PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part Two: Market Impact
Written By: Predrag Jakovljevic
Published On: July 27 2004
"inaugurated" as the No. 2 leading business applications provider after digesting
the former J.D. Edwards & Company, PeopleSoft,
Inc. (NASDAQ: PSFT), has been making decisive moves to deliver
a number of new, and refurbished solutions, in a great part by leveraging its
recently acquired product portfolio. Although the vendor has acted swiftly on
assimilating its former competitor (see PeopleSoft
Gathers Manufacturing and SCM Wherewithal), these recent initiatives
might show us that the vendor has moved even farther from the digestion stage
and into a full-blown execution and productivity phase.
Recent announcements that reflect this are
World Express, one of the industry's most comprehensive solutions
for smaller businesses with annual revenues between $20 million and $100 million
(USD), on May 3, at COMMON 2004, the IBM iSeries
A new release of PeopleSoft World that included more than
280 new features and enhancements that span the product family's human capital
management (HCM), supply chain management (SCM), and financial management
(FM) applications, and a new web-based user interface (UI),on March 18 at
Further extensions of the longstanding partnership with IBM
(NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit
which expands their global alliance by enabling IBM's expanding SMB reseller
channel (see IBM
Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications.
PeopleSoft on May 18.
details, see Part
importance of the above announcements is multifaceted. First, against the background
of SAP having to recently tackle the lower-end of the mid-market
by acquiring and then further sprucing up a more suitable and genuine product
for the segment, PeopleSoft stands a good chance in the market segment by leveraging
a revamped release of a tried-and-true vantage product. (See SAP
Tries Another, Bifurcated Tack at a Small Guy and SoftBrands
to Institute Fourth Shift for SAP Business One Manufacturing Work-Plan
for information on SAP.) To refresh our memory, the original J.D. Edwards
WorldSoftware product was launched in 1984, and it has always run only
on the IBM eServer iSeries platform (formerly AS/400).
It has also since become one of the most stable and widely used ERP applications
on the platform, with 3,400 almost religiously loyal customers worldwide, and
it was available in 21 supported languages.
while the product was both a blessing and a curse for its original owner, the
new owner, PeopleSoft seems to have learned from these experiences to its advantage.
Namely, throughout the 1990s, the former J.D. Edwards has kept its focus on
what was then the breadwinner, the RPG code-based World product. It maintained
strong services until its next-generation OneWorld product
(currently called PeopleSoft EntepriseOne) was released in
the late 1990s. The vendor had thus established itself at that stage through
a combination of its reliable product and a strong services organization, which
was able to help a tide of enterprises overcome the Y2K compliance issues.
is Part Two of a four-part note.
One detailed recent announcements.
Three will continue the market impact.
Four discuss challenges and make user recommendations.
J.D. Edwards' Experience
addition, a former J.D. Edwards' US-focused, mid-market program called Genesis,
which aimed at ensuring stability and low support must-haves for the market
segment, through a competitively-priced older (and thus market-proven) release
of J.D. Edwards' World, had been sold to enterprises with less
than $100 million (USD) in annual revenue by distributors that provided local
support. However, the program had not fully fulfilled its indisputable promise
because of J.D. Edwards' lack of willingness to take a more aggressive stance
in building up its distribution channel. PeopleSoft will have to watch carefully
in order not to repeat the mistake.
J.D. Edwards had avoided the financial turmoil that its traditional AS/400-based
competitors experienced in the mid-1990s, when some, like former SSA
(now SSA Global) and JBA International (now
part of Geac Computers) were fatally wounded, it has still
had an Odyssey-like transition from solely IBM iSeries and DB2
platforms to UNIX, Oracle, and Microsoft
Windows NT/2000 while keeping most customers committed and arguably
Namely, although erstwhile J.D. Edwards had successfully targeted conservative AS/400-oriented enterprises with its mature World product and a well thought-out migration to the next-generation, cross-platform, ERP application OneWorld (i.e., owing to a well-conceived data model consistency, virtual functional parity, and the ability to have the older and next-generation applications coexist), it has nonetheless not been an easy and completely successful feat for many reasons. For one, it has taken several years for former OneWorld to entirely reach the functional parity with its older and more mature sibling, WorldSoftware. Also, because of J.D. Edwards' heritage and market presence, iSeries had initially, and for a long time, been the dominant platform even within the OneWorld constituency. While the Microsoft Windows NT/2000 platform, in particular, has long been capturing an increasing share of the overall OneWorld deals and prospects, still, J.D. Edwards' belated entry to the non-iSeries ERP market hampered its success, since it had not initially been a known force for UNIX, Oracle, and Windows customers.
again, most new functional enhancements have since been added to the more technologically
promising (in terms of support for multiple platforms and scalability) OneWorld
product, which had meanwhile gained a functional edge over World in most areas,
especially outside the core ERP scope. However, it still would fall behind in
others, including certain financial and accounting modules. Also, J.D. Edwards'
growing implementation partner program at the time had targeted the more attractive
non-iSeries platforms, whereby the WorldSoftware's user enterprises and partners
have thus long been wary of J.D. Edwards' (and, eventually, PeopleSoft's) intentions
to indefinitely support the ageing product, given the company's development
effort immediately prior to the acquisition had mostly been on extending the
OneWorld's footprint (meanwhile once again renamed into J.D. Edwards
5, shortly prior to being acquired by PeopleSoft) and ensuring the
upgrade path from World to OneWorld.
contrast, because of OneWorld's immaturity, there were initially only a few
operational installations, while experienced service and support personnel were
also limited, as both the internal and external professional services organizations
made the slow transition to OneWorld. Thus, many enterprises facing tight Y2K-related
deadlines at the time (the late 1990s) had to opt for a coexistence strategy
of OneWorld and World, which could work off the same data at the same time.
Many enterprises would logically then deploy the most mission-critical, shortest
timeframe functions on World and implement OneWorld in non-mission-critical
areas. Eventually, most of these problems were solved by the still independent
J.D. Edwards. However, the bottom line has since resulted in an attractive J.D.
Edwards 5 (now PeopleSoft EntepriseOne) product suite, while the World product
has been all but relegated to the status of a "stabilized" product, with a quite
disenchanted channel and disconcerted user base (for more details, see J.D.
Edwards Finds Its Inner-Self Within Its 5th Incarnation).
PeopleSoft in the Growing SME/SMB Market
Concurrently, as the small to meduim enterprises (SME) and small to medium businesses (SMB) open season started several years ago, the last few years have seen a growing awareness of this market segment as a more fertile ground than the upper echelon, and pre-merger PeopleSoft had not been an exception. Indeed, former PeopleSoft had achieved some notable milestones (i.e., over 1,100 mid-market customers, or 25 percent of all customers, whereby this figure is now over 30 percent after the acquisition). Yet, PeopleSoft has had its share of trials-and-errors, and resultant mid-market strategy reiterations that all the larger enterprise vendors have espoused during last several years. Namely, several "creative" pricing, software functional scope repackaging, hosting arrangements, channel strategy revisions, and so on, have resulted with customary limited success of nearly all large vendors in their "tier-dropping" initiatives, with PeopleSoft not being an exception.
example, even immediately before acquiring J.D. Edwards, PeopleSoft yet again
further refined its offering in April 2003. After building on more than six
years of its mid-market feats and by delivering thirteen new mid-market solutions
designed specifically for companies with $50 to $500 million (USD) in annual
revenues. Preconfigured to automate mid-market business processes, these PeopleSoft
Mid-Market Solutions included an unlimited user license for PeopleSoft
applications, training, and implementation services—all for a fixed price for
one module (process), such as "source-to-settle" and "recruit-to-hire", at a
time, with the option to deploy additional applications to extend business processes
as needed. The solutions were mainly a packaging exercise but they did address
key issues such as the cost of integration, the hidden costs of unpredictable
user license requirements, and training costs. It also provided potential users
with a way of spreading the cost of their purchases. The initiative did not
bring any new functionality to the table, albeit it was designed to address
the recurrent problems of cost and complexity that high-end vendors face whenever
they attempt to sell into mid-market enterprises.
in 1997, PeopleSoft, for the first time, launched an orchestrated effort to
target smaller enterprises by forming a separate Mid-Market Division.
At that stage, the company delivered PeopleSoft Select, which
included a software and services solution for human resources (HR) and financials.
During 2000, PeopleSoft announced Accelerated Solutions for HR and Financialsa
solution that included applications, technical and end user training and implementation
services, while in 2001, PeopleSoft launched Accelerated SCM,
Accelerated CRM, and Accelerated ESA (Enterprise
Service Automation), all aimed at customers with $500 million (USD)
or less in annual revenues. Also in 2001, PeopleSoft announced the launch of
its Accelerated Alliance Program, a select group of systems
integrators that provide customers with high quality, low cost implementations.
During 2002, PeopleSoft delivered Accelerated solutions to countries including
France, the United Kingdom, the Netherlands, Australia, New Zealand, and Canada.
For more information on PeopleSoft's mid-market attempts in the past, see Welcome
to the CRM Mid-Market Abyss-PeopleSoft and PeopleSoft
Internationalizes Its Mid-Market Forays.
there has been nothing inherently faulty in the vendor's approach (PeopleSoft
had even attempted to overcome a typical "cookie cutter" approach, as each of
its solutions would be preconfigured by developed industry templates to reduce
cost and complexity, but would also allow for available extensions based on
each customer's need), it has, nevertheless, failed to strike the true differentiating
chord with the target market. In addition to typical faux-pas that have been
discussed at great length in Cookie-cutter
Solutions Won't Cut It with the Mid-Market, prior to the J.D. Edwards'
acquisition, PeopleSoft had been additionally hampered by the lack of strong
native supply chain management (SCM) and manufacturing functionality.
for both aspiring vendors and needy users, small and mid-size enterprises, like
their bigger brethren, generally operate in a dynamic, competitive environment
and have global, multisite operations that are either wholly owned or that function
in a complex supply chain relationship. Consequently, all these companies need
some level of support for advanced collaborative functionality, scalability,
SCM, customer relationship management (CRM), e-procurement or e-sourcing,
and distributed computing environments. Additionally businesses in different
industries have different requirements and laws, regulatory requirements and
business practices that vary by geographic regions (for more information, see
Companies Have Full-size IT Issues).
the other hand, these enterprises have to accomplish these feats with less (or
completely without) IT staff and a much more limited budget compared to their
bigger counterparts, which demands a "zero level" of tolerance for errors, and
a little time for tweaking technology to match their business needs and for
getting their staff members up to speed. Indeed, increasing customer expectations,
growing regulatory requirements, intensifying global competition, and so on
affect small, mid-size and large companies alike in terms of real time responsiveness,
and the first two have the additional burden of limited working capital, and
limited business analysts and IT support staff. These companies typically require
integrated basic functionality straight out of the box, while the functionality
comparable to upper mid-market and large enterprise software solutions, ever-lower
total cost of ownership (TCO), and "always-on" reliability and availability
go without saying. However, these enterprises do not want to be too terribly
bogged down into figuring out which switches and parameters within a large overkill
tier one application have to be turned off, so that just enough and manageable
functionality remains available (see Catering
to Small and Medium-Size Enterprises).
To recap, these companies have complex business requirements similar to their up-market brethren, they value integration and a "one-stop-shop" provider's capability, but with modular components, and, as a rule, they have smaller IT budgets and project teams, creating the "do more with less" mantra as the order of the day. Furthermore, these enterprises typically look to scale both horizontally (i.e., to extend business processes across departmental silos, e.g., to achieve customer order capturing integrated with order management) and due to growth (organic or through acquisitions).
The well-known and much publicized major factors of success in business applications for the
mid-market segment have traditionally been flexible pricing, packaging, and deployment options; speed of implementation; vertical focus; interconnectivity to other applications and legacy systems; product scalability and scope expandability; Internet and wireless device accessibility; low cost business-to-business (B2B) electronic connectivity; and a single point of contact possibly with a local consulting and implementation support. Furthermore, PeopleSoft's internal research indicates that cost, complexity, and risk are key considerations for these targets, with a distinction that the first time buyers (so-called "green field plants") put the highest importance on price, best-of-breed modular but integrated functionality, speed of implementation and quick ROI, whereas experienced (repeated or follow-up) buyers value the vendor's reputation and support and integrated software and services solutions the most. Therefore, PeopleSoft seems to have captured (or at least tackled) most of these, partly owing to finally breaking its product in more manageable components (which provides for faster phased implementations and system agility) and Internet-enabling it (which provides for easier deployability and user interface [UI] intuitiveness).
concludes Part Two of a four-part note.
One detailed recent announcements.
Three will continue the market impact.
Four discuss challenges and make user recommendations.