PeopleSoft: speed is of the essence
The Big Mo
At a conference last week, PeopleSoft said that the aim of acquiring JD Edwards is to expand its software license, service and maintenance revenue streams. PeopleSoft needs to make progress in its integration plans quickly or risk investors becoming more interested in Oracle's takeover bid.
At its eagerly awaited conference to outline its JD Edwards integration plans, PeopleSoft made much of its assertion that its aim in acquiring its mid-market rival was to achieve growth, not to consolidate product lines.
The aim is to exploit the intellectual property and domain expertise of each company to "build superior products" and enable new business opportunities. Craig Conway, CEO of PeopleSoft, likened its plans to those of auto giants Ford with Jaguar and BMW with the Mini, where each used their acquisition to improve the existing products and facilitate a move into new markets. However, as well as integrating modules to strengthen each product line PeopleSoft is also committed to building new functionality, for example adding a compensation management module, which neither product currently has.
The company will still be required to perform some juggling and careful management because as the intention is to expand rather than consolidate products, the integration plan is not geared toward the development of common components. Although this would be ideal, executive VP of products and technology Ram Gupta said, he recognizes that the reality is different. The need to support vertical industry sectors, for example, will mean there will be divergence within components even though the design aim will be to maintain as much commonality as possible. Unless it is carefully handled, this is one aspect that could have repercussions among the customer base when upgrading selected components.
Given that it only completed the acquisition by mopping up the final JD Edwards shares within the last week, PeopleSoft is moving quickly to address the integration issue. This is a key factor as the company gave little indication of its intentions when it announced its acquisition plans in June, and if PeopleSoft can deliver working integrations in the fourth quarter, its credibility will soar. Speed is also essential in maintaining stockholder interest against the fading charms of the Oracle bid. The stock price soared above Oracle's $19.50 bid offer immediately following the unveiling of the PeopleSoft plans.
Recommended research: Datamonitor, "Oracle vs. PeopleSoft: Shakeup in CRM" (BFTC0862)