What the PeopleSoft/Oracle Drama Means to You

By Heather Baldwin

Unless you’ve spent the last month trekking through the middle of the Amazon with no connection to civilization, you no doubt are aware of the hostile offer made, and then sweetened, by Oracle to purchase PeopleSoft. The move not only puts PeopleSoft’s planned purchase of J.D. Edwards in jeopardy, it puts PeopleSoft’s entire CRM product in jeopardy. Oracle CEO Larry Ellison already has said he not only will stop selling the PeopleSoft product, but he will incorporate PeopleSoft’s advanced features into future versions of the Oracle eBusiness Suite. The question, of course, is what all this means for users and those considering the purchase of a CRM application.

In a nutshell, it means wait, says Sheryl Kingstone, program manager for CRM strategies at Yankee Group, a research and consulting company specializing in communications and IT products. If you’re considering the purchase of either a PeopleSoft or J.D. Edwards CRM product, hold off until everything shakes out, says Kingstone, estimating that the shake-out could take up to six months. On the other hand, if you’re leaning towards an Oracle product, there’s no risk in going ahead with the deal now, she adds. Ultimately, these market realities – buyers holding off on PeopleSoft but going forward with Oracle purchases – will be a major contributing factor in what could be the eventual acquisition of PeopleSoft. PeopleSoft’s stock price will go down, says Kingstone, and Oracle’s offer will look increasingly attractive to PeopleSoft’s shareholders. “Oracle’s bid has already done the damage to PeopleSoft,” says Kingstone.

If you’re already a PeopleSoft user, Kingstone advises playing the waiting game as well. Don’t worry about upgrading, she says. If Oracle buys PeopleSoft, “Oracle will have the motivation to financially incent PeopleSoft users and ensure the migration path is a smooth one. You’ll want to take advantage of those financial incentives.”

So what’s the CRM landscape going to look like when all this is played out? Yankee Group says there is a 60 percent chance Oracle will reach an agreement with PeopleSoft, resulting in an eventual acquisition. And there’s less than a 50 percent chance right now that PeopleSoft’s acquisition of J.D. Edwards will go forward. Before the Oracle–PeopleSoft deal is sealed, Yankee Group predicts, Oracle will again increase its offer to above $19.50 a share. And in the next few weeks it will outline exactly how it will manage PeopleSoft’s customers over the next 18 to 36 months. As all this happens, look for PeopleSoft to soften its position against the takeover, says Kingstone.