JD Edwards users not sold on PeopleSoft's takeover

Twelve months after it paid US$1.8 billion to buy business applications rival J.D. Edwards & Co, PeopleSoft has yet to get a big sales boost from the deal or anything close to the kind of acclaim it had hoped to receive from the users it inherited.

Based on interviews with 15 J.D. Edwards users and an informal poll of 48 IT managers conducted this week, PeopleSoft is far from winning over its new customer base.

Five of the users who were interviewed said unequivocally that life with PeopleSoft is better than it was under J.D. Edwards. But several said it's worse in at least some aspects, and the others indicated that they're still on the fence about the acquisition.

The poll of Computerworld subscribers reflected even sharper attitudes toward the buyout, which PeopleSoft completed last Aug. 29 by purchasing the remaining J.D. Edwards shares it didn't already own. Twenty-one of the J.D. Edwards users who responded said PeopleSoft's takeover has had a negative effect on them, while six said the deal has been positive.

In addition, 29 of the respondents said they would have preferred that J.D. Edwards remained independent. Ten voiced support for the company's acquisition.

"It's a mixed bag," said J.D. Edwards user Fredrick Pond, referring to PeopleSoft's ownership. "They are our key vendor, and our business depends on them, but there is still a lot of evolution for the merged organization that has to go on."

Pond is director of information services at Schnitzer Steel Industries in Portland, and the new president of Quest International Users Group, an independent organization for J.D. Edwards customers. He said the customer support and software development operations for the applications he uses are running at about the same levels as they did under J.D. Edwards.

However, like some other users, Pond has had to change sales representatives and has raised concerns about PeopleSoft's software licensing policies.

Differences in corporate culture have also affected user perceptions about PeopleSoft, according to Pond. "J.D. Edwards was very relationship-oriented -- almost to a fault," Pond said, adding that he thinks PeopleSoft is more sales-oriented.

"The warm, fuzzy feeling is gone," said Mari Jo Moody, manager of customer support at Batesville Casket. She added that her company, which is midsize, has lost some of the prominence it had with J.D. Edwards, which catered to such users. "We used to have a close connection with J.D. Edwards, but now we're no longer the big fish in the pond," Moody said.

Despite such comments, PeopleSoft sees the acquisition as a big success, said Ram Gupta, the vendor's vice president of products and technology and its point man on the integration of the two companies.

"My experience in 16 acquisitions tells me that in 12 months, this acquisition has gone absolutely pretty much as planned or better," Gupta said. "We've added more products, increased the research and development, and are getting cultural benefits from the companies' similarity, and we're adding better support."

Gupta acknowledged that PeopleSoft is "a more businesslike company" than J.D. Edwards was. But he said that approach is necessary because PeopleSoft has many banks and other large companies in its user base.

Users said that one plus is that PeopleSoft has upheld its commitment to enhance the product lines developed by J.D. Edwards, including its World green-screen applications. PeopleSoft has released new versions of both the World software and the more modern J.D. Edwards 5 applications, which are now called EnterpriseOne.

"As a World user, life is infinitely better under PeopleSoft than it was during the last days of J.D. Edwards," said Dave Hyzy, director of IT at Benderson Development, a real estate developer in N.Y. "World is now a viable software product again."

But a huge rift has developed between Quest and PeopleSoft, which decided not to take part in the Lexington-based user group's conferences after talks between the two broke down late last year.

There also is the looming issue of Oracle Corp.'s hostile takeover bid for PeopleSoft, which was launched in apparent response to the deal with J.D. Edwards. PeopleSoft fell short of both its initial revenue forecast and a subsequent reduced target in this year's second quarter, a showing it blamed primarily on publicity about the US Department of Justice's attempt to block Oracle's bid.

"Without a doubt, the world would have been vastly different for PeopleSoft without the Oracle (offer)," said Josh Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif. "Had they been more free to operate, there would have been much more hand-holding and more careful attention to the details that would have made the J.D. Edwards customers happy."

PeopleSoft has shown promise but remains on "probation," said David Hilmer, director of IT at GrafTech International in Wilmington. Hilmer will be paying close attention to PeopleSoft at its Connect 2004 user conference next month in San Francisco.

"I'm still watching to be sure I'm serviced and supported as a customer and have the commitment from this company like I had from J.D. Edwards," he said.

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