Users at show dismayed by Oracle bid for PeopleSoft

Whatever the outcome of Oracle Corp.'s hostile takeover bid for rival applications maker PeopleSoft Inc., the attempt alone is creating confusion and doubt among users of PeopleSoft and J.D. Edwards products. In some cases, it may prompt them to delay software purchases until the matter is resolved.

That was the overriding message from J.D. Edwards & Co. users at this week's Quest Global 2003 conference in Denver. J.D. Edwards is slated for acquisition by Pleasanton, Calif.-based PeopleSoft, a deal that now could hinge on whether the Oracle takeover of PeopleSoft goes through.

A number of J.D. Edwards users were upbeat about the prospect of a merger with PeopleSoft, which they see as bringing scale and other benefits to the company. But they didn't share the same warmth toward the idea of an Oracle takeover. Neither did PeopleSoft's board of directors, which earlier today unanimously rejected the offer.

One user who faces possible disruption in his software purchasing is John Hill, CIO at Praxair Inc. in Danbury, Conn. The industrial gas company runs applications from all three software vendors in various lines of business, including Oracle 11.3 financials, PeopleSoft human resource and payroll applications, and J.D. Edwards OneWorld and OneWorld XE software.

Praxair is evaluating software for possibly standardizing its global human resource operations, but it must now wait to see how the various merger scenarios play out.

"I believe it's Oracle's motivation to stall the market as long as possible," said Hill. If in fact the Oracle merger goes through, he said, he would reconsider his existing investment in PeopleSoft -- even though Oracle CEO Larry Ellison has promised tools to enable migration from PeopleSoft to the Oracle 11i Business Suite.

"It's amazing that Larry Ellison is so glib to say they would create native migration tools," said Hill. "It never happens that way. Any ERP conversion is a highly costly and complex endeavor, and it would cause us to re-evaluate the marketplace."

He opposes what he feels is Oracle's intention to do a "forced-march switch" that could cost him his investment in PeopleSoft and J.D. Edwards' intellectual capital. "As a customer, I'm shocked by the brazen arrogance Oracle has expressed to the customers of PeopleSoft," Hill said.

Oracle has said it would continue to offer support for PeopleSoft's customers and won't force them to migrate to the E-Business Suite, although Oracle won't sell the PeopleSoft lineup to new prospects.

Mark Federle, CIO at The Weitz Co., a Des Moines, Iowa-based contractor that runs hosted OneWorld XE applications, is considering a move to J.D. Edwards' ERP Version 8 in the next year, which wouldn't be affected by a merger with PeopleSoft. But if Oracle purchases, and then eliminates, OneWorld XE functions that are specific to his industry, Federle said, he will stick with J.D. Edwards as long as he can while looking for some other construction-specific, second-tier ERP product.

Federle also fears that the brewing merger battle could turn into a "prize fight" that absorbs company resources.

Several users at the show said they have yet to fully assess what the struggle means.

"It's a hard question to answer. I don't have the full understanding of how it would impact the look of J.D. Edwards' software," said Leah Hansen, applications manager at CanWel Distribution Ltd., a building materials distributor in Vancouver, British Columbia, that uses OneWorld XE financials. "I think the only thing to do is sit back and wait. (The Oracle merger is) a scary idea. We don't know what's going to happen."

PeopleSoft users not at the show also chimed in.

"We see only a potential downside of significant additional costs," said Bill Monroe, chief operating officer at the Texas Education Agency in Austin, which runs PeopleSoft's financial management and CRM software. "Conversion to another system could cost over $2 million plus database costs," he said. "There are many other factors such as ... function loss, project delays, related plan disruption, etc., that we have not assessed yet."

"I don't agree with Larry Ellison's statements regarding it being a good thing for existing PeopleSoft customers to have as their only future option an upgrade to Oracle applications," said Chris Alderson, a program director at Air New Zealand Ltd., an Auckland-based airline running PeopleSoft ERP applications.

Even if the upgrade to Oracle were free, there would be unpalatable training and implementation costs "that may result in little or no additional benefit," he said.

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