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.

What about existing PeopleSoft customers?

[lucabrasi999]

I checked Oracle's web site. [oracle.com] 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:incorrect economic analysis.

[Anonymous Custard]

Vertical: a bigger company buys a smaller one, and the smaller one essentially becomes a division of the larger one. Like when Hitachi bought IBM's hard drive unit.

Horizontal: Two large companies that already do similar things merge. Such as the Compaq/HP merger.

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: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:incorrect economic analysis.

[Anonymous Coward]

The most often cited real-world example I can think of is the film industry, in its early years. Vertical integration of the industry resulted in the same company owning the film studios, the distribution channels, and the theaters themselves. There was a time when you could only see Paramount movies at Paramount theaters or Universal movies at Universal theaters as a result of this, until the government got involved after some lawsuits. NOT always better for the consumer.

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 [sap.com].

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: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: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: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.

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.

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: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: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.

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.