PeopleSoft Completes Acquisition of Vantive; Vantive CRM Applications Integrate with PeopleSoft and Other ERP Systems

Event Summary

On January 3, 2000 PeopleSoft Inc. announced it had completed its acquisition of The Vantive Corporation, the world's second-largest independent supplier of customer relationship management (CRM) solutions. The transaction was completed December 31, 1999 with the issuance of approximately 28 million shares of common stock and options to purchase common stock, and is anticipated to be accounted for as a pooling-of-interests. The acquisition of Vantive makes PeopleSoft the only enterprise software company offering a full suite of CRM products that integrate tightly with PeopleSoft and other major back-office applications. Organizations can now turn to PeopleSoft for an industry-leading, functionally rich CRM solution, or take full advantage of PeopleSoft's front-office CRM and eCommerce software, back-office Enterprise Resource Planning (ERP) applications, and business intelligence applications for strategic decision-making. PeopleSoft's end-to-end eBusiness solutions integrating customer information, transactional data, and business intelligence provide companies with a 360-degree view of their business.

"PeopleSoft is now the only company in the world that can truly provide organizations worldwide with a proven, enterprise solution for eBusiness," said Craig Conway, president and chief executive officer at PeopleSoft. "The Vantive acquisition adds more than 30 widely used products in use by more than 860 customers around the world to PeopleSoft's repertoire of nearly 100 products for ERP, eCommerce and business intelligence. Together PeopleSoft and Vantive will continue to provide flexible enterprise solutions that fulfill customer needs."

The acquisition expands PeopleSoft's customer base to more than 4,000 organizations, further strengthens its global presence in more than 90 countries, and adds nearly 500 Vantive employees from all levels to its workforce. Organizations can now use eBusiness solutions offered by PeopleSoft to sell, support and service customers through any channel of interaction -- the Web, call center, e-mail, or directly through sales and service representatives. These solutions include The Vantive Enterprise, an integrated software suite that leverages the Internet to increase sales, marketing, call center, field service, help desk and Web service effectiveness. Vantive and PeopleSoft products -- as well as products from other enterprise software vendors -- can be integrated today via Vantive QuickConnect, a packaged integration solution announced in August 1999. In addition, Vantive's software was integrated with PeopleSoft's software earlier this year under PeopleSoft's Open Integration Framework program, allowing real-time communication of customer information between Vantive and PeopleSoft enterprise applications.

Market Impact

Although PeopleSoft had floundered on CRM for some time before its decision to buy Vantive, we believe PeopleSoft finally is now in a strong position to compete head on with the other top ERP vendors. By acquiring a complete and one of the best CRM product suites available, PeopleSoft leapfrogged most of its competitors, who are still struggling to deliver a patchwork of internally developed or acquired CRM modules. Nonetheless, we expect the usual painstaking effort associated with merging two large companies. The mitigating factor, however, is the fact that PeopleSoft and Vantive had a marketing and development partnership. The technical problems are likely to arise with the future integration of the two products into a common interface and code base, which, we believe, PeopleSoft will have to undertake in order to continue to compete with the other top ERP vendors in the combined ERP and CRM space. In addition, management has yet to resolve the challenge of poor marketing acceptance of PeopleSoft's manufacturing applications.

User Recommendations

As a summary of our recommendations in TEC's note on PeopleSoft (See TEC Technology Research Note: "PeopleSoft - Are Business Intelligence and e-Commerce Enough?" September 1st, 1999), PeopleSoft is a very strong contender in enterprise application selection processes within the following industries: utilities, service providers, financial institutions, public sector, insurance, and higher education. It should be on a short list in any selection where HRMS system and financial modules are the main pillars of an enterprise application. Furthermore, organizations that are in an early stage of evaluating PeopleSoft should negotiate incorporation of new CRM applications components by bundling them into the contract now at negotiated license fees, and be wary of expected application integration problems.

comments powered by Disqus