Yet some are sceptical of Oracle's assurances that it will support PeopleSoft products over the next decade. "I don't know of any software company that supports a 10-year-old product and continues to update it for tax-code changes and other such requirements," said Mary Lynne Perushek, chief information officer of Young America, a marketing services company. "I find that slightly unbelievable." Many customers say that if PeopleSoft disappears, a lack of competition could lead to higher prices and lower quality in the market overall. Others worry about how well Oracle would be able to serve customers in market segments that PeopleSoft has specialised in but Oracle hasn't traditionally catered to, such as health care and education. Ginger Bonham, financial systems administrator at Health First, is critical of Oracle's ability to provide applications to health care organisations because of the company's lack of focus on that market in the past. "If Oracle thinks they are going to keep the health care community, they will be sadly mistaken," she said. Bonham said that if Oracle does discontinue PeopleSoft's products, that will leave Health First, which runs a set of hospitals and health care facilities throughout the state of Florida, with few alternative software suppliers. Lawson Software, which also specialises in health-care applications, but is much smaller than Oracle, was the only other choice she could name. Universities, another traditional PeopleSoft stronghold, are similarly worried about a lack of competition in a software market recast by Oracle. Besides PeopleSoft and Oracle, the only other major higher education competitor is SCT in Pasadena, said David Makowski, assistant vice president of information systems at the University of Colorado. "I'd like to see more than two vendors out there," Makowski said. "It's healthier for us in terms of vendors competing to make products richer and to pay attention to innovation. It puts us in a better position on the price side of things, too." The university has spent $35m on its PeopleSoft human resources and financial systems over the last five years, Makowski said. Others expressed doubt about Oracle's support for rival technology, particularly for companies running PeopleSoft applications on databases from Oracle arch-enemies IBM and Microsoft. "Even if this was a friendly takeover and everything was rosy, I just don't see Larry Ellison supporting (Microsoft chairman) Bill Gates' database platform," said the customer who requested anonymity. "There's a significant segment of the PeopleSoft customer base that has to be really concerned about that." Among them, is Smead Manufacturing, a maker of office supplies that swapped out its Oracle database three years ago in favour of Microsoft SQL Server. The company saved millions on licensing costs as a result, said Mike DeSorda, an information systems manager at Smead. "That would probably deter us from moving to Oracle applications," he said. Sales tactics a concern
Even organisations running PeopleSoft systems on Oracle databases say past experiences with Oracle, notorious for its hard-charging sales practices, make them wary of letting more Oracle technology in the door. For example, Oracle angered more than a few database customers a couple of years ago when it changed its database-licensing plans, resulting in higher overall prices for some businesses. "Oracle has the reputation that they really look after their bottom line, and they have good database technology, which gives them leeway to press customers," said the University of Colorado's Makowski. "With Oracle, there is a history of some distrust." Yet, even PeopleSoft has committed the occasional customer faux pas. In the late 1990s it released a buggy version of its student administration application for schools and universities. Dozens of universities struggled to install the systems, resulting in operational disruptions and budget overruns on numerous projects. Because PeopleSoft fixed many of the early glitches, most universities buried the hatchet with the company, said Joe Taylor, director of administrative computing services at the University of Utah. "Our institution's feeling is that we have put that behind us, we are marching ahead, and we have created a good relationship with PeopleSoft," he said. "I haven't heard of a single one of my peer institutions that is welcoming (an Oracle buyout) because of earlier dissatisfaction with PeopleSoft." That kind of customer loyalty, coupled with PeopleSoft's money-back guarantee, helped the company surpass earnings targets in the quarter ended 30 June. By announcing its bid just three weeks before the end of PeopleSoft's second quarter, Oracle could have plunged its rival into chaos during a critical sales period. If PeopleSoft had missed sales targets for the quarter, its stock price could have plummeted, making Oracle's $19.50-per-share offer more tempting to shareholders. If that was indeed Oracle's strategy, it backfired. PeopleSoft's shares closed up 1 percent from the previous day to $17.98 on 2 July, the day it announced preliminary earning results On a teleconference call with securities analysts that day, Craig Conway, chief executive of PeopleSoft, declared an initial victory in the battle for the support of customers. "I think there was cumulative brand damage to Oracle as the last three weeks unfolded," he said. "There a remarkable outpouring of support for PeopleSoft from customers. We got calls from chief executive to board members and throughout IT." As for the shareholder wrangling and courtroom clashes that are still raging over the proposed merger, Conway and Ellison could be locking horns for some time to come.
For a round-up of the latest tech business coverage, see the Business News Section.
Let the editors know what you think in the Mailroom.
