Customers overlooked in merger mania

Customers have been abandoned in an acrimonious battle for shares that has emerged in the takeover fight between Oracle and PeopleSoft.

This is the view of AXS-One chief executive John Rade, who said that as a 40-year industry veteran, "I have never seen such negligent behaviour towards the customer [demonstrated in Oracle's unsolicited bid for PeopleSoft].

"The issue which PeopleSoft and Oracle have failed to address is the relevance of the customer in this deal. Where is the voice of the customer in all of this?" he asked.

Charging that megalomania is not good for the software industry, Rade said the outcome as to whether Oracle does buy PeopleSoft has become irrelevant.

He said the focus is on spending ridiculous amounts of money to negotiate a deal that will only benefit the vendor.

"They talk about all this warm and fuzzy stuff like being a good cultural fit. But what are they going to, do sit around, holding hands, singing Kum-Ba-Yah together?" Rade asked turning his attention to industry analysts that have given a "lack lustre assessment" of how the deal will impact customers in terms of software costs, investment lifecycles, support and whether users will be left with orphaned technology.

The best mergers, he said, are those that deliver wins for the customer creating greater innovation through more R&D.

While there are plenty of cowboy tactics at the negotiating table the one thing that is absent, Rade said, is innovation.

He said the complexity of merging the two companies will create "ludicrous scenarios" for software licensing.

"In customers' next licensing meeting, you'd see three more lawyers and five more clauses in a contract," he gibed."The message to customers will be 'We think you can't be trusted'."

He said the companies had left customers behind because of their focus on the financial might of the deal, arguing: "No where in the industry is it written that bigger is better or more innovative, and I include SAP, Microsoft, Oracle and PeopleSoft when I [think] about this trend. There's this increasing focus on size, and customers are feeling pressured to make wallpaper investments. I find that sad."

Rade said enterprise software vendors are being characterised as an industry that only cares about the bottom line, alienating customers in the process.

"I don't see companies growing by behaving like that. Watch them drive their customers away if they continue to go down this path," he said. Gartner has advised Asia-Pacific region customers not to change their plans until PeopleSoft reveals product plans and the new merged product lines.

So far PeopleSoft has not articulated those plans. Meanwhile, Oracle has tried to reassure PeopleSoft customers that it will continue developing and improving PeopleSoft's products for the next 10 years.

Also, PeopleSoft has begun promising, if it is acquired, to refund new or upgrading customers if products they bought are discontinued. The refund strategy is seen as an attempt by PeopleSoft to keep concerned users from delaying software purchases because of Oracle's hostile bid.

If Oracle's bid goes through, PeopleSoft's ERP customers in particular can expect to have to "undertake a disruptive migration at some point", Gartner warned.

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