Oracle Shifts to Integration Mode

Michael Singer

Updated · Dec 15, 2004

Oracle has begun laying the foundation for its eventual
with PeopleSoft .

In a briefing with reporters, Oracle President Charles Phillips
reaffirmed the company’s plans to solidify the deal before Dec. 30.
The executive is expected to meet with PeopleSoft brass today to
offer an olive branch to PeopleSoft employees, customers, resellers,
partners . . . and in the process, discuss the transition plan.

“Operationally, this [merged company] will hit the ground running in
January. PeopleSoft employees will become Oracle employees and you
should see a successful transmission over the next few months,” Phillips

Regarding PeopleSoft’s 11,600 employees, Phillips stuck by the
same story he gave at last week’s Oracle OpenWorld conference: to retain
the developers and support organization staff and shave the redundant
positions in administration staff. Previously, Oracle considered layoffs
of as much as 6,000.

Job cuts or no, Michael Dortch, a principal analyst with IT
consultancy Robert Frances Group said now the real fun of integrating
the No. 2 and No. 3 enterprise resource planning software vendors

“Oracle has to literally cash the check its mouth has been writing
for several months about continuing to enhance, maintain, and support
PeopleSoft solutions,” Dortch told

The challenge for Oracle, even Phillips admitted, is how many
customers stay on board with their maintenance contracts, which was one
of the motivations for acquiring PeopleSoft in the first place. Oracle
said its software license updates and product support increased 12
percent to $1.25 billion in the last three quarters. PeopleSoft reported
license revenue of $161 million for its third quarter for products like
its recently revamped Enterprise One and World Product lines.

Even before the merger contract was signed, Oracle publicly committed to enhance PeopleSoft 8 and develop a PeopleSoft 9, as well as
enhance JD Edwards 5 and develop a JD Edwards 6.

“These are a lot of smaller customers we can’t reach,” Phillips said
in reference to the JD Edwards line. “We also would like them to take a
look at the Oracle eBusiness Suite special edition, which is our
mid-market product.”

Oracle released the eBusiness Special Edition earlier this year in
anticipation of its need to migrate JD Edwards customers. Phillips said
Oracle continues to sign up resellers.

The executive said Oracle was very impressed by the breadth of
alliances that PeopleSoft had amassed in the past 18 months since the
announcement of the unsolicited offer. PeopleSoft added 138 new
customers during its fiscal third quarter. Some of the relationships
would be valuable and some not, Phillips added.

One of those relationships just happens to be with IBM . The joint $1 billion, five-year partnership bundles WebSphere middleware in every future shipment
of PeopleSoft products.

Phillips said he was not privy to the details of the agreement but
added he is skeptical that a contract was ever actually signed.

“It’s not clear what PeopleSoft committed to do with WebSphere,” he
said. We have a strong application server that we think is better. We
are not interested in adding more IBM technology to the stack.”

In addition to IBM, Phillips said PeopleSoft’s other partnerships
with the U.S. government and financial services firms would prove
extremely valuable. The acquisition gives Oracle the keys to the U.S.
Federal payroll unless the Congress requests a proposal for a re-bid on
the contract.

“PeopleSoft’s strong presence in the federal government, as well as
state and local governments and the education sector, made the company a
more attractive acquisition target,” Phillips said.

Michael Singer
Michael Singer

Michael Singer is a career coach, podcast host, and author to help you step into a career you're excited about. Currently, He is a coach and trainer helping entrepreneurs and executives achieve business and leadership success. He is also an award-winning business journalist focused on the intersection of technology, Big Data, Cloud, SaaS, SAP, and other trending technology.

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