiCo & Kentucky Fried Chicken???

[mosel-saar-ruwer]

The match is a good one, and I think that both the customers and the companies will benefit.

Oracle is in the business of selling Relational Databases [RDBs]. Unfortunately, with competition from DB2/Informix, SQLServer, Sybase, Ingres, MySQL, Postgres, and a myriad of tiny little database vendors you've never heard of [Progress/ObjectStore, Intersystems/Cache, Versant/POET, Objectivity, etc], the database end of things is rapidly becoming little more than a commodity.

Increasingly, the profit is in the middleware & the front ends, where the business logic and the "schema" reside. Oracle is rather weak in those areas, hence its desire to subsume whatever logic/schema template vendors [and customer bases married to those templates] that it can get its grubby little hands on.

The problem is that most of Oracle's channel is pursuing the very same market, so that Oracle has, in effect, declared war on its own channel. And the road to business hell is paved with the skeletons of enterprises that thought they could screw the channel and get away with it.

Ever wonder why you can only order a Coca-Cola in a restaurant? Ie: Why is it that you can never find Pepsi products when you go out to eat? Setting aside the fact that Coke might have a better sales staff, a better management team, and a better product at a better price, the reason is that PepsiCo declared war on their channel when they purchased Kentucky Fried Chicken, Taco Bell, and Pizza Hut.

And you know what the channel - from the little Mom-n-Pop restaurants down the street, all the way to the global oligopolies, like McDonald's & Burger King - had to say in response?

SCREW YOU, PEPSICO!!!

Larry Ellison, you have been forewarned...