Larry makes a grandstand play

Oracle's hostile takeover bid for PeopleSoft has sparked a flurry of media coverage in the past 10 days — predictably so. The story has the classic elements of a made-for-TV movie: a dramatic surprise attack, high-stakes finance with antitrust overtones, executive power struggles and a quirky cast of combative CEOs.

But the undisputed star of this show has been Oracle CEO Larry Ellison, an insatiable attention-seeker who obsesses over the tactics of Japanese feudal warlords and who shopped for his fourth wife on the Oprah show a few years back. Now he’s shopping for software market share and customer body count among PeopleSoft’s thousands of enterprise users, who play the sympathetic but largely helpless victims in this drama.

Why victims? Because their fates are tied to what could become a dead-end software platform.

Larry has made it clear he has zero interest in PeopleSoft’s portfolio of applications, strategic product roadmaps or even the technology fuelling it all. So, if he sidesteps the potential antitrust concerns and kills off one of his main competitors, development of new PeopleSoft applications will halt. And the inevitable upgrade march to Oracle’s E-Business Suite software will begin.

When one CIO called that prospect “a disaster” and predicted that Oracle ownership would “destroy much of what we value in PeopleSoft”, he was speaking for many of his peers. At a time when IT organisations are trying to standardise platforms, simplify architectures and keep budgets under control, the spectre of a forced migration off strategic business software is horrifying.

But what does Larry care? On the customer relationship front, Oracle has a spotty record.

The vendor has feuded publicly with its own user group, and two years ago, it was forced by vociferous customer outrage to abandon a controversial database pricing plan.

Even if Oracle’s bid fizzles, it may undermine PeopleSoft’s future — especially in the eyes of potential customers. As Wall Street analysts noted, the bid increases the perception that PeopleSoft is in trouble and sows confusion and doubt among customers and prospects. Checking out a vendor’s financial stability is a standard business practice for CIOs today, and PeopleSoft just got pushed into the wobbly red zone.

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