PeopleSoft has also struggled to reorganise its customer support and sales groups as it absorbed thousands of J.D. Edwards employees and cut staff as part of the merger, analysts and customers have said. Matelski, from the City of Orlando, said his regional support group is on its third PeopleSoft liaison person since the merger. And David J. Joseph, a scrap metal company in Cincinnati, hasn't heard much recently from the new account representative PeopleSoft assigned to the company after the merger, said Ron Schulte, a systems administration manager there.
PeopleSoft admits the reorganisation could have gone more smoothly. For instance, the company was slow to explain to sales staff how the reorganisation would affect their territories, said Renee Knee, general manager of the global integration team at PeopleSoft.
The company was also uncertain about how to work with J.D. Edwards' network of software resellers in the United States, which may have led to some confusion, Knee added. PeopleSoft typically relies on its own legion of sales people to sign up US customers but is now incorporating that approach with the reseller model, she said.
Wall Street worries
These stories are making their way to Wall Street. Pacific Crest Securities analyst Brendan Barnicle said that troubles from the J.D. Edwards merger were among several factors in the shortfall in PeopleSoft's second-quarter profit. Other were the high-profile Oracle trial and a widespread decline in corporate software spending that hit numerous software makers this spring.
Also, widespread discounting of software sales -- a result of increased competition -- is eating into PeopleSoft's revenue. Discounting is a growing problem for other enterprise software makers, including Oracle and SAP.
"It's not because of J.D. Edwards that they missed," Barnicle said. "It's just that J.D. Edwards has not contributed as much as they had hoped or we had hoped."
Those hopes may have been based on false assumptions, said Greenbaum -- for example, that the 6,700 J.D. Edwards customers have bigger software appetites than they really do. The typical J.D. Edwards user is a midsized business with conservative approach to information technology and a limited software budget, Greenbaum said. About half run their business systems on aging IBM AS/400 computers. Take David J. Joseph, a company that runs an outdated version of J.D. Edwards' accounting software and that is in the midst of an upgrade.
"We're not buying anything new at this point," Schulte said. "We're just planning to keep current."
Automotive supplier Durr Industries is similarly undertaking a J.D. Edwards upgrade project and has no plans to purchase additional software -- not that it isn't interested.
"We're also kind of holding our breath on the Oracle factor," said Robert Robinson, a business systems supervisor for Durr Industries, which is based in Stuttgart, Germany. "Once the case is settled, I think that will have a thawing effect in terms of what people are willing to invest in the products."
